NDC Annual Review 2009 & 2010 Plan by The National Dairy Council

Dairy: Food for Life Annual Review 2009 & 2010 Plan

4 Chairman’s Statement

5 Chief Executive’s Statement: 2009 in Review

9 International Market Review 2009 & Outlook 2010

11 Irish Market Review 2009 & Outlook 2010 13 Advocacy & Communications Programme 16 Marketing & Promotion Programme The National Dairy Council 28 Westland Square, Dublin 2, Ireland Tel: +353 1 616 9726 Fax: +353 1 616 9760 E: info@ndc.ie W: www.ndc.ie © National Dairy Council (NDC) 2010. 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.

19 School Milk & Dairy Programme 21 Issues Management and Nutrition Programmes 23 Accountability & Corporate Governance Programme 25 Summary of 2010 NDC Plan 26 NDC Board 27 Marketing & Promotion Sub-Committee 27 School Milk & Dairy Sub-Committee 28 Issues Management & Nutrition Sub-Committee 28 Accountability & Corporate Governance Sub-Committee

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

29 Staff Organisational Chart 30 Function Organisational Chart National Dairy Council Annual Review 2009 & 2010 Plan

Chairman’s Statement Over the last 12 months, the Irish dairy industry has found itself beset by some of the toughest economic challenges we have seen in a generation. The pressures exerted by a virtually unparalleled set of circumstances impact on every part of the industry, with farmers confronted by milk prices below the cost of production and processors put under pressure in a deflationary retail environment. Persistently poor weather, culminating in serious flooding and a prolonged cold snap, could only confirm the sense of a year that few will care to remember. The National Dairy Council (NDC) is acutely aware of the nature and scale of the challenges that now confront the industry in 2010. We are conscious too that, set against such a backdrop, our own outputs and achievements must be measured all the more scrupulously. With this in mind, I believe we can speak of 2009 as a year of significant progress and achievement, where the NDC demonstrated both relevance to our many audiences and value to all our stakeholders. It is worth reflecting that 2009 was the first full calendar year in the implementation of our five-year strategy Dairy: Food for Life. In the context of economic turbulence, the determined performance of the organisation must be attributed, in large measure, to the robustness and farsightedness of this strategy document. Since its launch in April 2008, Dairy: Food for Life has established and guided NDC activity in the key programme areas of Marketing & Promotion; Advocacy & Communications; the School Milk & Dairy Programme; Issues Management and Nutrition; and Accountability & Corporate Governance. In 2009, we saw not only significant advances in each programme but also elements of the strategy adapted and fine tuned to changing circumstances. The launch of the ‘Farmed in the Republic of Ireland’ trade mark in September 2009 represented a particular high point of the year, demonstrating the impact the NDC can have at national level in co-operation with our industry partners.

As we anticipate a year of further market pressure in 2010, the NDC will continue to play a dynamic role in advocacy, promotion and education, highlighting the benefits of Irish milk, butter, cheese and other dairy products in healthy, balanced diets and communicating to targeted consumer audiences and health professionals. Guided by the Dairy: Food for Life strategy, our actions will reflect an ongoing commitment to the industry we serve and, in all our activities, we will continue to deliver value for money to our stakeholders, measurable in terms of influence, value and outcomes.

Notwithstanding the difficulties our sector confronts, this is an exciting time to be part of the NDC. The level of commitment and professionalism demonstrated by the organisation is now recognised across the industry and I would, in particular, point to the securing of EU co-funding in December 2009 for the ‘Milk in Action’ Programme, as evidence of this. The NDC has now been tasked with leading an innovative promotional programme in cooperation with our equivalent organisations in England, Wales and Northern Ireland and one which will provide a model for co-operation in promotional activity across the EU. I would like to acknowledge the ongoing support of dairy farmers and our member co-ops throughout 2009, as well as the continued goodwill extended to us by the broader agri-food community, including the Department of Agriculture and Minister Brendan Smith T.D. As Chairman, I would also like to thank my fellow board members and those who serve on our expert committees for their ongoing commitment and hard work. On behalf of all the board, I continue to be very grateful for the efforts of Chief Executive, Helen Brophy and her team and look forward to working with them in the year ahead. We share the determination of our stakeholders that a recovery of confidence in 2010 will lead to a brighter outlook for the entire industry. I believe the actions we are taking now will pave the way for greater understanding and awareness of the value of our milk and dairy products far into the future.

Dominic Cronin Chairman National Dairy Council

National Dairy Council Annual Review 2009 & 2010 Plan

Chief Executive’s Statement Dairy: Food for Life: Year Two in Review Deteriorating economic conditions, exacerbated by a sense that the decline had not yet ‘found its floor’, made 2009 an exceptionally difficult year for the Irish economy at large, and the Irish dairy industry in particular. There is little need to reiterate the causes of our current economic difficulties, except to note that, as an advocacy organisation funded directly by the farming community, the National Dairy Council (NDC) implicitly shares their concerns about the impact of the recession on the sector. Irish dairying is an industry of nationwide reach and international significance, with the livelihoods of many thousands of families dependent on its wellbeing. In all our activities over 2009, and those planned for 2010, the NDC has sought to mirror the real concerns of these communities in our actions, and to show measurably positive outcomes in all the activities we undertake.

Consumption of dairy products in Ireland has remained stable within the current recessionary environment. However, market pressure has been exerted through a sustained ‘flight to value’ as Irish consumers demonstrated often radically changed shopping patterns and, at the start of the year in particular, a greater preference for low-cost commodity goods over branded and value-added products. It is important to stress, however, that much of this change could be attributed to the shock of recession than just the actual economic conditions and, as the year progressed, there was a rebalancing of attitudes. A growing awareness of the importance of supporting locally-produced products surfaced, albeit with value for money remaining paramount. Worth noting in this context is the recent Food Safety Authority of Ireland (FSAI) survey on consumers’ attitudes to food labelling, conducted in late 2009. It found that ‘nearly three National Dairy Council Annual Review 2009 & 2010 Plan

quarters (74 per cent) of consumers thought that it should be compulsory for an indication of origin to be given for all foods – pre-packaged and loose.’ While it is to be hoped that 2009 represented the ‘high-water mark’ of recessionary trends, it should be clear, too, that concerted and sustained marketing efforts are required to support the dairy industry in the Republic of Ireland in strengthening market share. In this context, the underlying value of the Dairy: Food for Life strategy, launched in April 2008, can hardly be overstated. Through its implementation, the NDC has sought to fundamentally re-connect with the concerns and aspirations of all its stakeholders, from farmers to consumers. The scope and strength of the strategy document, as a guide and driver of NDC activity, became particularly apparent in 2009. Six key channels for service delivery are set out in Dairy: Food for Life:

In an environment where uncertainty prevails, the Annual Review provides an important opportunity to reflect on progress made by the NDC over the last year. I believe we can speak with confidence of a successful year where targets were met and, in many cases, surpassed. The ability to communicate coherently to diverse audiences is a principle at the heart of any effective advocacy organisation. Throughout 2009, the NDC demonstrated its ability to be highly impactful to consumers, health-care professionals, media, schoolgoing children and dairy farmers. One achievement in particular would, however, seem worthy of singling out as a significant and distinctive expression of the NDC’s growing dynamism and capacity to serve the industry – the launch of the ‘Farmed in the Republic of Ireland’ trade mark in September 2009.

Marketing Capability } The TNS Segmentation Project has been central to the Marketing & Promotion Programme since it was initiated in 2008. In 2009, the first part of this project was concluded, with a report issued to industry in April. The volatility of consumer sentiment highlighted the timeliness of the project which offers industry an unrivalled opportunity to examine consumer behaviour through the prism of segmentation, where different buying patterns are attributed to different consumer personalities. The development of our overall marketing capability remains a priority for the NDC in 2010 and will not only find expression in sophisticated market research programmes, but equally through participation at key agricultural events, including the National Ploughing Championships, the Tullamore Show and the National Dairy Show, which has proved extremely successful over the last two years. In 2009, the NDC stand at the National Ploughing Championships was a focus of attention for both the public and media and our book of support for the new ‘Farmed in the Republic of Ireland’ trade mark received over 6,500 signatures, a testament to the strong feelings of support it engenders in the farming community. In the same vein, a partnership agreement with Macra na Feirme in 2009 has also opened up an important communications channel to younger members of the farming community in Ireland. Among other benefits, the NDC now provides information on health and wellness as part of the Macra na Feirme website.

New Trade Mark } The launch of the trade mark followed a period of extensive consultation with our member co-ops and represented, indisputably, the most high profile activity undertaken by the NDC in the course of the year. Supported by a successful media campaign, this umbrella trade mark brings much-needed clarity to consumers in the Republic of Ireland on the key issue of dairy provenance. As of February 2010, the trade mark encompasses ten Irish dairies and appears on over 340 retail milk and cream products. Early consumer response confirms the important role it can play in ensuring the continued livelihoods of farming families in the Republic of Ireland in the critical year ahead. In the longer term, the NDC believes it will secure a lasting place of trust among consumers, prominent not just in the retail environment but in the foodservice industry too. Underpinning its usage, it should be noted, is a comprehensive and robust audit programme, designed to monitor and verify that

Advocacy & Communications } The areas of promotion and communications naturally overlap and, indeed, complement each other. The introduction of the NDC Quality Milk Awards in 2009 offers an excellent case in point. Building on work that began in spring 2009, the awards surpassed expectations in terms of the quality of nominations received from our member co-ops, and the media profile generated through our supporting PR campaign. As with all NDC activity, these awards are structured so as to ensure longterm value to the industry and, in this regard, we particularly appreciate the support of an expert judging panel that included Jack Kennedy, Dr David Gleeson and Prof. Paddy Wall. Congratulations go to the winner of the NDC Perpetual Cup, Brochan Cocoman as well as the five worthy runners-up. On another front, while Paul O’Connell was undoubtedly the most visible ‘champion’ of dairy industry values in 2009, the NDC also enjoyed the support of other nationally and

• • • • •

it is used exclusively on milk farmed in the Republic of Ireland. The successful launch was further aided by the choice of Paul O’Connell, a national sports figure who speaks convincingly to urban and rural, and younger and older consumers, as the lead ‘voice’ of the campaign. Launched in September, the campaign ran through to early December and was continued again in January 2010. A detailed survey of its impact at both trade and consumer level was conducted in January 2010 and the NDC has strong evidence at this point of a very high impact. Significantly, the potential extension of the trade mark to other dairy categories and to foodservice is now under active consideration in the year ahead.

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

National Dairy Council Annual Review 2009 & 2010 Plan

internationally-recognised personalities. Earlier in the year, television presenter, Craig Doyle lent his support to our radio campaign, run in conjunction with the Irish Osteoporosis Society (IOS), that reminded consumers that the preventative action against osteoporosis was about lifelong choices in diet and that the disease affected men as well as women. As part of the campaign, a new 3aday.ie website was developed as a gateway to both the NDC and Irish Osteoporosis Society web sites. Meanwhile, a very successful Pancake Tuesday promotion was also run with the support of the IOS. With the help of Ryan Tubridy and Derry and Sally Anne Clark of L’Ecrivain, the NDC combined promoting the importance of dairy in the diet with some useful tips for making pancakes – and received widespread media coverage in addition to a number of radio interviews as a result. Ongoing collaboration with the Irish Osteoporosis Society (IOS) will remain a cornerstone of NDC advocacy and communication activities in 2010. Health-Care Channels and Information } The need to communicate to and through the health professional channel is a priority identified in Dairy: Food for Life and, with this in mind, the establishment of the Scientific, Nutrition & Technical Committee (SNT) was also an important milestone of 2009. Populated with leading figures in food science and nutrition, the SNT supports and guides the NDC in its sciencebased activities. During 2009, the NDC took the first steps in establishing a concerted presence within the healthcare channels. The two-pronged approach involves communicating directly with professionals on one hand and ensuring relevant consumer literature is available through the healthcare channels on the other. The introduction of the DN Forum newsletter has soundly established our credentials in science-based communications, with three editions distributed in 2009 to almost 4,200 health professionals nationwide. It is also satisfying to note that, as of the beginning of 2010, three quarters of GP surgeries nationwide now host up-to-date and targeted information supplied by the NDC. The NDC Dairy Den Programme enjoyed continued success in 2009 and will publish new booklets on weaning and pre-school nutrition for mothers in 2010. The Health & Wellbeing Evenings, meanwhile, ran from strength to strength in 2009 and will continue to develop and expand in 2010. Key to the culture of renewal at the NDC has been the strengthening of international links through fora such as Global Dairy Platform, the European Dairy Marketing Forum, and the Utrecht Group. In 2009, formal links were developed with the Dairy Council, Great Britain through the GB Alliance. The strategic alliance will undoubtedly, bring significant benefits across many NDC activities. As well as strengthening the knowledge base for the NDC’s health professional e-library in 2009, it provided the necessary trans-national partnership which the EU stipulated in its funding provision for the ‘Milk in Action’ Programme.

