An Explorative study into growth

strategies used for developing a large-

scale niche dairy Industry in Ireland.
Brendan Crosse
DIVISION OF PACKAGING LOGISTICS | DEPARTMENT OF DESIGN SCIENCES
FACULTY OF ENGINEERING LTH | LUND UNIVERSITY
2017

MASTER THESIS
This Master’s thesis has been done within the Erasmus
Mundus Master Course FIPDes, Food Innovation and Product
Design.

FIPDes has been funded with support from the European

Commission. This publication reflects the views only of the
author, and the Commission cannot he held responsible for any
use which may be made of the information contained therein.

2
 MSc Thesis
An Explorative study into growth strategies
used for developing a large-scale niche dairy
Industry in Ireland.

Brendan Crosse

2017

3
An Explorative study into growth strategies used for developing a large-
scale niche dairy Industry in Ireland
Copyright © 2017 Brendan Crosse

Published by Department of Design Sciences Faculty of Engineering LTH, Lund

University P.O. Box 118, SE-221 00 Lund, Sweden

Subject: Food Packaging Design (MTTM01)

Division: Packaging Logistics
Supervisor: Mä rit Beckeman, Karla Marie Batingan Paredes
Examiner: Malin Olander Roese 

This Master’s Thesis has been done within the Erasmus Mundus Master Course
FIPDes, Food Innovation and Product Design
www.fipdes.eu

ISBN 978-91-7753-357-3

Abstract

4
The Irish dairy industry has seen significant growth in recent times. It is also seen
as one of key drivers in the Irish government’s plans to grow food and drink
exports. However, there is an environmental cost to this. The niche dairy industry
has been stagnant for years. This project looks at the potential for the niche dairy
industry to grow and resulting in higher economic impact but lower environmental
impact compared to the conventional dairy industry. Niche milk in Ireland refers to
organic cow, sheep and goat milk.

In order to grow the industry, an extensive document analysis was conducted to

identify the growth strategies used by successful niche dairy companies around
the world from countries such as the Netherlands, U.A.E. and New Zealand.
Interviews were conducted with stakeholders in both the conventional and niche
dairy industries in Ireland in order to understand their mind-sets on the potential
growth of the niche dairy industry. Market research was conducted in order to
assess the value of these products and if there is specific trends these products
would align with and finally the core competencies of the niche dairy industry
were assessed in order to assess if the industry would have a competitive
advantage over competitors in the world markets.

The key outcomes of the research were that market development and
diversification were the most common internal growth strategies. External growth
strategies have the potential to provide synergies to niche diary industry that
allow them to compete with conventional dairy due to benefits such as economies
of scale. The Irish niche dairy industry would enjoy a sustained competitive
advantage and there exists the expertise in Ireland to capitalise on the opportunity.

Future research needs to be completed on the environmental impact of these niche

dairy operations have in an Irish setting. There should also be increased lobbying
to the government to offer supports to new entrants into these sectors.

Key words: Organic milk, sheep milk, goat milk, Irish dairy, core competencies,
growth strategies, SWOT analysis, VRIO analysis, collaboration, Packaging and
Product selection.

Acknowledgements

5
This project concludes my FIPDes Masters experience. It has been a once in a
lifetime experience. There are so many people that made this possible. I have met
and worked with so many great people in this course.

I would like to start by mentioning my classmates. There are 23 people in my class

from 15 different nationalities. Such diversity has led to a completely unique class
dynamic. I would like to thank all of them for their friendship over the two years. A
special mention has to go out for my Lund classmates; Wally, Elena, Divya, Syahir,
Julia and Yoga. They were such a support to me in my final year of FIPDes. I will
not forget our time together.

FIPDes is a great course. The staff made it even more special. I want to thank them
for the effort they put into FIPDes. The course is still in its infancy, but I’m sure in
time it will become widely recognised as a top MSc program. This will be in no
doubt, due to the hard work of the FIPDes staff. A special mention to Daniel and
Erik in Lund University, Lund was my favourite semester I have had in my
academic life. It was an absolute pleasure to spend time in IKDC. I also want to
thank Daniel, who interviewed me for during my application for FIPDes. Thank you
for the faith you have shown in me. I hope that you are happy with how I have
progressed. I literally, don’t think I would be in FIPDes without your intervention.

During my thesis, I set of on, at times, a solo run. There were times when I didn’t
know the direction my thesis was going and I want to take this time to thank my
supervisors, Marit and Karla. You both have shown great patience and mentorship
to me throughout this project. At times, I have not made your jobs easy. Thank you
for sticking with me and seeing this through.

Finally, I am forever grateful to my family, especially my Mam and Dad. There is no

way I can repay or describe fully the love and support you have given me over the
years. You have always been there, digging me out of holes, providing guidance,
and sometimes even a stern word when required. Although, I am finished this
course and moving into a new stage in life, I am happy to know that I can still count
on your support.

Brendan Crosse
Lund, Sweden
June 2017

Executive Summary

6
Introduction

The Irish dairy industry has seen significant growth in recent times. It is also seen
as one of key drivers in the Irish government’s plans to grow food and drink
exports. However, there is an environmental cost to this. The niche dairy industry
has been stagnant for years. This project looks at the potential for the niche dairy
industry to grow and resulting in higher economic impact but lower environmental
impact compared to the conventional dairy industry. Niche milk in Ireland refers to
organic cow, sheep and goat milk.

Purpose & Goal

Research question: How can the Irish niche dairy industry be developed and
grown? 
What core competencies are necessary for its long term success? 
What learnings can we get from successful niche dairy companies around the
world?

7
Methodology

Data collection method Summary

Theoretical Help the researcher and reader develop
Framework their own knowledge and understand the
fundamentals behind this paper from
theories surrounding different growth
strategies to business analysis techniques.
Literature Review Familiarisation with previous work done in
the area, gather data on nutritional,
environmental information to niche milk
production and information surrounding
the topic of product and packaging
selection.
Document Analysis Gathering relevant information on the
companies studied in this thesis in order to
decipher the different business strategies
used and the level of collaboration seen in
their business.
Market Research Analysis of consumer trends and needs in
order to understand if there is a need for
these niche products in the market. Identify
potential markets and products for the
industry to develop.
Interviews Conducted in person, over the phone and
via email in order to obtain insights from
relevant stakeholders and experts in the
industry.

Results & Discussion

In the body of the report, the results are presented sequentially. To avoid repetition,
in this summary, results are presented according to main outcome, based on the
synthesis of results in the report.

Summary table of the document analysis are shown below. There are a number of
different companies analysed during the research. This provided a broad view on
how niche dairy companies achieved their growth.

8
Market penetration does not play a large role in the niche dairy industry as it
would lead to profit margin reduction. It is much more favourable to diversify the
product offering or develop new markets for the products.

There a number of different external growth strategies used in the niche dairy
industry. Due to main benefits such as shared risk, increased flexibility and market
reach, access to new resources such as staff, technology and finance. Working with
external growth strategies in a lot of cases, provides the framework that makes the
niche dairy industry viable and a realistic alternative to conventional dairy.

External Growth Internal Growth

Company
Strategy Strategy
Dairy Goat Co-Op Merger Market Development
Market Penetration/
Spring Sheep Milk Co. Joint Venture
Market Development
Goat Milk Powder B.V. Joint Venture N/A
Advanced Food Concepts Joint Venture N/A
Epicom Strategic Alliance N/A
Little Milk Company Strategic Alliance Market Development
Blue River Acquisition Diversification
Alimenta S.R.L. Acquisition Diversification
Emmi Group Acquisition N/A

The SWOT and VRIO analysis proved that a large scale, niche dairy industry in
Ireland has the capabilities to enjoy a sustained competitive advantage over its
international counterparts. This was mainly due to the low-cost pasture
agricultural practices in Ireland, the rarity and difficulty to imitate the products
and the skills and expertise in Ireland are world class in the dairy industry.

There are numerous consumer trends and needs to which the niche milk products
could align with this enhances their value and improves the chances of consumer
acceptability. The main trends and needs spotted were” sportification”,
trustworthiness of brands, on-the-go packaging and dairy intolerances.

The interviews highlighted that there is an appetite for a large niche dairy industry
at all levels of the value chain. The main hurdles will be seen at the secondary
processing level where a significant investment needs to occur so that the proper
products can be developed that cater for export markets and meet customer
requirements.

9
Conclusion & Future research

It is undeniable in the researcher’s opinion that Ireland is missing out from a

purely economic perspective the potential to grow a significant niche dairy
industry. It would provide another viable farming enterprise for small landowners
throughout the country who are struggling with the lack of profitability of other
farming enterprises such as beef and sheep meat farming.

Collaboration plays a huge role in many ways of life but especially in the niche
dairy industry as it allows the actors to benefit from the economies of scale that
most of the conventional dairy companies profit from

The research conducted on the various growth strategies deployed by various

companies in the industry provided a value insight into how the Irish niche
industry could grow. Especially, the New Zealand companies who are operating in
a similar environment.

The environmental sustainability of the niche dairy industry was not as good as
previously thought. The impact may be negated in the future once the farming
systems are optimised to Ireland’s farming landscapes.

Any interested parties should lobby for government support for this project; there
is significant industry ready for Ireland to enter. The government support should
allow the early adopters to fast-track their way to creating a viable, sustainable
business.

A niche dairy association needs to be developed for each of the Goat, Sheep and
Organic cows in Ireland and these associations could collaboratively work
together.

Further research needs to be completed with regards to the uniqueness of

specifically Irish produced niche milks and the consumer benefits that go with
these products and on the environment sustainability of these niche industries in
an Irish agricultural setting and how to improve their rating by optimising farming
and feeding practices.

10
 Table of Contents
List of acronyms and abbreviations....................................- 12 -
1. Introduction.......................................................................- 12 -
1.1 Background............................................................................................................. - 12 -
1.2 Problem discussed................................................................................................ - 14 -
1.3 Purpose of the research....................................................................................... - 15 -
1.3.1 Research Question...............................................................................................................- 15 -
1.3.2 Purpose....................................................................................................................................- 15 -

1.4 Disposition.............................................................................................................. - 16 -
1.5 Limitations.............................................................................................................. - 17 -

2. Theoretical framework.....................................................- 18 -
2.1. Collaboration and Growth Strategies.............................................................- 18 -
2.1.1 Collaboration.........................................................................................................................- 18 -
2.1.2 Growth Strategies................................................................................................................- 19 -
Internal Growth Strategies - The Ansoff Matrix...................................................................- 20 -
External Growth Strategies.........................................................................................................- 21 -

2.2 Core Competencies................................................................................................ - 22 -

2.2.1 Swot Analysis.........................................................................................................................- 23 -
2.2.2 VRIO Analysis........................................................................................................................- 25 -
2.2.3 The use of two business analysis techniques.............................................................- 26 -

2.3 Literature Review.................................................................................................. - 27 -

2.3.1 Physico-chemical and Nutritional analysis.................................................................- 27 -
2.3.2 Environmental impact........................................................................................................- 29 -
2.3.3 Product selection.................................................................................................................- 30 -

3. Methodology......................................................................- 31 -
3.1 General Approach.................................................................................................. - 31 -
3.1.1 Research plan........................................................................................................................- 32 -

3.2 Data Collection....................................................................................................... - 33 -

11
3.2.1 Document analysis..............................................................................................................- 33 -
3.2.2 Market research...................................................................................................................- 34 -
3.2.3 Interviews...............................................................................................................................- 35 -

3.3 Data Analysis & Validating Procedure............................................................- 35 -

4. Results & Discussions.......................................................- 37 -

4.1 Market Research.................................................................................................... - 38 -
4.1.1 Trends......................................................................................................................................- 38 -
4.1.2 Consumer needs...................................................................................................................- 39 -
4.1.3 Product selection & Packaging selection.....................................................................- 40 -
4.1.4 Market development and selection...............................................................................- 41 -

4.2 Collaboration and Growth Strategies.............................................................- 42 -

4.2.1 The role of Collaboration in the niche dairy industry............................................- 42 -
4.2.2 Internal Growth Strategies...............................................................................................- 46 -
4.2.3 External Growth strategies...............................................................................................- 48 -

4.5 Applicability to Ireland........................................................................................ - 50 -

4.6 Core competencies of the niche Irish dairy industry..................................- 51 -
4.6.1 SWOT analysis of the Irish niche dairy industry.......................................................- 51 -
4.6.2 VRIO analysis.........................................................................................................................- 54 -

4.7 Is this transition feasible?................................................................................... - 56 -

4.7.1 Actors involved in Primary Production.......................................................................- 56 -
4.7.2 Actors involved in Secondary processing....................................................................- 58 -
4.7.3 Actors involved in Packaging and Distribution.........................................................- 60 -
4.7.4 Actors involved in the Marketing and Sales of niche Irish dairy products......- 62 -

5. Conclusion & Recommendations for future work.........- 64 -

5.1 Conclusion............................................................................................................... - 64 -
5.2 Recommendations................................................................................................ - 67 -

Bibliography..........................................................................- 67 -
Appendices.............................................................................- 77 -
Appendix 1: Trends in the food industry...............................................................................- 77 -
Appendix 2: Internal Growth strategies – summary..........................................................- 79 -
Appendix 3: External growth strategies – summary..........................................................- 83 -
Appendix 4: List of Interviewees...............................................................................................- 88 -
Appendix 5: Complete Nutritional breakdown of Cow, Goat and Sheep Milk...........- 89 -
Appendix 6: Examples of Potential products for the Niche dairy industry................- 91 -

12
 Table of Figures

Figure 1 Niche Milk industries................................................................................................- 14 -

Figure 2 Objectives of thesis...................................................................................................- 16 -
Figure 3: Thesis structure..................................................................................................- 17 -
Figure 4: Potential growth strategies (Sherman, 2003).................................................- 20 -
Figure 5: Ansoff's matrix (Yin, 2016).......................................................................................- 20 -
Figure 6: SWOT analysis with examples (conceptdraw, 2017).....................................- 24 -
Figure 7: VRIO analysis (Jurevicius, 2013)...............................................................................- 25 -
Figure 8: Research plan designed by the researcher for this thesis.............................- 33 -
Figure 9 Sheep Milk Market assessment 2017 (KPMG, 2017).......................................- 42 -
Figure 10: Avopure (FOOD WAIKATO, 2015)....................................................................- 44 -
Figure 11 Integration of Cashel Blue and Little Milk Company’s Branding.................- 45 -
Figure 12 Spring Sheep corporate structure (Chapman, 2016)...............................................- 49 -
Figure 13 Epicom's certifications (Epicom, 2017)....................................................................- 61 -
Figure 14: Enterprise Ireland offices................................................................................- 64 -
Figure 15: The timeline of Blue River’s corporate structure...................................................- 86 -
Figure 16 Structure of Goat Milk Powder B.V.........................................................................- 88 -

13
List of acronyms and abbreviations

GHG Greenhouse Gas

M&A Mergers and Acquisitions
JV Joint Venture
SA Strategic Alliance
FW FOODWAIKATO
SME Small and Medium Enterprise
NPD New Product Development
DGC Dairy Goat Co-Operative
R&D Research and Development

1.Introduction
This chapter will present to the reader the background behind this Master’s thesis
and help the reader understand the problem and motivation for this investigation. It
will start with a broad, empirical outlook on the Irish government’s actions. It will
present challenges currently facing the Irish agriculture on a whole and with regards
to the niche dairy industry.

