NDC Annual Review 2008 & 2009 Plan by The National Dairy Council

Dairy: Food for Life Annual Review 2008 & 2009 Plan

4 Chairman’s Statement

5 Chief Executive’s Statement

8 Market Review 2008 & Outlook 2009

4 Strategic Evolution 1 5 Advocacy & Communications Programme 1 The National Dairy Council 28 Westland Square, Dublin 2, Ireland T: +353 1 616 9726 F: +353 1 616 9760 E: info@ndc.ie W: www.ndc.ie © National Dairy Council (NDC) 2009. All rights reserved. No part of this publication may be reproduced without prior permission from the NDC. The NDC has made all reasonable efforts to ensure the accuracy of information presented in this document, but can accept no responsibility for omissions or errors.

17 Marketing & Promotion Programme 19 School Milk & Dairy Programme 22 Issues Management & Nutrition Programmes 25 Corporate Governance & Accountability 26 Summary of 2009 NDC Plan 27 NDC Board 28 Marketing & Communications Sub-Committee 8 School Milk & Dairy Programme Sub-Committee 2 9 Issues Management & Nutrition Sub-Committee 2

Published by IFP Media, 31 Deansgrange Road, Blackrock, Co Dublin www.ifpmedia com

29 Accountability & Corporate Governance Sub-Committee 30 Organisational Structure & Staff National Dairy Council Annual Review 2008 & 2009 Plan

Chairman’s Statement The last year has been a time of considerable progress at the National Dairy Council (NDC). As farmers, processors and the broader economy come under growing pressure, the NDC has increased its credibility as an advocate of the Irish dairy industry and as a science-based nutritional advisor to consumers. The Irish dairy industry has, historically, enjoyed leadership positions based on strong brand loyalty, but it has been clear for some time that significant changes in consumer behaviour require a broad re-evaluation of our communication strategies. The NDC also recognised its own need to re-engage with consumers in a way that responded directly to their changing concerns. With the launch of our five-year strategy Dairy: Food for Life – A Strategy to Promote Irish Milk & Dairy Products 20082012 last April, the process of renewal is now in train. What followed over the last eight months of 2008 has been exciting, innovative and timely. We have strengthened the knowledge base and credibility of the NDC substantially, and through a fresh and consistent marketing programme, gained a great deal of useful insight into the modern dairy consumer. We have also strengthened the position and visibility of Irish dairy products at consumer level and embarked on an ambitious programme to ensure their continued vibrancy within the domestic market with particular focus on maintaining and increasing the presence of milk in our schools nationally through a new School Milk & Dairy Programme. In addition, as we build our scientific and nutrition knowledge base at an international level, the NDC is moving strongly towards acting as the key advocate of Irish dairy products. This role is vital in light of the continued challenges faced by the sector. The recent pigmeat crisis has focused all minds on the necessity of robust issues management policies for the dairy industry.

These are difficult times for the Irish dairy industry but current market conditions only serve to underline the importance of a vibrant NDC. This publication is designed to illustrate this sense of achievement, but to stress too that our activities must be viewed as ‘work in progress’ and their success gauged by the measurable and long-term impact in the communities we serve. This is a foundation principle of the Dairy: Food for Life strategy and we are delighted that the feedback from the first year of its implementation has validated it. The continued financial support of the NDC’s levy contributors is the clearest evidence that the industry recognises the significance of the NDC’s role. The return of Connacht Gold and the joining of Town of Monaghan as contributors for the first time in 2008 were important indications National Dairy Council Annual Review 2008 & 2009 Plan

that the NDC’s new strategy has secured the industry’s confidence: a message further supported by the Irish Dairy Board’s decision to increase its contribution by 50 per cent for 2008 and 2009. The NDC is now well placed to capitalise on the goodwill that has been generated towards it and to strengthen the role we play in promoting milk and dairy products as nature’s most natural and complete food. In the coming year, Dairy: Food for Life will continue to play its role in guiding the NDC and in supporting a ‘win win’ situation: promoting greater health awareness in the public and real growth amongst our members. I would like to thank the Department of Agriculture, Fisheries & Food for their support over the last year and also our members, whose commitment to the regeneration and rebuilding of the NDC in the last year is to be commended. In reflecting on the achievements of 2008, I would like to thank the Board, the Chief Executive, Helen Brophy and her colleagues for their tremendous effort over the last year. I look forward to a year of further achievement in 2009.

Dominic Cronin Chairman NDC

Chief Executive’s Statement Dairy: Food for Life: Year One Review Strategy is an often overused word in business life but the economic downturn of the last year has clarified, for many, the difference between those organisations that simply react to events and those that are led by clear goals and objectives. With the launch of Dairy: Food for Life – A Strategy to Promote Irish Milk & Dairy Products 2008-2012 in April last year, the National Dairy Council has firmly positioned itself among the latter. Dairy: Food for Life is nothing less than a roadmap for the NDC as it sets out to serve both consumers and the Irish dairy sector in the coming years. The launch of the strategy also proved a turning point in what was one of the most momentous years in our 44-year history. In 2008, the NDC secured its future relevancy following an honest and thorough process of review and by setting out clear, ambitious and, critically, measurable targets to be achieved over a five-year period. Winston Churchill once commented, “however beautiful the strategy, you should occasionally look at the results.” Though Dairy: Food for Life is in its earliest phase, we can already say with confidence that it has proven to be both robust and grounded. It is now timely then, with the first calendar year completed and with an investment of 12.8 million, to review the objectives and achievements in each of the six core programmes identified in the strategy: • • • • •

Advocacy & Communications Programme Marketing & Promotion Programme School Milk & Dairy Programme Issues Management and Nutrition Programmes Accountability & Corporate Governance

Equally, it is important to assert how the strategy will continue to evolve in 2009. This document highlights the measurable way in which the NDC has and will continue to increase its relevancy to consumers and the dairy industry. It confirms that the organisation is once again meeting the challenge of providing a trusted, science-based advocacy voice in nutrition and health management issues and has taken a vigorous and frequently innovative approach to addressing a number of pressing challenges. From this strengthened position, built on a structured approach to areas such as corporate governance and issues management, the NDC is now well placed to counter assertively the ‘anti-dairy’ agenda that has gained currency in recent years. The Challenges } Though Ireland leads the EU in terms of per capita consumption of milk and dairy products, there is little reason for complacency with regard to this position, which we enjoy largely on the strength of loyalty to a traditional diet. Branded Irish milk continues to enjoy market dominance, but this position is experiencing significant and accelerating slippage, largely through the growth in private label supply and the growing market share of the discounter supermarkets. According to the National Milk Agency, the industry share of indigenous milk supplies in the domestic fresh milk market in 2007 fell by one per cent to 81 per cent as imports gained a market share of 19 per cent. This is further compounded by the fact that private label milk now accounts for 32 per cent of the market. While we are still a long way from the situation in the UK, where the vast majority of milk purchased by consumers is private label, it is already clear National Dairy Council Annual Review 2008 & 2009 Plan

that 2009 will see a further continuation of the trend. Of further concern is the fact that the Irish milk industry faces strong competition from other beverage categories such as soft drinks, bottle water and juices, which have created lucrative markets through capitalising on lifestyle trends. The broader dairy category tells a similar story. Superficially, the news is good: consumer spend in this category has never been higher and innovative products have redefined the relevancy of the category over the last decade. But closer inspection shows much of this activity to be largely of international origin with brands which, however laudable in their own right, feed little back in the way of positive promotion of the Irish dairy industry. Key Irish outputs such as butter and cheese belong to mature categories and have not benefited from the kind of new product development (NPD) and marketing activity that has transformed the perception of, for example, yogurts and spreads. The prospect of the abolition of milk quotas by January 1, 2015, resulting in an additional 0.5 million tons of milk per annum, will create the need for the development of opportunities to drive growth across the dairy category, particularly for cheese. It is also of concern that consumer research has shown a considerable proportion of Irish consumers have developed negative perceptions of these products for health reasons and actively resist their purchase. Measurable Results } At its launch, Dairy: Food for Life set out a plan for the NDC to meaningfully address the challenges facing the Irish dairy industry and to champion its inherent strengths. As both a statement of intent and a template for action, it recognised that only by measurable results and a culture of transparency and accountability can the NDC be seen to serve its stakeholders and the value of its activities ultimately judged. This document sets out the goals, progress and achievements to date in the six key programmes. It is, in one sense, a ‘snapshot’ of a strategy in motion but one that highlights the significant progress that has been made in diverse but interconnected areas.

Advocacy & Communications Programme } A relationship of trust with consumers is, perhaps, the fundamental benchmark of success for the NDC and, in recent years, the organisation suffered from a perception of being ‘out of touch’ and not fully engaged with changing consumer needs. The Dairy: Food for Life strategy sets out to reposition it as a trusted and respected information source for consumers, health professionals and the media. Up-to-date science-based material now forms the basis of the communications programme and, in 2008, key outputs included a range of information guides, strong press coverage on key health concerns, presence at a number of important promotional events as well as the introduction of the new Health & Wellbeing Evening Programme, which will be extended nationally in 2009. The redevelopment of the NDC website also represented a significant gearing up in the area of IT and, as well as being National Dairy Council Annual Review 2008 & 2009 Plan

attractive to consumers, it will provide a portal for a range of stakeholder services in 2009, including an e-library facility for health professionals. The advocacy process is also being strengthened by meaningful links with relevant national and international industry organisations. Key among these in 2008 was the hosting of the first European Dairy Marketing Forum in Dublin and the building of formal links with the Irish Osteoporosis Society. This process will be further strengthened through a new Ireland-UK Dairy Alliance, to be launched in February, based on a formal partnership between the NDC and the UK Dairy Council. Marketing & Promotion Programme } A marked shift of emphasis in media strategy was one of the clearest indications of change in 2008. Fundamentally, it was recognised that, to be effective, the NDC’s marketing and promotional activity needed to be informed and guided by its Advocacy and Communications Programme. It was also recognised that returning to public prominence required a fresh, updated image and a credible message. The ‘Nothing’s as Natural as Milk’ execution was the centrepiece of a 15-week multi-media campaign that targeted a range of identified audiences and, in many cases, particularly among younger consumers, introduced the NDC to them for the first time. Follow-up market research indicated above average levels of consumer recall and satisfaction with the campaign. In terms of our services to industry, one of the important achievements of 2008 was to offer real insight into the dairy consumer in Ireland. Based on consumer modelling work conducted in conjunction with TNS Worldpanel, the NDC can now segment Irish dairy consumers in terms of five ‘behaviour’ clusters. Not only will this prove invaluable to the NDC in its own marketing activity, it will also help member co-ops to better understand the behaviour and attitudes that drive purchases, identifying opportunities for real growth in volume and value terms. School Milk & Dairy Programme } The redevelopment of the School Milk Scheme is a vital step in ensuring the dairy industry engages positively with the consumers of the future. 2008 proved a critical year as we undertook a full root and branch review of the current scheme in close co-operation with the dairies involved in school milk. In 2009, the new programme will roll out in over 500 schools across the country including a new pilot programme to be introduced to secondary schools. Over the long-term, the NDC will support a greater emphasis on health and nutrition in the school curriculum and build on the natural link between dairy consumption and sport. To this end, partnership with the Football Association of Ireland (FAI) is particularly important. The pilot scheme in 2008 saw the FAI’s Club Promotions Officers promote the link between milk and sport in five club areas in close co-operation with the NDC and local dairies. The linkage also allowed the NDC to achieve significant profile for the School Milk Programme with endorsements from Ray Houghton, Packie Bonner and Giovanni Trapattoni.