School Milk & Dairy Programme } The development of the School Milk & Dairy Programme has been a priority in the Dairy: Food for Life strategy since its launch in April 2008. The nationwide launch of the Fresh Milk Club in 2009 brought the School Milk & Dairy Programme to the attention of a new generation of schoolchildren and, through new packaging, a new website and attractive loyalty incentives, the NDC has risen to the challenges of communicating directly to this hugely important demographic. Logistical support was provided with the distribution of 114 fridges to schools and, in 2010, the NDC will also encourage the installation of milk dispensers in secondary schools, a development that offers a number of advantages over the carton-based approach. The NDC has achieved an increase of 4,480 new pupils targeted and introduced 83 new schools to the programme. The groundwork is now being laid for further strong growth in 2010. Ongoing collaboration with the FAI saw 417 national schools visited by FAI school liaison officers, strengthening the message of milk as a healthy, natural product, a process that will continue in 2010. Also strengthening the educational message, a DVD aimed specifically at primary school children is being considered in co-operation with the Irish Osteoporosis Society. In 2010, the key focus will be on developing participation in secondary schools in collaboration with the dairies through the NDC’s school milk industry working group. Issues Management and Nutrition } The pork-recall crisis of late 2008 is, fortunately, a receding memory for most of us as of early 2010. As the crisis peaked there was, however, considerable media interest and consumer concern, and the significance of the NDC as a representative organisation was highlighted by its role as a conduit of reassurance for the dairy sector. Overall, there are many lessons to be learnt from the crisis for the entire food sector and, throughout 2009, the development of an Issues Management Manual remained a priority for our expert Issues Management Committee. Outputs from their work will be made available to our members through the online portal, which is now built and will be operational in 2010. The NDC will continue to compile, format and update areas of priority in issues management and communicate this to industry members. Information is, of course, a two-way stream and the NDC is kept up-to-date and aware of current and pending issues that affect the sector, with a view to being in a position to respond to or pre-empt issues effectively. Relationships developed with Teagasc Moorepark and the FSAI have been highly significant in this regard, while the establishment of the SNT committee further facilitates the NDC in playing an authoritative role. Critical issues being determined at this time include the nutrition and health claims for dairy products, which are being decided at EU level, the pending implications of the broadcasting legislation and the forthcoming national dietary guidelines to be formulated by Government. Equally, an active and evolving Nutrition Programme is critical to the credibility of all NDC activity. As a resource of immediately accessible science-based evidence on the role of dairy, the NDC has shown itself capable of effectively combatting National Dairy Council Annual Review 2009 & 2010 Plan

misinformation and scaremongering, which are, unfortunately, apt to receive more media attention than science. Supporting this, in 2010, the NDC’s e-library will be further developed as a resource for health professional members, while the GB Alliance has also enhanced our ability to source up-to-date and relevant dairy research information for this professional audience. Accountability & Corporate Governance } Progress in the areas of corporate governance and accountability has been comprehensive since the launch of Dairy: Food for Life in April 2008. The NDC is now confident that sufficient progress has been made to confirm transparency and accountability in its activities. Publication of the first Annual Review in 2009, as well as the publication of the Annual Report including the financial statements in June 2009, are footprint documents that demonstrate the culture of professionalism and accountability governing NDC activity. The NDC Conference and AGM in June, as well as the ongoing support and feedback of our Chairman, Board, expert committees and auditors provide further supports to ensure optimum performance in this regard. In 2010, the NDC will review and revise its Memorandum and Articles of Association and will also complete our human resources policy with the support of IBEC. ‘Milk in Action’ } The end of 2009 saw a final and very positive footnote to the NDC’s performance over the year as confirmation came that cofunding from both the EU and the Department of Agriculture, Fisheries and Food of just over x1 million had been approved for the ‘Milk in Action’ Programme. ‘Milk in Action’ is a three-year milk-promotion campaign that will commence in April 2010 and run until 2013. It will operate as a separate programme from the NDC’s core programmes but is designed to complement the Marketing & Promotion and School Milk & Dairy Programmes in particular. The aim of ‘Milk in Action’ is to link increased milk consumption with sporting activity, with young people as its particular target. ‘Milk in Action’ will also inform women of the nutritional benefits of milk and milk products, in particular cheese and yogurt, in the battle against osteoporosis. Funding from the EU is being matched by support from NDC industry members and the Department of Agriculture, Fisheries and Food. ‘Milk in Action’ is an NDC-led initiative, developed in association with our partners in Britain and Northern Ireland, and EU co-funding represents a major acknowledgement of the developing capacity of the organisation.

Looking Forward } In 2010, the NDC’s singular objective is to drive and stimulate the consumption of milk and dairy products farmed and produced in the Republic of Ireland. The six programme areas of the Dairy: Food for Life strategy will provide the channels through

National Dairy Council Annual Review 2009 & 2010 Plan

which NDC activities will be advanced. With the year ahead also forming the mid-way point of this strategic action plan, the sense of momentum gathering on many fronts is palpable. Promotion and potential extension of the ‘Farmed in the Republic of Ireland’ trade mark will be a marketing priority and this, in conjunction with the return of the Quality Milk Awards, will bring a further growth in stature to the dairy industry in the Republic of Ireland. Further developments in the School Milk & Dairy Programme, in particular, its roll out in secondary schools, as well as the implementation of the ‘Milk in Action’ Programme, provide a platform to communicate the positive values of dairy to the consumers of the future. The continued development of links with national and international organisations strengthen the resources of the NDC and allows us to develop targeted and effective communications that grow our stature and credibility, and benefit the Irish dairy industry as a whole. In conclusion, I would like to echo the Chairman’s words in saying that, in spite of the many difficulties that 2009 presented, it has been one of significant advance and progress for the NDC and a satisfying year for these reasons. I would like to sincerely thank our Chairman, Dominic Cronin and all the members of the NDC Board, as well as the expert committees for their service, commitment and support throughout 2009. Equally, I would like to thank the member co-operatives with whom we share the vision of a dynamic and evolving Irish dairy industry and the determination to meet the challenges that confront it. I would also like to thank the Department for Agriculture, Fisheries and Food for its support and assistance over the year. Last but not least, the staff of the NDC continue to stretch the possibilities of what a small organisation is capable of. I am grateful for their support and enthusiasm as we progressed our many activities over 2009. I look forward to working with all of you and to serving the our dairy industry further in 2010.

Helen Brophy Chief Executive National Dairy Council

International Dairy Market Review 2009 and Outlook 2010

Key Features of International Supply and Demand } Trading in 2009 began with a continuation of the demand pattern which emerged during the middle of 2008. The global financial crisis significantly reduced access to credit, forcing buyers to withdraw from the market. Letters of credit became increasingly difficult to obtain, which is a key requirement for dairy exports to emerging economies such as Russia. The situation was further compounded as companies ran down stock levels in an effort to reduce working capital requirements. This de-stocking which followed the financial crisis began in October 2008 and continued well into 2009. The overall result was that, as demand stalled in the first half of 2009, prices of dairy commodities receded to levels last seen in 2006.

Figure 1: Price trend for dairy commodities Cheddar

SMP

Butter

6000 5500

US $ per ton

5000 4500 4000 3500 3000 2500 2000 1500 Nov ‘09

Jul ‘09

Sep ‘09

May ‘09

Jan ‘09

Mar ‘09

Nov ‘08

Jul ‘08

Sep ‘08

May ‘08

Jan ‘08

Mar ‘08

Nov ‘07

Jul ‘07

Sep ‘07

May ‘07

Jan ‘07

Mar ‘07

Nov ‘06

Jul ‘06

Sep ‘06

May ‘06

Jan ‘06

Mar ‘06

1000

Source: USDA

The second half of 2009 saw buyers return to the market. This was inevitable as a point had to be reached where buyers needed to re-stock. Demand since August 2009 lifted prices. In response to depressed markets both the EU and the USA re-introduced market supports with the EU reactivating intervention purchases and export subsidy payments, while the USA employed the Dairy Export Incentive Programme. In December 2009, EU stocks stood at 76,400 tons for butter and 259,300 tons for skimmed milk powder. The US government also built significant stocks during 2009 and, at one point, reached 220,000 tons skimmed milk powder. Currently uncommitted CCC government stocks are just 27,000 tons. Figure 2: Combined EU and US SMP stocks 900 800 700 600 ‘00 tons

A turbulent year in the international dairy industry saw a collapse in world dairy prices, precipitated by a burn-off of stocks and increased production in New Zealand, exacerbated by the global recession. The impact on the Irish dairy sector was further intensified by the collapse in the value of sterling against the euro. This impacted particularly on cheese exports and saw a greater volume of imports as well as loss of retail spend as a result of cross-border shopping. For Irish and European dairy farmers, the dramatic fall in prices demonstrated the low level that the EU-support prices had been reduced to as a result of the Fischler reforms, with the new intervention prices reflecting a below-cost level of support. The EU was forced to introduce refunds in the medium term and, given a pattern of increased market-price volatility, there has been a major call for the EU Commission to make the management of public stocks a continuing part of its overall market management in the dairy sector. The role of retail buying power, meanwhile, came sharply into focus in 2009. The EU Commission high-level group, which was set up to examine the role of market management in the dairy sector, noted how much of a disconnect there is between the extreme price volatility experienced by producers and processors and the high margins on dairy products sold at retail level.

500 400 300 200 100

Table 1: Global export trade in dairy products (tons) Skimmed milk powder

Butter

Whole Milk Powder

Cheese

2007

1,130,000

805,000

1,467,000

1,293,000

2008

1,082,000

691,000

1,615,000

1,261,000

2009

1,000,000

639,000

1,627,000

1,152,000

Source: USDA

However, reviewing the full-year global trade for dairy commodities shows that trade was only marginally back with skimmed milk powder slipping just 8 per cent to 1 million tons and butter dropping to 639,000 tons.

0 Aug 01

Aug 02

Aug 03

Aug 04

Aug 05

Aug 06

Aug 07

Aug 08

Aug 09

Source: Dairy Australia

A further implication of the market situation has been a milksupply contraction in some regions notably in the USA, where the CWT scheme assisted with the retirement of 2 per cent of the dairy herd there. Changes in supply in the milk producing regions can have a significant impact on global trade and a 1 per cent reduction in US milk production is significant in terms of restricting export volumes from the USA onto the world market. In 2009, US exports of skimmed milk powder declined by 49 per cent, while butter exports declined by 96 per cent. National Dairy Council Annual Review 2009 & 2010 Plan

China is, increasingly, becoming a significant buyer of dairy products. This trend continued and the demand from China was significant in stimulating the recovery in the latter half of 2009. Figure 3: China imports (tons) Whey

WMP

Lactose

SMP

Butterfat

Cheese

800,000 700,000 600,000 500,000

Prospects for 2010 } As milk consumption grows in milk-producing regions such as South America and the US, then it will reduce the volume of milk to which those regions export on to the world market. Such movements will lift world prices. In areas such as Brazil, where per capita consumption is relatively low at 134 litres, any upward movement in per capita consumption will significantly reduce volumes exported. In 2009, the USA saw significant growth in domestic demand for skimmed milk powder with the quantity exported reduced by 49 per cent.