1.1 Background
Ireland has matured into one of the most sophisticated, export-orientated food
producing countries in the world. In 2016, Ireland’s food and drink exports
exceeded €11 billion for the first time ever. Irish food is sold in 180 markets
worldwide and [CITATION Bor17 \l 6153 ]. Irish agriculture also employs 8.5% of the
population[CITATION Dep17 \l 6153 ]. Irish agriculture has been through a period of
large scale mergers of processors and co-ops and many farms have been
amalgamated along with this, increasing the average farm size from 26.0 hectares

14
in 1991 to 32.5 hectares in 2013[CITATION CSO13 \l 6153 ]. This has led to Ireland
become world renowned producers of dairy products and large scale production
allied with the efficiencies that come with that economy of scale.

The Irish government has signalled its intention to grow food and drink exports by
85% to €19 billion by 2025[ CITATION Dep15 \l 6153 ]. This is contained in the
report; Food Wise 2025, a 10 year vision for the Irish agri-food industry. The
removal of EU milk quotas and the growing demand worldwide for dairy products
has led the Irish government envisage that the predicted dairy expansion will be a
significant contributor to the target.

In 2016, Ireland signed the Paris Agreement to tackle climate change. By 2030,
Ireland has to reduce its greenhouse gas (GHG) emissions by 40% of 1990 levels
[CITATION Eur17 \l 6153 ]. This is will be a major challenge for all countries
especially those like Ireland, whose economy has a large agricultural industry
where there is limited room for reducing the greenhouse gas emissions while
increasing the output.

The author of this thesis is specifically interested in another aspect of the Irish
dairy industry. Organic milk, Sheep milk and Goat milk production are niche dairy
industries in Ireland. For the purpose of this paper, these are the only niche milk
looked at as a viable alternative to conventional dairy. These are what the
researcher is referring to as niche milk. The author’s family are involved in Sheep
milk production and they are looking for opportunities to grow the sector.

15
 Niche Milk

Applicable to
Ireland
(discussed in this Other Niche milks
thesis)

Camel
Organic Cow Goat Sheep (briefly
(briefly Buffalo Deer
studied)
studied)

Figure 1 Niche Milk industries

Burgeoning industries spring up frequently, especially those based on consumer

trends and preferences. This paper will focus on how certain companies achieved
their growth and the level of collaboration involved in achieving that growth.
Collaboration is an important aspect in the start-up world across a range of
sectors. The role collaboration plays in successful niche milk companies is crucial
to understand and learn about especially when assessing the potential here in
Ireland and the ability of the different companies across the niche milk industries
to achieve the growth.

1.2 Problem discussed

The problem that will be dealt with in this paper has several different perspectives
and they are outlined below.

 The apparent disconnect of the government planning to expand the dairy sector
by 50% by 2020 and also signing the Paris agreement to reduce the GHG emissions
by 40%. These two actions contradict each other as agriculture in Ireland already
accounts for a large percentage of Ireland’s GHG emissions, 32.2% in 2012
[ CITATION EPA12 \l 6153 ].

16
 The Irish dairy sector is competing in a global marketplace with the large part
commodity products. This has resulted in farmers experiencing volatility with the
price they receive for their milk [ CITATION Ais15 \l 6153 ]. With Ireland’s average
farm size being quite small, these fluctuations have put many farmers under
serious pressure, especially those who are recent entrants to the market or those
expanding on the premise of a certain milk price.
 Ireland’s organic and niche dairy industry has seen little growth over the last few
decades. The demand for these niche, high value products are growing worldwide.
There is a case that this industry would align perfectly with Ireland’s green image.
Ireland could become specialists in this area. Removing volatility from the dairy
sector and resulting more sustainable (economical, social and environmental)
enterprises for rural Ireland.
 There is a lack of a cohesive strategy or plan for the niche dairy industries as
individuals or as a collective.

1.3 Purpose of the research

1.3.1 Research Question
How can the Irish niche dairy industry be developed and grown? 

What core competencies are necessary for its long term success? 

What learnings can we get from successful niche dairy companies around the world?

1.3.2 Purpose
The main purpose of the study is to study if the niche milk industry can achieve the
growth necessary to become a viable alternative to a growing conventional dairy
and thus produce high value products requiring less overall production.

Objectives with this main purpose are as follows:

 Explore: Study other successful niche dairy companies to understand the

strategies used achieve their growth, the level of collaboration involved and the
market research to understand potential markets and trends for these products.
 Applicability of Exploration to Ireland: Understand how the explorative study
can be applied to Ireland and the insights of experts and the actor’s mind-sets on
the status quo, as well as the potential for a dairy transition.

17
 Core Competency: Assess the core competencies using a SWOT and VRIO
analysis in order to discover if the proposed niche industry has a sustained
competitive advantage.

These are illustrated in the figure below to show the three objectives required to
answer the research question and ensure a lasting purpose for this thesis.

Figure 2 Objectives of thesis

Ultimately, the belief is that this research is useful for not only the current actors in
this industry but also for interested parties looking at entering and growing the
sector.

1.4 Disposition
This thesis is structured as illustrated in the figure 1. Firstly, the Introduction is
presented which provides an overview of the background and the main ideas that
are dealt with in the thesis. Following this, a presentation of the Theoretical
framework describing the relevant work done in business collaborations and
growth strategies, is put forward in order to provide a backbone to the research.
The Methodology of the conducted research is then presented. This will include the
various data collection methods used in the paper and the procedures taken to
conduct the analysis. The Results and Discussions will be presented after the
Methodology. The Conclusion and Recommendations chapter will summarise the
thesis and the key findings. The recommendations section will comment on the

18
thesis as a whole and propose future research and implementation of these key
findings.

Theorectical
Introduction Methodology
framework

Results and Conclusion and

Completion
Discussion Recommendations

Figure 3: Thesis structure

1.5 Limitations
The author has a 20 week period to start, research, compile results and finish this
paper. This will not allow a level for a large level of depth and a significant base of
the information presented will be secondary research, however the message of this
paper will instigate thought and potentially further discussion.

The research phase will be conducted solely by the researcher. The document
analysis section will be researched by analysing available information to the
author without contacting the named companies. The conclusions drawn from the
document analysis section are the perceived strategies that the companies took in
order to achieve their growth.

The interviewees are selected based on availability to the author. They are not
representatives of their industry; it is their point of view. This, however, is taken as
a reflection of a portion of their industry. They were chosen based on their role in
the value chain of the dairy industry from primary production through to
marketing and sales. Given the time limitations, there was only the opportunity to
interview one from each stage of the value chain.

No consumer research will be conducted as part of the market research.

19
 2. Theoretical framework
This chapter will summarise the most relevant and significant work done in this area
of study. It will help the reader develop their own knowledge and understand the
fundamentals behind this paper. It will be divided in two parts. The first part will
deal with collaboration and growth strategies. This summary allows the author to
frame the growth strategies of businesses studied in the qualitative research section
and develop a recommendation on the conclusion of this paper. The second part will
deal with studies done on the value that these niches provide, from a nutritional and
environmental point of view.

2.1. Collaboration and Growth Strategies

2.1.1 Collaboration

Collaboration - to work jointly with others in some endeavour

Collaboration is an age old theory; it is even seen widely in nature where animals
hunt and work to together or bees eating the plants nectar and spread the plants
seeds in return. Collaboration is actually one of the key reasons for success in
nearly every case.

“If you want to go fast, go alone. If you want to go far, go together.” - African
Proverb

In an effort to keep this relevant, collaboration is a becoming a major factor in the

world of business where globalisation is on the rise and major mergers of
businesses takes place every day. In the food and dairy industry, companies such
as Nestle, Unilever and General Mills have come to the fore and now have control
of some of the world’s biggest brands [ CITATION Oxf16 \l 6153 ].

Collaboration is an effective business strategy. Collaboration can occur between

many stakeholders in the business universe such as:
 Providers
 Staff
 Competitors
 Mentors
 Customers

20
 Prospects
 Partners [ CITATION Bar16 \l 6153 ]
The benefits are widely appreciated. They can be unique to the individual case but
generally, collaboration facilitates:
 Economies of scale
 Improved R&D
 Access to finance
 Technology transfer
 Access to Markets [ CITATION Wei11 \l 6153 ]
Within Ireland, the mergers seen within the Irish Dairy industries have resulted in
all of the above. The Co-Ops have collaborated with State bodies such as Teagasc,
body in Ireland that is responsible for R&D, training and advisory services in the
agri-food sector, to establish Moorepark Technology Limited, a food hub with a
pilot plant and provides contract research services [ CITATION MTL17 \l 6153 ]. This
has given academics access to funding for their research and also helped the Co-
Ops to stay at the forefront of innovation and direct research undertaken for their
own benefit.

2.1.2 Growth Strategies

Definition: Strategy aimed at winning larger market share, even at the expense of
short-term earnings. Four broad growth strategies are diversification, product
development, market penetration, and market development. [ CITATION Web17 \l
6153 ]

21
 Growth Strategies

Internal External

Market Product
Mergers Acquisitions
Penetration Development

Market
Diversification Joint Ventures Strategic Alliances
Development

Figure 4: Potential growth strategies [ CITATION She03 \l 6153 ]

As any business is developed, it is always advised to develop a growth strategy.

Questions such as; who is going to buy your product? Where are you going to sell it?,
are asked of the business. This is their growth strategy. Most businesses deal with
internal growth strategies such as The Ansoff Matrix.

Internal Growth
Strategies - The Ansoff
Matrix
H. Igor Ansoff developed
the Ansoff Matrix in 1957.
The Ansoff Matrix is an
illustration on the four
broad internal growth
strategies and their
relationship with the
product and the market.
[CITATION HIg57 \l 6153 ]

For example: An Irish

company with an
established domestic

Figure 5: Ansoff's matrix [ CITATION Yin16 \l 6153 ]

22
 market begins to export its products to the French market. This company needs to
engage in Market Development. If this company identifies an opportunity in a new
category for a new product, this is an example of Diversification.

It must be noted that Ireland is a strong exporting country and with a relatively
small, saturated domestic market. This makes market penetration very difficult for
new entrants. While there is an appreciation in Ireland for local, Irish products,
there is still a large amount of imported products. This is especially seen in the
yogurt category.

External Growth Strategies

One way firms can create and capture value is through growth. However, operating
in isolation, continued growth can be difficult. There are other ways, externally, a
firm can grow. The four methods discussed below involved working/collaborating
with another company.

Mergers & Acquisitions

A merger is when two or more companies come together to operate as a single

company [ CITATION She03 \l 6153 ].

An acquisition occurs when one company takes over another company. This can
be hostile at times.

The advantages of M&A (Mergers & Acquisitions) are as follows:

 Increase plant capacity
 Economies of scale
 Diversification of product or service offerings
 Acquiring new technology
 Improved market reach and industry visibility [ CITATION She03 \l 6153 ]

Joint Ventures

A JV (joint venture) is an entity formed by two or more companies, who use their
individual resources to establish a new, jointly owned company. Both companies
still exist as unlike M&A. The JV should be more competitive when the
competences of the parent companies are combined.

Examples of when JVs are formed:

 Marketing or distributing a product in a new market

23
  Run production facilities in another country
 When both companies have complementary skills

The advantages are:

 Shared risk
 Flexible – limited lifespan and doesn’t total commitment of resources
 Access to new resources – staff, technology and finance [ CITATION Jin16 \l 6153 ].

There is a strong dependency on human relationships when a JV is formed.

Different companies can have different cultures and ways of doing things. This can
put a strain on the JV. It also may take considerable time to set up a joint venture,
as both sides are potentially putting in different types of resources and the value of
these resources can be perceived differently by each partner [ CITATION Jin16 \l
6153 ].

Strategic Alliances

A SA (Strategic Alliance) is a relationship between two or more firms to pursue a

business goal or meet a need of one of the firms [ CITATION Rek16 \l 6153 ]. The
firms remain independent throughout the SA. The firms work together under
contract, not as a legal partnership such as a JV.

An example of when a SA is used:

 Contract manufacturing
 Distribution
 Licensing out Intellectual property
 Franchising
 Outsourcing [ CITATION Rek16 \l 6153 ]

2.2 Core Competencies

Core competency can be defined as "a harmonized combination of multiple
resources and skills that distinguish a firm in the marketplace”[ CITATION Sch13 \l
6153 ].

A core competency fulfils three criteria:

 Provides potential access to a wide variety of markets.

24
 Should make a significant contribution to the perceived customer benefits of the
end product.
 Difficult to imitate by competitors [ CITATION Pra90 \l 6153 ].

Success of many companies is dependent on their ability to acquire and hold

competences. A company with an array of core competencies is likely to have a
sustainable business model as it is not dependent on other businesses, difficult for
someone to come in and compete for their space in the market and their
customers. Complexity of a product is often a strong core competence. It may
require rare raw materials, expensive technology or staff expertise. A product that
is central to this is called a core product. The iPhone would be considered the core
product of Apple. These are the physical embodiment of the core competencies
[ CITATION Pra90 \l 6153 ].

Many companies judge competiveness in terms of the price/performance of the

end products which can lead to a company gradually losing its core competency.
Outsourcing and licensing of key skills and processes can make them vulnerable in
the long view. Outsourcing does offer a shortcut to a competitive product but does
little in developing the skills within the company [ CITATION Pra90 \l 6153 ].

Vertical integration is often seen as route to obtain core competences. As this

prevents situations where your suppliers by-pass you and release products of their
own and leaving the company in limbo. Business takes place at different levels in
the value chain. A company that has long term success is usually a winner at all
levels [ CITATION Pra90 \l 6153 ].

In terms of food production, a core competency could be seen as having the lowest
cost of production, the benefits of economies of scale, environmentally sustainable
production, access to markets, patents on technologies and as previously stated a
vertical integrated company [ CITATION Gra15 \l 6153 ].

In order to assess the feasibility and core competences of a large niche dairy
industry in Ireland, two business analysis techniques, SWOT and VRIO analysis,
were be conducted as part of this thesis. These techniques and the reason for using
two separate techniques are described in the sections below.

