ALL IS quiet on the Kerrygoldstrasse. Running through green fields, the lonely road leads to a boxy, grey factory in the middle of nowhere. Nobody goes in and nobody comes out. At the entrance two life-size, fibreglass cows stand guard.
Welcome to the German headquarters of the Irish Dairy Board (IDB), the company behind Kerrygold, for decades Germany’s favourite branded butter.
With a 14 per cent share by turnover – 11 per cent by volume – the world famous Irish export is more than twice as popular as its nearest rival in Germany.
Now, after years as the lone ambassador for Irish food on the German market, a growing number of other food companies are aiming to tap into this massive export market – worth nearly half a billion euro to Irish food companies.
Exports to German market sprang into life in 2011, climbing by a fifth year-on-year. There is little doubt that a key to the success of the Harvest 2020 programme to boost Ireland’s €24 billion agri-food and fisheries industry will depend on how well it can sell to Germany.
But there’s a lot to learn before Irish companies can follow Kerrygold down its yellow brick road to commercial glory. Lesson one: there’s no such thing as overnight success.
Next year Kerrygold butter marks its 40th anniversary on the German market, which was launched in parallel to its introduction in Ireland. Five years ago it moved to this new greenfield site near the western city of Duisburg, where it employs 100 people and packages about 38,000 tonnes of Irish butter for most of central Europe.
On the factory floor, eight people per shift keep an eye on the huge steel machines that work day and night, tearing apart and repacking the frozen butter blocks that arrive from Ireland. Blue conveyor belts transport the butter products to pallets in the next hall which are shrink- wrapped and ready for transport to stores as far as Poland, Austria and the Czech Republic.
But Germany is the company’s biggest success, an achievement that is hard to overstate. Premium brands always have a battle to survive here, the land of Lidl, where deep discounters have tapped into Germans’ cultural preference to spend their money on cars and holidays rather than on food.
And so Kerrygold’s first four decades in Germany have been about finding new ways to answer the same fundamental question: if a German can buy domestic butter for less than a euro, why should they spend €1.69 on an Irish product? “Millions buy us even though we were always the most expensive,” said Manuel Rodriguez, marketing and innovation manager at IDB Germany. “But they wouldn’t do that if the consistent quality wasn’t there.”
To keep consumers convinced of this unique quality, Kerrygold has pumped millions into what it calls “stringent brand management” – advertising campaigns that are as much about Ireland as its butter. After years of bombardment, most Germans now know that happy Kerrygold cows graze on green Irish grass to produce “meadow milk”, which is turned into a distinctively yellow, easy-to-spread butter.
The Ireland of German Kerrygold ads is an untouched and pure place – no one-off housing here – an island alone in the wild sea, populated by friendly, grounded people who treat their animals well.
This approach doesn’t just shift 38,000 tonnes of butter annually; it has created positive connotations of Ireland that are all but impervious to negative noise, such as the financial crisis or the corporate tax row.
“We have largely influenced the German view of Ireland,” said Patricia Kief, marketing manager of IDB Germany. “Even though many people here have never been in Ireland, they have seen a Kerrygold advertising spot and that is their image of Ireland.”
Four decades of consistent Kerrygold marketing means food firms which exploit their Irish roots will find a receptive market for their products in Germany. Last year every Irish food sector posted a rise in exports to Germany; the most impressive rise was a doubling of beef exports to an estimated €70 million in 2011.
Market share in Germany for Irish beef collapsed after the BSE scare, and Irish imports were replaced largely by Argentinian beef. Now the tables have turned again: Argentinian government quotas on beef exports have pushed up prices and generated uncertainty among German buyers. Sensing an opportunity, Irish companies have stepped in and snatched back customers. Irish beef is now listed in four of Germany’s top-five supermarket chains.
Building on that success – and borrowing heavily from Kerrygold’s visual cues – a new print campaign for Irish beef will roll out this month, presenting a red-haired Irish beef farmer as rugged as the misty landscape behind him – with not a cow in sight.Planned as much as enlightenment as pure consumption campaign, the target of the ads is Germany’s 12 million so-called Lohas – people who prioritise a “lifestyle of health and sustainability”. More affluent than the average German, they buy organic products but, increasingly, are interested in sustainable production in the traditional food sectors.
“There is a category between organic food and quick buys at Aldi,” said Jan Limbach, managing partner of Die Botschaft, the agency behind advertisements. “And research shows that Ireland is viewed as very credible in this Loha category.”
Bord Bia also sees this potential. “People are hungry for authentic products, they’re always looking for something new, for a story,” said Liam MacHale, German marketing manager for Bord Bia. Irish food producers may be able to trade as much on the island’s green image as their actual products but German consumers are prone to mass hysteria over food scares and run a mile from a product they believe to be tainted. Anyone who pays lip service to a green Irish image without taking it seriously could see their German market collapse overnight.
Despite the challenges, there is growing recognition among Irish food producers that the German market is the big prize in Europe. In February, Bord Bia and six Irish firms had a stand at Fruit Logistica, the world’s largest fruit and vegetable trade fair in Berlin, pushing Irish products.
Shane McEntee, Minister for State at Agriculture, attended Fruit Logistica and headed on to Nuremberg and Bio Fac, the world’s largest organic food fair. Some 15 food companies participated here, with a focus Irish organic seafood.
Back in Berlin, another marketing push was launched by Irish Ambassador Dan Mulhall: a month-long “embassy brunch” of Irish food at the city centre Maritim hotel. “If German people think at all about Irish food, it usually begins and ends with Irish stew,” said restaurant manager Matthias Böhme. “But the guests have been surprised by the quality and range of the meat and fish. You really have to advertise to let people here know about the quality.”
On a recent Sunday afternoon, a curious crowd turned up to sample the all-Irish menu: Galway oysters, seafood chowder, juicy lamb in a herb crust as well as Bailey’s cheesecake and Irish coffee cream mousse. Around the tables, decorated with Irish flags and Tourism Ireland magazines, sat scores of satisfied customers.
“We don’t get a lot of seafood and this is really good,” said Prof Hans Lechner, one of the diners, after his meal. “For quality, German people are prepared to pay.”
This is the key to cracking the German wholesale and retail food market: give them quality and, in return, you get near-unshakeable loyalty.
Back at the Kerrygold factory, John Murray, IDB Germany’s chief financial officer for Europe, has three pieces of advice for Irish companies anxious to crack the German market: do careful market research; target the premium end of the market; and make no cultural assumptions. Kerrygold would have flopped here, he says, had they tried selling Germans a salty butter favoured by Irish palettes.
Instead, it listened to local experts and pitched its product in the right place at the right time.