400,000 300,000

Table 2: Details on skimmed milk powder quantities in the US (tons)

200,000 100,000 0 09 20

08 20

07 20

06 20

05 20

04 20

03 20

02 20

01 20

Production

Source: USDA

The world market for dairy revolves around trade between the exporting regions and the importing regions, with price determined by the relationship between the surplus milk from the export regions with that demanded in the import countries. The key import countries for cheese are South Korea, Mexico, Japan, Canada and Russia. Those countries that are reliant on milk powder imports include Algeria, Indonesia and China. Impact on Domestic Price Market } The price of milk is a combination of two elements, the first being the local internal (domestic) market for milk and the second being the global market for milk. However, the domestic price level is intrinsically linked to the global price level. Typically, about 7 per cent of world milk production goes to the global market, this being the volume of milk in excess of domestic demand in the milk-producing regions. The price is determined by the relationship between world demand and world supply. Seven per cent of world milk production equates to approximately 38 billion litres of milk, which in global production terms is small and explains why small changes in supply and demand can have such an impact on price levels.

Ireland is quite a significant participant in the global trade of milk. Ireland exports 85 per cent of its milk production, which corresponds to approximately 4.5 billion litres, accounting for close to 12 per cent of the global trade. Ireland therefore, occupies a significant position in global milk trade. Unlike milk producers in Australia, where the proportion of domestic milk production consumed internally is as high as 60 per cent, Irelandâ&#x20AC;&#x2122;s milk producers rely on the world market for demand. This highlights the significance of the global milk price on the price of milk paid to Irish milk producers. The close dependency on the world market explains why the price paid to Irish milk producers closely tracks world commodity prices. National Dairy Council Annual Review 2009 & 2010 Plan

Domestic Imports consumption

Exports

Stock unsold

2009

836,000

627,000

1,000

200,000

27,000

2008

859,000

404,000

1,000

391,000

63,000

-2.7%

56%

-49%

55%

732,000

443,000

1,000

300,000

% change

â&#x20AC;&#x2DC;09/â&#x20AC;&#x2122;08 2010

(Estimate)

Source: USDA

It is expected that the CWT programme in the USA will continue in 2010 and this will further reduce milk production in the US. In 2009, it is estimated that the CWT programme retired (culled) 242,000 cows, equivalent to 2 per cent of the herd, and accounting for a milk production decline of 0.8 per cent. The forecast is for a further decline of 1 per cent in 2010. Also, supply in Australia is expected to drop by 3 per cent in 2010 while the EU will be static. New Zealand is expected to grow by 2 per cent in line with the trend of recent years. The positive indication on milk production is that New Zealand is the only region which remains on an expansion curve, notably Brazil, has stabilised and is not reaching the expansion levels it experienced in 2007/2008. Prices in 2010 will be boosted by more positive global economic outlook relative to 2009 with GDP growth for developed economies of 1.7 per cent, while the developing economies are projected to grow by 5.5 per cent, with China growing by 9.3 per cent (Source, IMF). These growth rates are a turnaround from the 2009 situation and should boost demand levels. The rally in prices seen in the final quarter of 2009 is uncertain to carry through into 2010. Some commentators are cautioning against a strong rally in prices as it may lead to price volatility and serve to dampen demand. The other unknown that will impact the market in 2010 is at what stage the EU disposes of its stocks and to what extent this could weaken/distort the market. It is worth noting that annually approximately 1 million tons of skimmed milk powder are exported globally and the EU already holds a stock of close to 300,000 tons. These figures highlight the degree to which EU stocks could distort an upward swing in dairy prices.

Irish Market Review 2009 and Outlook 2010 In an exceptionally difficult year for Irish food and drink suppliers, focus on price was paramount. However, the dairy sector proved resilient in marketing and, in some cases, growing market share volume over the year. General Overview } The Republic of Ireland’s decline in spend on fast-moving consumer goods (FMCG) over 2009 was, according to Nielsen, one of the most severe recorded in Europe. Whereas other countries began to see signs of recovery in the last quarter, in Ireland, a stabilisation in the rate of decline was, by and large, the extent of positive economic indicators. There was, however, a glimmer of optimism expressed with a small increase in consumer confidence in the second half of 2009, the first time that this had happened since April/May 2008. Not surprisingly, this level of consumer confidence was still low compared to the rest of Europe. There is no doubt that cross-border shopping impacted further £131,574,450 – 13% Fats on this decline, with the double digit growth experienced by the £36,810,053 – 4% Total Cream multiples in Northern Ireland coming at the expense of the eight £400,284,235 – 39% Yogurts per cent decline experienced by the supermarket chains in the Milk £179,539,440 – 18% Republic of Ireland. The purchase of alcohol, in particular, has Cheese been a major feature of this£261,997,991 trend,– feeding into the trend of home 26% entertainment which, as will be seen later, is of significance also in the context of the dairy industry too. Spend on beer and spirits showed growth of more than 40 per cent in Northern Ireland in 2009.

The growth of the private label sector within the multiples was also one of the major trends of the marketplace in 2009. Total private label share reached 19 per cent by the year end and, according to Nielsen, this will increase to 28 per cent by 2012. For every trend, there is also a counter trend and, despite this intense focus on value among consumers, the bottom line was not always price. Consumers in the Republic of Ireland are also actively looking to buy Irish, local and environmentally-friendly 100% products, with 25 per cent willing to pay more for products with 90% Processed 80%these attributes, a trend that became more pronounced as 2009 70% Natural 60%progressed. Speciality

50% 40% 30% 20%

Cottage Cheese

Dairy Market Overview } The dairy market at retail level (excluding independent and doorstep sales) was valued at €1.01bn in 2009 with sales value down by 6.5 per cent on 2008. Figure 5 shows the breakdown of the retail market, with milk accounting for 39 per cent of the total 100% category, followed by yogurts (26 per cent)Flavoured and cheese (18 per 90% 80%cent). In line with the total grocery market, price deflation was a Speciality 70% overall price fall for 60%feature of the year but, in comparison to an Skimmed 50% all food of 7.8 per cent, according to CSO figures, the impact on Fortified 40% 30%dairy was less pronounced. Milk saw a reduction of 5.5 per cent, Low Fat 20% 10%cheese at 5.2 per cent and butter at 4.2 per cent according to CSO Whole Milk 0% statistics. 100% 10% 0%

£131,574,450 – 13%

10% 0%

£36,810,053 – 4%

£400,284,235 – 39%

100%

Cheese 100% % 38.1% 37.3 % 36.7% 35.5% 35.1% 34.4% £261,997,991 – 26% 80% 90% 37.1% 36.6% 36.5% 37.4% 36.7% 37.3% 38.1 70% 80% 70% Source: Nielsen, Jan 2010 8.4% 8.2% 9.3% 60% 60% 7.1% 7.6% 7.5% 7.6% 7.9% 8.3% 8.5% 8.0% 7.5% 7.5% 50% 50% 40% 40% 30% 55.8% 55.8% 56.0% 55.0% 55.4% 54.5% 53.4% 54.0% 55.2% 55.8% 56.1% 56.8% 56.3% 30% 20%

Fats

10.2% 11.0% 10.9% 11.8% 9.6% 10.2% 10.4% 10.4% 10.8%£36,810,053 11.2% 11.5%– 10.6 4%% 10.5%

Total Cream

60%

Yogurts

£400,284,235 – 39%

50% 40% 30%

Cheese

£261,997,991 – 26%

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2/ /E 09 M A 4 W R 22 /0 /E 9 AP R1 4W 9/ /E 09 M A 4 W Y 17 /0 /E 9 JU 4 W N 14 / /E 09 JU L1 4W 2/ /E 09 AU G 4W 09 /0 /E 9 SE 4W P 0 6/ /E 09 OC T0 4W 4/ /E NO 09 V0 4W 1/ /E NO 09 4W V 2 9/ /E 09 DE C2 7/ 09

10% 0% Source: Nielsen, Jan 2010

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2 /E /0 9 M A 4W R 2 2/ /E 09 AP 4W R 1 9/ /E 09 M A 4 W Y 17 /0 /E 9 JU 4W N 1 4/ /E 09 JU 4W L 1 2/ /E 09 AU G 4W 09 /0 /E 9 SE 4W P 0 6/ /E 09 OC 4W T 0 4/ /E 09 NO 4W V 0 1/ /E 09 NO 4W V 2 9/ /E 09 DE C 27 /0 9

Discounters ROI

39% 12%

4%28% 4% 8%

90% 80% 70%

Discounters ROI Symbol GRPS Forecourtsshare was Multiples the ROI Republic Within of Ireland, the battle for&market defining feature of the retail environment in 2009. Without 1% 90%doubt, the discounters, as illustrated in Figure were 28.2 27.6 27.7 28.4 28.1 28.5 29.0 29.1 28.3 27.7 Flavoured 26.6 4,26.0 25.0 the clear 4% 80% Speciality winners, their move from the periphery to centre stage in the 10.9 11.8 70% 4% 11.5 10.6 10.5 10.2 11.0 9.6 10.2 10.4 10.4 10.8 11.2 now well in train. Furthermore, Skimmed 60%Irish retail grocery market8% 50%holding a 7 per cent share overall of the retail market at the end 24% Fortified 40% 59% of 2009, expected more double to 15 62.2 this 62.2 is 61.8 61.2 61.1 to 60.2 59.5 than 60.3 61.2 62.1 62.4 63.1 per 63.3 cent by Low Fat 30% have taken 20%2012. The symbol groups and forecourts, meanwhile, Whole Milk 10%the heaviest toll in the retail grocery market, experiencing a 0%decline from 28.2 per cent to 25 per cent over the course of 2009. The multiples, meanwhile, started 2009 with a 62.2 per cent share and fought aggressively to grow this to 63.3 per cent by the end of Dunnes ROI Estimation 15% the year. 6% %

Multiples ROI Forecourts Flavoured ROI Speciality

Symbol Groups

Skimmed

10% 0%

Skimmed

As had been predicted, overall consumption of Low Fatthe products remained stable throughout the year. However, 10% 20% consumer focus was on value, translating into largerWhole packMilk formats 0% 10% and extra-fill promotional packs, for example in yogurt. Figure Discounters ROI Symbol GRPS & Forecourts Multiples ROI 0% 6 outlines the market share of the various retail distribution 100% channels. 28.2% 27.6% 27.7% 28.4% 28.1% 28.5% 29.0% 29.1% 28.3% 27.7% 26.6% 26.0% 25.0%

Figure 6: Total dairy sales divided by channel in 2009 10.9%

100%the

100% 90% 80% 70% 60% 50% 40% 30% 20%

milkFortified and dairy

Milk £179,539,440 – 18% 62.2% 62.2% 61.8% 61.2% 61.1% 60.2% 59.5% 60.3% 61.2% 62.1% 62.4% 63.1% 63.3%

20%

Flavoured Speciality

11.0% 9.6% 10.2% 10.4% 10.4% 10.8% 11.2% 11.5% 10.6% 10.5% 10.2%

Discounters ROI

60% Multiples ROI 50% 100% 40% 90% 30% 80% 20% 70% 10% 60% 0% 50% 40% 30%

4% 7.6%

7.5%34% 7.6%

Symbol GRPS & Forecourts

30%

Cooking, Yellow Fats 7.9%

8.3%

8.5%

8.0%

7.5%

Health Spreads, Yellow Fats

7.5%

8.4%

8.2%

9.3%

Butter, Yellow Fats

31% 55.8% 55.8% 56.0% 55.0% 55.4% 54.5% 53.4% 54.0% 55.2% 55.8% 56.1% 56.8% 56.3%

Dairy/Taste Spreads, Yellow Fats

20%

90%

37.1% 36

70%

62.2% 62.2% 61.8% 61.2% 61.1% 60.2% 59.5% 60.3% 61.2% 62.1% 62.4% 63.1% 63.3% 37.1% 36.6% 36.5% 37.3% 38.1 % 38.1 Cooking, White Fats% 37.3% 36.7% 35.5% 35.1% 34.4% 1%37.4% 36.7%