25
2.2.1 Swot Analysis
A SWOT analysis is structured business analysis tool. It is an acronym that stands
for Strengths, Weaknesses, Opportunities and Threats. It can be used on a wide
variety of entities such as businesses, products or industries. The SWOT is useful
as it analyses internal (strengths and weaknesses) and external (Opportunities and
Threats) factors that contribute to the success and failure of a project [ CITATION
Ife14 \l 6153 ]

SWOT is used mainly when conducting Feasibility studies. It helps the researcher
to form a reasonable conclusion by illustrating the factors. As it is widely practised,
it is easily understood by the general population. This makes it a useful method in
conveying a message[ CITATION Ife14 \l 6153 ]

One of the limitations of the SWOT analysis is that it does not form one conclusion
and the quality of the analysis is heavily dependent on the researcher’s ability to
pre-identify all the factors that may influence the project. To avoid this, SWOT
analyses are often conducted in larger groups [ CITATION Val16 \l 6153 ]

Figure 6: SWOT analysis with examples [ CITATION con17 \l 6153 ]

26
 2.2.2 VRIO Analysis
VRIO framework is the tool used to analyse firm’s internal resources and
capabilities to find out if they can be a source of sustained competitive advantage.
It is based on four questions which are:

 Is the resource valuable?

 Is it rare?
 Can it be imitated?
 Can the organisation capture the value?

It is a straight forward method but by answering straight up questions, it provides

a more definite answer to question of viability. [ CITATION Jur13 \l 6153 ]

27
 Figure 7: VRIO analysis [ CITATION Jur13 \l 6153 ]

2.2.3 The use of two business analysis techniques

Two business analysis techniques, SWOT and VRIO, are conducted during this research.
The reasoning for this is that they complement each other when assessing the viability
of a business/industry. The SWOT analysis is a broad analysis taking in a range of
internal and external factors which affect the industry. However, it often does not
provide a conclusive answer. The VRIO analysis, with its specific framework of
questioning, is more explicit and gives a clear depiction of the industry’s real
challenges [ CITATION Pik08 \l 6153 ]. The researcher felt that given the explorative
nature of the study, the SWOT analysis will provide both the researcher and the reader
an opportunity to take in a significant number of factors about the industry while, the

28
VRIO analysis will provide a more conclusive result for this particular research paper on
the growth of the Irish niche dairy industry.

29
2.3 Literature Review
2.3.1 Physico-chemical and Nutritional analysis
Primary production capabilities are one of many important factors in the success of a
dairy diversification in Ireland. However, consumer needs are more important. The
demand for the products needs to be present and a market must be found for these
products. In order to assess if these products are indeed, valuable to the consumer, a
literature review is done on the research of the physico-chemical and nutritional
qualities of these milk. These qualities are not the sole reason for the desirability of
these products but they can contribute to the consumers’ acceptance of the products.
This section will be presented under the headings; Overview, and then a comparison
between each of the milks to conventional cow milk.

Overview

The table below provides a breakdown of the average composition of basic

nutrients in goat, sheep, cow and human milk.

Composition Goat Sheep Cow Human

Fat (%) 3.8 7.9 3.6 4.0
Solids-not-fat 8.9 12.0 9.0 8.9
(%)
Lactose (%) 4.1 4.9 4.7 6.9
Protein (%) 3.4 6.2 3.2 1.2
Casein (%) 2.4 4.2 2.6 0.4
Albumin, (%) 0.6 1.0 0.6 0.7
Non-protein N 0.4 0.8 0.2 0.5
Ash (%) 0.8 0.9 0.7 0.3
Calories/100ml 70 105 69 68
Table 1 Composition of various milks [ CITATION YWP07 \l 6153 ]

Sheep & Goat milk Vs Conventional cow milk

Total Milk Solids (MS) is the amount of proteins, fats and carbohydrates in the
milk. Sheep milk has approximately 18% solids comparing to 12% solids of cows
and goat milk (Table 1). Milk sugar, lactose, is the major carbohydrate in goat,
sheep and cow milk. The quantities of this do not differ much between the milks
[ CITATION YWP07 \l 6153 ].

30
The average protein content in sheep milk (5.8%, w/w) is higher than in goat
(4.6%, w/w) or cow milk (3.3%, w/w).The principal proteins in sheep and goat
milk are about the same as in cow milk. [ CITATION YWP07 \l 6153 ] .

Lipids are the most important components of milk in terms of cost, nutrition, and
physical and sensory characteristics that they impart to dairy products. Lipids are
present in the form of globules, which in ewe and goat milk are characteristically
abundant in sizes less than 3.5 meters. Some studies found that the average fat
globule size is smallest in sheep milk followed by goat milk (65% of globules less
than 3m) This is advantageous for digestibility and a more efficient lipid
metabolism compared with cow milk fat [ CITATION YWP07 \l 6153 ].

Calcium is a very important component in milk especially for human health and
cheese production Cow’s milk has 113mg per 100g, Goats have 134mg and sheep
have 193mg. Sheep milk has 70% more calcium than cows and 44% more than
Goats [ CITATION JMJ96 \l 6153 ].

Processing Qualities
The processing qualities vary between the milks. Sheep and Goat milk are more
naturally homogenized than cow’s milk. Goat and sheep milk products are white in
colour compared with cow milk, which are yellowish because of the presence of
carotene [ CITATION Bis91 \l 6153 ].

Sheep milk has higher solids content than goat or cow milk. As a result, more
cheese can be produced from a gallon of sheep milk than a gallon of goat or cow
milk. Sheep milk yields 18 to 25 percent cheese, whereas goat and cow milk only
yield 9 to 10 percent. [ CITATION JMJ96 \l 6153 ].

Other Health properties

Many people who have intolerances or sensitivities to cow’s milk find that they can
consume sheep’s dairy products successfully because sheep milk contains higher
levels of medium-short-chain fatty acids, which aids in the absorption of lactose.
They also limit and/or inhibit cholesterol deposits [ CITATION Bal17 \l 6153 ].

Increased protein digestibility has formed a niche market in infant, convalescent

and allergic based diets. Sheep and Goat milk are predominately A2 casein as
opposed to conventional cow’s milk which is A1 casein. A1 casein is a source of
discomfort to a lot of milk consumers [ CITATION Bal17 \l 6153 ].

31
Organic vs Conventional Milk
A consumer switching from conventional to organic would raise omega-3 fat
intake without increasing calories and undesirable saturated fat. This is due to a
lower omega-6/omega-3 ratio in organic milk. Higher levels of fat soluble vitamins
such as vitamin E and carotenoids and 40% more conjugated linoleic acid in
organic milk was also observed [ CITATION Ben13 \l 6153 ].

The study showed that the more desirable fat profiles in organic milk were closely
linked to outdoor grazing and low concentrate feeding in dairy diets, as prescribed
by organic farming standards. The other main reasons people chose organic milk
was perceived better animal welfare and the positive impacts of organic farming
on the environment[ CITATION Ben13 \l 6153 ].

A full nutritional breakdown of the milks can be found in the appendix 5.

2.3.2 Environmental impact

There are many ways to assess the environmental impact that dairy production
has. It is a very large industry across the world, creating business and producing
food from intensive farming in countries such as New Zealand to subsistence
farming in Western Africa. These diverse systems require different inputs and
produce different outputs. In order to compare systems, carbon footprint and Life
Cycle Analysis tools are used. These methods are becoming increasingly important
in communicating the impact of farming systems to its stakeholders [ CITATION
GZe12 \l 6153 ].

Goats and sheep are capable of operating in extensive farming systems. They are
lighter on the ground, their faeces is smaller in size so less likely to be leached into
waterways. The leaching of faeces has become an issue in countries such as New
Zealand, where there is a large cow population. They can go longer without food
and water [ CITATION Hae01 \l 6153 ].

The average carbon footprint for milk from Sheep and Goat is more than double
that of milk from cows: 6.5 kg CO2-eq/kg vs. 2.8 CO2-eq/kg [ CITATION FAO14 \l
6153 ]. However, it has been stated that very little research has been conducted on
small ruminants from this point of view. There is also such a variety of agricultural

32
systems that would make these figures vary from country to country, even farm to
farm.

Organic cow dairy has many different angles at which one can view it in compared
to conventional cow dairy. It is accepted that organic farming needs more hectares
because of lower stocking rates; however this does not come without cost.
Conventional farming achieves efficiency through larger, cleaner (weed content),
and easier to harvest crops to feed the dairy herd. The reduction in the use of
chemical fertilisers and herbicides is negated by the extra methane per litre of milk
produced. However, the principles are strong but at present, when taking a holistic
view, it is clear that “organic milk production demonstrates a balance of
environmental offsets rather than clear green gains” [ CITATION Hen07 \l 6153 ].

2.3.3 Product selection

The main aim of this section is to identify the potential products that could be
produced from niche dairy products so that the level of risk is lowered. This will
allow the researcher to provide an insight into what alternative dairy products
Ireland could successful produce in the event of a diversification at farm level.
Packaging plays a major role in this. It is important to understand the role
packaging could play especially when dealing with exportable products where
product protection is essential.

Product selection

Ireland is an extremely small and competitive market for food companies to break
into. This has led to Ireland’s food companies looking to export markets quite soon
into their life cycle compared to companies in other markets [ CITATION Aid14 \l
6153 ]. The threat of Brexit means that Ireland’s trade with Britain is under threat.
This is a large market and very close to Ireland. It is Ireland’s most important trade
partner. The business strategy and the products chosen are ones that will allow the
niche dairy industry to bring its business further afield. For example, China is now
Ireland’s sixth largest market for food, with exports trebling in the past three years
[ CITATION Aid14 \l 6153 ]. This is an example of the market that the products
selected must be able to cater for.

Packaging Selection

There are numerous criteria involved in selecting a package for a product and each
of these can affect the cost, usability, distribution, marketing and much more. Food

33
manufacturers and retailers undertake great efforts to differentiate their products
[ CITATION Jon08 \l 6153 ]. Packaging also plays a major role in attracting consumer
attention and influencing consumer purchase decisions. Packaging provides food
companies the last chance to persuade consumers to buy the product before brand
selection [ CITATION Con77 \l 6153 ]. This is especially important when dealing with
high value, niche products that have a unique and significant message to convey.

Colour and packaging shape also plays an important role. In one particular study,
which focused on this subject with regards to dairy products, found that black
packages were associated with premium and interesting products and white packages
were associated with soft, creamy and pure products [CITATION Gas10 \l 6153 ].

As this research is focused on the development of niche products, not new packages,
the research will not explore unique packaging solutions for these products. The
subject of packaging will only dealt with from a practicality and consumer preference
point of view.

3.Methodology
In this section, the methods used for the research and also a description of the
approach taken will be introduced. It will include an overview of the various data
collection methods and a plan that will outline how this project will be carried out so
that the research question is successfully answered. A summary of how the data
collected will be process will be included followed by the validation steps required.

3.1 General Approach

This thesis project is a 20 week body of work. This is a short project but it should
be sufficient to answer the research question and motivate further research. The
research has qualitative research characteristics with strong inductive reasoning
taking place. Inductive reasoning or “bottom up” reasoning, according to
Burney[ CITATION Aqi17 \l 6153 ], is the practise of making several specific
observations on related topics and forming patterns from these observations. The
patterns allow the research to tentative form hypothesises and generalisations,
which although come from limited, but specific data, develop strong conclusions.
Uncertainty plays a big role in this research as the research will attempt enter the
project without bias and allow the patterns to unfold as the data is collected. The

34
title of the project indicates a predisposed bias; however the objective of this
approach is to let the results form its own path.

Tentative
Observation Pattern Theory
hypothesis

Figure 3: Inductive reasoning [CITATION Aqi17 \l 6153 ]

The scope of this project is to answer the research question proposed in the
introduction chapter.

Research Question: How can the Irish niche dairy industry be developed
and grown?

As discussed in the limitation section, the timeframe is limited and use of

secondary research to overcome these limitations and focus on the specifics of this
research. The Theoretical Framework section allowed the researcher to collect
relative information on this topic and educate both the researcher and the reader
on the different growth strategies that are undertaken by firms. The theoretical
framework also allowed the researcher to concretely propose that the niche milks
(Organic cows, Goats and Sheep milk) have a nutritional value to the end user and
that they are environmentally sustainable enterprises to be growing. This is an
important research step as the sustainability and longevity of these industries is
paramount to the researcher.

The research is characterised as qualitative study. This is primarily

exploratory research with a broad methodological approach. It is used to gain an
understanding of underlying reasons, opinions, and motivations. It provides
insights into the problem or helps to develop ideas or hypotheses for potential
quantitative research [ CITATION Giv08 \l 6153 ]. In this project, theoretical
framework, document analysis, market research and interviews were all
performed in order to provide the most comprehensive results under the given
constraints.

35
3.1.1 Research plan
It is important due to the short timeframe this project is completed over that the
research is done in a timely, organised manner. In order to ensure this, a research
plan needs to be established. A Gantt chart was the chosen method to manage the
time and also help the reader visualise the research plan [CITATION DUF16 \l 6153 ].

Figure 8: Research plan designed by the researcher for this thesis

3.2 Data Collection

Data is collected during the first part of the thesis and takes up a significant
amount of the allotted time for the thesis. It is needs to be completed before any
analysis can occur. Three types of data collection were used for the thesis. They are
summarised below. It will include why this method is chosen, how the method was
preformed and the duration of time allotted to the different methods.

3.2.1 Document analysis

Document analysis is a systematic procedure for reviewing or evaluating
documents. The documents are created without any input from the researcher and
like any other data collection method they must be analysed and interpreted by the
researcher to provide meaning for the researcher’s topic [CITATION Placeholder1 \l
6153 ]. A wide variety of sources can be used for document analysis such as books,

36
 papers, brochures, press releases among others. This will be of benefit to the
researcher who is mainly using the internet searching as the main researching aid.

The advantages of using this method are:

 It is very time-efficient. It does not require the researcher to collaborate with other
people and it also allows the researcher to data select the most appropriate
documents to analyse.
 The documents are relatively readily available and allow the researcher to access
the information freely as generally the documents used are in the public domain
[ CITATION Bow09 \l 6153 ].
 The documents are stable and easily referenceable for the purpose of the research
[ CITATION Yin94 \l 6153 ].

Problems with document analysis may arise when there is insufficient information
available and biased selection of documents. Documents were selected on their
relevance to the studied companies and to the contents of this thesis. The
documents have to be widely available to the reader and in the case they are not;
the researcher will provide substantial referencing and include figures to help the
reader develop their own point of view. These depend on the topic being analysed
and are more of a warning to the researcher when choosing this method.
Document analysis is generally used in a multi-method approach to avoid these
issues[ CITATION Bow09 \l 6153 ], such is the case with this research paper.

The analysis of the documents will be content analysis as the documents should
contain the information for the researcher and not require the researcher to
identify patterns or themes in the documents [ CITATION Bow09 \l 6153 ].

3.2.2 Market research

Market research is the method used to gather information about target markets
and customers. It is a crucial part of business strategy [ CITATION Edw05 \l 6153 ]. It
is used in order to assess the market size, competitors and the needs of the
customers. In this thesis, it is used as it will allow the researcher to identify if there
is a market for the niche dairy products that would be produced in the situation of
a dairy diversification in Ireland. It will be conducted using various third party
publications such as Bord Bia, Mintel and analysing the consumer trends and the
product ranges of the companies studied in the document analysis section. This
will play an important role in the synthesis section of this thesis as it will either
support or oppose the scalability of these niche dairy industries through the

37
projected demand for such products. This method will help identify if there is
sufficient unique selling points and core competences to safeguard the industry in
both the near and distance future.