Issues Management & Nutrition Programmes } As a ‘guardian’ of the image of the Irish milk and dairy industry, the NDC has recognised the need to take a robust and proactive approach to issues management and nutrition. It is now in a position to confront more actively the challenges that have emerged in recent years, from a vociferous anti-dairy community and to the risks any potential food scare might present. In line with the strategy outlined in Dairy: Food for Life, a functioning Issues Management and Nutrition Programme supported by an expert Board Sub-Committee was established in 2008. It has, in a short time, laid a solid foundation for a systematic and informed approach to issues management. The creation of a template for an Issues Management Manual was an important advancement of this process in 2008 and further development is a priority for 2009. The Nutrition Programme, also supported by an active and expert Board Sub-Committee, is central to the NDC’s stated aim of becoming recognised as a national centre of knowledge on dairy and nutrition. Already we have seen greater agility and responsiveness in delivering positive science-based messages and this has impacted across a range of programmes. In 2009, the NDC Nutrition Programme will continue to have an important role to play in advancing advocacy issues as well as in marketing and promotion with a particular focus on the health professional area. Accountability & Corporate Governance } The NDC is funded directly through a levy system, with the average dairy farmer contributing approximately €160 per annum. The need for transparency, accountability and professionalism is, therefore, self-evident and is part of our commitment to ensuring our contributors are getting value for money. In line with Dairy: Food for Life, the NDC has taken a number of important steps to ensure best practice guides its governance structures and supports its development as a more dynamic and results-driven organisation. A redundancy and restructuring programme, involving the outsourcing of the finance function, was designed to improve both efficiency and transparency within the NDC. During the year, new external auditors were appointed. In addition to increasing the number of Board Meetings to bi-monthly, the establishment of four new Board Sub-Committees was also an important development to ensure the highest levels of expertise exists to drive the programmes forward. Outlook } For the Irish dairy industry, the last number of years have seen swings of fortune that were largely unpredicted, from the international dairy price rises of 2007 to the steep economic decline of 2008. In the coming year, Ireland is entering a period of unprecedented economic challenge and while there is little cause for optimism of any immediate reversal of fortune, it is more important than ever to remain focused on our key strengths and our core objectives.

NDC Core Values Dairy: Food for Life The NDC set out core values it wishes to convey and embed in the culture and ways-of-working for the organisation. Trusted: The NDC is building trust with key stakeholder groups through the provision of well-informed and balanced views and information. Innovative: The NDC strives to be innovative, bringing new ideas and a fresh approach to the work undertaken. Forward-looking: The NDC endeavours to be forward-looking, pre-empting issues and matters of interest and importance to the funders and the milk and dairy sector. Authoritative: The NDC ensures that the views and opinions of the organisation are rooted in robust scientific research so that it can speak with authority. Accessible: The NDC strives to engage openly with the many stakeholder groups and to be accessible and responsive.

The NDC is now a strategy-driven organisation and our ambition for the coming year is to build on the achievements of 2008 and to develop as a strong and positive voice for the Irish dairy industry. There is a great deal of work to be done and with the support of our stakeholders and the confidence and goodwill of Irish dairy consumers, we believe 2009 can be a year of further significant progress as we strive to make the NDC a world-class organisation, one that safeguards the long-term development of Irish dairy products and supports the recognition among consumers of dairy products as nature’s most nutritious and versatile food.

Helen Brophy Chief Executive National Dairy Council Annual Review 2008 & 2009 Plan

Market Review 2008 & Outlook 2009 International Dairy Market Review & Outlook

Global Supply } International dairy trade is limited to a small proportion of the global milk supply for a number of reasons. Firstly, milk is a perishable product and in many countries, the industry focus is to satisfy domestic demand and achieve self-sufficiency. Many of these countries are never likely to achieve self-sufficiency. For example, Brazil only moved from being a net importer to exporter of dairy in 2002; however, current Ministry of Health targets in Brazil are to grow per capita milk consumption from 134 litres to 185 litres per capita. Achieving this consumption level, through self-sufficiency, would require a domestic supply of 35 million tons up from the current level of 27 million tons. This situation is mirrored in most developing markets where local supply will be challenged to keep pace with per capita consumption growth. At the same time, some countries such as New Zealand and Ireland National Dairy Council Annual Review 2008 & 2009 Plan

International dairy trade is limited to a small number of regions, mainly the EU, Australia, New Zealand and the US. Therefore, any supply swings in these regions will impact global markets and price volatility. This point is highlighted by the fact that the supply short-fall in 2007 was estimated to be approximately 3 million tons, which represents just 0.5 per cent of global milk production. 15

2008

2007

10 5 %

0 -5

ile Ch

A US

il Br az

lia

nt in Ar ge

tra Au s

Ze a

-10

The market buoyancy in 2007 was stimulated by a range of factors. Key among these was strong global demand, especially in China and Asia, supply shortfalls in Australia, Argentina and New Zealand due to drought and flooding, while inventories in both the US and EU were all but depleted. A weakening US dollar and competition for crops from the biofuel sector together with oil price inflation, all contributed to the buoyancy in dairy markets. In 2008 many of these factors corrected: oil prices retreated, the US dollar began to appreciate, global supply recovered, while the global credit crunch saw a contraction in demand as the world moved into recession. Another consequence of the credit crunch is pressure on financing working capital, which is forcing traders to reduce stocks. With demand soft in 2008, sales were difficult without a price discount, further adding to the weakening of prices. A dramatic demonstration of the impact of these market pressures was the catastrophic decline in prices in the global marketplace. Fonterra auctions saw a cumulative decline in prices of 50 per cent from July to December. Clearly, New Zealand is attempting to move stocks. The situation is further complicated by the fact that the financial crisis is making credit harder to secure, leaving buyers scarce and thus making sales more difficult.

have nearly their entire industry based around exports. Overall just 7 per cent of the global milk supply is traded internationally, which equates to approximately 38 million tons of milk within the total global supply of approximately 550 million tons.

2008 has seen the strong market performance recorded in 2007 all but eroded. As market prices followed an inflationary path over the course of 2007, commentators predicted a future characterised by increased volatility. This volatility was expected as global dairy markets adjusted to the economics of supply and demand, with no publicly held stocks of dairy products and less reliance on market support measures such as export refunds and intervention purchases. However, the speed and extent to which prices retreated in 2008 was sharper than that forecasted. The outlook at the close of 2007 was that prices would retreat from the highs achieved in the middle of 2007 and stabilise at a new plateau at some point between the marketsâ&#x20AC;&#x2122; lows of 2006 and the peak achieved in 2007.

Source: IDF/USDA

Figure 1: % Change in Milk Supply Relative to Previous Year

In 2008 milk supply recovered in those regions that saw declines in 2007, while other regions notably New Zealand and the US expanded significantly. Estimates are that New Zealand will report an 8 per cent increase in supply which represents 1.2 million tons, while a rise of 2 per cent in the US accounts for 1.7 million tons of milk. 2006

2007

2008

USA

82.4

84.5

86.2

EU 27

132.2

132.5

132.7

9.5

8.5

8.6

New Zealand

15.0

15.7

16.9

Argentina

10.2

9.5

10.0

Australia

Source: IDF

Table 1: Milk Supply in Key Exporting Countries Expressed in Million Tons of Milk

It is well documented that milk supply in the EU has been largely flat, reflecting the constraints of the quota on supply, while recent

policy reform has prompted a decline within some individual countries. Over time, the EU share of global dairy trade has declined. Both New Zealand and the US have gained share of global trade. The US expanded milk supply over the period 1984 to 2005 at a rate of approximately 1 per cent per year. However, since 2005 milk output in the US has grown at an annual rate of between 2 per cent and 3 per cent. In the US, dairy cow numbers expanded in 2007 and 2008 by 40,000 and 120,000 respectively. The expansion is partly a response to the market buoyancy achieved in 2007. The US Department of Agriculture report that cow numbers in New Zealand increased by 200,000 over the last two years. Some sources are anticipating the US dairy herd will reduce by at least 100,000 cows in response to the falling milk prices with margins also facing the double blow of becoming squeezed by rising feed costs. Such a reduction would remove approximately 1 million tons of milk from the global supply: this would help put upward pressure on international prices. The expectation is that New Zealand is at the limit of its capacity. Export Trade } Historically, the US has been a net importer of dairy products; over the period since 2000 milk supply has expanded by 13 per cent, moving the US towards export trade. In 2007, 9.5 per cent of US production was exported and this increased to 11.5 per cent in 2008. Currency movements have a significant impact on export trade. The US dollar weakness in 2007 encouraged US dairy exports. The US dollarâ&#x20AC;&#x2122;s appreciation in the second half of 2008 contributed to the price collapse on the international market. A stronger US dollar reduces the demand for US exports while stimulating exports from the EU and Oceania. Hence the outlook for 2009/2010 will be influenced by the exchange rate. If the US dollar shows a sustained appreciation, then the expectation is that exports from the US will reduce from the 2008 levels back towards 2007 volumes. This export movement will benefit international prices. Also any contraction in US cow numbers will help stem US exports and prompt a recovery in market prices. Should prices recover, it may stimulate an expansion in US milk supply again and hence in 2010, US dairy exports could return to 2008 levels. The overall outlook will be volatile. Demand } As already mentioned, demand in 2008 dropped off sharply due partly to a perception that inventory was available with some buyers waiting for the market to bottom out. Data from the US Dairy Export Council would indicate that there has been a modest build-up of stock in the US since 2006.