7.1%

Multiples ROI 100% 80%

11.8%

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2/ /E 09 M A 4 W R 22 /0 /E 9 AP R1 4W 9 / /E 09 M A 4 W Y 17 /0 /E 9 JU 4 W N 14 /0 /E 9 JU L1 4W 2/ /E 09 AU G 4W 09 /0 /E 9 SE 4W P 0 6 / /E 09 OC T0 4W 4/ /E NO 09 V0 4W 1/ /E NO 09 4W V 2 9/ /E 09 DE C 27 /0 9

70%

60%

7.1%

50% 40% 30%

Source: Nielsen, Jan 2010

14%

1% 4%

Flavoured

Speciality Cottage Cheese

Speciality

Skimmed

24%

Fortified2009 & 2010 Plan National Annual Review 58%Dairy CouncilProcessed 59% 1%

27%

4% 34%

LowFats Fat Cooking, White Natural Whole Cooking, Yellow FatsMilk Health Spreads, Yellow Fats

55.8% 55

20% 10% 0%

10% 0%

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2 /E /0 9 M A 4W R 2 2/ /E 09 AP 4W R 1 9/ /E 09 M A 4 W Y 17 /0 /E 9 JU 4W N 1 4/ /E 09 JU 4W L 1 2/ /E 09 AU G 4W 09 /0 /E 9 SE 4W P 0 6/ /E 09 OC 4W T 0 4/ /E 09 NO 4W V 0 1 /0 /E 9 NO 4W V 2 9/ /E 09 DE C 27 /0 9

80%

Milk

£179,539,440 – 18%

90%

28.2% 27.6% 27.7% 28.4% 28.1% 28.5% 29.0% 29.1% 28.3% 27.7% 26.6% 26.0% 25.0% £131,574,450 – 13%

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2/ /E 09 M A 4 W R 22 /0 /E 9 AP R1 4W 9/ /E 09 M A 4 W Y 17 /0 /E 9 JU 4 W N 14 /0 /E 9 JU L1 4W 2/ /E 09 AU G 4W 09 /0 /E 9 SE 4W P 0 6/ /E 09 OC T0 4W 4/ /E NO 09 V0 4W 1/ /E NO 09 4W V 2 9/ /E 09 DE C2 7/ 09

90%

Total Cream Symbol GRPS & Forecourts Yogurts

Discounters ROI

Multiples ROI

Symbol GRPS & Forecourts

Cottage Cheese

Fats

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2/ /E 09 M AR

Discounters ROI

10% 0%

Natural Figure 5: Breakdown of the retail dairy market in Republic of Ireland in 2009 (excluding independent/doorstep sales) Speciality

Figure 4: Total grocery sales divided by channel in 2009 Multiples ROI

Processed

90% 80% 70% 60% 50% 40% 30% 20%

100% 90% 80% 70% 60% 50% 40% 30% 20%

Milk

£179,539,440 – 18%

Cheese

£261,997,991 – 26%

Discounters ROI

Multiples ROI

Skimmed

60% 50% 40% 30% 20%

Yogurts

£400,284,235 – 39%

Symbol GRPS & Forecourts

Fortified Low Fat

10% 0%

100%

90%

28.2% 27.6% 27.7% 28.4% 28.1% 28.5% 29.0% 29.1% 28.3% 27.7% 26.6% 26.0% 25.0%

80% 70%

80% 60%

60%

90% 20% 28.2% 80% 10% 70% 0% 9.6%

Discounters ROI

Symbol GRPS & Forecourts

62.2% 61.8% 61.2% 61.1% 60.2% 59.5% 60.3% 61.2% 62.1% 62.4% 63.1% 63.3%

90% 20% 80% 10% 37.1% 70% 0%

27.6% 27.7% 28.4% 28.1% 28.5% 29.0% 29.1% 28.3% 27.7% 26.6% 26.0% 25.0%

10.2% 10.4% 10.4% 10.8% 11.2% 11.5% 10.6% 10.5%

10.2% 11.0% 10.9% 11.8%

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2/ /E 09 M A 4 W R 22 /0 /E 9 AP R1 4W 9/ /E 09 M A 4 W Y 17 /0 /E 9 JU 4 W N 14 /0 /E 9 JU L1 4W 2/ /E 09 AU G 4W 09 /0 /E 9 SE 4W P 0 6/ /E 09 OC T0 4W 4/ /E NO 09 V0 4W 1/ /E NO 09 4W V 2 9/ /E 09 DE C 27 /0 9

60% Growth in private label was a strong feature of the retail dairy 50% market, with the multiples showing an increase in volume from 40% 62.2 62.2 61.8 61.2 61.1 60.2 59.5 60.3 61.2 62.1 62.4 63.1 63.3 24.9 30%per cent unit volume share to 27.5 per cent over the year. Equally, the efforts of the convenience channels to compete more 20% 10% effectively can be seen in the increase in the volume of private 0% 1% label from 6.7 per cent to 11.9 per cent over the period. Flavoured %

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2/ /E 09 M A 4 W R 22 /0 /E 9 AP R1 4W 9/ /E 09 M A 4 W Y 17 /0 /E 9 JU 4 W N 14 /0 /E 9 JU L1 4W 2/ /E 09 AU G 4W 09 /0 /E 9 SE 4W P 0 6/ /E 09 OC T0 4W 4/ /E NO 09 V0 4W 1/ /E NO 09 4W V 2 9/ /E 09 DE C 27 /0 9

Speciality

Milk & Cream } Skimmed 8% 24% According to Nielsen, for the twelve-month period, total volume Fortified 59% of milk sales was up one per cent on 2008, with sales value Low Fat showing a decline of 4.9 per cent (excluding Dunnes Whole Stores). Milk 1% When the independent sector and doorstep Flavoured sales are factored in, 4% Speciality the total volume of the retail 4% milk market was estimated at almost Skimmed 469 million litres in 2009. 8% 24% Fortified Larger pack formats became increasingly dominant while, in line Dunnes ROI Estimation 15% 59% Low Fat with overall trends, private label 6% milk now accounts Discounters ROI for up to an 39% milk sales Whole Milk Republic of estimated 39 per cent of total retail in ROI the Multiples 12% Ireland. Forecourts ROI 28%

Figure 7: Breakdown of retail milk market in 2009

Symbol Groups

15%

Dunnes ROI Estimation

Discounters ROI

39% 12% 28%

Multiples ROI Forecourts ROI Symbol Groups

Source: Nielsen, Jan 2010

The year also saw an increase in the sales of low fat milk which 100%accounts for 24 per cent of total milk sales (see figure 8). now 90% Processed The 80%share of fortified milk now stands at eight per cent, with a 70% Natural number of new introductions within the category in 2009. Sales 60% Speciality of cream (excluding independents and doorstep sales) have grown 50% by 40% 4.9 per cent in volume in 2009, reflecting a ‘return to basics’ Cottage Cheese in 30% the20% recession and the increase in home cooking. 10% 0%

10% 0%

Fats

Speciality

£36,810,053 – 4%

Skimmed Total Cream

£400,284,235 – 39%

Yogurts Fortified

£179,539,440 – 18%

Milk

£261,997,991 – 26%

Low Fat

Cheese Whole Milk

Source: Nielsen, Jan 2010

Butter } The trends in the butter and spreads sector in 2009 throw an Discounters ROI Symbol & Forecourts Multipleslight ROI on consumer interesting behaviour andGRPS priorities. While volume grew marginally in overall terms, there was a 5.8 per 100% ROI Discounters ROI Symbol GRPS & Forecourts Multiples cent 90%decrease in the value of sales. The major casualties were the 100%health spreads, 37.1% 36.6which % 36.5% 37.4 % 36.7 % 38.1% or 38.1%11 37.3per % 36.7% 35.5% in 35.1% 34.4% In fell by% 37.3 €4.3m cent 2009. 80% 90% 70% contrast, sales of butter a%decline two 28.2% 27.6 % 27.7 % 28.4 % 28.1% recorded 28.5% 29.0% 29.1 28.3% 27.7%of 26.6just % 26.0% 25.0%per cent or 80% 60% 8.4position % 8.2% 9.3% % 7.9returned % 8.3% less than €0.5 million and in the 7.1% 7.6 % 7.5% 7.6 8.0%a positive 7.5% 7.5% 8.5% to 70% 50% 9.6% 10.2% 10.4% 10.4% 10.8% 11.2% 11.5% 10.6% 10.5% 10.2% 11.0% 10.9% 11.8% final quarter of the year. The private label butter category grew 60% 40% 55.8% 55.8% 56.0% 55.0% 55.4% 54.5% 53.4% 54.0% 55.2% 55.8% 56.1% 56.8% 50% 30% National Dairy Council Annual Review 2009 & 2010 Plan 40% 20% 62.2% 62.2% 61.8% 61.2% 61.1% 60.2% 59.5% 60.3% 61.2% 62.1% 62.4% 63.1% 63.3% 30% 10% 20% 10%

7.5%

7.6%

7.9%

8.3%

Discounters ROI

8.5%

8.0%

8.4%

7.5%

8.2%

9.3%

Symbol GRPS & Forecourts

55.8% 56.0% 55.0% 55.4% 54.5% 53.4% 54.0% 55.2% 55.8% 56.1% 56.8% 56.3%

36.6% 36.5% 37.4% 36.7% 37.3% 38.1% 38.1% 37.3% 36.7% 35.5% 35.1% 34.4%

8.2 9.3 8.4 7.5 7.6 7.5 two7.1 per over7.9the8.3 year. Figure 9 provides a breakdown of 7.6 cent 8.0 7.5 8.5 key categories in yellow fats.

50% the 40% 30%

55.8% 55.8% 56.0% 55.0% 55.4% 54.5% 53.4% 54.0% 55.2% 55.8% 56.1% 56.8% 56.3%

Figure 9: Breakdown of retail market for butter and spreads 20% 10% 0% Cooking, White Fats

1% 4%

Cooking, Yellow Fats

34%

Health Spreads, Yellow Fats

30%

Butter, Yellow Fats

31%

Dairy/Taste Spreads, Yellow Fats 1%

Cooking, White Fats

Cooking, Yellow Fats

Source: Nielsen, Jan 2010

34% Cheese } Health Spreads, Yellow Fats 1% 30% The value of the cheese category was €179.5m at the end of 2009, Butter, Yellow FatsCottage Cheese 31% with a 5.2 per cent decline the value ofYellow the Fats category over the 14%in Dairy/Taste Spreads, Speciality year. Sales of processed cheese were hardest hit, with a decline Processed 58% of 10 per cent (€4.5m) recorded over the year. Price deflation Natural and heavy promotions were the reasons for this. Natural cheeses, 27% which accounted for1%58 per cent of sales in 2009, saw a decline of four per cent in value (see figure 10). Cottage Cheese 14% Interestingly, the standard block cheese showed a growth of two Speciality per cent, contrasting58% to declines recorded Processed in grated and sliced cheese. However, with the overall Natural cheese category growing in 27% volume by 0.7 per cent, this illustrates the consume desire to treat themselves more at home and the increased emphasis on home dining as a feature of current recessionary trends.