3.2.3 Interviews
Interviewing plays an important role in this research paper as it allows the author
to obtain insights from experts and actors in the sector. It is the most basic form of
data collection and allows the researcher to access the in-depth knowledge of the
participant[ CITATION Mar10 \l 6153 ]. It will be conducted in semi-structured
manner which will have some key questions but also the freedom to vary the
course of the interview based on the participant’s responses.

The interviewer has the power to run interview as they would see suitable and ask
the questions that would help with their research in a manner they believe to be
appropriate [ CITATION Cor03 \l 6153 ]. This supports the use of the semi-structured
interview, as long as the interviewer is prepared and has the in-depth knowledge
to be comfortable in allowing the conservation to go beyond the boundaries of the
prepared questionnaire.

These interviews will be conducted in person, over the phone or in extreme

circumstances via email. The interviews conducted in person will take place at the
interviewee’s place of work for their convenience. The participants have been
selected due to a few important factors such as their availability during research
period, the potential value they can add to the research and their position in the
industry. The interviews are to be recorded and the key points are transcribed to
insure they are not lost during the research process. An identifying code is given to
each respondent to ensure that they remain anonymous but their title, company
and country is provided. The list of interviewees can be found in the appendix 4.

3.3 Data Analysis & Validating Procedure

Once all the data is gathered, collected and refined for the most relevant material,
the author will begin a period of data analysis. This analysis will hope to draw out
patterns from the concepts and insights gained during the data collection phase
and work with the author’s own grounding in the area to provide valuable
synthesis that answers the thesis’s research question.

The main form of analysis is the constant comparative analysis. This analysis
technique allows the researcher to take one piece of data (one interview, one
statement, one theme) and compare it with all others that may be similar or

38
different in order to develop conceptualisations of the potential relations between
various other data collected.  The constant comparative method permits the
researcher to use established theory to conceptualise the data collected. This is
important as it helps validate the researcher’s own drawn conclusions. [ CITATION
Gla67 \l 6153 ]

In order to validate the interviews, the information contained in this thesis that is
related to each interview is sent to the interviewee. This will allow the interviewee
the opportunity to remove, change or add further to the thesis as a whole and
make sure that information they do not want publically shared is removed. The
confidentiality of each interviewee is ensured and is very important when the
document is open to the public.

39
 4.Results & Discussions
The table below contains a brief outline of the companies analysed in this research.
The criteria for selection were as follows:

 Involved in niche dairy products

 Export focused
 Sufficient information regarding their business available to the researcher
 Relatively small domestic market.

They will be discussed and introduced throughout this section at the appropriate
times.

Company Name Activity Country Related sections

Spring Sheep Sheep milk New Zealand Collaboration, Internal,
External Growth Strategies
Dairy Goat Co-Op Goat milk New Zealand Collaboration, Internal,
External Growth Strategies
The Little Milk Organic Milk Ireland Collaboration, Internal,
Company external growth strategies,
feasibility
Al Ain Dairy Camel milk and others U.A.E. Internal growth strategies
Blue River Dairy Sheep Milk New Zealand & Italy Internal & external growth
strategies
AVH dairy Dairy trading Netherlands External growth strategies
Emmi Group Goat and Sheep milk Switzerland, External growth strategies
Netherlands
Food Waikato Secondary processing New Zealand Collaboration, Feasibility
Bettinehoeve Goat milk Netherlands Collaboration, Internal,
External Growth Strategies
Epicom Packaging and Ireland External growth strategies,
distribution Feasibility

Advanced Food Packaging and Ireland External growth strategies

Concepts distribution
Pan Euro Foods Packaging and Ireland and U.A.E. Collaboration, Feasibility
distribution
Alimenta S.R.L. Sheep Milk Italy Collaboration, External
growth strategies
Goat Milk Powder B.V. Goat milk Netherlands External growth strategies
Moorepark Technology Secondary Processing Ireland Collaboration, Feasibility

40
Ltd
Table 2 Companies that are studied in this research process

4.1 Market Research

The aim is to explore a range of products that are exported by niche dairy companies
around the world. The main reason for this section to show what products should be
developed in order for the niche Irish dairy industry should produce so that it can
develop and grow. Some of these products are from the studied companies and the
rest are from various other companies throughout the world. Trends and consumer
needs will be briefly discussed as a method of analysing the core competencies of this
dairy diversification. This will help set the stage for the rest of the paper.

4.1.1 Trends
The consumer awareness surrounding alternative milk options is certainly
growing. It is estimated that alternative milk is growing at a rate of 15% year on
year from 2016 to 2024 [CITATION gra16 \l 6153 ] . This is due to many reasons
ranging from nutrition, environmental, health and trustworthiness.

These trends are very relevant to the niche dairy industry because:

 Nutrition plays a huge role in the reason dairy is consumed. Two other key
trends are the “sportification” of food and beverages and the topic of added
protein to everyday food products [ CITATION Jul171 \l 6153 ]. These supported
the overbearing trend that people are seeking more nutrition from their dairy
products and are willing to pay a premium to obtain it.
 Environmental impact of dairy products has been highlighted across the
world. Due to this, people have sought more environmentally friendly
options. [ CITATION The16 \l 6153 ]
 Health and Digestive Wellness has become a major trend [ CITATION
Jul171 \l 6153 ]. There is a growing consumption of dairy products in Asia
and not all people are capable of digesting dairy products well. These
people are seeking dairy alternatives.
 People buy brands they trust. There has been numerous food scares.
People are willing to pay a premium for products that they know are safe
and free of contamination [ CITATION Min16 \l 6153 ].

A more detailed version of these trends can be found in the appendix 1.

41
4.1.2 Consumer needs
Consumers in China look for more on-the-go packaging. 23% of consumers
complain that current milk packaging is not suitable for on-the-go occasions. More
convenient and considerate packaging designs are therefore required to encourage
greater consumption of milk on-the-go. There is a significant opportunity to design
products for this opportunity [ CITATION Min161 \l 6153 ].

Due to the confusion of consumers surrounding dairy intolerances and allergies,

there would a significant education piece involved in promoting products that
solve individual intolerances. Some are done successfully such as A2 milk and
lactose free milk, however the goat and sheep milk are a lot more difficult to
communicate [ CITATION Jul17 \l 6153 ]. This the challenge associated when
communicating attributes solely related to these products.

A survey by Mintel was conducted to determine the reasons why different milks
are consumed. The group shown in the figure below are internet users aged 20-49,
who have drunk plain milk, flavoured milk or milk beverage in the last 3 months
[ CITATION Min161 \l 6153 ]. Plain milk is clearly chosen for the health benefits it
gives to its users, where reasons such as protein, calcium, nourish the stomach and
other health benefits were all chosen by over 50% of the participants. Flavoured
milk is chosen more for its taste and to accompany meals.

42
 Table 3 Drinking purposes of different types of milk, December 2015 [ CITATION Min161 \l
6153 ]

Working with the consumer during the development of a product has become an
increasingly important for food producers. Paying attention to consumer needs
and reasons behind purchasing is an important part of this [ CITATION Rii16 \l
6153 ].

4.1.3 Product selection & Packaging selection

The products that have merits for this industry have to meet certain criteria. These
criteria are that the products must have a long shelf-life and not focused on
domestic or British markets. The products are described in table 4. Examples of
each of these products can be found in the appendix 6.

Products Milk Used

Whole Milk
All milk
Powder
Probiotic
All milk
Powder
Infant formula All milk

43
 UHT Milk All milk

Butter All milk

Milk Tablets – Sheep and Goat
calcium source milk
Sheep and Goat
Soap
Milk
Ice Cream All milk

Whey Protein Organic cows

Food
Organic cows
Ingredients
Cheese products All milk
Table 4: Potential products from niche dairy industry

Packaging plays a huge role in the ability of the product to sell. Contract Packaging
company and milk brand owner, Epicom, believe that these products require a
premium package. Their preference for a sheep & goat milk powder was a “pure,
white tub that had a matt finish” [ CITATION JC17 \l 6153 ]. This is a similar to the
results of the research that found that white packaging is associated with purity
[ CITATION Gas10 \l 6153 ]. Canning for these products may not be required.
Canning is an expensive process and does not illustrate the company’s
commitment to a sustainable ideology [ CITATION JC17 \l 6153 ]. The branding and
packaging must be of a high standard to represent the premium price that these
products will command.

4.1.4 Market development and selection

This is a specialist area when a huge amount of knowledge and contacts is required
to make concrete decisions on the best markets to sell these products. The researcher
is using the information contained in a KPMG report titled: Sheep milk Market
assessment. KPMG is a professional service company and one of the world’s biggest
auditors. This was commissioned by the Canterbury Development association. It was
presented at the New Zealand Sheep dairy conference 2017. This is conducted purely
with sheep milk products in mind, but it is the belief of the researcher that it rings
through for the other niche dairy industries as well. This was shared with the
researcher by the chair of the conference, Craig Pritchard and this is currently not

44
available on the internet, it will be published on a date not yet available. The most
important slide is shown below.

Figure 9 Sheep Milk Market assessment 2017[ CITATION KPM17 \l 6153 ]

Immediately, this slide illustrates the varying attributes that a company looks for when
developing and entering a market. KPMG have identified the US, Taiwan and South
Korea as the markets which are the most attractive for the sheep milk industry in New
Zealand to enter. Ireland will have to conduct similar studies bearing in mind Ireland’s
own trading partners and existing distribution channels.

4.2 Collaboration and Growth Strategies

4.2.1 The role of Collaboration in the niche dairy industry
The agriculture and food industry appears to be at a tipping point where supply
chain collaboration is now becoming an imperative for success in global markets.
The average farm generates poor profits across the globe. Processor profitability is
also poor. Suppliers of farm inputs and products make low profits. Scale is
increasingly seen as not a protection against risks now being faced [ CITATION
Gra15 \l 6153 ]

It is clear from analysing the selected organisations that collaboration plays a huge
role in their development and growth of the niche dairy industry. This can be seen
in many different ways. Some companies start out focusing on collaboration, while
others used taken different methods.

45
In New Zealand, Spring Sheep Milk co. started out from the outset focusing on the
strengths that both parties could bring. In a presentation, the CEO, Scottie
Chapman refers to the ability of both companies, Landcorp and SLC, could
potentially have gone into the business alone [ CITATION Sco16 \l 6153 ]. Landcorp
will be focusing on the farming and SLC will be focusing on branding, marketing
and selling. There is a clear distinction of who is in charge of each area; this brings
clarity to the operation[ CITATION Sco15 \l 6153 ].

In the Netherlands, AVH Dairy is a specialist company in dairy trading and has a
large network of contacts in this sector. They export goat and sheep dairy products
and offer a broad selection of dairy ingredients for retail, food service and industry.
AVH collaborate with Bettinehoeve, who make goat milk products [ CITATION Jim16
\l 6153 ]. They have developed their own cheese brand “Bettine” where they export
their cheeses around Europe.

Since 2001, Bettinehoeve and AVH have been working together to export the goat
milk products Bettinehoeve produce. Both companies complement each other
perfectly: Bettinehoeve with its suppliers of milk and its production of high quality
goat cheese and goat curd, and AVH with its international network in the dairy
processing industry and its distributors in many countries both in and outside the
EU.

Sybren Ewijk of Bettinehoeve states “the partnership offers great synergies and
growth opportunities by increasing the distribution of the “Bettine” ranges through
the sales network AVH has in Europe and Overseas” [ CITATION Jim16 \l 6153 ].

Back in New Zealand again, The Dairy Goat Co-Operative (DGC) started in 1984
when an amalgamation of different goat milk co-operatives around New Zealand
occurred. The Co-Operative model was chosen as it was felt that it provided the
best way to ensure sustainable returns, wealth and future security for the farmer
shareholders [ CITATION DGC171 \l 6153 ]. The company is a real success in the
niche milk industry where it now, effectively “owns” the Goat Infant Formula
sector [ CITATION Sco16 \l 6153 ]. The collaboration of many farmers and many Co-
Ops gave them a big presence and thus a better chance of success.

The advancement of dairy sciences is very much a collaborative effort. Both

FOODWAIKATO and Moorepark Technology Limited (MTL) rely on the companies
come to their facilities and working on projects with them. MTL was set up in 1993
and plays a key role in market led research conducted by these shareholders. It

46
provides a commercial pilot-plant and research services to industry [ CITATION
MTL17 \l 6153 ]. There has been a small amount of research done that benefit of
niche milk industry by MTL. It has been a cottage industry until recently when the
emergence of the Little Milk Company and Glenisk. However, only briefly have they
developed products that needed MTL’s involvement. [ CITATION KD17 \l 6153 ].

FOODWAIKATO in New Zealand was established with the philosophy of working,

collaborating and developing with new food companies and since it’s
commissioning of their spray drying facility, niche dairy companies. FW is
independently owned and was built by Waikato Innovation Park to deliver open
access. It currently specializes in the manufacture of Sheep, Goat and Nutritional
powders for both the local and export markets [ CITATION New17 \l 6153 ]. The CEO
of New Zealand Food Innovation (Waikato) Ltd, Derek Fairweather, stated that
“We believe this dryer facility is a key mechanism for moving the dairy industry
from a focus on commodities to value-added production,” [CITATION Tet \l 6153 ].
This collaborative facility provides such opportunities to food innovators even
outside of the dairy industry due to the availability of these expensive technologies
from their origin. Avopure would not be possible without access to this spraying
facility.

Figure 10: Avopure [CITATION FOO17 \l 6153 ]

In Italy, Alimenta S.R.L. is company that takes sheep milk and the by-products of
sheep cheese production and then processes it to obtain powdered products,
combining the unique natural properties with the benefit of a long shelf life and
high solubility. The company is integrated and capable of exploiting 100% of
locally available resources: from quality extensive farming system to the
production of traditional age-old dairy products and recovery of sheep whey
[ CITATION Red151 \l 6153 ]. Sheep milk and whey are collected from local

47
manufacturers of the regional DOP cheeses such as Pecorino Sardo and Pecorino
Romano. The sheep milk awarded the definition of “Sardinia white gold” due its
value to the region [ CITATION Red15 \l 6153 ]. This company was established with
collaboration at its heart, to work with many different cheese producers and take
their by-products. Through collaboration, they have taken a by-product that was
previously seen as waste and made it into a valuable product.