SMP Stocks (tons)

September 2006

September 2007

September 2008

20,000

50,000

65,000

Table 2: US Inventory of Skimmed Milk Powder

The New Zealand auctions will have the effect of helping to move stock, avoiding inventory build-ups. The EU has resisted

any moves to bring forward the date for intervention purchases. Overall, there would not appear to be any excessive building of stocks. The 2008 demand pattern reflects the time lag before consumption was impacted by retail price inflation.As the year evolved, factors such as price inflation and the onset of recession saw consumer spend contract globally. Price inflation also impacted the animal feed sector where demand for milk powders and especially whey reduced significantly. Feed formulations were adjusted towards cheaper substitutes in response to dairy commodity inflation. The most significant consumer event in 2008 was the melamine contamination in China. The fact that infant formula was the product implicated, means that it could have a prolonged negative effect on dairy in China. However, experience in relation to similar public health episodes in the EU indicates that where consumption trends are underpinned by consistent demand, consumers will purchase internationally recognised brands because of the long-term integrity of the product. Early data indicates that following the scandal, dairy consumption in China slipped by as much as 30 per cent. It is likely that a combination of the impact of the scandal and reduced economic growth will mean that demand from China may not re-emerge until the second half of 2009 or early 2010. The credit crunch has affected purchasing decisions and the ability of traders to carry stocks and, overall, there is limited appetite to hold stocks. Also the credit crunch will have impacted investment decisions, which means it is unlikely that producers and processors will invest in expansion plans in the short to medium term. Looking to 2009, population growth trends, further westernisation of diets and lifestyles and urbanisation will remain key demand drivers which means buyers will have to come back to the market. Also the lower prices will encourage demand. Conclusion } Tightening of margins experienced in the second half of 2008 may result in a contraction in cow numbers in the US. This, together with an appreciation of the US dollar may reduce US exports in 2009, putting upward pressures on prices. It is unlikely there will be any significant supply expansion elsewhere given the current price point, the lack of credit and appetite for investment. The weak supply chain structures in Brazil may limit its capacity for further expansion; Australia will continue to be at risk to irrigation and climate change, while Argentina will be constrained due to government policy around export taxes. Given that supply expansion in developing regions is limited, over the long-term prices may have to return to a level that can support the more expensive production systems based on concentrates. Such an adjustment would support a US type production system and the projected growth in output from New Zealand, which may be necessary to meet global demand. Trade sources expect global trade will remain slow into 2009 but buyers should re-enter the market at the turn of the first and second quarters, as the low prices stimulate increased demand. Also, inventories in the major dairy importing countries will need to be replenished. The underlying positive note is that, over the long-term, global demand will expand in line with global population projections and the market may have to return to a higher price that attracts more expensive milk. National Dairy Council Annual Review 2008 & 2009 Plan

Market Review 2008 & Outlook 2009 The Irish Market Review & Outlook Do you buy PL? Top 3 Consumer Reasons for Purchasing in Aldi/Lidl

Don’t Buy PL 20%

Cheaper alternative to brands 78% Quality is just as good 71%

Buy PL 80%

They taste the same 45%

Figure 2: Consumer Reasons for Purchasing Private Label

(Source: Nielsen, December 2008)

Do you buy PL?

Dairy Market Overview } Top 3 Consumer Reasons for Purchasing in Aldi/Lidl Overall performance Don’t in the dairy category was positive in 2008 Cheaper alternative to brands 78% Buy PL in most segments both in terms of value and with growth achieved 20% volume. However, on closer analysis, theas good Irish71%dairy sector had Quality is just mixed fortunes with performance largely based on the increase in Buy PL the same 45% share of the market private label80% and the growth ofThey thetaste discounter alongside increased pressure from imported product, particularly for milk. 70

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Milk } According to Nielsen, the retail market for milk grew by 25.7 per cent to almost €405 million from November 2007-November 2008, with actual volume increasing by 3.5 per cent to almost 383 million litres as illustrated in Figure 3 below. When the independent sector and doorstep delivery is factored in, this value is estimated at €466 million in 2008 (TNS, November 2008). 

+0.9% 70 6  2

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23 5,

81 9,

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+3.5% 

National Dairy Council Annual Review 2008 & 2009 Plan

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Turning to the Irish market, the recession provided the rationale for the consumer price deflation of 2008, but perhaps the most genuine surprise was how rapidly Irish consumer sentiment transformed from spend to conserve mode. This palpable mood change is certain to shape the entire retail environment of 2009. While, historically, it has been shown that milk and dairy products are not overly affected in volume terms in times of recession, the shifting emphasis to value-for-money is putting increasing pressure on branded Irish offerings and the value added sector. The last twelve months have provided the Irish consumer with a litany of crises. Whether in house prices, fuel prices, banking or employment, the contrast to the excesses of the Celtic Tiger could hardly be greater and the response of the consumer has simply been to cut back. The result of this, according to Nielsen, is that grocery shopping habits have changed dramatically with many consumers persuaded to shop in the discounters for +25.7% the first time. In the past, growth observed for both Aldi and Lidl was highly correlated to store expansion but, more recently, growth is moving ahead of this with notable sales increases observed in the food category. For a basket of fifteen grocery items, Nielsen reports that the discounters are 50 per cent cheaper than Sales Value convenience outlets and 40 per cent cheaper than the multiples, a fact that is driving this shift in shopping patterns. Further supporting this is the belief among 71 per cent of Irish consumers that their quality is just as good as branded products (See Figure 2). As a consequence, private label sales are accelerating with both the multiples and convenience retailers investing in private label in an attempt to provide value to consumers. While private label still remains underdeveloped in many categories, Nielsen believes that where it exists and consumers are convinced of the quality of the product, the more likely they will be to trade down in 2009.

Sales Litres

Sales Units

+25.7%

+3.5%

+0.9%

Sales Value

Sales Litres

Sales Units

Figure 3: Milk Value & Volume Sales in 2008 (excluding independents and doorstep)

(Source: Nielsen, November 2008)

2 Ltr Whole Low Fat

Brand Y 1

Brand Z 1

1.99 to 2.50

2.16 to 2.40

2.20 to 2.35

1.99 to 2.50

2.16 to 2.40

2.20 to 2.43

Tesco 1

Dunnes 1

Aldi/Lidl 1

1.65

Private Label Milk Price

2 Ltr Whole Low Fat

new vigour to the market. These include the rising incidence of new households embracing butter and a move among the broader consumer base back to butter from dairy spreads. This presents an opportunity for the sector going forward. Butter Block (foil) #38m (+28%)

Health Standard #28m (+10%)

Butter Spreads #42m (+16%)

Butter Special #23m (+5%)

Cooking #7m (+13%)

Northern Ireland/UK - Private Label Milk Price

2 Ltr Whole/Low Fat

(NI stg)

(UK stg) Table 3: Comparison of Retail Milk Prices (Source: National Milk Agency, December 2008)

Tesco £

Dunnes £

1.28

1.35

In comparing the increase in volume to the smaller increase in units sold, it is clear that more larger size units are being sold. Also, it is interesting to note that the growth in volume is being driven largely by increased sales of low fat and enriched milk with whole milk sales now accounting for 64 per cent of total milk consumption. The volume of enriched milk grew by 13.2 per cent in 2008 with low fat volumes increasing by 5.4 per cent. Both now account for 29 per cent of total milk consumption. This offers an opportunity to further develop the market for milk by focusing on the key consumer segments that are moving towards low fat/enriched product. However, of growing concern is the fact that sales of private label milk through the discounters increased by 22 per cent in volume and 58 per cent in value from November 2007-November 2008, according to Nielsen, indicating that milk is one of the growing areas for consumer spend in Aldi and Lidl. Equally, private label continues to be driven by the multiples and as a result, private label now accounts for 32 per cent of total milk sales in Ireland (Nielsen 2008). Table 3 compares the price of 2 litres of whole and low fat branded milk to private label equivalent and demonstrates that the price difference is significant (34-85 cents). With the majority of private label milk being sourced from Northern Ireland, this will continue to place increasing pressure on the sector in 2009 and create a challenge in retaining brand loyalty for Irish dairy processors. Equally, the table also illustrates the comparative retail prices for Northern Ireland and the UK which again show a marked difference to not only branded milk prices but equally private label prices in Ireland. The increase in the numbers of consumers doing their weekly shopping across the border is also a point of concern given these significant price differences based on current exchange rates. Butter } The total market for butter and spreads grew by 16 per cent in value from November 2007-November 2008 from €118 million to €137 million. Volumes also grew by two per cent over the same period to 29,000 tons with Aldi and Lidl seeing a 23 per cent growth in volume and 40 per cent growth in value across the category. This further demonstrates the growing pressure of private label but, nonetheless, the top eight brands of butter and spreads still account for 76 per cent market share with Aldi and Lidl only taking a 4 per cent share of the total market value. The most interesting trend was the increase in value recorded for butter as illustrated in Figure 4. While this has been mainly due to price increases, according to TNS research, there are some significant market trends bringing

Health #51

Brand X 1

Taste #80m

Branded Milk Price Range

(Source: Nielsen, November 2008)

Figure 4: Breakdown of Butter & Spreads Market by Segment

In addition, the current recession and caution in consumer spending offer the opportunity to promote butter in the cooking segment with a reversal to home cooking and more in-home entertaining. To take full advantage of these trends, it will be important to counteract the negative perceptions that are held by many consumers on the adverse impact of butter on health. Research commissioned by the NDC in 2008 showed clearly the need for positive reinforcement of the use of butter as part of a healthy diet with many consumers indicating a reluctance to use butter as a result of negative press coverage and, in many cases, as a result of GP advice (TNS Omnibus Survey, March 2008). Cheese } Total sales of cheese grew by 15 per cent to €193 million from November 2007-November 2008 with a corresponding increase of 6 per cent in volume up to 17,730 tons. Again, in line with butter and milk, all segments of the cheese category continued to grow in 2008 as is illustrated in Figure 5. Cheese #193m (+15%)

Block #64m (+23%)

Convenience #109m (+11%)

Speciality #21.5m (+13%) (Source: Nielsen, November 2008)

Figure 5: Breakdown of Cheese Market by Format

While the top eight brands (which are all Irish brands) account for 46 per cent of the total market share for cheese, this is a highly competitive sector with pressure from both international players such as Kraft and Unilever and a growing discounter market share. Retailer and discounter brands account for 26 per cent of the total market with cheese being a key target for the discounters. Table 4 demonstrates the growth in volume and value terms over the last twelve months across a number of segments showing Data: Year to 30th November 2008

Multiples/ Groups/ Forecourts

Hard Discounters

Kilo % Change

Value % Change

Kilo % Change

Value % Change

Soft Cream Cheese

Cheese Spreads

-1

Prepacked Sliced Cheese

-8

Fixed Weight Cheese

Cottage Cheese

-19

-8

Cheese Snacks

-14

-7

Grated Cheese

-3

(Source: Nielsen, November 2008)

Table 4: Discounter Increase in Volume/Value Market Share for Cheese

National Dairy Council Annual Review 2008 & 2009 Plan

increases of up to 50 per cent in some cases through the discounters with corresponding declines across the rest of the retail sector. The prevailing trends indicate a significant opportunity to grow the market for cheese in Ireland particularly in the convenience segment, which accounts for nearly two thirds of the market. However, the pressure from overseas competitors will grow, and a rationalisation of the category will see leading Irish and international brands remaining with private label continuing to gain share from weaker brands. Equally, there are opportunities to develop the cheese snacking segment, while the market for healthier cheese will continue to offer opportunities for NPD given consumer health concerns and a focus on healthier diets. Conclusions } The consumer story of 2008 in Ireland was the speed in which both behaviour and attitude entered ‘recessionary mode’. The retail response of price promotions and heavy discounting as well as consumer reluctance to spend extra on value added products has put intense pressure on suppliers. These difficulties were further compounded by the new attractiveness of UK food imports and Northern Ireland as a shopping destination following the demise of

the value of sterling in December 2008. 2009 will no doubt be a challenging year for Irish dairy processors with hard decisions to be taken in light of the pressure from retailers to compete in this new “value” environment. The temptation to chase volume by increasing promotions or cutting prices is an obvious route to deal with this pressure. However, in the long-term, this can create its own difficulties, as consumers come to expect lower prices as the norm and thereby weakening the brand equity and lowering margins. For survival, processors will need to adopt a long-term strategy that ensures costefficiency is at the centre of their business and by focusing on key brands, while still continuing to capitalise on the opportunities that exist to expand the category through innovation and NPD. The positives in this challenging environment are worth restating: the market for milk and dairy products continues to show growth and opportunity amidst an increasingly competitive and costfocused environment. Growth over the coming year is possible but will require robust strategies to deal with the current situation and a continuous assessment of consumer behaviour so as to ascertain whether shopping trends are cyclical or long-term shifts that require a realignment of business strategy.

