Irish diplomats come and Irish diplomats go, but Ireland’s best-ever ambassador to Germany has no legs and weighs precisely 250g.
For four decades, Kerrygold butter has been Ireland's flag-bearer in Germany, selling people here a dream about "the Green Isle's gold". Slick advertising has carefully intermingled Kerrygold dairy products with imagery of wild redheads, rough landscapes and a general mood of Ireland's misty mystery.
The sales pitch is so effective that Kerrygold maker Ornua, formerly the Irish Dairy Board (IDB), has achieved the near- impossible of selling a premium-priced product to price-conscious German consumers.
Just how effective a brand it is was made clear at the height of the euro crisis. A 2012 Irish Times poll asked Germans what they associated with Ireland. Three times as many people thought of the Kerrygold butter in their fridge as the Celtic Tiger meltdown on the news.
Kerrygold look
Still, all is not well in paradise, and Kerrygold is feeling the squeeze on German supermarket shelves.
On one side is Danish dairy giant Arla; on the other is an array own-brand Irish butter with names such as “O’Grady’s” and “Irische Butter”, since renamed “Golden Hills”. Almost all borrow the look of Kerrygold packaging, and all undercut it on price.
So. Where is all this butter coming from?
The hunt begins on the broad Kurfürstendamm in western Berlin. In a modern office block, one I have passed hundreds of times, is the office of Ostmilch Handels GmbH.
Founded in 1991, Ostmilch reports an annual a turnover of €250 million, including a valuable contract to supply Aldi with O’Grady’s Irish butter. Ostmilch’s website encourages customers to make contact: “We will do everything to inform you.”
Except, that is, if you are a journalist from Ireland. Several attempts to contact Ostmilch executives got nowhere. Aldi’s Irish butter supplier is as secretive as the German discounter.
“It’s company policy to basically never give interviews,” explains a receptionist, “and nothing to do with the Irish butter product.”
Another attempt is made, this time in Hamburg and FS Milchprodukte, which was founded in 2001 and has an annual turnover of €740 million. One of its big clients is Lidl, to whom it supplies Golden Hills. The packaging that, like Aldi’s, is a Kerrygold knock-off.
FS Milchprodukte manager Andreas Serrahn is pragmatic about the rise of no-name Irish butter. Germans with money buy Kerrygold, he says, while those with tighter budgets but who prefer the taste of Irish butter buy Golden Hills from Lidl.
Market share
No-name butter brands like Golden Hills have a total 10 per cent share and are expanding the total market for Irish butter, eating into Kerrygold’s share of the the German butter market. Serrahn understands why Ornua is less than delighted.
“For them, this is competition, where before there was none,” he says. “But for Irish dairy farmers, we are a bonus.”
German own-label Irish butter is profiting from the lifting of EU milk quotas, he says, as well as tensions between Ornua/ IDB and its Irish suppliers. Serrahn says these have lead to estrangements.
“Some suppliers didn’t feel particularly well-treated by IDB because it had a monopoly and [they] left. If IDB had treated them well, perhaps more would have stayed.”
With Kerrygold holding about 90 per cent of Germany’s Irish butter market, Ornua executives in Germany insist they are not worried by the competition. They point to steady growth and high consumer loyalty (see panel below).
“Of course, it would be nice to be alone on the market, but we can live with competition,” said Gisbert Kügler, chief executive of Ornua Germany.
Apostate suppliers
But what of the non-Kerrygold butter, which some Ornua employees whisper comes from “apostate” Irish suppliers?
“We don’t know where the others’ butter is coming from,” says Kügler. “We assume it is from Ireland, but not necessarily the Republic.”
FS Milchprodukte insists that all of its Irish butter for Lidl is from Ireland, but declines to say whether some is from Northern Ireland. Like all the other own-brand labels, the butter is actually packaged in Germany.
“What’s on the package is inside,” says Serrahn. “Anything else would be fraud and not worth the risk. You can be sure IDB are checking us regularly, as we test them.”
Kügler confirms that Ornua Germany does check competitors’ products regularly, Still, it is impossible to be sure for certain where exactly the butter originates.
“That’s nonsense,” says Serrahn. “With genetic testing you can trace everything back. I buy Irish butter from Irish suppliers. Others might want to create a bad vibe about their competitors, but I’m not going to engage in that.”
Carsten Dörrie is used to such spats. After years working for the IDB/Ornua group behind Kerrygold, he now heads no-name Irish butter sales to German supermarkets at Bremen’s Westdeutschland Butterzentrale (WBZ), which is part of the larger dairy group DMK.
Dörrie says the “Kerrygold boys are doing a very good job” and that their brand “remains unquestionably the number one”.
He insists that all WBZ Irish butter comes from the Republic of Ireland. He is stung by “audacious” claims to the contrary by Ornua and says he “wasn’t aware that Irish butter was a political term”.
Ornua, he notes, sells Kerrygold in Germany under the advertising slogan “green isle”.
“That is more a geographical term,” he adds. “I’ve not noted yet that Ornua sells German customers butter [only] from the Republic of Ireland.”
Regarding the pretenders to its Irish butter throne in Germany, Kerrygold maker Ornua is not beyond sowing doubt about its competitors. Nor is it too grand to cut the price of its premium Kerrygold butter from €1.75 to 99 cent on special offer.
“We’re all freeloaders on decades of work to build up the Kerrygold brand here,” said Dörrie of no-name Irish butter supplier WBZ. “If you are the one affected, it’s no laughing matter and you react. But if you are the freeloader, as we are, you just smile.”
Kerrygold spreads out its offering: ‘Selling butter alone a thing of the past’
Germany’s favourite Irish brand is not resting on its buttery laurels: in May, Ornua Germany will launch a premium Irish yoghurt.
Kerrygold “Meadow Yoghurt” will be a premium product with a creamy consistency, offering fruit and natural yoghurt ranges being sold in 150g and 500g oval beakers.
“While Kerrygold butter remains our most important pillar, selling butter alone is a thing of the past,” said Gisbert Kügler (right), the chief executive of Ornua Germany.
“Kerrygold has such a high level of recognition and sympathy, it’s time to expand to other dairy products.”
In recent years, Kügler has presided over the launch of several new Kerrygold products, including “Kerrygold Extra” spreadable butter and pre-sliced Irish cheddar that is sold only in Germany, Austria and Poland.
The Kerrygold brand was launched in Germany in 1973 and last year grew its share of the premium dairy market to 17.3 per cent.
Kerrygold sliced cheddar took home a 52 per cent market share last year. In total, Ornua sold 56,000 tonnes of Kerrygold products last year in 23,000 German stores, for a total turnover of €357 million.