Figure 10: Breakdown of retail cheese market in 2009 100% 90% 80% 70% 60% 50% 40% 30% 20%

Processed Natural Speciality Cottage Cheese

Source: Nielsen, Jan 2010

Flavoured £131,574,450 – 13%

60% by

7.6%

10% 0%

Figure 8: Breakdown of milk type within the retail market (excluding independent/doorstep sales) 100% 90% 80% 70% 60% 50% 40% 30% 20%

7.1%

50% Multiples ROI 40% 55.8% 100% 30%

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2/ /E 09 M A 4 W R 22 /0 /E 9 AP R1 4W 9/ /E 09 M A 4 W Y 17 /0 /E 9 JU 4 W N 14 /0 /E 9 JU L1 4W 2/ /E 09 AU G 4W 09 /0 /E 9 SE 4W P 0 6/ /E 09 OC T0 4W 4/ /E NO 09 V0 4W 1/ /E NO 09 4W V 2 9/ /E 09 DE C 27 /0 9

50% Multiples ROI 40% 62.2% 100% 30%

37.1% 36.6% 36.5% 37.4% 36.7% 37.3% 38.1% 38.1% 37.3% 36.7% 35.5% 35.1% 34.4%

70%

11.0% 10.9% 11.8% 9.6% 10.2% 10.4% 10.4% 10.8% 11.2% 11.5% 10.6% 10.5% 10.2%

4W /E JA N 4W 25 /0 /E 9 F 4 W EB 2 2/ /E 09 M AR 4W 22 /0 /E 9 AP R1 4W 9/ /E 09 M AY 4W 17 /0 /E 9 JU 4 W N 14 /0 /E 9 JU L1 4W 2/ /E 09 AU G 4W 09 /0 /E 9 SE 4W P 0 6/ /E 09 OC T0 4W 4/ /E NO 09 V0 4W 1/ /E NO 09 4W V 2 9/ /E 09 DE C 27 /0 9

90%

Whole Milk Symbol GRPS & Forecourts

Discounters ROI

Multiples ROI

56.3%

100% discounters now hold a 13 per cent share of the cheese The Flavoured 90% category while the symbol groups and forecourts saw a combined 80% Speciality 70% per cent loss in sales value over the year. 18.6

Skimmed

60% 50% 40% 30% 20%

Fortified Outlook } The dairy category held its own in volume sales inLow 2009 Fat and will 10% continue to do so in 2010. The main exception is yogurt, which Whole Milk 0% recorded a 3.4 per cent volume decline in the first half of the year, largely impacting functional yogurts (eg. probiotic yogurts) as well as reflecting a heavy focus on promotions.

While the search for value continues to exert pressure on the sector, the fact that consumption remains positive is key in assessing prospects for recovery The challenge, Discounters ROI and growth. Symbol GRPS & Forecourts Multiples ROI moving ahead, is to ensure that these price pressures do not 100% result in the commoditisation of the category. Investment in 90% brand values remains essential as the dairy industry continues 37.1% 36.6% 36.5% 37.4% 36.7% 37.3% 38.1% 38.1% 37.3% 36.7% 35.5% 35.1% 34.4% 80% to innovate and meet consumer needs in a fast-changing and 70% challenging environment. 8.4% 8.2% 9.3% 60% 50% 40% 30% 20% 10%

7.1%

7.6%

7.5%

7.6%

7.9%

8.3%

8.5%

8.0%

7.5%

55.8% 55.8% 56.0% 55.0% 55.4% 54.5% 53.4% 54.0% 55.2% 55.8% 56.1% 56.8% 56.3%

Advocacy and Communications Programme Over the course of 2009, significant advances in the Advocacy & Communications Programme saw the NDC strengthen its core message and reinforce its relevance to stakeholders.

Celebrating perfect pancakes 2009 are Niall McLoughlin, CEO, Irish Osteoporosis Society; television and radio presenter, Ryan Tubridy; 10-year-old Kerrie Patten from Clontarf, Dublin; and Henry Corbally, ViceChairman, National Dairy Council

International tri-athlete and sports presenter, Craig Doyle, launches the joint NDC/Irish Osteoporosis Society National Osteoporosis Awareness Radio Campaign. Pictured with NDC Chief Executive, Helen Brophy

It goes without saying that advocacy and communications have been at the heart of the NDC’s rationale since its inception. The intensive restructuring that has taken place over the last two years has allowed the organisation to meet a range of objectives set out in the Dairy: Food for Life strategy. Impactful among diverse audiences and with a renewed sense of purpose, the NDC has evolved rapidly in a short period to be recognised as a credible, effective and respected agent of advocacy. A small organisation in terms of personnel, it now has a significant footprint both in Ireland and internationally. Success in securing co-funding for the ‘Milk in Action’ Programme from the EU and the Department of Agriculture, Fisheries and Food is testament to this. This collaborative project involves Britain’s Dairy Council and the Dairy Council for Northern Ireland, with the NDC acting as the co-ordinating organisation, a position that further reinforces its credibility and stature on the European stage. In a media-saturated world, a commitment to effective communications requires a thorough understanding of both traditional and non-traditional channels and the NDC is confident that, through the cohesive implementation of its activities in 2009, it has demonstrated a firm understanding of the opportunities presented by traditional and new media.

saw two distinct but connected elements of this programme progressed: firstly, communications aimed directly at these professionals and, secondly, relevant consumer literature made available and accessible through them. DN Forum, a publication focusing on current research and findings on dairy nutrition, was initiated in April 2009. Three editions were distributed, covering the role of dairy foods in blood pressure management; the nutrient value of dairy; and the role of dairy in bone health. In 2010, further issues of the publication will address the potential of dairy in sports nutrition and the role of dairy in body weight management. DN Forum reached an audience of 3,500 GPs and over 700 dieticians and public health nurses in 2009. In 2010, a major health professional seminar will also be hosted by the NDC to reinforce its position in this space. In terms of broader communications to the public, 2009 saw a range of fully up-to-date diet and health literature made available. Penetration of 75 per cent of GP surgeries nationwide is testament to the relevance and value of these outputs, which will be further supported with the introduction of a new booklet Dairy: Part of a Balanced Lifestyle in 2010. The NDC Dairy Den Programme has also developed apace as an important resource for parents, highlighting the changing role of dairy in the diet of growing children. The Dairy Den now has an active database of 30,000 mothers. The Guide to Toddler Nutrition was one of a series of booklets on weaning and pre-school nutrition developed in 2009. In 2010, further additions will be made to the series, while the Dairy Den database will also form the basis of NDC communications to young women as part of its ‘Milk in Action’ Programme. Recognising the growing significance of the internet as a source of primary information, 2009 saw the creation of a password protected health professional area within the NDC website,

Health-Care Professionals } In keeping with its commitment to the highest standards of scientific insight, the NDC established the Scientific, Nutrition & Technical Committee (SNT) in 2009. This Committee now provides expert guidance to the organisation and will play an invaluable role in ensuring the highest standards underwrite our science-based communications. Having identified health-care professionals as a critically influential audience in the Dairy: Food for Life strategy, 2009

National Dairy Council Annual Review 2009 & 2010 Plan

NDC Quality Milk Awards 2009 winner, Brochan Cocoman from Co. Kildare with his wife, Lelia, and sons Philip, Michael, Brochan Junior and Joseph

accessible through registration. In 2010, this will be further developed and enhanced to offer professional members access to significant information in the key areas of nutrition and health. The GB Alliance, detailed further in this section, will be highly significant in this regard.

NDC Quality Milk Awards } As an organisation funded directly by dairy farmers, the NDC recognises that all its activity is ultimately rooted in their concerns. In the course of 2009, a more direct relationship with farmers was initiated with the development of the NDC Quality Milk Awards. The Irish dairy farmer’s dedication to producing a world-class product, in often very difficult circumstances, is far from widely appreciated and the awards offer not only recognition among peers but a platform to communicate to a wider consumer audience. In an era where provenance and local food production are increasingly valued, there is also a timeliness with these awards as they offer a platform for farmers as the first-hand advocates of the unique qualities of milk farmed in the Republic of Ireland. Work on the awards progressed through the year with farmers nominated by their co-operatives and six ultimately selected as finalists by the panel of expert judges: Prof. Paddy Wall, Associate Professor of Public Health at UCD; Dr David Gleeson, Milk Quality Research, Teagasc; and Jack Kennedy, Dairy Editor, National Dairy Council Annual Review 2009 & 2010 Plan

Irish Farmers Journal. Farms were ranked based on milk-quality results and the six finalists were also visited by the judges who undertook an intensive on-site investigation. At the awards ceremony, held on October 6 in Citywest, Co. Dublin, Ireland’s top dairy farmer for 2009 was named as Brochan Cocoman from Kilwarden, Kill, Naas, Co Kildare. A supplier to Glanbia, Brochan was presented with the NDC Perpetual Cup and a cheque for €5,000. A national category award was also presented to manufacturing milk supplier Michael O’Donovan from Gurranes, Ballineen, Co Cork, who supplies milk to Lisavaird Co-op. Singled out for special commendation were: • Richard Claxton, Colt, Ballyroan, Portlaoise, Co Laois (supplying Glanbia); • Gordon Kingston, Tawnies, Clonakilty, Co Cork (supplying Clona Dairy Products); • Sean and Goretti Leahy, Corran, Waterfall (near) Cork (supplying Bandon Co-op); and, • Cathal Moran, Curragh Lane, Skeoughousteen, via Borris, Co Kilkenny (supplying Glanbia) Commending the finalists at the awards ceremony, Dr Gleeson commented ‘The winners stand out for their attention to detail… their record keeping is excellent, and their knowledge and enthusiasm for their work is obvious.’ The Quality Milk Awards are very much a reflection of the

NDC Chairman, Dominic Cronin, with NDC Quality Milk Awards 2009 judges (left to right) Dr David Gleeson, Teagasc; Prof. Paddy Wall, UCD and Jack Kennedy, Irish Farmers’ Journal

philosophy currently driving the NDC. Similar initiatives in the past were largely trade-focused events. By generating awareness of the awards among consumers, through coverage in local and national media, they represent a powerful reminder of the quality of milk to the end user and so naturally convey the values that underline the ‘Farmed in the Republic of Ireland’ trade mark. The NDC Quality Milk Awards will now be an annual event, identifying excellence and rewarding the effort that goes handin-hand with it. In 2010, promotional activity will begin earlier in the year, and the increased lead-in time will benefit response at industry level and consumer recognition in the media. Health and Wellbeing } The Health and Wellbeing Evenings, which the NDC has been jointly organising with member co-ops throughout the country since 2008, have been one of the major successes in the communication programme. In 2009, evenings were hosted in partnership with North Cork Co-op in Kanturk; Arrabawn Co-op in Claregalway; Wexford Creamery in Wexford; and Connacht Gold in Westport. The events take place in a location selected by the co-ops with proceeds raised donated to a local charity of their choice. The Kanturk event proceeds were donated to the COPE Foundation. Arrabawn in Claregalway and Wexford Creamery in Wexford donated proceeds to Croi and Wexford Hospice Homecare respectively. Finally, the Connacht Gold evening in Westport donated proceeds to Western Care. The evenings consist of a nutrition presentation focusing on the value of dairy in a balanced diet; followed by a more general talk on health and wellbeing; and concluding with a lifestyle-oriented presentation, for example, advice on using cosmetics. All the 2009 events delivered very positive feedback from participants and, in 2010, the evenings will be rolled out to a number of new locations. Partnership } The NDC’s commitment to building relationships with likeminded organisations saw formal links forged with a number of bodies in 2009. Among the most significant was the alliance between the GB Dairy Council and the NDC, agreed in April

Helen Brophy, NDC Chief Executive (right) pictured with Dr Judith Bryans, Director, The Dairy Council (Great Britain) at the launch of the GB Alliance

2009. Covering a number of areas of strategic interest, it formally allows for a high level of information sharing and co-operation between the two bodies. Significantly, this proved immediately beneficial to the NDC in the ongoing development of its online portal, e-library and Issues Management Manual. It was also a foundation stone for the successful ‘Milk in Action’ funding proposition which was awarded co-financing of over x1million in December 2009. The NDC will play the co-ordinating role in the programme for which a trans-national element was essential to secure EU support. Participation in the Global Dairy Platform, the European Dairy Marketing Forum, and the Utrecht Group were also important expressions of the NDC’s outward-looking approach and demonstrate the interconnectedness of dairy with so many aspects of modern life and health. Meanwhile, the NDC’s close working relationship with the Irish Osteoporosis Society (IOS) progressed through a number of significant promotional activities in 2009. Celebrity endorsement was provided by television presenter Craig Doyle, who lent his voice to a radio campaign stressing the value of dairy in combating osteoporosis and reminding listeners that the condition affects both men and women. The NDC’s annual Pancake Tuesday promotion with the Irish Osteoperosis Society was supported by Ryan Tubridy in L’Ecrivain with proprietors Derry and Sally Anne Clark, where the importance of dairy in the diet was stressed, alongside some useful tips for making pancakes. The NDC gained widespread media coverage and a number of radio interviews as a result. The NDC also established itself as a health and wellbeing partner with Macra na Feirme, the young farmer representative body. The development of a health and wellbeing micro-site on the Macra na Feirme website www.macra.ie is a tangible expression of this, allowing the NDC to offer advice to members on healthy eating, nutrition and wellbeing as well as information on NDC Health and Wellbeing events and recipes. The NDC also contributes to Macra Magazine and is formally associated with Macra sporting events. National Dairy Council Annual Review 2009 & 2010 Plan

Marketing and Promotion Programme The launch of a new trade mark provided a major opportunity for the NDC to establish provenance as a key value of our dairy industry in the decade ahead. In mid 2008, the ‘Pink Lady’ campaign successfully brought national profile to a resurgent NDC. In 2009, the same could be said for the launch of the ‘Farmed in the Republic of Ireland’ trade mark. What may be more interesting to reflect on in the latter case, however, is the significant advance this concerted multi-media marketing campaign represents, not just in terms of advancing the NDC’s own strategy, but in the marketing of our milk and dairy products generally.