Industry Perspectives Alan Purcell Head of Marketing - Ireland The Nielsen Company

co-ops to develop marketing campaigns that are strategically focused

The growth of discount retail outlets has seen shopping habits change

showed a widespread lack of understanding of the health benefits of milk.

dramatically in recent times. In the past, the growth observed for the

“The Irish dairy industry now has new tools to help them understand their

discounters (Aldi and Lidl) was highly correlated with the increase in

market. We can track the behaviour of these clusters as they react to

their store numbers. However, Alan Purcell, Head of Marketing – Ireland,

different strategies and set real targets for them,” Marie says.

The Nielsen Company, explains: “Recently, we have seen their growth

While predictions for overall consumer spending may be bleak in 2009,

rates move ahead of their store opening programmes as their sales have

she believes the research shows opportunities for the dairy industry to

increased in every category.”

respond. “We’re seeing the take-home market get bigger. People will

As suppliers and retailers face these challenges going forward, Alan

start having breakfast at home more as the coffee on-the-go culture falls

highlights some possible actions that can be taken: “Focus your

back. Despite the recession, it is likely that some of the dairy categories

investment behind stronger brands. Review your consumers’ assumptions.

will benefit.”

Review your markets thoroughly. Finally, don’t rush into decisions Recessions present opportunities as well as challenges.”

Mary Fox General Manager, Retail Foodservice Division Connacht Gold

attitudes are often at odds with their actual purchasing decisions and

Nuala O’Duffy Consumer Insights Manager, Glanbia The current growth in private label is part of a long-term shift. Nuala O’Duffy observes that, as early as last March, a dramatic shift in consumer behaviour accelerated this trend. “Consumers began trading up to larger

Connacht Gold had a solid sales performance in its liquid milk business

formats and better value pack sizes, buying private label and shopping

in 2008 against a market movement into retailer branded products. Mary

across different retailers. This happened across the board in every

Fox attributes this to the strong brand loyalty Connacht Gold enjoys

category.”

in its region and a strategy of investment in innovative, value-added

One of the significant learnings from 2008 is that recession instils a ‘back

products. This will continue in 2009 as the company combines NPD with a

to basics’ mentality in consumers. “A lot of consumers were suddenly

determination to be as cost effective as possible.

not prepared to pay for the convenience of grated and sliced cheese.” In

The company works closely with its customers but takes a pragmatic

yogurt, the move was even more dramatic with a shift towards traditional

approach to the private label issue. “Retailers see their own brands as

yogurts and away from premium functional offerings.

important. We recognise that and get on with it. “While we are expecting

While consumers have clearly started to look for value, they are still

2009 to be a very difficult year, we believe we will hold our market share

willing to pay for significant added value with Glanbia’s fortified milk

through continuing to produce high quality products and meeting our

growing strongly over 2008.

customer and consumer needs.”

Nuala believes that, in terms of consumer behaviour, the trends seen

Marie Burke Managing Director, TNS Worldpanel - Ireland 12

and results oriented. The cluster groups highlighted how people’s

in 2008 will continue this year and dairy suppliers will be challenged to deliver value. “In the last ten years, every purchase was justified on the grounds that ‘I’m worth it’. Now consumers are asking ‘is it worth

Closely involved in the NDC’s consumer segmentation project initiated in

it?’ People are cutting down on low involvement categories and food,

2008, Marie believes the research will allow the NDC and member dairy

unfortunately, is high on this list.”

National Dairy Council Annual Review 2008 & 2009 Plan

Jackie Cahill President, ICMSA

Looking toward the challenges of 2009, he sees the need for a concerted

In December 2008, the ICMSA held a series of about 80 meetings

out there that local supply is essential for long term sustainability. Long-

around the country and found a huge level of concern among farmers

distance distribution makes no sense when there is an excellent local

about the anticipated price of milk in 2009. The sense of despondency

supply that involves local communities.”

was exacerbated by the amount of investment made on dairy farms

Noting the decline experienced in much of the valued added dairy

since 2007, when most commentators had expected milk prices to

sector, he argues people will still drink milk to the same degree in a

hold at somewhere between the high 20s and low 30s (c/l). “This was

recession “but the trend is towards own label and larger formats.”

the baseline on which investments were made and with the prediction

communications strategy. “Irish co-operatives need to get the message

whether they can pay the bills,” Jackie comments.

Jim Begg Director General, Dairy UK

With global recession dampening demand and international supply

The year ahead will be tough and market volatility has made the dairy

increased, a price recovery is unlikely in 2009. However, Jackie notes that

industry a difficult one to manage. Jim Begg believes the sector will

the volatility witnessed over the last two years brings an extra level of

have to develop new business strategies in response. While falling oil

unpredictability to all forecasting. “Climatic conditions can have an effect

prices will ease pressure on the cost side of the business, he points to

of prices - the law of supply and demand is a very simple equation,” he

the model in the UK where retailers enter into contractual arrangements

notes.

with farmers which link their milk prices to the operating costs of

Recognising that growth in private label represents a consumer search

the business. “That’s resulted in a greater degree of protection for

for value, Jackie observes that “consumers have a choice and Irish dairies

British farmers and you may see it extending into other countries,” he

have to compete. But consumers also have to realise that if they are

observes.

demanding top class products they have to pay a reasonable price.”

One of the emerging trends in 2009 will be the use of dairy’s strong

that prices in early ‘09 will be 25 cents a litre, farmers are now worried

Padraig Walshe President, IFA

environmental credentials as a marketing resource. “Consumers are more aware of health and nutrition and the environment, so I expect to see dairy companies develop the added value sector using the positive

After the price high of 2007, 2008 was a sobering year for the Irish

aspects of the dairy industry.”

dairy industry Padraig Walshe reflects. A virtual collapse of commodity

Overall, Jim argues that the long-term prospects for dairy are largely

prices, the economic downturn and the melamine scandal in China

positive. “The industry has to be understood in terms of global

have all contributed to bringing milk prices to their current low level.

dynamics: we’re going to see continuing rising demand, driven by

Internationally, the credit crunch will continue to have an impact on

income growth and population growth and - a very important factor –

production through 2009.

the fact that consumers like and value dairy products.”

“We’re in very volatile times and this volatility affects family farming.

Padraig supports the work of the NDC in challenging the misinformation

Martin Territt Director of the European Commission Representation in Ireland

around dairy and believes there is a greater need for leadership in the

In January 2009, the European Commission is reintroducing export

industry. “The role of the industry is to make sure milk is processed as

refunds for butter, cheese and whole and skimmed milk powder. As Martin

efficiently as possible, while adding maximum value and returning the

Territt - Director on the European Commission Representation in Ireland

best possible price for farmers.”

- explains, when intervention buying for butter and SMP begins in March,

However, milk is still one of the best foods you can buy and, in terms of nutrition, offers the best value for money to consumers.”

John Tyrrell Director General, ICOS

the Commission undertakes to, if necessary, buy more than the predetermined quantities through regular tenders. “As we can see from the last two years, quotas no longer fulfil the price-stabilising role they were

The dairy sector in Europe experienced extreme price volatility in 2007

designed for. Recent changes to CAP will help producers adjust to a world

and 2008. “This is a new reality for dairy producers in Ireland and Europe.

without milk quotas.”

Small changes in supply or demand are tipping the balance and having a

“With both European and global demand for dairy products set to

major effect on price. Major price volatility will be a feature of the dairy

increase markedly over the next decade, it makes no sense for us to

market from now on,” says ICOS Director General John Tyrrell.

prevent our producers benefiting from the new market opportunities,

Demand for dairy products, John states, is expected to grow at about 2.5

especially in emerging economies. Ireland’s dairy products are of

per cent per annum for the period 2010 – 2012. However, in the short-

particularly high quality and should have a bright long-term future.”

term the rate of this growth may slow, to below 2 per cent, reflecting slower economic growth in developing countries.

The Department of Agriculture, Fisheries and Food

However, John is positive: ”The dairy industry is constantly investing in

During 2008 dairy markets fell back from the record high levels they

technologies, research and product development to deliver products

reached in 2007, when Irish dairy exports rose 13 per cent to €2.36bn.

which meet the varied tastes and demands of consumers”.

The prospects for 2009 are mixed and Irish and EU dairy exports will

Conor Ryan Chief Executive, Arrabawn

find market conditions challenging. The EU Commission has agreed to activate the range of market management mechanisms at its disposal. Export refunds have been restored for all products and APS for butter

Conor Ryan describes 2008 as “a rollercoaster year” that started with

was introduced on January 1, 2009. The Commission is committed also to

high milk prices and ended with considerable downward pressure

continuing to buy product into intervention after reaching the mandatory

depressing prices across the board. With competition from private label

limits. In the medium-term most analysts forecast strong demand and high

growing “the supply of milk is back substantially at farm level and there’s

prices for dairy products, as population growth and greater prosperity in

no sign of that abating,” he says.

developing countries will induce higher levels of demand. National Dairy Council Annual Review 2008 & 2009 Plan

Strategic Evolution Dairy: Food for Life was a vital step forward in ensuring that the NDC remains relevant and valuable to the Irish dairy sector. Critical to its success is a strategic framework by which its activities can be judged and assessed. With the appointment of new Chief Executive Helen Brophy in September 2007, the NDC embarked on a deep and thorough review of its operations. Recognising a widespread perception that it had become dislocated from its core objectives, the review process was conducted with a sense of urgency and honesty, and an understanding that its conclusions needed to be authoritative. Eight months later, Dairy: Food for Life, a new five-year strategy for the NDC, was launched by the current Minister for Health Promotion, Mary Wallace T.D. and with the endorsement of the Department of Agriculture, Fisheries & Food. This marked the beginning of a new direction for the organisation, focused on delivering services of real value and relevance to the Irish consumer and the Irish dairy sector. Control } The development of a five-year strategy has provided a very clear roadmap for the NDC to follow over the coming years with clear measurable objectives. Ann O’Connell is Partner in charge of Strategy Advisory Services at PricewaterhouseCoopers and assists organisations in preparing their strategies. She believes that a strategy to guide an organisation is invaluable, a fact proved particularly by the sudden economic downturn of the last six months. “Without a strategy, a business or organisation such as the NDC can go into what is termed as ‘mission drift’ and become reactive. The organisation will lose visibility of the macro issues and only deal with micro issues, which can result in a loss of focus. With a strategy in place, you are taking control of the destiny of the organisation, which will ensure that it is more productive and focused on its goals and its ability to deliver these.”