The Little Milk Company in Ireland collaborates with many artisan cheese
producers around to produce their cheese. This meant that the significant
investment that is involved in building a manufacturing facility was not required
and it allowed them to focus all their time and effort into the sales and
marketing[ CITATION SH17 \l 6153 ]. It also allows them to avail of decades of
experience in the art of cheese-making. They are farmers by trade so delving into
this area would have untold risks. It is also builds a community and a network for
the business which is full of good will and opportunities[ CITATION SH17 \l 6153 ].
One example of this is their relationship with Cashel Farmhouse cheesemakers.
They produce an Organic Blue cheese with the milk that the Little Milk Company
provides[CITATION cas15 \l 6153 ]. It helps build the brand of both companies and
helps Cashel Blue increase factory output and brand equity. The branding of the
cheese perfectly illustrates the great synergies the companies share. This can be
seen the figure below.

Figure 11 Integration of Cashel Blue and Little Milk Company’s Branding

There is no doubt that collaboration can be seen in all areas of agriculture, food
and business, but it is especially prevalence in the niche dairy industry as it gives
smaller players a bigger presence as it is seen with the formation of the Dairy Goat
Co-Op. It provided the companies with the economies of scale that are normally

48
associated with large industries. This a prime illustration of the benefits of
collaboration as described by Weinstein [ CITATION Wei11 \l 6153 ]. It allows cheese
producers such as Bettinehoeve gain access to markets as is seen with their
partnership with AVH Dairy. It is also important in NPD where companies can
collaborate and use their by-products to produce something of value as is seen in
Alimenta S.R.L. Collaboration can and does play a key role in the development of
the niche dairy industries.

4.2.2 Internal Growth Strategies

Internal growth strategies are strategies that are focused on how a company can
grow its revenue. The purpose of this section is to analyse how the selected niche
dairy companies found success using internal growth strategies. A summary of the
findings can be found in the table below.

Company Strategy Future focus Justification

Premium, Unique
Camel Milk and
Al Ain Dairy Diversification Powdered products
products with
world-wide appeal
Maintain premium
Opening new
Dairy Goat Co- Market price point, lower
markets for Infant
Op development dependency on any
formula product
one market
Market Develop a brand in a
few markets that Obtain a strong
Spring Sheep penetration/Market appreciate their brand presence
Development values
Limited growth
Powdered sheep milk opportunity for
Blue River Diversification and Infant formula cheese products,
for mainly export which are mainly
domestic products
Exporting their Reached a ceiling for
Little Milk Market
cheeses around the growth in domestic
Company Development E.U. market (Ireland)

There are small elements of all the internal strategies involved in running a
business. The researcher identified the main internal strategy using the theoretical
framework as a point of reference. As Ansoff (1957) illustrated in his matrix,
product development is the strategy of releasing new products in an existing
market, the researcher acknowledges that most of the above companies engage in
this strategy. It is not the focus of this research, where companies were selected in
terms of their export-focused strategy.

49
It obvious from the companies studied that market penetration is a short-term
strategy for niche dairy companies. They need to penetrate the market to a degree
in order to gain some traction from the consumers, justify their presence in the
market to retailers and distributors and build some brand equity. However, it
reaches a point with niche products where the only way to grow in a market is to
drop the price of their products. This may not be feasible and also sets a precedent
for other markets. It is the strategy of the companies studied, to bring out more
products or enter new markets rather than lower their prices.

There is a summary of the internal growth strategies section to be found in the

appendix 2. It provides the background information that was used in order to form
the table.

50
4.2.3 External Growth strategies
There was a high instance of niche dairy companies engaging in external growth
strategies. This is seen as a trend throughout the business world. The large
companies buy out the smaller companies. In the niche dairy industry, it is no
different. All of the companies studied were involved in external growth strategies
and that lesson alone should be taken on board by any company entering this field.

A summary table of the external growth strategies can be found below.

Company Strategy Summary

Several smaller co-ops merged. Resulted in
Dairy Goat Co-Op Merger significant growth and investment
50:50 JV between SLC and Landcorp. Creates
Spring Sheep Milk
Joint Venture synergies and utilises both groups’ specific
Co. skills.
JV between AVH and Bettinehoeve created a
new capabilities by building a spray drying
Goat Milk Powder
Joint Venture facility. Distribution and sales by AVH dairy
B.V. combined with the raw material processing by
and production location of Bettinehoeve
JV between Epicom and Abbeyfield Foods. Joint
Advanced Food
Joint Venture ownership of several brands and markets these
Concepts products around the world.
Epicom are primarily a manufacturing and
packaging partner for companies looking to
Strategic outsource elements of their business. Epicom
Epicom have a strategic alliance with the Dubai Duty
Alliance
Free to supply them with their own brand of
milk powder.
The Little Milk Company outsources the
Little Milk Strategic production of their cheeses to various
Company Alliance farmhouse cheesemakers around Ireland. They
supply them with their milk.
Pan Euro Foods operate a sales and distribution
Strategic service to various European companies looking
Pan Euro Foods to export their products to Asian and Middle
alliance
Eastern countries.
Chinese investors acquired the processing arm
and the Blue River brand from Keith Neylon. His
Blue River Acquisition company now can focus on sheep milk
production and are an exclusive supplier to Blue
River.
The same Chinese investors invested in
Alimenta S.R.L. Acquisition Alimenta. This will bring significant investment
and stability to the company’s stakeholders.
Emmi Group Acquisition Emmi are focused on growing their business in
the niche milk industries. They acquired
controlling stakes in both AVH and

51
 Bettinehoeve.

The external growth strategies played pivotal roles in the development of the niche
milk companies studied. Each example has a unique reason for the growth strategy
but they all bring similar benefits to the particular organisation. There is a detailed
summary that can be found in the appendix 3 which covers the other companies.

Jin (2016) states that Joint ventures are usually formed when two companies have
complimentary skills. Often one company, or both companies, identify an
opportunity and in order to maximise the opportunity, or reduce their own
exposure to risk, they partner up with another company. Spring Sheep Milk Co.
was formed under this pretence. The structure of Spring Sheep can be found
below. It clearly indicates the roles and responsibilities of each partner. Landcorp
are a massive corporate farming business and SLC, an investment marketing
company, are specialists in sales and marketing. It makes sense to work to together
in this unestablished industry so that the chances of success are increased
[ CITATION Sco16 \l 6153 ].

Figure 12 Spring Sheep corporate structure [ CITATION Sco16 \l 6153 ]

Another interesting strategy is the acquisition of Alimenta S.R.L, an Italian sheep

milk company. They get their milk and other by-products from cheesemakers to

52
make their products. They were acquired by Blue River HK. This meant the orginal
owners lost control of their company. However as stated by Sherman (2003), this
can have many benefits for both parties. Blue River are going to grow the company
significantly. Some of these benefits are listed below:

 Stability of the milk price by being less reliant on the cheese markets as a growth in
the amount of milk powder produced.

 The development of an Infant formula creates a new industry for the region and
with this, increased sales.

 Increased brand equity as the company’s brand is distributed around the Chinese
market.

 Reduced waste material from Cheese production as the by-products (whey) are
increasingly used as ingredients for the infant formula.

 An investment of €50 million into new factory improvements

 Working with the dominant player in the Chinese market has improved their access
to this market and other related markets [ CITATION Mim16 \l 6153 ].

It is the reality for small companies that they be acquired by larger organisations who are
seeking to grow by external growth strategies. The niche industry is small by definition. The
collaboration of companies may provide the synergies that the conventional dairy
companies enjoy and improve their ability to compete.

4.5 Applicability to Ireland

Studying how other niche dairy companies in small markets (New Zealand,
Netherlands and U.A.E.) achieved their growth provides valuable lessons for this
potential industry in Ireland. Ultimately, the companies studied faced problems and
opportunities similar to what an Irish equivalent will face. Before this thesis begins to
focus on the Irish dairy industry, a summary of the key learnings, according to the
researcher, is provided below.

 It is difficult to do it all alone. Collaboration and external growth strategies

provide the synergies that allow companies to prosper. Growing the niche
dairy industry in Ireland is a huge undertaking. It may require several
organisations working together to make it happen.

53
  A niche dairy company must develop products that are focused on export
markets to ensure continued growth.
 Opening up new markets all the time and not becoming heavily dependent on
any one market reduces the risk and facilities sustained growth.
 A niche dairy company does not need to be directly involved in all the points of
the value chain. Contracting out certain tasks such as contract manufacturing
allows the company to focus on its strengths. This can be done by strategic
alliances, joint ventures or by contracting out jobs.
 Following trends and targeting consumer needs is an important part of
successfully establishing new products, brands and companies. Alternative
milk products are certainly on trend and with Ireland having a reputation of
supplying nutritious, healthy and trustworthy products.

It is important to study what was and what is before focusing on what could be.
Ultimately, history repeats itself and it is an important part of assessing the potential
for the industry by studying other players. Having taking this global viewpoint, it is now
essential to assess Ireland’s core competencies and its ability to compete in these
international markets.

4.6 Core competencies of the niche Irish dairy industry

As a major food exporter with already widely perceived ‘green credentials’, Ireland
has much to gain by adopting a leadership role in the development of new models
of food production, with the development and adoption of strategic crop and
livestock husbandry practices that improve performance in all economic,
environmental and societal dimensions of its agriculture. Low carbon Irish food
exports can provide a defining market advantage in an expanding global food
economy. Ireland is also well positioned to capitalise on its existing track record in
supporting the developing countries, which are likely to be most impacted by
climatic and market volatility. The benefits to be gained are strategic and will give
a premium rating to Irish agri-food exports, leading in time to higher farm gate
prices. This strategy will place Irish agriculture at the forefront of international
policy development and carry a considerably reduced risk of penalties for failure
to meet international obligations

4.6.1 SWOT analysis of the Irish niche dairy industry

This section shows the results of the SWOT analysis of a potentially large niche dairy
industry. This was conducted solely by the researcher based on his judgement but

54
 also combined with data collection from relevant actors, experts and secondary
research.

STRENGTHS

 It is a relatively unexploited agricultural opportunity which no major domestic

players.
 Ireland as a country has vast experience in the dairy industry. This can be
leveraged to build other dairy opportunities. Ireland has developed sophisticated
low-cost pasture based systems. This will allow Organic cows and Sheep milk
producers mirror these on their pathway to producing the product at a world
competitive price [CITATION JGC17 \l 6153 ]
 Sheep (Meat) and Goat farming are not new animals to Ireland. There are many
experienced people in these sectors.
 Currently, Organic milk, Sheep milk and Goat Milk products can be sold as
premium products around the world. This can be seen by the actions of DGC, Blue
River and the Little Milk Company.
 Ireland has a great reputation around the world. Its Origin Green programme is the
envy of many countries, such as New Zealand [ CITATION Pet16 \l 6153 ]. This adds
intrinsic value to any product coming from Ireland.
 Due to the premium nature of the products, there is possibly a faster return on
investment than conventional dairy cows.
 Goat and sheep can succeed on marginal land that cows cannot occupy.
 Sheep, Organic and Goat milks have natural health benefits. This will be attractive
to many consumers.
 Ireland, located in the EU, has access on its doorstep to genetics, expertise and
markets. This is not like countries such as New Zealand, who have trouble working
with the EU.

WEAKNESSES

 No strong tradition of sheep dairying in Ireland.

 Capital set-up costs and additional feed costs are a disincentive for early adopters
if there is no reliable market at the farm gate.
 Milking is a 7 days a week, 2 times a day task. This is labour intensive and may
require extra labour units on the farm.

55
 Access to land is an issue. There are high land prices in Ireland both for purchase
and rental. Ireland also lacks large farming blocks of land. Ireland’s agricultural
model is based on family farm structures.

OPPORTUNITIES

 In the event of poor land availability, Sheep and Goats can be utilise part indoor,
part pasture based systems.
 As the world continues to develop, the health and wellness markets are looking for
products with functional food benefits, and niche and specifically Goat and Sheep
milk can be seen as highly nutritious dairy products.
 Retail prices of niche milk products are at a premium price point in all the markets
that were seen.
 Import Goat and sheep milk genetics from EU countries such as the Netherlands
and France.
 Sheep milk produces some of the most well-known cheeses around the world, such
as Feta, Pecorino, Roquefort and Manchego.
 The potential to establish a cooperative with a focus on premium quality products
and returns profits to farm level. Unlike, what is seen in the Sheep meat and Beef
industries in Ireland, where the secondary processors are in private ownership.
This ensures that the farmers in these industries are price takers and have little
input into how the industry is run.
 Rapidly westernising population in Asia, with an associated increase in dairy
consumption and the ever increasing demand for milk alternatives. Sheep and Goat
dairy products can cater to the lactose intolerant which is a growing concern
around the world
 Origin Green would be able to promote Ireland’s new environmentally sustainable
industry, backboned by science.
 Ireland and New Zealand have always been competitors. Where there is a New
Zealand product, there is room for an Irish alternative. New Zealand has stolen the
march with A2, Organic, Goats and Sheep; however their actions may provide
much learning and open a pathway for similar Irish products.
 Replicate the success the DGC have had with their Goat milk Infant formula and
produce a range of Sheep milk, Goat milk and Organic milk powder products.
Ireland is the second largest importer of Infant formula to China. Currently, Ireland
has to import organic milk powder for the organic infant formula produced in this
country.

56
 THREATS

 Synthetic milk (lactose free), A2 Milk and plant based alternatives.

 Supply of milk before markets for products established leading to a crash in the
farm-gate price of milk putting farmers out of business.

4.6.2 VRIO analysis

Are the resources valuable?

It can be concluded that Sheep milk, Goat milk and Organic milk are valuable raw
materials. They command a premium in every market that the researcher has
analysed. Goat and Organic Milk are increasingly becoming commoditised due to
the large market space they now occupy. These products coming with a stamp
from Ireland also makes them more attractive in terms of the world competition as
Ireland is renowned for its world class agricultural and processing standards.
Sheep milk products would be seen as very valuable especially considering the
unique nutritional characteristics. Sheep milk may occupy the super-premium
category [ CITATION Jul17 \l 6153 ]. Producing the milks for the low price possible is
not a new demand for Irish farmers. With Ireland’s unique competitive advantage
in this area, this should increase the value of the products. Adding value to the
products through secondary processing is also considered as strength of Ireland’s
food industry.

Are the resources rare?

Goat milk and Organic milk products are not rare for the consumer as they have a
presence in most supermarkets across the world. However, high quality, niche
dairy Irish products are rare and they would complement the exporting of
conventional dairy products in export markets. Sheep milk is extremely rare and
with the actions of Blue River H.K. controlling over 70% of the world’s sheep milk
powder production, it is about to become significantly rarer despite growing
demands. Having the capabilities to add value to these products is essential to the
success of them. Currently, cheese dominates the sheep milk market however
shifting away from this and into more valuable products such as health
supplements and infant formulas will increase the rarity.

Are the resources imitable?

57
Due to the vertical integration of the proposed industry, the products are not easily
imitable. The coordination involved in starting this industry will be one the biggest
challenges, another company in Ireland would find it hard to imitate this in Ireland.
Competitors outside of Ireland may have established production systems but they
will not have the brand equity that an Irish product should have.

Does the organisation have the capabilities to take advantage of the

opportunity?