Action } As with all activity in the NDC’s Marketing & Promotion Programme, a comprehensive and thorough pre-planning process underpinned the creation and execution of the ‘Farmed in the Republic of Ireland’ trade mark, with input from the NDC’s member dairies a pivotal element of this throughout the year. In Dairy: Food for Life, the NDC had set out the rationale for the development of an identifying logo linking all its member dairies. Since its launch, an increasingly competitive marketplace, as well as the economic pressures faced by 2,200 dairy farm families directly engaged in producing liquid milk in the Republic of Ireland, had created a compelling context for action in this regard. A development committee, with representatives from the NDC’s member co-ops, was established to consider the development of the trade mark. With the quality of milk now being reinforced in the minds of consumers through the NDC Quality Milk Awards, market research pinpointed the opportunity in identifying provenance. BMR consumer research undertaken in mid-2009 found that 87 per cent of people couldn’t state where their private National Dairy Council Annual Review 2009 & 2010 Plan

label/unbranded milk came from and 81 per cent favoured a mark that would clarify the origin of all milk sold at retail level. The ‘Farmed in the Republic of Ireland’ concept and the green rosette device evolved to capture the underlying sense of local pride and the link back to the farm. Testing among focus groups confirmed it presented a strong expression of origin and a solid message on which to build a campaign. The NDC also recognised that if a claim of provenance was to secure the long-term trust of consumers, it needed to be supported by a robust auditing programme, and one that could systemically validate the integrity of the claim. Overseen by the new NDC Trade Mark Monitoring Committee and with the support of independent auditors, a full traceability system has been put in place to ensure the trade mark only features on milk farmed and processed in the Republic of Ireland. The NDC recognises the collective support and goodwill of its co-op members in advancing this complex project in a short space of time.

(Above and right) Journalist and broadcaster, George Hook, and radio and television presenter, Mary Kennedy, record radio advertisements for the NDC ‘Farmed in the Republic of Ireland’ advertising campaign

Local Heroes } In developing a communications programme around the launch, the NDC further recognised that its messaging needed to ‘reach out’ rather than in anyway be seen to lecture its audience. With this in mind, the concept of positioning the dairy industry as national heroes, whose leadership in their field was recognised by other Irish heroes, was developed. The NDC was delighted to bring on board Paul O’Connell to play the role of the keynote hero, which he does to considerable effect in the TV advertisement and in all activities he has undertaken in association with the trade mark. This was the first promotional work undertaken by Paul outside of the sports arena and his commitment to the entire project has been remarkable. In parallel with the TV ad, which went live on the major channels in early November, the NDC also ran a radio campaign, featuring Paul O’Connell, along with Mary Kennedy, George Hook and Michael O’Muircheartaigh; a press campaign utilising Paul O’Connell and Mary Kennedy; and a comprehensive outdoor advertising programme. In total, the media campaign ran for six weeks in 2009 before being re-introduced in early January for a further three weeks. Impact } As of February 2010, the ‘Farmed in the Republic of Ireland’ trade mark is carried by 10 member dairies and has been implemented on over 340 retail milk and cream products. Data from consumer research undertaken in January indicate a very encouraging public response. Key findings are highlighted in the panel across. The opportunity to extend the trade mark to cover other dairy products is now under active consideration as a natural potential progression of the programme. There is also an opportunity to extend the trade mark into the foodservice sector, and the NDC is actively progressing plans to give the trade mark prominence in a variety of foodservice environments. Much of the NDC’s promotional activity, particularly in the last quarter of 2009, was associated with the launch of the

Trade response to the ‘Farmed in the Republic of Ireland’ trade mark • All dairies rated the advertising campaign for the NDC mark positively while 60 per cent of dairies provided concrete evidence to the NDC on specific customers/accounts that had benefited from support of the NDC mark.

• All dairies believe the NDC mark is a very worthwhile initiative that needs to be continued and supported by the NDC in 2010.

• All dairies confirmed that their retail customers are fully aware of the NDC mark, while 80 per cent of dairies have had retail customers specifically ask for the mark or have included it in their tender requirements.

• Despite the fact that the advertising campaign was focused at retail level, 70 per cent of dairies confirmed that customers in the catering/restaurant trade are now aware of the NDC mark.

• 40 per cent of dairies also confirmed that customers in the catering/restaurant trade had specifically asked for the NDC mark or have included it in their tender requirements.

• 90 per cent of dairies intend to incorporate the NDC mark within their consumer and corporate advertising and promotion in 2010. Note: Results based on questionnaire completed by NDC member dairies in January 2010

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Consumer response to the ‘Farmed in the Republic of Ireland’ trade mark • 49 per cent of consumers surveyed were spontaneously aware of the NDC mark advertising campaign.

• 68 per cent of consumers had seen the TV advertisement a few times or more while 72 per cent commented favourably on the ad.

• 80 per cent of consumers believe the advertising campaign informs people about the existence of the NDC mark.

• 82 per cent also believe the campaign asks people to look out for the NDC mark when buying milk.

• 79 per cent of consumers believe the campaign explains that the NDC mark means supporting our local dairy farmers and dairies in the Republic of Ireland.

• 55 per cent of consumers stated that milk with the NDC mark is now either the only milk they would consider or the milk they would look out for first.

• A further 35 per cent of consumers stated that milk with the NDC mark now is one of 2 or 3 milk brands they buy. Note: Consumer results compiled by BMR in January 2010

‘Farmed in the Republic of Ireland’ trade mark. Highlights include a promotion on RTÉ’s Mooney Programme that featured a 20-minute interview with the CEO; an eight-page supplement produced for the Country Living section of the Irish Farmers Journal as well as large number of radio and press interviews. In 2010, promotion of the trade mark will continue and the NDC will also progress plans to increase the visibility of cheese and butter at consumer level. Step Change } The initiation of the TNS Segmentation Project in 2008 represented an important step change in the NDC’s use of modern consumer research techniques to gain a better understanding of the modern dairy consumers. This work continued in 2009 and, in 2010, will be further developed, as information is made available to member dairies through the online portal with a view to enhancing and supporting their marketing capability. The NDC and its member co-ops celebrated the start of National Dairy Week on 16 November by ensuring over 40,000 children in 952 schools throughout the Republic of Ireland received their school milk free. National Dairy Week was also supported by a free online competition open to the public on the NDC website. Finally, participation at key national farming events such as the National Ploughing Championships, Tullamore Show and National Dairy Show has proved extremely successful for the NDC in the last number of years. Over 6,500 signatures were collected from visitors to the NDC stand at the National Ploughing Championships, in support of the ‘Farmed in the Republic of Ireland’ trade mark. The Minister for Agriculture, Fisheries and Food, Brendan Smith TD, other visiting politicians, leaders from farm organisations such as IFA, ICMSA and Macra na Feirme, and Kilkenny hurlers Michael Fennelly, John Tennyson and Martin Comerford, along with Tipperary hurlers Lar Corbett and Eoin Kelly, were amongst those to sign the ‘Wall of Support’ for the trade mark and local dairy farming at the stand. Participation, once again, served to strengthen the positioning of the NDC as an organisation in touch with farm families in Ireland and committed to their future.

‘Milk in Action’ – a new departure for the NDC

‘Milk in Action’ is a three-year promotional campaign that gets underway in April 2010. Designed to highlight the nutritional benefits and consumption of dairy to young people, from pre-teens to the 20-30s age bracket, ‘Milk in Action’ is a project led by the NDC and involving close co-operation with Dairy Councils in Northern Ireland, England and Wales. In December 2009, it was announced that ‘Milk in Action’ had been approved for EU co-funding of almost €730,000 for the Irish element of the project, representing 50 per cent of the cost. A prerequisite of this financing is that industry in the Republic of Ireland, through NDC’s co-op members, will fund an additional 30 per cent of the campaign costs with a final 20 per cent provided through the Department of Agriculture, Fisheries and Food. The programme will commence in April 2010 and key among its aims will be the linkage of dairy with sporting activity. The

National Dairy Council Annual Review 2009 & 2010 Plan

programme will also inform women of the nutritional benefits of milk and milk products, in particular cheese and yogurt, in the battle against osteoporosis. Elements of the campaign will include printed information guides to target 11-20 year olds; health seminars throughout the country targeting women aged 20-35 years; engagement with health and fitness specialists, regional workshops with a focus on sports and fitness, web content and online promotions. The NDC is excited about the opportunity the ‘Milk in Action’ campaign represents for our dairy industry to extend and renew its message to consumers in critical and targeted areas. Its activities will also complement the existing NDC programmes on a variety of fronts, including Marketing & Promotion, the School Milk & Dairy Programme and the NDC’s ongoing nutritional advice.

Jonathon Armfelt Ramstrom, age 6, Senior Infants; Chloe Day, age 8, 2nd Class, and Samual Ndukke, age 6, Senior Infants from Our Lady’s Clonskeagh Parish National School celebrate National Dairy Week with free school milk

School Milk and Dairy Programme The revitalised School Milk & Dairy Programme generated huge interest in its first nationwide launch and reached its targets in increasing the presence of fresh locally-produced milk in the country’s national schools. A complete revitalisation of the School Milk & Dairy Programme has been a key priority for the NDC since the launch of Dairy: Food for Life in 2008. In September 2009, a significant milestone was reached with the introduction of the Fresh Milk Club among national schools. Prior to the launch, the percentage of schools participating in the School Milk & Dairy Programme stood at 34.9 per cent for national schools and 12.5 per cent for secondary schools, a figure well down on the peak years of the 1980s. The NDC’s objectives for the next three years is two-fold: not only to see the number of schools who participate increase, but also to see the level of uptake within participating schools enhanced. The formal aim of the progamme in 2009 was to see national school participation rise by 12 per cent. With 14,807 students enrolled in the programme in the months September-December 2009 across the targeted 500 schools, as opposed to 9,967 in 2008, this goal has been more than achieved. In effect, an additional 4,840 pupils have joined the programme. More informally, the School Milk & Dairy Programme aims to create a vibrant context for the enjoyment of milk in school among students, making the logistical side as easy as possible for teachers to manage, and communicating to parents the excellent value proposition it represents.