Consultative Approach } The NDC consulted widely with its key stakeholders as part of the input process for Dairy: Food for Life. Dairy processors, farmers and Government departments were engaged in a frank and open dialogue, with a view to gaining a comprehensive understanding of the core issues and challenges facing the sector. In addition, the NDC also reviewed twelve comparable international dairy organisations as a benchmark and investigated research into trends of milk and dairy consumption on a global scale so as to fully understand the current issues impacting on the dairy industry. If the NDC was to play its role as an informed and trusted voice for the consumer then it was important that the strategic development process engage with them and considerable resources were dedicated to understanding consumer perceptions of dairy right back to the farmer’s role. Armed with relevant and up-to-date information, the NDC could National Dairy Council Annual Review 2008 & 2009 Plan

Helen Brophy, CEO, NDC and Minister for Health Promotion and Food Safety, Mary Wallace T.D.

then evaluate how to add value to such a large and important sector and assess the role it could play in relation to other existing organisations. Adaptation } Ann O’Connell believes that, no matter how exhaustive the initial process, an important component of every strategy is review and, if necessary, adaptation. “It is important to remember that plans are nothing, but planning is everything. A strategy is a dynamic blueprint which will help drive the organisation, but as we move into 2009, the NDC will need to examine how the world has changed since Dairy: Food for Life was launched and will need to review its priorities on an ongoing basis.” An example of this changing landscape is the growing importance of environmental sustainability which has risen in prominence over the last twelve months. This may require greater emphasis as the NDC’s agenda moves forward, particularly in light of growing retailer focus on the issue (e.g. Tesco Carbon Footprint Label). The NDC is acutely aware that any viable strategy must have an inbuilt review component, essentially the ability to be modified according to changing circumstances. Reflecting on the overall achievements of Dairy: Food for Life to date, Ann believes one of its core achievements is the sense of clarity it creates by linking strategic objectives to concrete actions. “There is clarity around the vision put forward in the strategy, particularly in the stated key strategic objectives and how these are linked into work programmes. Dairy: Food for Life tells the story of where the organisation has come from and where it is going.”

Advocacy & Communications Programme The NDC has established a positive, proactive approach to communicating the health and nutritional benefits of milk and dairy products to the consumer and other relevant stakeholders. Credibility in advocacy and communications is critical as the NDC positions itself as a trusted and respected information source for Irish consumers in the coming years and communicates positive, proactive messages regarding the health benefits of milk and dairy products. Dairy: Food for Life identified key issues for exploration and committed the organisation to becoming a knowledge base, sourcing relevant, accurate science-based information to support the consumption of dairy products. Following the establishment of the Advocacy & Communications Programme, key stakeholder groups were identified as communication targets including: the consumer; the media; policy makers and Government representatives; the scientific community and health professionals. Research has been initiated to establish the important issues and perceptions of each of these groupings, both negative and positive, with particular focus given to the consumer in 2008. Also under the Advocacy & Communications Programme, analysis of scientific material and research is receiving greater resources. This forms the basis for an on-going communications programme centred on easily digestible, audience-tailored advice and information about milk and dairy products. Reaching the Consumer } In 2008, the NDC began to develop and implement a strong programme of communications at consumer level with specific focus on key dairy issues. These included supporting the successful fifteen-week “Nothing’s as Natural as Milk” marketing campaign, which resulted in a high level of media coverage including national press, regional press in addition to national and local radio. The coverage ran parallel to the campaign and raised awareness of a range of important dairy issues including the recommended intake of three dairy servings per day, the calcium deficiencies in Irish teenage girls, the importance of dairy for children and the benefits of milk in sports nutrition. Support for these key messages was secured through collaboration with four GAA players: Richie Power, Joe Canning, Bernard Brogan and Marc Ó Sé through public appearances and featuring in the marketing campaign. Again, this had a very positive impact on raising the profile of dairy and the link to fitness and wellbeing. Alongside this high profile coverage, the NDC developed a new range of nutritional advice literature and conducted a number of outreach projects such as the Health & Wellbeing Evening Programme held in Sligo in November, which saw a high level of

attendance. Also, as part of the revitalisation of the School Milk and Dairy Programme, a pilot initiative saw nutritional advice delivered directly to children within the 75 schools selected for the pilot programme. In September, the NDC returned to the National Ploughing Championships in partnership with the FAI, running a very successful three-day penalty shoot-out competition with over 12,000 children taking part and bringing more than 20,000 visitors to the NDC marquee. Each participant received a goody bag with tailored-information on the benefits of milk and dairy products. A celebrity penalty shoot-out with a wide range of media and sporting personalities saw €10,400 raised in aid of Concern, who celebrated their 40th anniversary in 2008. In 2009, there will be a continued effort to target consumers effectively. The Health & Wellbeing Evening Programme will travel to four new locations in 2009, and it is planned to expand the NDC/FAI partnership to a nationwide programme of activity that will promote dairy nutrition in schools with the additional provision of support curriculum resources. Additional events include the launch of new consumer-specific information guides and initiatives such as the NDC Dairy Den Programme for mothers and young families, which will support dairy consumption from toddlers up to the teenage and young adult years. Communicating through the Media } The 2008 marketing campaign featured cross-media advertising aimed at communicating the value of milk in the diet. Market research (see Marketing & Promotion Programme) indicates a very positive consumer reaction to these targeted campaigns. Also in 2008, NDC advice and information appeared in monthly columns in the Irish Farmers Journal and the Irish Farmers Monthly. The NDC will continue to work closely with the agri-press in 2009 as the NDC shares information on its programmes and activities with both industry and the rural community. Meeting the Needs of the Health Professional Re-engaging with health professionals was an important target of the NDC Advocacy & Communications Programme in 2008. The redeveloped NDC website has laid the groundwork for an e-library facility which will evolve into a source of science-based online information for health professionals. A new, fully updated, series of nutritional information guides, relating to areas such as osteoporosis and food allergies and intolerances are also available National Dairy Council Annual Review 2008 & 2009 Plan

from the NDC. In 2009, the key priority of the Advocacy & Communications Programme will be to grow this suite of literature and build strong relations with health professionals, recognising their role as key influencers of consumer perceptions. Central to this objective will be ensuring that all NDC literature is distributed nationally through the appropriate healthcare channels including GP surgeries, healthcare centres and hospitals. Collaboration with Industry and Key Stakeholders } The Advocacy & Communications Programme is also reinforcing and strengthening understanding of the NDC at industry level. The NDC is now committed to participating at key farming events as well as participating in international committees such as the European Dairy Marketing Forum and the International Milk Promotion Group. Stronger relationships are being built with a variety of industry stakeholders including international peer organisations such as

The Dairy Council UK and the Global Dairy Platform. At home, strong links with health organisations such as the Dental Health Foundation and Irish Osteoporosis Society were forged in 2008 and these represent exciting areas for programmes of joint activity in the coming years. Equally, at Government level, the NDC has developed closer links with relevant Government departments and authorities, particularly the Department of Agriculture, Fisheries & Food, and involved a number of Ministers in various high profile events throughout the year including Tanaiste, Mary Coughlan T.D., Minister for Education, Batt O’Keeffe T.D. and Minister for Health Promotion, Mary Wallace T.D. The success of Dairy: Food for Life will, in many ways, be benchmarked on the achievements of the NDC’s Advocacy & Communications Programme. Activities in 2008 and the continued development of the programme in 2009 affirm the NDC’s intention of becoming a trusted voice for consumers and an authoritative resource for industry.

Successful Collaboration with the Irish Osteoporosis Society Building a close relationship with the Irish Osteoporosis Society was one of the centrepieces of the NDC’s Advocacy & Communications Programme in 2008. The Irish Osteoporosis Society (IOS) is a charity established in 1996 to provide information to Irish public and health professionals about osteoporosis, which affects bones resulting in a significant increase in the person’s risk of broken bones (fractures). It affects one in two women over 50, and one in five men over 50. It can also affect children. The Osteoporosis Society has long recognised that milk and dairy products have an important role to play in assisting in the prevention and treatment of osteoporosis. Dairy products are naturally rich in calcium and fortified milk, in addition, offers an excellent source of vitamin D. Calcium and vitamin D are essential for healthy bones, as vitamin D is essential for the absorption of the calcium. The NDC has consistently advocated similar sciencebased messages and, in 2008, the two organisations saw an opportunity to work closely together to further the benefits of dairy products in relation to bone health, while also increasing awareness of osteoporosis.

Links

Professor Moira O’Brien the president and founder of the Irish Osteoporosis Society, says this collaboration has been very important: “We felt there was a natural fit between the NDC’s promotion of milk and our promotion of calcium consumption and we are always keen to partner with organisations who share our objectives.” In 2008, the two organisations worked closely together on a 12-page colour Guide to Osteoporosis. This educational and easy-to-read brochure provides comprehensive information and advice about osteoporosis and osteopenia (a condition of lowered bone density that precedes osteoporosis).

National Dairy Council Annual Review 2008 & 2009 Plan

“The Guide to Osteoporosis will be distributed to over 1,200 GP’s surgeries nationwide in 2009. This would be very expensive for a charity such as ourselves on our own so it is fantastic to be able to get it distributed in GP surgeries with the help of the NDC. The brochure will also be available to our members and to those who call the IOS Helpline,” according to Professor O’Brien. Professor O’Brien added that “one of the most important messages regarding this silent disease is that there are usually no signs or symptoms prior to a fracture and that people need to find out if they are at risk. “One of the misconceptions surrounding osteoporosis is that it’s an ‘old lady’s disease’, however, it can affect all age groups and both sexes.