As of yet, there is no organisation taking on all three niche milks. The Little Milk
Company has shown they have the capabilities to take advantage of the
opportunity with the growth of their organic cheese products. There exists the
expertise at secondary level, packaging and distribution levels and the marketing
and sale level in Ireland. It is a well-trodden path to produce dairy products for
export. The main driver in this will be development of an interested party at the
secondary processing level to take the lead and connect the primary producers
with the end users. This is what will allow the products to be developed that are
catered for export markets. However, secondary processing is not something that
can be built cheaply. Collaboration will be essential and having an organisation
that builds up the synergies to maximise the facility and reduce the dependency of
the facility on any one product. This is a hurdle that one company or only one of
the niche milk industries may find too difficult to accomplish on its own. There are
most certainly the capabilities and skills in Ireland to take advantage of this
opportunity once the team is correctly formed.

To conclude the VRIO analysis, it can be confirmed that the proposed niche dairy
industry in Ireland would have a sustained competitive advantage based on low-
cost, pasture-based farming practises, Ireland’s reputation for top quality food
products and the experienced people already operating in the dairy sector albeit
the conventional dairy sector.

58
4.7 Is this transition feasible?
4.7.1 Actors involved in Primary Production
To assess the feasibility of this transition to more niche dairy production, interviews
were completed with various farm producers. These people were already engaged in
the practise and had a unique insight into the growth of the industry. The four
farmers interviewed are given in the table below.

Initials Industry Products

FR Organic Cow Cheese – Little Milk
milk company
KF Goat milk Cheese
MC Sheep milk Cheese
LJR Conventional Milk powder & Cheddar
Cow Milk Cheese - Tipperary Coop

Conventional dairy has long been the most profitable agricultural enterprise in
Ireland. The following table was provided by the Teagasc consultant [CITATION
JGC17 \l 6153 ].

System 201 201 201 Averag 40ha

0 1 2 e
Profit in € per hectare
Dairy 771 131 783 955 3818
Cows 0 7
Single 203 39 46 96 3820
Sucklin
g
Cattle 24 67 70 54 2147
Finishin
g
Sheep 74 264 163 118 4733
Meat
Spring 149 115 133 132 5293
Barley
Winter 433 388 123 315 1258
Wheat 7
Table 5: Farm profitability per hectare of various farm enterprises

59
It is clear that conventional dairy farming in Ireland is the most profitable farming
enterprise. Ireland competes well on the global markets with this product and with
the low input, pasture-based systems, the success trickles down to the primary
production level[CITATION JGC17 \l 6153 ]. With the removals of quotas, however
many farmers have taken out loans to expand their operations; this has put them
under pressure as the milk prices have dropped [ CITATION LJR17 \l 6153 ]. The
farmer who was interviewed, LJR, inherited the farm from his father and has
sustainably built up the farm over the years. He does not view the quota as too
much of an opportunity for him immediately as he was already near maximum
capacity. The required investment and extra labour wouldn’t justify him expanding
to a level required to make the expansion worthwhile. He does not currently see
organic dairy as a viable option due to the factors outside of his control are riskier
from his point of view than the price fluctuations that the conventional dairy is
currently experiencing. He could see how new entrants would be more inclined to
look at niche dairy opportunities as it is a “long road of debt ahead” for anyone
getting into conventional dairy now [ CITATION LJR17 \l 6153 ].  

Organic cow farmer (FR) has had “a great experience on his journey” with organic
cows to present. He finds it a much less stressful enterprise and his involvement
with the Little Milk Company has given him something to be proud of. He believes
that there is huge potential for organic dairy in Ireland as most farms are near
organic standard as it is, just with the use of fertiliser as the major point of
difference. He did not disclose the price he receives for his milk but said there is a
premium on the milk and he has a supply contract which allows him to make five
year projections[ CITATION FR17 \l 6153 ]. On a similar Irish organic dairy, the
farmers received an average of 49c/L [ CITATION Sea17 \l 6153 ].

The goat farmer interviewed (KF) was very optimistic about his farming setup. His
parents got into Goats as it had a low setup costs, plenty of “free labour” (their
children) and a supply arrangement with a local cheesemaker. They only foresee
incremental growth at the moment as the cheesemaker is seeing only slow growth.
They fear Brexit will have a large impact on the cheese as much of the
cheesemaker’s products go to the UK. They receive 70c/l collected at the farm.
Their goats produce 5/6 litres a day and are housed early full-time due to their
temperamental nature. They believe it is very easy to establish a goat milk farm.
The problem lies with finding an outlet for the milk produced. From what they are
aware, many goat milk farmers are frustrated about the slow growth of the

60
industry and are looking at all potential avenues to increase the outlet [ CITATION
KF17 \l 6153 ].

The sheep milk farmer (MC) interviewed, is a recent entrant to the business and is
“gung-ho” about pushing sheep milk as a product. Initially, he got into the business
as he saw what was happening in New Zealand and felt Ireland should have a
comparable industry. He is looking into opportunities to develop his own products
as he feels the domestic cheese market is “sown up with high quality cheeses” and
it would be too difficult for a cheese product to mirror his growth plans. Sheep
dairying complements Ireland very well and has the ability to be as cost effective
as any sheep milk producers across the world once given time to develop the
genetic merit of his flock. He receives over €1/L and he said this is comparable to
what sheep milk farmers receive across the world [ CITATION MC17 \l 6153 ]. He
believes powders and Ice cream products would be interesting for him to be
involved in as they can be produced from the cheap, peak-supply milk that he
produces mainly off grass[ CITATION MC17 \l 6153 ].

4.7.2 Actors involved in secondary processing

Moorepark Technology Limited

MTL have a 100kg/h spray drying facility. This is more expensive to use than large
scale industrial dryers. It does provide the option for businesses to have access to a
dryer which would all a whole new range of products to be developed with the
export market in mind. The potential plan could propose that a niche milk
company would start its drying operations in MTL until it successfully achieved the
scale the commission their own drying facility [ CITATION KD17 \l 6153 ].

MTL have looked into upgrading its current facility to a 250kg/h dryer and an
infant formula production facility however, it failed to progress on the conclusion
of the feasibility study which was conducted. MTL are open to future expansion
ideas with interested industrial partners if there was sufficient interest [ CITATION
KD17 \l 6153 ].

MTL are open to work on any valid project with any company within any scope of
the dairy industry. It is a core principle behind its existence to help the growth and
diversification of the dairy industry in Ireland by staying at the forefront of
innovations and research [ CITATION KD17 \l 6153 ].

Bord Bia’s opinion on the secondary processing in Ireland

61
Ireland has not succeeded in growing the organic or alternative dairy industries in
Ireland. These industries are for the most part artisan, cottage industries. Ireland’s
conventional dairy systems are amongst the best in the world and there is an
established path for anyone looking to enter or grow in this sector [ CITATION DO17
\l 6153 ]. With the abolition of the milk quotas, large dairy companies in Ireland are
under more pressure to handle the growing volumes of milk than to develop
alternative dairy sectors[ CITATION DO17 \l 6153 ].

The scale at which these companies operate means that they are unlikely to be
much assistance to a new entrant with regards to processing. This is highlighted by
the recent commissioning of new spray drying facility by Glanbia in Belview, Co.
Waterford. This facility processes 2.5million litres of milk a day [ CITATION
Mar151 \l 6153 ].

Not only does this illustrate the scale at which conventional dairy operates in
Ireland but also shows the level of expertise available in Ireland to develop another
industry that would complement conventional dairy [ CITATION DO17 \l 6153 ].

The belief is that the only way this diversification will have success is if it is driven
by major investment at processing level in the middle of the value chain. There is
room for this at farm level and there is a growing demand at consumer level. It is
up these actors in the middle of the value chain to “connect the dots” and fuel this
through investment and their available expertise [ CITATION DO17 \l 6153 ]. There
are only so many products and markets a farmer can produce and serve as an
individual. Scale, collaboration, potentially through the formation of a Co-Op and
investment into processing can help the farmer reach more markets and
consumers. Alternatively, a third party such as investors or entrepreneurs may
identify the opportunity and establish their own facility and purchase the raw milk
from the farmer. This area in the middle of the value chain is required but how this
is filled, can take many different forms.

Tetra Pak/GEA

Tetra Pak and GEA were both contacted with the view to obtain some knowledge
on the feasibility of installing a small/medium scale drying facility in Ireland. It
was the belief of the researcher that since there was no dryer similar to that of
FOODWAIKATO, that it would extremely beneficial to the industry to investigate
the possibility.

62
Tetra Pak, no longer, are involved in the construction of 1 ton/hour drying
facilities. Most of the production companies recently have favoured economies of
scale and dryer sizes are getting bigger and bigger for this reason. They have found
that their customers are looking to go up in capacity and feasibility of smaller
plants is difficult to justify [CITATION KL17 \l 6153 ].

GEA who are more specialists in drying technologies have a dryer of any size and
scale. It was recommended to study what was happening in India, there are several
small scale dryers in India. It is their preference to dry the milk as the cold chain
distribution systems are not well developed[CITATION FOC17 \l 6153 ].

With regards to the feasibility of commissioning a drying facility, they shared with
the researcher a project they completed in Germany for a 1ton/h facility, which
dried goat’s milk for 9 months and produced a yeast powder for the remaining 3
months of the year. They cost of the complete drying technology were as followed:

 Wet process: €2.8million

 Concentration: €2.35million
 Spray dryer: €5.4million
Totalling: €10.55million

The rule of thumb with these projects is that is costs a similar price again for the
buildings and extra equipment required such as milk handling and effluent. It was
suggested that building the facility on the grounds of another spraying facility
would lead to cost reductions [CITATION FOC17 \l 6153 ].

4.7.3 Actors involved in Packaging and Distribution

Contract-packer’s opinion on the feasibility of the dairy transition

Epicom’s strategy is solely focused on the customer’s demands. They have a very
flexible manufacturing ability and are capable of meeting the requirements of

63
nearly customer that they have had discussions with, the problem only occurs
when it is decided if it is feasible of both Epicom and the customer [ CITATION
JC17 \l 6153 ].

Epicom has approval for most certifications. These can be seen in the figure below.
This helps with their consumer focused approach as predominately they are
dealing with Asian and Middle Eastern countries. Epicom have put significant
expense into achieving accreditation to introduce products into the Chinese
market and are one of the only companies in Ireland to successfully do so. It has
taken a significant investment and it has taken over 5 years. It is a difficult road
and the only to do so is to achieve scale [ CITATION JC17 \l 6153 ].

Figure 13 Epicom's certifications [ CITATION Epi17 \l 6153 ]

If the opportunity is feasible, Epicom will help. They have a dedicated R&D
department which allows the company to provide solutions and thorough service.
They believe that there is significant room for large alternative dairy operations in
Ireland. They have often been asked by clients in exports markets about the
availability of Organic cow and Goat milk products. It is something they would
definitely be interested in working with these products should they come
available[ CITATION JC17 \l 6153 ].

Ultimately, producing premium branded products has to be the objective of this

sector if it is to grow. It will be starting behind other nations in terms of scale and

64
expertise, but considering Ireland’s reputation and potential efficiencies, and then
once the premium price point is established, the rest of the business should fall
into place.[ CITATION JC17 \l 6153 ]

65
Distributor’s opinion of the dairy transition

Pan Euro Foods exportw Irish yogurt, ice cream, milk powder, cheese and butter.
They focus their efforts exporting to Middle Eastern and small Asian markets.
There is such a demand for Irish dairy produce that they have looked at developing
their own brand of milk powder to increase profits from these markets. All of the
above products have a long shelf life and thus are transported via ship, this can
take a long time but it is significantly more cost efficient. Yogurt is however,
transport via air freight. This can add over 100% to the price of the yogurt that it
retails for here in Ireland. This is only justifiable for the most premium of Irish
yogurts. Currently, they are exporting Glenisk yogurts, which are made using
organic milk. Ice cream only has around 10/15% distribution cost and thus is more
achievable for all the actors involved [ CITATION CR17 \l 6153 ].

Pan Euro foods have regularly looked into the possibility of adding more Irish
organic and goat milk products to their portfolio however they have found that
their currently isn’t the hunger to exploit this growing demand from a secondary
level. They have numerous organic Irish cheeses but the volumes of these that are
moved are quite low and the growth of these products is what was referred to as a
“slow-burn”. This means there is not going to be a large jump in order sizes and the
growth isn’t big enough to warrant massive investment [ CITATION CR17 \l 6153 ].

4.7.4 Actors involved in the Marketing and Sales of niche Irish dairy products
The Little Milk Company

The main markets for their products are the BENELUX, French and German
markets. Their USP of being organic is a major boost and allows them to command
a premium for their products especially in Germany, where organic products are
extremely popular[ CITATION SH17 \l 6153 ].

For the foreseeable future, they are focused on the growth of their cheese business.
They feel there are still significant opportunities for them in this area before there
is a need to look into other product developments. They feel no need at present to

66
explore the opportunities around organic milk powder as it would require a large
outlay and would mean they are moving away from their philosophy of
sustainable, organic business growth [ CITATION SH17 \l 6153 ].

Bord Bia

Bord Bia (Irish Food Board) is responsible for the collective marketing and
promoting of Irish food and drink products. The interview was as much about a
potential start-up regarding alternative milk as it was about the industry at the
moment.

Bord Bia’s usual process for helping developing businesses is to put the start-up
through various accelerator programmes such as Food Works
(http://foodworksireland.ie/) and Food Academy (https://supervalu.ie/real-
people/food-academy-programme). Both programmes are supported by Bord Bia.
Food Works is a programme that is more geared towards scaling up a business
compared to the Food Academy, which assists with obtaining retail listings
[ CITATION DO17 \l 6153 ].

Bord Bia is not aware of any organisation really engaged in growing the organic or
the alternative dairy industries in this country to a large scale and as a result has
not taken any steps to market these sectors. Bord Bia responds to the needs of its
clients and until a client makes a push in this sector, Bord Bia will continue to push
the benefits of conventional dairy and other Irish food products abroad [ CITATION
DO17 \l 6153 ]. One brand for the industry is seen as advantageous so that there is a
higher chance of gaining traction in a new market. The industry will be too small
for the foreseeable future to have several different actors attempting to establish
their own brands.

There is a feeling that once products are produced to a high standard with high
quality branding and packaging then supporting the marketing and sales of the
products will not be an issue. Bord Bia and Enterprise Ireland, a government
agency in Ireland responsible for supporting Irish businesses, have offices across
the world. This can be seen in the figure below which contains all of the Enterprise
Ireland offices.

67
 Figure 14: Enterprise Ireland offices

These offices provide a base of trade, local knowledge and a support system for
Irish businesses operating in these locations.

5. Conclusion & Recommendations for

future work
This chapter presents the overview of the findings, insights gained and suggestions for
future research on the topic

5.1 Conclusion
It is undeniable in the researcher’s opinion that Ireland is missing out from a
purely economic perspective the potential to grow a significant niche dairy
industry. It would provide another viable farming enterprise for small landowners
throughout the country who are struggling with the lack of profitability of other
farming enterprises such as beef and sheep meat farming.