Join the Club } The concept of the Fresh Milk Club was developed based on in-depth consultation of school children, parents and teachers in the early part of 2009. The Fresh Milk Club promotes the link between dairy and health, and the design concept evolved through the finding that children responded particularly strongly to the idea of milk as a natural product and to the logo of a smile made from milk. In fact, one of the early findings was that the original smile wasn’t big enough so the NDC went back to the designers to enhance it! The new Fresh Milk Club brand was signed off by the nine participating dairies in June. Seven of the nine were then in a position to incorporate the logo onto their packaging in time for the September introduction. The Fresh Milk Club was officially launched by the NDC in St Mary’s and St Gerard’s National School in Enniskerry, Co Wicklow, a school emblematic of what the NDC hopes to achieve with the programme. While it had dropped out of the School Milk & Dairy Programme for a number of years, it is now an active participant, with a significant number of children receiving fresh milk daily. To maximise the impact of the launch, the NDC recognised that timing was critical. A comprehensive school information pack

19 National Dairy Council Annual Review 2009 & 2010 Plan

Pictured at the launch of the new School Milk & Dairy Programme in partnership with the FAI are (left to right) Tara Regan, School Programme Manager, NDC; news broadcaster, Sharon Ní Bheoláin; Amanda Mullins, Bray Wanderers; and pupils from St. Mary’s and St. Gerard’s National School, Enniskerry, Co. Wicklow

was sent to each of Ireland’s 3,300 national schools in the first week in September, outlining the benefits of the programme. Logistical support is recognised as critical to ensure the participation of schools, as safe storage and easy distribution of milk to students are important day-to-day considerations. Since the September launch of the Fresh Milk Club, a total of 114 fridges were delivered to schools, a process that will continue in 2010. All the fridges are merchandised with Fresh Milk Club branding and monitored to ensure they are used only for this purpose. The provision of cooler bags has also been a major boost, a lowcost solution that allows the delivery agents to drop off the milk to schools early in the morning and ensure it stays chilled until the school day begins. Supporting Roles } The role of milk in an active, healthy lifestyle is also emphasised in the Fresh Milk Club. Thanks to the NDC’s ongoing association with the FAI, a total of 417 visits were made by trained FAI personnel, who provided free soccer coaching sessions and advice on the benefits of a healthy, balanced diet. FAI support allows the NDC to seamlessly promote the excitement of sport with a clearer understanding of how to achieve a healthy diet. FAI visits will continue in 2010, although at a lesser level. The FAI’s support was also invaluable in securing a great prize for World School Milk Day, when the NDC was able to give students from Cloghan’s Hill National School, Cloghan’s Hill, Co Mayo and Donoughmore National School, Old Cork Road, Co Limerick, a chance to enjoy the Republic of Ireland v Italy match in Croke Park on 10 October 2009. A supporting website, www.freshmilkclub.ie was also launched on September 1, highlighting the benefits of the School Milk and Dairy Programme to children and parents, and demonstrating how schools could participate. Loyalty incentives such as branded sports equipment have been developed and offer an attractive element to help build relationships with schools. Secondary Schools Programme } In 2009, the NDC also undertook much of the preparatory groundwork to take the School Milk & Dairy Programme to secondary schools in 2010. A significant opportunity exists here to

20 National Dairy Council Annual Review 2009 & 2010 Plan

expand the scheme as, currently, only 7.2 per cent of participants are secondary schools. Funding secured by the NDC from the EU, Government and co-operative partners to implement the ‘Milk in Action’ Programme will have particular relevance here and will provide an important resource in the successful relaunch of the programme among secondary schools in September 2010. As secondary schools are more likely to have canteen facilities, the opportunity to install milk dispensers will support the NDC in presenting a fresh image of school milk relevant to teenagers as well as being green and environmentally-friendly. For dairies there is an attractive opportunity to brand dispensers and beakers/cups. With the low level of secondary schools in Ireland currently participating in the School Milk Scheme, this provides significant potential for improvement. The NDC will engage in a nationwide campaign to raise awareness of the School Milk Scheme in secondary schools from September 2010. The campaign will encompass a number of elements, recognising the importance of teenagers as key decision-makers. Complementing existing NDC programmes, the FAI will run a National Futsal Blitz in 100 secondary schools, involving teenage boys and girls, leading to county, regional and national finals. In addition to this, the NDC will provide students with the opportunity to develop a PR and marketing campaign promoting milk to the teenage market. This initiative will not only raise awareness of dairy as a relevant and healthy drink without ‘talking down’ to teenagers, but it will also provide valuable learning outcomes central to the curriculum. Finalists in the competition will have the opportunity to present their campaign to an audience of advertising professionals, with a prestigious awards ceremony for the winning entry. Links to the secondary school curriculum will be considered by a range of dairy-nutrition lesson plans to be explored for the Social Personal and Health Education curriculum and distribution of an osteoporosis-awareness DVD, which was created for secondary school students by the Irish Osteoporosis Society. Momentum } While there will be considerable focus on secondary schools in 2010, the NDC will also aim to ensure momentum is sustained within the national school programme. New information packs will be distributed in September 2010, which will include the healthy-eating guidelines (food pyramid); English and Irish versions of a new school-milk poster; further development of the website; and further incentives in the school-milk loyalty programme. The year will also see consideration given to the introduction of low-fat fortified school milk on a phased basis to secondary schools as well as the introduction of other dairy products. This will be governed by recommendations from the new National Dietary Guidelines anticipated in 2010. Following a year of achievement, the NDC continues to be grateful for the support of the School Milk Industry Working Group. Its ongoing support will continue to underwrite the success of a programme that looks forward to another year of progress in 2010.

Ray Houghton, former Republic of Ireland international soccer player, pictured with twins Thomas and Sarah Parle, age 10, from Kilpedder and twins, Max and Grace Dufficy, age 10, from Enniskerry, from St. Mary’s and St. Gerard’s National School, Enniskerry, Co Wicklow

Dr Catherine Logan, Nutrition Manager, NDC, shares nutrition tips with 10-year-old Kerrie Patten and her 6-year-old sister Charlotte, from Clontarf, Dublin 3

Issues Management and Nutrition Programmes The NDC further enhanced its position as the recognised authority on dairy issues and nutrition over the course of 2009. Science-based research from around the world has built a compelling picture of the myriad role milk and dairy play in a balanced diet. In this context, it may seem that the nutritional values of milk and dairy can, to some extent, be taken for granted. However, a culture of misinformation has long surrounded the consumption of dairy products, making a determined and proactive Issues Management and Nutrition programme an essential foundation activity of the NDC. Credibility } Unsubstantiated and unjustifiable claims often gain credence in an informational vacuum and, conscious of this, the NDC is determined to become a conduit of up-to-date science-based information that is readily accessible to policy makers, healthcare professionals and other influencers in Ireland. Academic rigour and credibility are paramount for any organisation engaged in such communications. The NDC established the Scientific, Nutrition & Technical Committee (SNT) in 2009 to draw on the expertise of Irish health experts and industry in the areas of health and nutrition. The SNT will play a hugely valuable guidance role in the development of the Issues Management & Nutrition programmes in 2010 and beyond. A valuable international perspective on the nutrition issue is provided by the NDC’s membership of the Utrecht Group, where it is represented by Dr Catherine Logan. Members of international dairy organisations with a particular interest in nutrition meet once a year in the Dutch city to exchange information and discuss issues relating to dairy and nutrition over an extensive three-day programme.

Knowledge Hub } In 2009, the NDC’s commitment to the nutrition area was further expressed in DN Forum, a dairy nutrition resource published three times a year and targeted at health-care professionals in the Republic of Ireland. In its first year of publication in 2009, DN Forum achieved considerable penetration, reaching an audience of 3,500 GPs and over 700 dieticians and public-health nurses. This will continue in 2010 when the NDC’s credentials in this area will be further strengthened by a major health professional seminar to be hosted later in the year. More information on this can be found in the Advocacy & Communications section. The development of a comprehensive e-library further commits the NDC to becoming a nutritional knowledge hub. The health-professional area on the NDC website will continue to be promoted to health-care professionals across Ireland in 2010. The NDC is also building its knowledge capacity through strategic links with like-minded organisations. In 2009, the formal establishment of an alliance with the GB Dairy Council created an important platform for knowledge sharing that has already generated dividends in several areas, including issues management. Closer links with the agricultural advisory body Teagasc have also increased access to science-based research on dairy taking place in Ireland. The Chief Executive of the NDC was also invited to join Teagasc’s Milk Quality Forum as the consumer interface. Meanwhile, the NDC has laid the foundation for possible co-operation on promotional activity with other professional organisations in the future. Close association with the Irish Osteoporosis Society (IOS) has been highly significant and mutually beneficial to both organisations. Collaboration on a number of projects has resulted in key outputs National Dairy Council Annual Review 2009 & 2010 Plan

through the NDC’s Advocacy & Communications Programme and anticipated outcomes through the School Milk & Dairy Programme, as well as informing activities in the Nutrition Programme. In 2009, the NDC appointed a student from UCC’s Nutritional Sciences Department as part of the NDC’s newly developed sixmonth placement programme. With direct involvement in a number of projects, including progressing the health professional area of the NDC website, the communications programme, the NDC Health and Wellbeing Page, the placement proved highly successful and another student has been appointed for 2010. Issues Management } There is, unfortunately, no need to look far for an example of how one, seemingly localised, incident in the food industry can have huge repercussions for a sector as a whole. The recall of Irish pigmeat from supermarket shelves around the world in December 2008 underlined just how vulnerable food and drink suppliers are to food scares. It is now clear that the long-term consequences of the recall to the Irish food and drink industry have not been irreversible. However, the short-term implications were enormous, with the damage to sales and reputations exacting an inevitable cost on businesses, employment and the farming community. It is worth reiterating, too, that while the dairy industry was in no way connected with the events that led to the recall, both media and consumer concerns in the aftermath were broad ranging, and the NDC was required to provide reassurance on this matter, as well as providing extra clarifications in response to individual media and consumer enquiries. No representative organisation can afford to ignore the lessons of this experience. With the NDC’s launch of the ‘Farmed in the Republic of Ireland’ trademark, the issues-mapping process also came to the fore in the NDC’s own activities. During the planning and roll-out period, a robust and comprehensive audit structure was developed as an essential part of the issues management ‘architecture’ of the trade mark.

Manual } The NDC’s Issues Management programme was established as a priority in the Dairy: Food for Life strategy in April 2008 and the development of an Issues Management Manual has been the chief priority of our expert Issues Management Committee (IMC) since then. This is, by its nature, a complex and extensive project and, in 2009, progressed with the categorisation of potential issues under four headings: 1) farming and production methods; 2) processing; 3) marketing and consumers; and 4) nutrition and health.

National Dairy Council Annual Review 2009 & 2010 Plan

The IMC identified key issues in the area of nutrition and health for which relevant position statements needed to be researched and prepared. Work commenced on these position statements as well as preparatory positions for three issues related to farming and production methods in 2009. In 2010, a full review and update of this work will be undertaken, at which point these outputs will be made available to members through the online portal. Dealing with Issues } The NDC dealt with a wide range of issues during 2009. While no formal research has been undertaken, the NDC is confident that there has been a significant reduction in spurious and unfounded ‘anti-dairy’ commentary in the mainstream media over the last two years, a conclusion that must reflect positively on the success of its communications and issues management programmes. There is, however, little room for complacency. At present, the European Commission is in the process of adopting a Community list of permitted health and nutrition claims, a development that involves close consultation with the European Food Safety Authority (EFSA). The NDC worked closely with the Food Safety Authority of Ireland throughout 2009 to ensure the most effective response to any EFSA queries that were relevant to dairy. While these can seem like somewhat rarefied considerations for an industry confronting the everyday realities of a recessionary marketplace, they are of critical importance to the long-term direction of the industry. Of concern on the domestic front are issues such as the forthcoming dietary guidelines and the implications of the new broadcasting legislation. The NDC is committed to ensuring that understandable concern about childhood obesity and the level of saturated fats in some foods does not translate in, for example, cheese being classified as a ‘junk’ food and lack of recognition for its nutrient content overall. Progress } Looking forward to 2010, the NDC is committed to the further development of its resources to become a ‘top-of-mind’ resource in dairy nutrition and health research information. The SNT Committee and the GB Alliance as well as the e-library and DN Forum will each play significant and interconnecting roles as the NDC sources and disseminates dairy-research information. As work on the Issues Management Manual progresses, completed elements will become available to NDC members through the online portal, a key resource highlighting the NDC’s overall commitment to responding to and pre-empting issues that impact on the dairy industry.