Benefits The booklet also highlights the fact that osteoporosis is a preventable disease in the majority of cases and the benefits of prevention extend right through society. “The important message we want to get out is that osteoporosis is preventable and that prevention of fractures is essential,” she added. “€402 million is being spent on fractures each year in senior citizens and 90 per cent of these are due to osteoporosis”. Hip fractures are especially devastating as 20 per cent of people who fracture a hip aged 60+ die within 6 to 12 months. Fifty per cent of people who fracture a hip aged 60+ cannot bathe or walk across a room unaided and only 30 per cent who fracture a hip aged 60+ regain their independence.

Positive Feedback The brochure, which is also available from the National Dairy Council website, has been well-received and the IOS have also had positive feedback regarding it. The Irish Osteoporosis Society is looking forward to further collaboration with the NDC in 2009 and beyond.

Marketing & Promotion Programme The Marketing & Promotion Programme runs parallel to the Advocacy & Communications Programme to strengthen the position and image of milk and dairy products in a targeted manner to key consumer audiences. A high impact advertising campaign reintroduced the NDC to Irish consumers in 2008 with an image very different to that of previous years. In the past, the NDC relied primarily on TV advertising to communicate its health messages. Informed thinking, however, suggests that reliance on a single medium is not ideal and, with the launch of Dairy: Food for Life, a radical reappraisal was initiated. This marked shift of emphasis in its media strategy was one of the more visible signs of change in the NDC in 2008. In the Pink } As Dairy: Food for Life noted, much of the NDC’s previous promotional activity was duplicating work already being done effectively by others in the dairy industry. To ensure its resources are used to best effect, all NDC marketing and promotional strategy now operates in parallel with the Advocacy & Communications Programme. This realignment not only strengthens the purposefulness of the NDC but means its communications activities can now address the key challenges facing the Irish dairy industry at consumer level and address the range of common misconceptions that exist.

‘Pink lady’ was the high impact advertising campaign that, more than any other single activity, brought the NDC back to public prominence in 2008. In contrasting a traditional slogan ‘Nothing’s as Natural as Milk’ with an image of urban individuality it proved engaging and, to some, provocative. The campaign was part of a fifteen week multi-media national campaign initiated in July. ‘Pink lady’ was specifically aimed at 18-to-34-year-old women, most of whom previously had little knowledge of the organisation. Other elements of the campaign were targeted at young mothers and young men, including the press and poster executions of the ‘toddler’ and four GAA players in addition to a national and local radio campaign. The overall campaign commenced with the unveiling of a new identity for the NDC featuring the ‘glass of milk’ and supported by the thirteen brands of liquid milk sold within the domestic market by NDC members. This was the first time that the NDC was associated with its members and represented a move by the organisation to promote the brands of its members more proactively against the backdrop of growing private label dominance. National Dairy Council Annual Review 2008 & 2009 Plan

Reactions } Following the campaign, market research company, TNS MRBI was employed to assess consumer responses. Specifically, the NDC aimed to gauge the degree to which it has been reintroduced to consumers; how engaged they had become with the campaign; and their reaction to messages either overtly expressed or implied. Luke Reaper, Director of B&A, was Deputy Managing Director of TNS MRBI when the research was undertaken. “We wanted to assess awareness and recall levels amongst target groups, the likeability and appeal of the campaign, and the degree to which consumers recalled the message of the campaign,” he explains. The research involved over 500 interviews among a nationally representative sample of adults and the fieldwork was conducted in late July/early August. “The most interesting fact about the campaign was not only that the overall recall was very good but that it hit the target markets particularly well. Average recall level was 59 per cent with 63 per cent of respondents stating that they would be likely to consume more milk as a result of the campaign. The ‘pink lady’ campaign had a higher buy-in in Dublin in line with greater media exposure and there was a higher recall among 18 to 34 year olds.” One of the surprises of the research according to Luke was that it hadn’t alienated the older, more traditional dairy audience. “If a campaign has certain elements that are a bit more ‘out there’, you can expect a little more negative reaction among more traditional audiences but, in this case, that didn’t materialise. The positive responses came through across the board.” Curiosity and likeability were other features that came in strongly. “The research told us that people liked seeing the ads and absorbed the messages that were being communicated. There is always a danger with visually strong or quirky advertising executions that, while the advertising is remembered, the message doesn’t get through but, again, that didn’t happen here. At both spontaneous and prompted levels, what came through was that milk was being made more relevant and the nutritional benefits of it were recognised.” A key feature of the 2009 programme will be the move to promote butter and cheese in parallel with milk to key target audiences. Given the fact that the take-home market is likely to grow in 2009 as a result of less out-of-home consumption, it is important to find new usage occasions for milk, butter and cheese and this will be a prominent feature of new campaigns. Equally, the recent growth in sales through the discounters and of private label generally as highlighted in our Market Review and Outlook section will see the NDC exploring the feasibility of developing an on-pack NDC logo to drive brand sales more proactively.

Market Information } In 2008, the NDC also devoted significant resources to identifying and tracking consumer activity through innovative, functionally dynamic ‘behaviour clusters’. Drawing from a model developed in the UK, this new approach identifies five key subgroups among Irish dairy consumers and lays the groundwork for sustained and effective promotional activity around them. Not only will it allow the NDC to develop (and monitor) campaigns that are meaningful to particular consumers, it will also identify new opportunities for NDC member co-ops, whether in NPD or category management. National Dairy Council Annual Review 2008 & 2009 Plan

Dairy: Food for Life highlighted the need for a more sophisticated consumer segmentation tool, one that would allow future marketing campaigns and communications programmes to selected target audiences rather than using the ‘scattergun’ approach of the past. With the development of this new segmented or ‘cluster’ approach to consumer profiling, the NDC now has a much clearer picture of the consumer’s concerns and this, in turn, is informing the development of its communication strategy. Marie Burke is Managing Director at TNS Worldpanel Ireland and works closely with the NDC in its market research. Information drawn from 3,000 Irish households and fused with actual purchasing data has allowed for sophisticated data analysis of the Irish liquid milk consumer’s usage and attitude (U&A) behaviour. “This is the first time that this kind of segmentation had been done in Ireland for the dairy sector and the first time that U&A behaviour was brought together. Following careful analysis and through a course of workshops with representatives from the dairies, Irish milk consumers have been segmented into five behaviour groups or clusters: Low fat, Low cost; The Simpsons; The Barry Family; Harassed healthy; and Loyal and local.” Behaviour and Attitudes } Though still in its early stages, what the research clearly highlights is how different people’s attitudes can be to their actions. One of the largest clusters – representing mainly family households – claims that if they knew money was going back to the farmer, they’d buy more of that milk. However, these are also the people who purchase predominantly private label milk. In addition, the research has highlighted the degree to which consumers don’t understand the health benefits of milk. While there were variations in terms of what people thought across the categories, lack of reliable information came through as a common feature across the board and highlighted the need for education. In 2009, the NDC will use the cluster model to track behaviour as it implements its promotional activities and marketing campaigns. The NDC can make informed decisions about its strategy and investment of resources as well giving member co-ops an opportunity to better understand and target their markets. The NDC will continue to monitor the progress of the clusters in 2009 and build strategic targets for each. Information from the different segments will also feed back into its evolving Issues Management Manual.

School Milk & Dairy Programme The new School Milk & Dairy Programme aims to make milk a more attractive and more relevant product to the key youth demographic. As the programme rolls out nationally in 2009, it will also help position milk at the heart of a healthy, active lifestyle. Unlike most European countries, Ireland has never had a national school lunch programme, meaning the responsibility for a balanced lunch has always been in the hands of busy parents. In 1982, the School Milk Scheme stepped into the breach and, for more than a quarter of a century, has been a nutritional constant in their daily life, reaching almost 250,000 Irish students at its peak. However, in spite of its obvious attractions, the programme has suffered in recent years from a perception of being irrelevant to modern life and out-of-date in its packaging and messaging. With Dairy: Food for Life, the NDC set itself the challenge of addressing this ‘image deficit’ and re-introducing school milk as a product in tune with modern, healthy living. Designated as one of the NDC’s six key strategic initiatives, a pilot scheme was initiated in 2008 and, as a result of its success, in 2009 the School Milk Programme will begin to reach a national audience of primary school children. Addressing the Issues } While the Celtic Tiger era demonstrated that increased prosperity has dramatically changed the relationship between consumers and food, it is now widely recognised that affluence has not translated into a better diet for many. From localised regions of ‘food poverty’ to the growing issue of childhood obesity, good nutrition can no longer be presupposed as a natural consequence of modern living. While it doesn’t propose to have all the answers, the revitalised School Milk and Dairy Programme is designed to address many of these issues head on, increasing consumption of milk among children and raising awareness of its health benefits as part of a balanced diet. In the long term, the benefits of a successful re-introduction of the School Milk and Dairy Programme are manifold, but, in targeting the customer base for the future, at least two stand out as particularly important. From a consumer perspective, it promotes positive dietary habits at a time when obesity and poor nutrition are increasingly prevalent and secondly, for the industry, it will help to build a customer base for milk and dairy products into the future.

Interestingly, the survey work also revealed that the main competitor drink in schools is not fruit juice or soft drinks but water, whether from a tap or bottled. While the importance of water must not be undermined, this reflects a real opportunity to communicate the nutritional advantages of milk to a receptive audience. The research phase also found that while the image of the school milk scheme was poor among students, there was widespread support among parents for its continuation. The perceived price-point (130 per annum) was interpreted as very good value for money for year-round supply of a healthy product, particularly in difficult economic circumstances. Furthermore, parents also saw the convenience aspect as valuable: providing the milk at school made it a simple, hasslefree way of supplementing their children’s daily lunch. Roll Out } Conceived in the 1980s and largely unchanged since then, the School Milk Scheme undoubtedly required a creative leap forward to address the needs of 21st century school children. The second stage of the research undertaken involved testing a number of creative concepts for a marketing campaign, which the NDC intends to roll out over the academic year 2009/2010. Once again, the research highlighted how sophisticated young consumers have become and demonstrated the need to target messages in ways that don’t ‘talk down to’ or patronise them. The NDC believes that the planned new campaign which will be developed in the first half of 2009 will offer a strong and fresh approach to sharing the positive message of milk to students,

Reflection } Revitalising a programme that has received little support in the last decade required reflection and review and the NDC was conscious that its new messaging needed to engage with the target audience as sophisticated consumers in their own right. With the support of the Department of Agriculture, Fisheries & Food, research activity over 2008 involved focus group sessions with children, teenagers and parents in addition to in-depth interviews with teachers. Collectively, they provided a framework for an honest assessment of the weaknesses of the existing scheme. Among the problems highlighted were a lack of promotion of the programme in schools; a large amount of administration in running the programme; and lack of innovation in the packaging formats.

19 National Dairy Council Annual Review 2008 & 2009 Plan

parents and teachers and the roll out will be supported by information packs available to every student and a range of curriculum resources for each school.