68
Collaboration plays a huge role in many ways of life but especially in the niche
dairy industry as it allows the actors to benefit from the economies of scale that
most of the conventional dairy companies profit from. This is especially seen with
the actions of the Little milk company in Ireland who by forming strategic alliances
with farmhouse cheesemakers around the Ireland, they were able to available of a
highly level of expertise and a low level of investment compared to a situation
where they would have had to build up their own facility. As seen with FOOD
Waikato in New Zealand, providing opportunities to collaborate to food innovators
can lead to new businesses even outside of the dairy industry, where to the
availability of their expensive technologies facilitated the aforementioned
Avopure.

The research conducted on the various growth strategies deployed by various

companies in the industry provided a value insight into how the Irish niche
industry could grow. Especially, the New Zealand companies who are operating in
a similar environment. Both countries have small domestic markets and large,
sophisticated conventional dairy industry. The actions of the sheep milk industry
in New Zealand towards developing powdered products for export, although the
industry is still in its relevant infancy is an important lesson. It is obvious that
powdered or long shelf-life products are very important to driving the growth of
the niche products developed in a small market.

In assessing the core competencies of a niche dairy industry in Ireland, it is

conclusive from the SWOT analysis that the strengths and opportunities of the
industry far outweigh the weaknesses and threats. Ireland has a great reputation
as a premium food producer, leveraging this to provide premium dairy products
across the world should be imperative to the industry. Ireland should attempt to
move up the value chain with all its products. Ireland should not be bulk selling
products. They should be developing strong Irish brands similar to the “Kerrygold”
brand owned by the Irish dairy Board, Ornua. The VRIO analysis concluded that
the niche dairy products are valuable with a strong demand from the consumer.
Organic milk products are not rare but the lack of exported Irish organic dairy
products is a missed opportunity and would complement the conventional dairy
sector very well. Goat milk products are somewhat rare, while quality sheep milk
products are extremely rare. Ireland has the ability to take its world-class dairy
production and milk processing expertise and create a whole new industry for the
country. It has the natural attributes to be low-cost producers of these products.
This makes it very difficult for another country to challenge Ireland.

69
The VRIO analysis was complimented by the researcher pondering the question
regarding the feasibility of this transition. The insights gained from actors in the
sector provided highly informative. From interviewing these people, the
researcher’s belief that the niche industry is a huge, untapped opportunity to
create real value for the actors involved in Ireland. The transition is without
question feasible.

The environmental sustainability was not as good as previously thought. The prior
review of scientific articles informed the researcher that the niche milk industry
would have many questions to answer in the future regarding the environmental
sustainability of its actions. The impact may be negated in the future once the
farming systems are optimised to Ireland’s farming landscapes. There is many
ways to assess sustainability and from an economic perspective, many of Ireland’s
agricultural industries are barely viable, judged from the profitability table
provided from the interview with the Teagasc advisor, especially in a world of
uncertainty caused by Brexit, Donald Trump’s political actions and Russian import
embargos. The niche dairy industry may be the very air to pump back into the
lungs of Irish agriculture.

However, despite the researcher’s optimism, there remains large uncertainty to

weather the niche dairy industry in Ireland can really take off. This will solely
down to individual parties, who want to make this happen. In New Zealand’s sheep
milk industry, it took Keith Neylon of Blue River to brave the uncertainty alone and
carry the industry for years. Ireland will probably require a similar outlier or
maverick, call them what you want, to take on the industry and open up the path
for everyone else. In the words of Keith Neylon, “We've had no industry support”
and goes on to say “''No-one wants to know, until the time something is proven and
becomes low-risk. Then everyone is quick to say: Me too” [ CITATION All14 \l 6153 ].

From an academia perspective, there is evidence of selection bias. This was mainly
caused by the limited resources of the researcher. There are other companies that
could have been assessed. This would have built up a more substantial analysis
when assessing the growth strategies used in the niche dairy industry. With more
resources, buffalo milk, deer milk and others could have been assessed.

The aim of this research was explore the possibility of developing a large niche
dairy industry in Ireland. It took a global viewpoint and analysed all aspects from

70
the primary production to consumer behaviour. The researcher had limited
resources and the results in this research can be viewed as basic, however the
merits of this research can be seen when it is used as an education tool for
someone interested in the niche industry or someone looking for an agricultural
opportunity. This research will be seen as one of the many first steps into
developing a large scale, niche industry in Ireland.

5.2 Recommendations for future work

 The researcher recommends that it is imperative that a facility, such as the
FOODWAIKATO in New Zealand, is made available to food innovators in
Ireland. MTL does not have the commercial viability to launch milk powder
products.
 Any interested parties should lobby for government support for this project;
there is significant industry ready for Ireland to enter. The government
support should allow the early adopters to fast-track their way to creating a
viable, sustainable business.
 The development of a niche dairy association for each of the Goat, Sheep and
Organic cows in Ireland. The members all face different challenges so
separate associations should be set up; however these associations could
collaboratively work together.
 The development of brands that encapsulate each of the industries. There is
little justification for many Irish sheep milk brands for example. The industry
needs to make an impact and to do this it needs strong consumer awareness
and brand equity.
 Further research to be completed with regards to the uniqueness of
specifically Irish produced niche milks and the consumer benefits that go
with these products.
 Academic research should be conducted on the environment sustainability of
these niche industries in an Irish agricultural setting and how to improve
their rating by optimising farming and feeding practices.

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Appendices
Appendix 1: Trends in the food industry
Nutrition

Coca-Cola made headlines in 2015 with it released Fairlife Milk in the US. The
brand’s new “ultra-filtered” milk offers lactose free and more nutrient dense
option compared to traditional milk. The new line of milk promotes itself as having
50% more protein, 30% more calcium and 50% less sugar than traditional milks.
This is accomplished through a filtration process that separates the components of
milk, which, with the exception of lactose, are then recombined. Priced at $4.29 for

81
1.5L, it is definitely located in the premium milk category [ CITATION Min16 \l
6153 ].

Environmental

Dairy and meat production have received significant bad light over the past
number of years due to their significant role in the contributing to climate change.
Due to this, people have sought more environmental substitutes to these products.
Veganism and Vegetarianism have grown dramatically in recent times with
environmental concerns being seen as a major contributing factor in this. In 2016,
The Vegan Society in partnership with Vegan Life Magazine commissioned
research that found that there were over half a million vegans in Great Britain:
three and a half times as many as estimated in 2006 [ CITATION The16 \l 6153 ].

Other consumers have simply sought options that were less harmful on the
environment such organic and less processed, raw products. Organic milk and the
rise of organic dairy products have been significant and are predicted to continue
to grow in the future. Studies have shown that customers are prepared to pay
approximately 20% extra as a premium for organic, this is based on the UK market
[ CITATION Bor16 \l 6153 ].

In Germany, the sales of organic food are booming due to the consumer’s strong
beliefs around food sustainability. Germany is Europe’s largest market for organic
products and in 2015, sales of organic food and drink grew 11% in Germany
[ CITATION Joh17 \l 6153 ].

In an interesting turn of events, Fonterra's brand manager of organic product had

put his name to a review of literature which indicated there was no difference
between conventional milk and organic. However in recent times, Fonterra is
"desperate" to gets its hands on organic milk supplies. The international retail
price of organic milk powder is $14,600 per tonne compared to about $2800 for
non-organic [ CITATION Ger15 \l 6153 ]. This shows that Fonterrra, New Zealand’s
largest dairy processor, recognises the potential of organic dairy from an economic
perspective.

Health

Digestive Wellness has become a major trend [ CITATION Jul171 \l 6153 ]. As stated
by Scottie Chapman, CEO of Spring Sheep Milk Co.,during a presentation,
Consumers only want benefits, not attributes [ CITATION Sco16 \l 6153 ]. This is

82
reiterated in a Mintel study where it states “consumers generally have poor
knowledge about lactose intolerance” although many suffer from lactose
intolerance [ CITATION Min161 \l 6153 ]. Consumers understand and appreciate
ease of digestion. This is something many products have done well.

New Zealand’s A2 Milk Co has had great success. The milk’s unique selling point is
that it contains the A2 beta case protein, which the company says may be easier for
some people to digest compared with A1 proteins that are more commonly found
in most milk products. They focus on digestive wellness rather than pushing the
science at the consumer [ CITATION Min16 \l 6153 ].

Spring Sheep milk co. produce a powder that is about 80% sheep milk and includes
probiotics and prebiotics. Sheep milk is naturally easier to digest, and with the
bacteria, are assisting in gut health [ CITATION Sco16 \l 6153 ]. Probiotics are a term
that is in common currency and supports the idea that sheep milk is also easy to
digest. Added value of probiotics is really big in Asian market and connecting
sheep milk with this type of product highlights the positive benefits of sheep milk
with focusing on the science of the sheep milk’s ease of digestion attributes
[ CITATION Jul17 \l 6153 ].

Trustworthiness

Trustworthiness is a major trend in the food industry. There have been many
scandals around the world. One scandal in particular was the scandal involving
milk and infant formula along with other products being adulterated with
melamine in China. China reported an estimated 300,000 victims in total
[ CITATION Tan08 \l 6153 ].

As a result of this scandal, Chinese consumes seek milk products that were
produced outside of China. One product produced in Ireland, Illuma is the top-
selling foreign baby milk brand in China. A 900g can retail in Shanghai
supermarkets for the yuan equivalent of €50 to €60 a can. This compares to
around €14 for the Chinese-manufactured formula [ CITATION Cat15 \l 6153 ]. This
illustrates the importance the Chinese consumer puts on having a trustworthy
brand.

An organic product is also perceived as a trustworthy product. However, it is no

longer enough to be organic, many conventional products claim to use no GMOs, no
antibiotics, and practice high levels of animal welfare. Organic products need to

83
push all aspects to maintain the premium price they currently achieve [ CITATION
Min16 \l 6153 ].

Appendix 2: Internal Growth strategies – summary

As the search for growing niche milk opportunities across the world was
conducted, many different types of milk were briefly analysed. Buffalo, Deer and
even Donkey milk were considered but one type of milk and the actions of one
company stood out, Camel milk from Al Ain Dairy.

Over the last 30 years, Al Ain has grown to become the largest dairy and juice
producer in the United Arab Emirates. They have been aggressive in their
expansion and strive to maintain extensive research and development with
product innovation at the heart of their future plans. Al Ain Dairy has released a
complete range of camel milk products under the “Camelait” brand name
[CITATION foo12 \l 6153 ].

Al Ain Dairy is not the only company involved in Camel milk production but they
have developed a wide range of products from milk drinks, ice cream to whole milk
powder. While it is still early days, camel milk does show promise and could
indeed appeal to the growing number of consumers looking to purchase
alternatives to cow’s milk. It has a range of benefits and unique selling points such
as its high levels of insulin, which may be of benefit to diabetics. It does however
come at a premium and this may limit its future growth [ CITATION Min14 \l 6153 ].

What stood out for the researcher about Al Ain was that it had moved into milk
powders unlike other brands. This was extremely innovative and required the
construction of a dedicated spray drying facility. Prior to commissioning a spray

84
dryer, Al Ain Dairy performed trials of camel milk production with the spray
drying technology at spray dryer manufacturing facility in Denmark.

On trials, both freeze drying and spray drying techniques were used for the
production of camel milk powder. As a result of these line trials, Al Ain Dairy
determined the spray drying technology would be the most suitable method.
Currently, Al Ain Dairy is one of only two companies in the world to produce camel
milk powder [ CITATION Kak14 \l 6153 ].

With the product having over one year of a shelf life, it is “primed for the export
market” says the CEO of AL Ain Dairy, Abdullah Saif Al Darmaki. With the demand
for nutritious alternative milks growing in European and North American markets,
they felt there was room for camel milk products now more than ever before
[ CITATION Mar15 \l 6153 ]

Al Ain focused on diversification. This is because the product they developed was
relatively new and innovative and brings the company into brand new markets.
Another company that displayed diversification is Blue River in New Zealand.

Blue River for a long period only produced Feta cheese from their milk. In the
years that followed when Keith Neylon became the sole owner, Blue River
successfully developed new products that moved Blue River into more export
markets. New Zealand similar to Ireland is a small market and their closest
neighbour, Australia is not of a significant size either. Neither market is at the level
to consume high value, niche cheeses that would allow Blue River to continue to
grow at the rate they desire. These products were mainly powder-based after they
had their own powder planted commissioned in 2013 [ CITATION Col13 \l 6153 ].
This move shows that diversification is so important when dealing with the niche
dairy industry. These alternative dairy products will never be able to compete on
price with conventional cow dairy.

Market development was seen particularly in two New Zealand companies, Spring
Sheep and the Dairy Goat Co-Op. New Zealand’s small domestic market providing a
barrier to continued growth that can be achieved by these companies in their home
market.

The strategy of Spring Sheep is to be completely demand-driven [ CITATION Jul17 \l

6153 ]. They want to avoid the commodity market, sell the right products in the
right markets, and create the right brand that is scalable. They want to avoid the
boom-bust phase that tends to occur with any new industry [ CITATION Sco16 \l

85
6153 ]. Initially, Spring Sheep have developed Whole Milk powder, Milk powder
fortified with probiotics, Sheep milk tablets with Manuka honey, Gelato and Butter.
These products all have long shelf-life and importantly for New Zealand products,
due to the small domestic market, exportable [ CITATION Spr17 \l 6153 ].

The three areas Spring Sheep are avoiding are A. China, B. Infant formula and C.
Cheese. This is because:

A. China – China is a huge market and it is very difficult to gain a strong

presence or achieve much market penetration. It is a market with
extremely tough border operations and very risky. China is also a largely
diverse market with different cities having different trends and attitudes.

B. Infant formula- Infant formula is becoming increasingly commoditised and

although it is a high value product now, it does not mean it will be a high
value product into the future. It is an area that has seen large investment by
major players in the dairy world. Spring Sheep do not wish to compete with
these players for consumers.

C. Cheese – Spring sheep are a new company with no tradition of cheese. They
believe the market is already served with excellent European sheep milk
cheeses such as Feta, Pecorino, Manchego and Roquefort.

Spring Sheep are focusing on obtaining strong market penetration in a few

markets as their initial strategy rather than developing a huge range of products.
To develop a brand and obtain value, they need to have a presence in the market.
[ CITATION Sco16 \l 6153 ]

The Dairy Goat Co-Op grows their business in a risk-averse manner, they only
allow the supply of milk to reach a level where they are confident they can sell and
instead of investing in growing their presence in an existing market, they seek to
build a new market every year. They are a premium, niche product and realise that
they product won’t ever be a massive seller in any one market. It can take 5 -8
years for DGC to establish the brand in a new market as it takes time to build
consumer awareness of their product[ CITATION Sco16 \l 6153 ]. This is a good
example of market development.