Pictured at the NDC Annual Conference & 45th Members’ AGM (left to right) NDC Chairman, Dominic Cronin; Kevin Bellamy, Executive Director, Global Dairy Platform; Prof. Moira O’Brien, President, Irish Osteoporosis Society; George Hook, journalist and broadcaster; Alan Purcell, Head of Marketing, Nielsen Ireland; and Prof. Damien McLoughlin, Smurfit Graduate Business School, UCD

Accountability and Corporate Governance Programme The NDC is committed to the very highest standards of accountability and corporate governance in its managerial, strategic and financial activities. As an advocacy organisation funded directly by dairy farmers, it is conscious that accountability is not simply an issue of internal operations; it must also include a sense of delivering real value for money to our supporters and stakeholders. Investment } The evidence from previous recessions, across different markets and many different categories, is compelling as to the long-term value of an active promotional and communications programme at a critical time of uncertainty. Consumers recognise those who are committed to service delivery at this time, and those who invest find themselves furthest ahead when recovery comes. Value for money is also about maximising resources through sharing objectives. ‘Milk in Action’, the new three-year campaign to promote the nutritional benefits and consumption of dairy, which will be co-ordinated by the NDC, will be co-financed by the Department of Agriculture, Fisheries and Food. Effectively, for every three euros the NDC spends on the programme, the Irish Government and the EU will spend an additional seven. The competitive pressures facing our milk and dairy industry, as well as the range of policy issues the sector must confront, underwrite the need for concerted and effective responses. Value for money must ultimately be decided on results and, throughout 2009, the NDC has shown its commitment to being in the vanguard of this and to doing so as a modern, efficient and bestin-class organisation. Feedback } The publishing of the NDC’s first Annual Review 2008 and 2009 Plan, in January 2009, was an important communications undertaking and was well received by NDC stakeholders. This was followed by the 2009 Annual Report, including the financial

statements, in June 2009, which coincided with the NDC Dairy: Food for Life Conference and 45th Members’ AGM in Dublin’s Clarion Hotel on 23 June 2009. The Conference, officially opened by broadcaster and journalist George Hook, saw the Chief Executive describe 2008 as a year of ‘restructuring and renewal’ and assessing the pressures faced by the Irish dairy sector as not only economic but including issues such as environmental sustainability, changing lifestyle and shopping trends, and misunderstandings about milk and dairy among Irish consumers. These challenges underline the need for a strong, science-based, authoritative and positive voice for the industry, a role the NDC is determined to continue to play.

Joe Podesta and Lynda Thompson from the NDC share a school milk break, with Aidan Redmond and Alanna O’Connor from Our Lady’s Clonskeagh Parish National School, Dublin

National Dairy Council Annual Review 2009 & 2010 Plan

Minister for Agriculture, Fisheries and Food, Brendan Smith TD, pictured with Helen Brophy, signing the NDC ‘Farmed in the Republic of Ireland’ Wall of Support at the National Ploughing Championships in Athy, September 2009

Dominic Cronin, Chairman NDC and his daughter, Sorcha, sign the Wall of Support at the NDC stand, National Ploughing Championships, September 2009

The Conference also included presentations from Kevin Bellamy, Executive Director, Global Dairy Platform, on world consumer issues regarding dairy; Alan Purcell, Head of Marketing with Nielsen Ireland, on changing shopper trends in Ireland; and Prof. Moira O’Brien, President of the Irish Osteoporosis Society, on promoting the benefits to dairy to the medical community; and finally, Packie Bonner, FAI Technical Director, on the link between sports performance and diet.

Return on Investment } In the coming year, feedback from market research into the NDC’s major undertaking such as the ‘Farmed in the Republic of Ireland’ trade mark and the ongoing School Milk & Dairy Programme will be disseminated to NDC members, as the organisation seeks to give the clearest possible sense of the return on investment to the dairy industry that these initiatives represent. In terms of its management structure, 2010 will also see a review and revision of the Memorandum and Articles of Association for the NDC, in line with best practice in this area. The NDC will National Dairy Council Annual Review 2009 & 2010 Plan

also implement a comprehensive HR policy in accordance with the advice and support of IBEC. The NDC is, in terms of personnel, a small organisation, with a staff of just four alongside the Chief Executive. Throughout 2009, it has demonstrated the ability to register a footprint of a far larger organisation. Undoubtedly, credit for this must go to the resourcefulness and flexibility of its staff members and the exceptional support of our Board and expert committees, our co-op members, strategic partners and peer organisations internationally. It is through their support that the NDC can demonstrate such impact on the national and international stage. The funding secured in late 2009 for the ‘Milk in Action’ Programme – from our co-op members, the Department of Agriculture, Fisheries and Food, and the EU – is perhaps the clearest expression yet that the NDC is now widely recognised as an organisation of purpose and capability. Through the implementation of this, and the many other activities the NDC will undertake in 2010, delivering value for money through excellence will be an over-riding priority.

National Dairy Council Annual Review 2009 & 2010 Plan

1. Continue to promote the Fresh Milk Club with information packs to be updated and sent to all primary schools in early September 2010. 2. Continue the FAI school liaison programme to national schools on a request basis as part of the Fresh Milk Club. 3. Further develop the Fresh Milk Club website to offer the opportunity to increase visits to the site by school-going children at primary level. 4. Continue to provide fridges and cooler bags, as this is imperative to ensure product integrity and support from national schools for the programme. 5. Undertake a range of initiatives to increase the awareness and visibility of the Fresh Milk Club including competitions and the celebration of World School Milk Day in September. 6. Initiate the development of School Milk at secondary level in 2010 through developing an information pack to be distributed to 750 schools in September 2010. 7. The NDC will continue the School Milk Industry Working Group with a number of meetings planned for 2010 to ensure industry collaboration on achieving the above, particularly in relation to the installation of dispensers in selected secondary schools. 8. Establish a new secondary schools competition to promote the nutrition and health benefits of milk for teenagers.

School Milk & Dairy Programme

1. Initiate Quality Milk Awards 2010 in spring to allow for generating increased interest at industry level and continue to develop consumer recognition of the Awards through a proactive PR programme. 2. Continue to expand presence within healthcare channels for consumers and introduce a new booklet ‘Dairy: Part of a Balanced Lifestyle’. 3. Further develop the NDC links with health-care professionals in developing three new editions of the DN Forum newsletter, expand the online health professional members’ area on the website and organise a health professional seminar. 4. Continue to expand the NDC Health & Wellbeing Programme in generating media coverage on specific aspects of dairy nutrition and health, and organise a new series of Health & Wellbeing Evenings in association with member co-ops. 5. Further develop the NDC Dairy Den Programme for mothers by the addition of information on weaning and pre-school nutrition in booklet format and continued development of the website. 6. Maintain and strengthen international links through participating in key fora – i.e., Global Dairy Platform, European Dairy Marketing Forum, Utrecht Group – in addition to developing partnerships where appropriate.

Advocacy & Communications Programme

1. Complete the three-month launch campaign for the NDC trade-mark and associated communication elements. 2. Evaluate the impact of the trademark to date at consumer and trade levels through a formal evaluation process. 3. Consider further extension of the trade mark at two levels: 1) product extension – extension of the mark to cheese, butter, yogurt; 2) channel extension – extension of the mark to the foodservice sector and to appropriate food companies utilising milk as a major ingredient. 4. Develop a plan for increasing the visibility and marketing of cheese and butter at consumer level in conjunction with industry. 5. Continue to develop the market research capability of the NDC and launch an online portal for access to information by members. 6. Participate at key farming events including the National Ploughing Championships, Tullamore Show and the National Dairy Show.

Marketing & Promotion Programme

Dairy: Food for Life 2010 Priorities

1. The proposed ‘Milk in Action’ Programme was approved for EU and Department of Agriculture co-financing under EU Regulation No. 698/2009. The 2010 Programme will now take account of the necessary planning and development work for year one of this programme.

‘Milk in Action’ Programme

1. Prepare and publish the Annual Review 2009 and 2010 Plan in February. 2. Prepare and publish the 2009 Annual Report including the financial statements in June. 3. Organise the NDC Conference & AGM in June to coincide with the publication of the Annual Report. 4. Review and revise, as appropriate, the Memorandum & Articles of Association for the NDC in line with recommendations. 5. Complete the HR policy in accordance with the advice and support of IBEC.

Accountability & Corporate Governance Programme

1. Ensure information developed for the Issues Management Manual becomes readily available to the members of the NDC through the online portal developed in 2009. 2. Compile, format and continually update the top twenty issues for the website and communicate availability of this information to industry. 3. Ensure the NDC is kept up-to-date and aware of current and pending issues affecting the sector and is in a position to respond or pre-empt issues effectively.

Issues Management Programme

1. Further develop the NDC’s e-library to act as a searchable database on the health professional member’s area of the website and to ensure that this database is continually updated with new dairy nutrition and health research. 2. Expand and further develop the GB Alliance to act as an aid to sourcing up-to-date and relevant dairy research information. 3. Continue the SNT Committee and oversee the dissemination of all information material for the health professional sector. 4. Recruit a student on a six-month nutrition work placement programme in conjunction with University College Cork (UCC). 5. Provide support and information to the advocacy, marketing and schools programmes based on informed scientific evidence.

Nutrition Programme

Summary of 2010 NDC Plan Programme Priorities

NDC Board December 2009

Dominic Cronin Chairman (ICMSA)

National Dairy Council Annual Review 2009 & 2010 Plan

Henry Corbally Vice-Chairman (Glanbia)

Eamonn Bray Jackie Cahill Tom Corcoran Sean Griffin Patrick Kelly Richard Kennedy Kevin Kiersey Sean McAuliffe Mary Purcell Gerald Quain Conor Ryan Frank Tobin (National Milk (ICMSA) (ICOS) (Barryroe Co-op) (Donegal (IFA) (IFA) (North Cork (Centenary (Kerry Group) (Arrabawn Co-op) (Glanbia) Agency) Creameries) Co-op) Thurles Co-op)

National Dairy Council Annual Review 2009 & 2010 Plan

Eamonn Bray

Philip Carroll

(Replaced by Tom Corkery in October 2009, Department of Agriculture, Fisheries & Food)

Eamonn Bray

James Burke

Frank Tobin

(MD, James Burke & Associates)

Patrick Kelly

George Kearns

(Secretary, National Dairies Association)

Noel Mooney

(Head of League, Marketing and Promotion, FAI)

Dominic Cronin Chairman

December 2009

School Milk & Dairy Programme

NDC Board Sub-Committee

Gerald Quain

(replaced by John Hehir in March 2009)

Dominic Cronin Chairman

December 2009

Marketing & Communications

NDC Board Sub-Committee

Mary Purcell

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

Prof. Damien McLoughlin

Gerald Quain

(replaced by JohnHehir in March 2009)

Frank Tobin

Conor Ryan

Jackie Cahill

Dominic Cronin

Dr. Pat Dillon

(Head of Centre, Teagasc, Moorepark Dairy Prod. Research Centre)

NDC Board Sub-Committee December 2009

Henry Corbally Chairman

Sean McAuliffe

Accountability & Corporate Governance

Tom Corcoran

NDC Board Sub-Committee December 2009

Henry Corbally Chairman

Sean Griffin

Kevin Kiersey

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 Annual Review 2009 & 2010 Plan

Issues Management & Nutrition

Ciaran Fitzgerald (MD, Ciaran Fitzgerald Consulting)

National Dairy Council Staff Organisational Chart December 2009

Helen Brophy

Lynda Thompson

Dr Catherine Logan

Tara Regan

Joe Podesta

29 National Dairy Council Annual Review 2009 & 2010 Plan

National Dairy Council Function Organisational Chart December 2009

Chief Executive

PA/Admin

Issues Management & Nutrition

30 National Dairy Council Annual Review 2009 & 2010 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 www.ndc.ie