School Milk and Dairy Programme Pilot Launch, Sligo. Pictured (l-r) are: Adam Higgins, Carraroe N.S.; Keith O’Dwyer, Club Promotions Officer, Sligo Rovers; Tara McHugh, School Programme Manager., NDC; Paul Cook, Manager, Sligo Rovers; and Orla Gilligan, Ransboro N.S.

Case study: Finland

In Finland, school children at primary and secondary level are entitled to a free hot, healthy meal every day and this is served with a choice of milk or water. Students use large dispensers in the school rather than cartons and eat in a communal canteen alongside their teachers. Valio, Finland’s largest dairy, has the contract to supply both the milk and food to 1,600 schools throughout the country and has invested considerable resources into the programme in conjunction with the Finnish Dairy Council, who take overall responsibility for promoting the programme. Healthy eating and good nutrition are viewed as integral to the education system in Finland, and the country offers a very well organised model of what a school milk scheme can achieve. As a result of the positive promotion and strong links with the curriculum, the country enjoys the highest per capita consumption of liquid milk in the world. Both Valio and the Finnish Dairy Council attribute this high level of consumption directly to the success of the school milk scheme. One particularly interesting feature is the link between the school milk programme and the company’s broader marketing objectives which has led the brand ‘Valio’ to be ranked as the number one preferred brand amongst young people in Finland, a very enviable position for Irish dairy processors. A recent study visit by the NDC to Finland saw the system in operation. While there are a great deal of positives, the NDC recognised that, logistically, the model cannot be easily adopted in Ireland. A lack of canteen facilities, for example, in Irish schools means that dispensers are not readily available. However, there is much to be learnt from our Finnish counterparts: aligning school milk with broader marketing objectives; working closely with relevant stakeholders; and making dairy and nutrition central to the curriculum are areas, where value can be added to our activities in Ireland.

National Dairy Council Annual Review 2008 & 2009 Plan

The first phase of the national roll out will focus predominantly on national schools. Of the 500 targeted for 2009, 90 per cent are in the primary sector with the remaining participants forming the core of the pilot programme for secondary level schools. The research conducted in 2008 indicated that a very different approach will be required to maintain interest in the programme at secondary level and that a ‘one size fits all’ approach will not work. The roll out at primary level will take place in close co-operation with the dairies involved in the distribution of school milk and will incorporate solutions to problems identified in product, distribution, administration and promotion with, for example, specific action taken on the packaging formats and on reducing the administration for school principals. This year is, therefore, essentially a new beginning for the School Milk Scheme and will provide a new opportunity to communicate with the consumer of the future and to share the healthy, positive benefits of milk in the learning environment.

The Market Position for Milk within the Drinks Category Taste/Gratification

Carbonated Soft Drinks

Cordials/Juices

Unengaging

Engaging Yoghurt Drinks/ Smoothies Tap Water

Milk

Mineral Water

Healthy/Nutrition

(Source: Behaviour & Attitudes, September 2008)

(L-r): Henry Corbally, Vice-Chairman, NDC; Giovanni Trapattoni, Manager of Republic of Ireland; John Delaney, CEO FAI; Helen Brophy, CEO NDC.

FAI Partners With NDC In 2008, the Football Association of Ireland (FAI) was brought on board to partner with the NDC in the redevelopment of the School Milk Programme. The NDC, together with the FAI League of Ireland Club Promotions Officers (CPOs), initiated a pilot programme in five different areas in September, involving 75 national and secondary schools. A target of 10 per cent increase in the consumption of school milk by the end of 2008 was set for the schools selected under the pilot programme. The results are currently being assessed as the new term begins and it looks that the overall 10 per cent target will be achieved and in some areas has been surpassed. This is all the more impressive given that issues such as distribution, packaging and administration had, at the time of the pilot programme, yet to be resolved. The five pilot clubs (and the associated co-operatives) selected were Finn Harps (Donegal Creameries); Sligo Rovers (Connacht Gold); Limerick 37 (Kerry Group), Monaghan Utd (Town of Monaghan) and St. Patrick’s Athletic (Glanbia). The ultimate aim is to increase school milk consumption by 35 per cent in all participating schools by the end of 2012.

Commenting on the partnership with the NDC to date, John Delaney, FAI Chief Executive, says: “Our network of National Club Promotions Officers are trained in presenting to schools and proved to be an ideal conduit to the NDC’s aim of increasing milk consumption through the School Milk Scheme. The promotion of dairy with a particular emphasis on the School Milk Scheme was a perfect fit for the FAI and our League of Ireland Clubs.” Extending the reach of the positive dairy message in association with largest participation sport in Ireland offers a real opportunity to build awareness of the benefits of milk to high achievers on the sporting field and the FAI is committed to building a partnership with the National Dairy Council over the long term. “The Club Promotions Officers who will be assisting the NDC in rolling out the nationwide programme in 2009 look forward to educating up to 100,000 Irish children on the benefits of dairy,” John says. “Much work is taking place between the NDC and the FAI to ensure the pilot programme is reviewed and that the full programme will be the very best it can be.”

National Dairy Council Annual Review 2008 & 2009 Plan

Issues Management & Nutrition Programmes Issues management and nutrition form the backbone of the NDC’s five-year strategy. 2008 saw significant developments on both fronts as the organisation sought to strengthen its resources and role in these areas. The pigmeat crisis at the end of 2008 showed how a localised event can have serious repercussions right across the food industry at both domestic and international levels. It also illustrates the paramount importance of having comprehensive issues management protocols in place at industry level, a gap that was identified in the dairy sector as part of the NDC’s strategic review process. Adopting best practice models, the NDC has now embarked on an ambitious programme to ensure that this gap is closed. Equally, the NDC’s objective to become a centre of knowledge on dairy nutrition has led to proactive developments in 2008 in attempting to build and develop the organisation’s knowledge base and expertise.

Building an Issues Management Roadmap } In recognising the need for a robust and responsive approach to issues management, under the NDC’s new Issues Management Programme, September 2008 saw the establishment of the National Issues Management & Nutrition Committee comprised of a specialist group of dairy industry representatives. Co-ordinated by the NDC, this Issues Management and Nutrition Committee also draws on the expertise of those involved in medical, nutritional, marketing and the media sectors. It has, in a short time, laid a solid foundation for the running of the programme that aims to: National Dairy Council Annual Review 2008 & 2009 Plan

Inform, advise, and publicly represent the dairy industry through building a systematic approach to, and competency in, issues management; and, l Be recognised as the national centre of knowledge on dairy nutrition and related matters of importance. Ciaran Fitzgerald (Ex-IBEC) is closely involved with the NDC in this programme. In 2008, according to Ciaran, “the Committee undertook a comprehensive issues mapping process in the first months of operation and has drawn up the template for an Issues Management Manual that will guide the NDC in the areas of nutrition and issues management in the coming year. The issues arising from the mapping process have now been prioritised and work is commencing to complete the manual for the priority level issues identified. This will involve considerable research and development work over the next 12 months on the part of the NDC”. l

Dealing with Ongoing Issues } Alongside the planning process involved in the development of this manual, the NDC dealt with a range of issues arising during 2008. These included: l The advertising campaign by the World Heart Federation drawing links between the dangers associated with saturated

Helen Brophy, CEO, NDC pictured with Prof. Moira O’Brien, Irish Osteoporosis Society at the launch of the joint Guide to Osteoporosis booklet.

fats and heart disease which used very destructive and misleading images of cheese and butter to illustrate their claims. l The application by the European Natural Soyfood Manufacturer’s Association to gain legal recognition of the term soya ‘milk’, which was subsequently rejected by the EU. l The new Broadcasting Bill published in May, which seeks to restrict advertising of foodstuffs which contain fat, transfatty acids, salts or sugars to children, on the basis that they are ‘detrimental to health’, and which would have serious implications for the dairy sector. l Responding to a large number of false and misleading claims regarding milk and dairy products which received either press or radio coverage. Examples include: high levels of hormones and antibiotics present in milk; milk from cows not being suitable for human consumption; links to cancer; higher levels of calcium in green vegetables than milk. Ciaran stresses that “the NDC plays a vital role in dealing with ongoing issues that arise in the media or from particular sources and has been proactive in providing balanced, evidence-based facts to debunk these claims. Equally, the need for strong representation at political level is important on issues that could potentially harm the future development of the sector as has been exemplified in 2008”. Development of the Issues Management Manual, meanwhile, will be a priority for 2009 and will enable the NDC to develop its capability in this area and continue to develop its role as an advocate for the dairy sector. Nutrition Programme Milk and dairy products have long been viewed as healthy and nutritious foods acting as an important source of key nutrients such as calcium, phosphorus and protein. As research programmes progress, more and more studies confirm and

advance these health benefits. For example, recent research has highlighted the fact that milk and dairy products may be very important in decreasing the chance of developing heart disease, high blood pressure or obesity. However, despite this constant stream of objective, scientific and largely positive information, there has also been a significant level of misinformation around milk and dairy products. The NDC’s Nutrition Programme has, therefore, a critical role in providing the research and information required to correct the myths and misconceptions that exist. Electronic Nutrition Library } As a first step, the NDC undertook to develop an electronic nutrition library in 2008. The e-library will be available through the Health Professional Member’s Area and Industry Member’s Area of the NDC website in 2009. It represents a comprehensive reference database of research studies, media coverage and information material specifically focused on dairy nutrition. A database template has been formed which groups the available literature into health effects, age groups and sources of information. A business-to-business portal is also under design to allow access to the database by NDC members. It is intended that the e-library will be fully operative in 2009, in line with the priorities that have been laid out in the Issues Management Manual template. Making Links } Networking has also been a key aspect of the NDC’s Nutrition Programme in 2008 with collaborations with other dairy industry counterparts such as the Dairy Council for Northern Ireland, the Dairy Council UK, the Global Dairy Platform and the Utrecht Group. In addition, links were strengthened with health organisations such as the Irish Osteoporosis Society and the Dental Health Foundation, which proved very worthwhile in National Dairy Council Annual Review 2008 & 2009 Plan

assisting the Advocacy & Communications Programme. In 2009, the NDC aims to continue forging partnerships and cooperative efforts with relevant organisations in the health and medical areas, in addition to Government departments and agencies. Of particular importance will be the launch of a new partnership in February 2009, entitled the ‘Ireland-UK Dairy Alliance’, which will see the introduction of formal collaboration between the NDC and the UK Dairy Council. In the initial stages, this collaboration will relate to the areas of nutrition and issues management and it is hoped that further opportunities will arise for other areas of co-operation in due course. Building Relations with the Health Professionals } The provision of literature to accompany key NDC information campaigns was established as a priority in 2008. NDC booklets designed for health professionals and consumers have been released and cover general topics such as healthy eating and weight loss, as well as more specific, medically relevant titles such as ‘Making Sense of Food Allergies and Intolerances’ and the ‘Guide to Osteoporosis’. This literature is also freely available on the NDC website. In 2009, the print media will continue to play an important role in highlighting NDC key messages with plans for an expanded suite of dairy-related literature targeted at consumers. In addition, in an effort to strengthen relations within the appropriate healthcare channels, a new newsletter, designed specifically for health professionals, will be produced in co-operation with industry. The newsletter will focus on specific dairy issues relevant to health professionals and will be issued online and in hard copy on a quarterly basis. In addition, health professionals will be encouraged to join the NDC’s Health Professional Member’s Area of the web site. Substantial investment will support the development of this part of the website as an interactive tool, which will be available free of charge to subscribing health professionals.