Over 60 farms and a waiting list of suppliers wanting to join, the value for DGC is
reliant on the brand strength they have built up over the years as there will be
many other suppliers. Value will only be retained if consumers feel there is value in

86
 their brand versus a cheaper alternative[ CITATION Sco16 \l 6153 ]. This is why they
avoid overall pushing their product in anyone market. Focusing on market
penetration would force them into devaluing their product.

In Ireland, The Little Milk Company’s starting strategy was simply to get artisan
producers around the Ireland to contract manufacture and package cheeses using
their milk and their brand.

Outside of Ireland, the main markets for their products are the BENELUX, French
and German markets. Their USP of being organic is a major boost and allows them
to command a premium for their products especially in Germany, where organic
products are extremely popular[ CITATION SH17 \l 6153 ]. Market development is
essential to their growth strategy as there is a ceiling to which they can achieve in
the Irish market due to the premium price-point of their products.

The Irish themed products such as the “Slievenamon” Vintage Cheddar, simply
became Vintage cheddar. These simple changes made it easier for consumers to
understand their products much more and bring more attention to their umbrella
brand and the story associated with that rather than these complicated product
names, especially in export markets. [ CITATION SH17 \l 6153 ].

Appendix 3: External growth strategies – summary

Merger

The merger of different goat milk co-operatives around New Zealand led to the establishment of
The Dairy Goat Co-Operative (DGC) in 1984. The Co-Operative model was chosen as it was felt
that it provided the best way to ensure sustainable returns, wealth and future security for the
farmer shareholders. This merger is attributed to the development the first goat milk-based infant
formula in 1988 [ CITATION DGC171 \l 6153 ]. The company has had real success in the niche milk
industry where it now, effectively “owns” the Goat Infant Formula sector [ CITATION Sco16 \l
6153 ].

Joint Venture

The DGC along with their merger, are also involved in a JV with Orient EuroPharma to export to
key APAC markets. This partnership has combines the strengths of both companies, utilising
DGC’s capability in development, manufacture and research of goat milk based formula, and
Orient Europharma’s sales, marketing & distribution expertise [ CITATION DGC17 \l 6153 ]. Taking

87
a direct involvement in the distribution of their products, DGC not only hold onto this margin,
they reduce the risk involved in outsourcing distribution.

The 50:50 JV between Landcorp Farming Ltd and SLC, an investment and strategic-marketing
company facilitated the establishment of the Spring Sheep Milk Company. This is the first public-
private partnership in the history of New Zealand agriculture [ CITATION Jul17 \l 6153 ]. It is very
clear from figure 9 what partners are in charge of what. Landcorp are in charge of the farming
activities and SLC are in charge of all activities beyond the farm gate.

The JV between AVH and Bettinehoeve was established on the 1 st May 2013. It was fuelled by the
acquisition of AVH by the Emmi Group, The current distribution and sales of goat milk powder by
AVH dairy combined with the raw material processing by and production location of
Bettinehoeve, and completed by the expertise of the Emmi group in Switzerland, form a solid
basis for Goat Milk Powder B.V. where a 5 ton dryer was commissioned. [ CITATION Goa17 \l
6153 ].

As the relationship between AVH and Bettinehoeve developed, it became clear that both
companies were looking for diversification in their activities. These meetings led to a supply &
demand analysis of the various products. It was clear that the possibility of developing milk
powders were interesting to them. In recent years, the use of goat milk powder in the infant
formula industry has increased the demand for goat milk. Goat Milk Powder B.V. also focuses on
sales in the areas of sports nutrition, diets for the elderly and on the various ways in which goat
milk powder can be used in the health care industry and pharmaceutical products [ CITATION
Goa14 \l 6153 ].

The benefits of the JV for both parties are:

 Price stability for farmers

 New product opportunities – whey from cheese run-off

 Shared risk on investment [ CITATION Goa14 \l 6153 ]

During an interview with Epicom, they revealed their part in a JV with Abbeyfield Foods, called
Advanced Food Concepts. Through this JV, they own a several food brands such as BONYA Irish
whole milk powder and Superlife, which is a mix of superfoods. They are a successful company in
the dairy industry as they have managed to live in the space that large companies such as Kerry

88
and Glanbia don’t find interesting [ CITATION JC17 \l 6153 ]. Abbeyfield Foods have brought
investment and contacts throughout the world in various markets that will help with selling and
distributing the products [ CITATION JC17 \l 6153 ].

Strategic Alliance

Strategic Alliances are prevalent throughout the niche dairy industry. From an Irish perspective,
Epicom’s initial business strategy focused on its ability to act as an outsourcing partner to
businesses, both domestic and foreign partners. They supply own brand milk powder to the Dubai
Duty Free and also work with many companies such as a Kinectica sports supplements as a
packing partner [ CITATION Epi15 \l 6153 ]. As their business grew, they began to offer more
services such as R&D and Quality Control [ CITATION JC17 \l 6153 ]. Forming a Strategic Alliance
with a trusted company such as Epicom, allows a business to focus its limited resources
elsewhere. It may eventually want to bring these operations in house as the business grows, but it
is a valuable asset to have in the beginning.

The Little Milk Company formed Strategic Alliances with many farmhouse cheesemakers
throughout Ireland. The Little Milk Company outsource the manufacturing and packaging of the
cheeses which are made using their milk and their brand. This meant that the significant
investment that is involved in building a manufacturing facility was not required and it allowed
them to focus all their time and effort into the sales and marketing[ CITATION SH17 \l 6153 ]. It
also allows them to avail of decades of experience in the art of cheese-making. They are farmers
by trade so delving into this area would have untold risks. It is also builds a community and a
network for the business which is full of good will and opportunities[ CITATION SH17 \l 6153 ].

Pan Euro Foods are a distribution and sales that focuses on the exporting of European but mainly
Irish produce to the Middle East and other markets such as Singapore and Hong Kong. Their main
relationships lie with retailers such as Spinneys in U.A.E[ CITATION CR17 \l 6153 ].

89
The strategic alliance they form with their suppliers is based on the fact that they have ample
experience to take products from Europe and sell them in export markets. They take a
distribution and sales margin off the product but it means the supplier does not need to invest
significant amount of time and capital into achieving export sales [ CITATION CR17 \l 6153 ].

Acquisitions

Blue River

This is believed to be the biggest sheep dairy operation in the world. In January 2015, Blue River
sold its processing plant and its brand to Chinese investors. The investors will continue processing
the milk at the present site. The sale of this side of the business has allowed Keith Neylon’s
farming side of the business, Antara, to focus on growing the primary production (milk-
production). This is believed to be the biggest sheep dairy operation in the world. McCarthy 2015.

Blue River was vertically integrated, owning its farms, milk, and sheep, transporting its milk to the
factory, processing the milk into cheese, ice-cream and milk powder, and marketing its products.
The overseas investment has allowed Blue River Dairy to increase production and expand its
export marketing.

In order to move away from purely bulk powder and wholesale products, the investment in the
canning plant was seen as a significant investment. It allows them to bring value-added products
to the retail space such as an infant formula product [ CITATION Col13 \l 6153 ].

90
 Sole ownership,
Foreign
Blue River
Co-Operative Vertically
Investment
Nutrition HK
integrated
Blue River owned Keith Neylon -
by 5 Farmers Blue River
Antara Ag

Figure 15: The timeline of Blue River’s corporate structure

Alimenta S.R.L.

In Italy, more and more, every year, Sardinian products and ingredients made from sheep and
goats are exported to China. Recently, Alimenta signed an agreement signed with Blue River
Dairy, a well-established Chinese manufacturer from the sheep and goat infant formula sector.
This is the same Blue River that owns the operations in New Zealand. The Chinese owners have
called their group Blue River HK. This was a major consolidation of sheep milk powder products
worldwide and represents another important step in reinforcing the Sardinian company in Asia’s
biggest market. The aim of the agreement is to put finished Alimenta branded products
containing Sardinian sheep infant formula on the Chinese shop shelves as well as improving its
factory. It is significant for the region of Sardinia as it will consume considerable quantities of
whey and ricotta whey from the cheese factories. It is based on the principle the more milk that is
taken away from the traditional cheese market; the more the market will stabilize. Currently the
market for sheep milk is suffering in Sardinia due to overproduction and cheese surpluses
[ CITATION Red161 \l 6153 ].

Blue River was very interested in what Alimenta was doing because it has plenty of milk
available as well as a long culture of sheep milk production. Blue River has taken 60% of the

91
controlling shareholder of Alimenta srl and has also committed to further invest 50 million into
the construction of the first European infant formula milk powder factory for sheep milk products
and desalination whey powder factory. The aim is to produce 200 tons of finished
products[ CITATION Mim16 \l 6153 ].

Emmi Group

Emmi is the largest processor of milk in Switzerland. Emmi entered the goat milk products
business in 2010 [CITATION Jul17 \l 6153 ]. Emmi describes goat milk dairy products as “one of
the dairy industry’s most attractive niche markets worldwide” and it has made growing its
presence in this low-volume but high-value, high-growth niche a key strategic focus since 2010
[ CITATION Jul17 \l 6153 ]. They have revealed that it intend to strengthen its position in the
international market for goat’s and sheep’s milk products. Emmi acquired a 70% stake in the
goat’s and sheep’s milk products trader AVH Dairy Trade BV

Emmi believe that the growth of sheep and goat milk products is due to three factors:

 Lactose intolerance

 High protein and calcium of Sheep and goats milk

 Increasing popularity of traditional cheeses [ CITATION Dai13 \l 6153 ]

Unlike most dairy producers, it has never fallen into the trap of focusing only on the high-volume,
low/no-margin markets and has always grown by choosing premium niches with nutritional
advantages and growth potential [ CITATION Jul17 \l 6153 ].

Emmi now have stake in both sides of the Goat Milk Powder B.V as they have since gone on to
acquire a 60% stake in Bettinehoeve. This has strengthened the group’s presence in the niche milk
industry further. Bettinehoeve is still managed by the original management team and acts
independently in the market [ CITATION Jim16 \l 6153 ].

92
 Goat Goat Milk
Milk
Joint Venture for Powder production
Powder B.V.

CollaborationBettinehoeve
AVH Dairy
AVH Dairy
on the sales of Bettinehoeve
Traders

Acqusition of stakes in both AVH

Emmiand Bettinehoeve
group

Figure 16 Structure of Goat Milk Powder B.V.

Appendix 4: List of Interviewees

Informant Company/Organisation Position Country
JGC Teagasc Farm advisor Ireland
KD Moorepark Technology LTD Research Officer Ireland
CR Pan Euro Foods Director Ireland/U.A.E
MC Sheep dairy Farmer Farmer Ireland
KF Goat Farmer Farmer Ireland
FR Organic Farmer Farmer Ireland
SH Little Milk Company Sales Ireland
JC Epicom foods Ltd New Product Dev. Ireland
DO Bord Bia Communications Ireland
KL Tetra Pak Sales Sweden
FOC GEA Business development Ireland

93
Appendix 5: Complete Nutritional breakdown of Cow, Goat and Sheep Milk

Nutrient content of milk varieties by 100 g reference amount. Compiled from the USDA
Nutrient Data

Component Unit Cow Goat Sheep

Overall Composition
Water g 88.32 87.03 80.70
Energy kcal 60 69 108
Carbohydrate g 4.52 4.45 5.36
Fat g 3.25 4.14 7.00
Protein g 3.22 3.56 5.98
Minerals (Ash) g 0.69 0.82 0.96
Vitamins
Vitamin A µg 28 57 44
Thiamin (Vitamin B1) mg 0.044 0.048 0.065
Riboflavin (Vitamin B2) mg 0.183 0.138 0.355
Niacin (Vitamin B3) mg 0.107 0.277 0.417
Pantothenic Acid
(Vitamin B5) mg 0.362 0.310 0.407
Vitamin B6 (Pyridoxine) mg 0.036 0.046 0.060
Vitamin B12
(Cobalamin) µg 0.44 0.07 0.71
Vitamin C mg 0.0 1.3 4.2
Vitamin D IU 40 12 ND
Vitamin E mg 0.06 0.07 ND
Folate µg 5 1 7
Vitamin K µg 0.2 0.3 ND
Minerals (Ash)
Calcium mg 113 134 193
Copper mg 0.011 0.046 0.046
Iron mg 0.03 0.05 0.10
Magnesium mg 10 14 18
Manganese mg 0.003 0.018 0.018
Phosphorus mg 91 111 158
Potassium mg 143 204 137
Selenium µg 3.7 1.4 1.7
Sodium mg 40 50 44
Zinc mg 0.40 0.30 0.54

94
Carbohydrate Detail
Lactose4 g 5.26 ND ND
Fat Detail
Cholesterol mg 10 11 27
Fatty acids, total
saturated g 1.865 2.677 4.603
4:0 g 0.075 0.128 0.204
6:0 g 0.075 0.094 0.145
8:0 g 0.075 0.096 0.138
10:0 g 0.075 0.260 0.400
12:0 g 0.077 0.124 0.239
13:0 g 0.000 ND ND
14:0 g 0.297 0.325 0.660
15:0 g 0.000 ND ND
16:0 g 0.829 0.911 1.622
17:0 g 0.000 ND ND
18:0 g 0.365 0.441 0.899
20:0 g 0.000 ND ND
Fatty acids, total
monounsaturated g 0.812 1.109 1.724
14:1 g 0.000 ND ND
15:1 g ND ND ND
16:1 unspecified g 0.000 0.082 0.128
16:1 cis g ND ND ND
17:1 g ND ND ND
18:1 unspecified g 0.812 0.977 1.558
18:1 cis g ND ND ND
18:1 trans g ND ND ND
Fatty acids, total
polyunsaturated g 0.195 0.149 0.308
18:2 unspecified g 0.120 0.109 0.181
18:2o-6,cis,cis g ND ND ND
18:2 i g ND ND ND
18:3 unspecified g 0.075 0.040 0.127
18:3o-3,cis,cis,cis g ND ND ND
Protein Detail
Alanine g 0.103 0.188 0.269
Arginine g 0.075 0.119 0.198
Aspartic Acid g 0.237 0.210 0.328

95
 Cystine g 0.017 0.046 0.035
Glutamic Acid g 0.648 0.626 1.019
Glycine g 0.075 0.050 0.041
Histidine g 0.075 0.089 0.167
Isoleucine g 0.165 0.207 0.338
Leucine g 0.265 0.314 0.587
Lysine g 0.140 0.290 0.513
Methionine g 0.075 0.080 0.155
Phenylalanine g 0.147 0.155 0.284
Proline g 0.342 0.368 0.580
Serine g 0.107 0.181 0.492
Threonine g 0.143 0.163 0.268
Tyrosine g 0.152 0.179 0.281
Tryptophan g 0.075 0.044 0.084
Valine g 0.192 0.240 0.448

Appendix 6: Examples of Potential products for the Niche dairy industry

Whole milk powder

Infant formula

Butter

96
 UHT Milk

Milk tablets

Soap

Ice cream

97
Whey Protein

Cheese

98