A health professional seminar will also be organised later in 2009 on a specific topic of interest. The aim is to increase awareness of current and emerging research on milk and dairy consumption. Shows, Seminars and Regional Initiatives } The last 12 months have also seen an unprecedented level of participation in shows, seminars and outreach projects, from the National Ploughing Championships to health promotion fairs such as the Dublin City University Health Promotion Fair and the Dublin Institute of Technology Staff Day. The successful Health and Wellbeing Evening, which took place in Sligo in conjunction with Connacht Gold in November 2008, proved very successful and a further four of these events are now planned for 2009. In addition, the NDC maintained a presence at relevant conferences and seminars such as the Irish Osteoporosis Society (IOS) AGM and Annual Conference, an All-Ireland Multi-sectoral Conference on Obesity, a Teagasc Relay Workshop looking at the National Teens Food Survey and the Irish Section Annual Meeting of the Nutrition Society. On an international basis, the NDC was also represented at the Dairy Council for Northern Ireland Annual Conference, the Global Dairy Congress and meetings of the Utrecht Group. This is critical to remaining abreast of the emerging developments in international dairy nutrition research and will continue in 2009. Supporting Development Programmes } In 2009, the NDC will continue to develop its knowledge base and expertise with particular focus on the health professional area. The programme will also provide the necessary support for the Advocacy, Communications, Marketing, School Milk and Issues Management Programmes. Given the substantial workload involved in the year ahead, the NDC has recruited a nutrition student from UCC on a six-month placement commencing from March 2009 to provide additional resources to support its activities.

Pictured at the 2008 National Ploughing Championships in Kilkenny are: former Republic of Ireland International soccer player Ray Houghton; John Delaney, CEO, FAI; Helen Brophy, CEO, NDC; and journalist and broadcaster, George Hook. National Dairy Council Annual Review 2008 & 2009 Plan

Corporate Governance and Accountability Underwriting the strategy outlined in Dairy: Food for Life is a commitment to transparency and best practice in the corporate governance of the NDC.

As an organisation funded directly by a farmer levy, the National Dairy Council (NDC) believes that the trust invested in it by Irish farm families must be rewarded with a demonstration of the highest standards of integrity and transparency. Dairy: Food for Life commits the NDC to becoming a worldclass advocacy organisation and, as it does so, it is confident that corporate best practice will inform and drive all its activities. Accountability is also about managing resources. While it is a small organisation, the NDC has a proven track record of performance at a national level. By investing strategically in the coming years, it can communicate a relevant and vibrant image for the Irish dairy industry in a challenging economic environment. The continued financial support of the NDC’s levy contributors is the clearest evidence that the dairy industry recognises the significance of this role. The return of Connacht Gold and the joining of Town of Monaghan as contributors for the first time in 2008 were important indications that the NDC’s new strategy has secured the industry’s confidence, a message further supported by the Irish Dairy Board’s decision to increase its funding by 50 per cent for 2008 and 2009. The ultimate aim of the NDC is to be representative of all Irish dairy co-operatives and, in 2009, it will continue to pursue support at this level. ‘Right-Sizing and Up-Skilling’ } As part of the review process initiated in late 2007/early 2008, the NDC reviewed and revamped its approach to corporate governance, correcting a number of structural weaknesses and aligning resources to the strategy evolving at its core. Significant actions included a redundancy package which reduced staff numbers to three in addition to the CEO and led to complete restructuring of roles and the recruitment of a new School Programme Manager. This was necessary to ‘right size’ the organisation and equally to equip the NDC with the appropriate skills required to implement the new strategic direction. The review process saw key financial functions such as payroll and accounting being outsourced, IT systems modernised and a new external auditor, Deloitte, appointed. The NDC became a member of IBEC for the first time. Going forward, the review process will ensure HR policy is strengthened and aligned to industry best practice in 2009.

Board Expertise } This process of restructuring also created an opportunity to bring new energy and expertise to the NDC at governance level and a range of initiatives were implemented in this area. The traditional quarterly meetings of the Board are now bi-monthly The establishment of four Board Sub-Committees has ensured a high level of expertise is now available to the NDC as it implements Dairy: Food for Life and seeks guidance on specific issues. The role of the Issues Management Committee in the creation of the template of an Issues Management Manual is just one example of this significant new resource and the important contribution it is making to corporate governance. Dairy: Food for Life set out a vision of the NDC as an organisation that enjoys the respect and trust of its supporters. With the average dairy farm family contributing about €160 annually to its running, transparency and accountability are critical. Implementing a culture of excellence at managerial level underpinned by value for money, is an important assertion of the NDC’s determination to become an organisation that enjoys the confidence of all its stakeholders. National Dairy Council Annual Review 2008 & 2009 Plan

Advocacy and Communications Programme

Issues Management & Nutrition Programmes

• Conclude market segmentation research and create online portal to track/ monitor segment behaviour. • Explore the feasibility of developing an on-pack quality logo for Irish branded milk. • Develop marketing campaign targeting priority market segments to support increased consumption of milk/ butter/cheese. • Devise supporting promotional and communcations material to support marketing campaign.

Marketing & Promotion Programme

Summary of 2009 NDC Plan Programme Priorities • Develop NDC suite of literature to support dairy consumption to address key consumer concerns. • Achieve national distribution of NDC literature through appropriate healthcare channels. • Develop stronger relations directly between the NDC and health professionals. • Deliver strong positive messages on the health and nutritional benefits of dairy at consumer levels. • Expand Health & Wellbeing Programme nationally to four new locations. • Further build co-operation and participation by the NDC within key international fora. • Communicate proactively with stakeholders and demonstrate value created by NDC programmes.

School Milk & Dairy Programme

Dairy: Food for Life 2009 Priorities

• Develop Issues Management Manual based on high risk issues identified in Mapping Process. • Build online portal for access by NDC members to Issues Management Manual. • Proactively deal with issues as they occur or are pre-empted during 2009 and respond appropriately. • Further strengthen nutritional capability by developing online e-library for access through the online portal. • Establish Scientific/Nutrition/Technical Committee (SNT) and commence production of quarterly newsletter for health professionals. • Co-ordinate Health Professional Seminar on dairy nutrition tailored to the needs/requirements identified. • Continue to maintain active database of emerging research to support dairy nutrition.

Accountability & Corporate Governance

• Publish Annual Review & 2009 Plan in January. • Publish Annual Report including Financial Statements in June. • Complete Corporate Governance Review and implement required changes. • Develop HR policy in line with best practice with the support of IBEC. • Organise A.G.M. in June 2009.

National Dairy Council Annual Review 2008 & 2009 Plan

Develop new School Milk & Dairy Programme for roll-out in September 2009 to 500 schools to include the following: Devise and produce the key deliverables required for September: • Teacher’s Pack for the classroom • Parents’ Pack on “Why Join the Programme?” • School Promotional Pack to support the roll-out in schools • Pre and Post Programme evaluation

Organise school liaison programme to include 2 visits per school to support the roll-out: • FAI support programme through Club Promotions Officers • Support curriculum material to be developed and provided to schools • Loyalty programme to be put in place to incentivise participation through provision of sports equipment. Co-ordinate Industry Working Group to achieve solutions to the following issues: • Level of product choice provided to schools to be increased • Packaging design and branding to be overhauled • Adquate delivery and temperature control system • Pilot on-line administration system to support roll-out of new programme • Ensure buy-in and support from government/key stakeholders

National Dairy Council Annual Review 2008 & 2009 Plan

Eamonn Bray (National Milk Agency)

Jackie Cahill (ICMSA)

Joe Collum (Glanbia)

Tom Corcoran Sean Griffin (ICOS) (Barryroe Co-op)

Patrick Kelly Richard Kennedy Kevin Kiersey (Donegal (IFA) (IFA) Creameries)

Henry Corbally Vice-Chairman (Glanbia)

Dominic Cronin Chairman (ICMSA)

December 2008

NDC Board

Sean McAuliffe (North Cork Co-op)

Mary Purcell (Centenary Thurles Co-op)

Gerald Quain Conor Ryan (Kerry Group) (Arrabawn Co-op)

Eamonn Bray

Philip Carroll (Principal Officer Milk Policy Division, Department of Agriculture, Fisheries & Food

James Burke (MD, James Burke & Associates)

Joe Collum

Patrick Kelly

NDC Board Sub-Committee Marketing and Communications December 2008

Dominic Cronin Chairman

Joe Collum

NDC Board Sub-Committee School Milk & Dairy Programme

Mary Purcell

Prof. Damien McLoughlin (Director - Mktg Development Prog., Michael Smurfit Graduate Business School)

Gerald Quain

Conor Ryan

National Dairy Council Annual Review 2008 & 2009 Plan

December 2008

Noel Mooney (National Club Promotions CoOrdinator, Football Association of Ireland)

Dominic Cronin Chairman

George Kearns Secretary, National Dairies Association

National Dairy Council Annual Review 2008 & 2009 Plan

Jackie Cahill

Dominic Cronin

Dr. Pat Dillon (Head of Centre, Teagasc, Moorepark Dairy Prod. Research Centre

Sean McAuliffe

Ciaran Fitzgerald (MD, Ciaran Fitzgerald Consulting)

Sean Griffin

Henry Corbally Chairman

December 2008

Kevin Kiersey

NDC Board Sub-Committee Issues Management and Nutrition

Tom Corcoran

Henry Corbally Chairman

December 2008

NDC Board Sub-Committee Accountability and Corporate Governance

Fiona Lalor (Research Asst., School of Public Health & Population Science, UCD)

Catherine Lascurettes (Executive Secretary IFA)

Paula Mee (MD, Paula Mee Nutrition Consulting)

National Dairy Council Staff Organisational Chart December 2008

Helen Brophy

Lynda Thompson

National Dairy Council Function Organisational Chart December 2008

Dr Catherine Logan

Tara McHugh

Joe Podesta

Chief Executive

PA/Admin

Issues Management & Nutrition

30 National Dairy Council Annual Review 2008 & 2009 Plan

School Milk & Dairy Programme

Marketing & Communications

The National Dairy Council 28 Westland Square, Dublin 2. Ireland Tel: +353 1 6169726 Fax: +353 1 6169760