In 2019, Cork-based dairy co-op Dairygold processed a record 1.39bn litres of milk from its farmer suppliers. Over the last five years, Dairygold’s milk supply has increased by more than one-third (+42%), or 415m litres, as its farmer suppliers increased production following the removal of EU milk quotas in 2015.

While the rate of milk expansion will probably slow over the coming years, it is clear there is still the potential for milk volumes to grow as member suppliers continue to invest in their on-farm enterprises.

This exceptional growth surge in its milk supply has seen the co-op invest heavily in additional milk processing capacity, particularly to meet the demands of peak milk supply in May and June.

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Since the end of quotas, Dairygold has invested almost €190m in capital projects across its various processing sites in Cork. And the co-op has committed a further €130m of investment up to the end of 2020, bringing Dairygold’s total investment to more than €300m since 2012.

At its core, Dairygold is a business to business (B2B) supplier of commodity dairy ingredients and manufactures a range of products including cheese, butter, whole milk powder, whey, casein, fat-filled milk powder and infant-grade skimmed milk powder.

Innovation

However, with most of the heavy lifting completed in terms of capacity investments, the aim for Dairygold now, like many other dairy processors, will be to add more value to its product mix. At the head of this drive for greater added-value is George McLeod, Dairygold’s head of innovation and new product development.

A native of Scotland, McLeod has been working for Dairygold for the last three and a half years and heads a team of food scientists and food nutritionists at the co-op. Forming this R&D team has been just as important an investment for Dairygold as its capital projects.

“Dairygold has a very clear ambition and that is to add value to the milk supplied by our farmer members. My role is to build the innovation culture across the Dairygold business and drive the added-value strategy in the co-op,” says McLeod.

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“Really, my focus is to dial up the science across our product range. Our innovation department works closely with the consumer insights team so we can develop ingredients that the customer really wants,” says McLeod.

As well as the significant internal investment in capability, a lot of Dairygold’s innovation work is grounded in two key collaborations with industry partners and third level research institutions. These are Food for Health Ireland (FHI) based in UCD and the Dairy Processing Technology Centre (DPTC) at the University of Limerick.

Dairygold has a very clear ambition and that is to add value to the milk supplied by our farmer members

In 2008, Dairygold was a founding member of FHI, a new research centre established to identify novel ingredients coming from milk and to develop functional food ingredients which will offer health benefits to consumers. The research focuses on infant nutrition, healthy cheese, appetite modulation, performance nutrition and healthy ageing as well as products that can be used to enhance insulin action.

FHI has since completed two phases of research on the back of matched funding from the Irish dairy industry and Enterprise Ireland. In November last year, FHI received an additional €22m in new funding to begin a third phase of research work.

Spread over five years, FHI received €7.2m from Enterprise Ireland, which was matched by €7.2m from Irish industry partners, including Dairygold, and another €7.2m from other sources.

According to McLeod, this work at FHI has dialled up the health benefits of eating dairy with a strong focus on nutritional science.

“For us, working with FHI has helped us build a development pipeline of functional products. It’s also opened doors for us to be able to talk to some more added-value customers that are out there, especially some of our Chinese customers,” says McLeod.

Efficiency

The second key research collaboration for Dairygold is DPTC, based in University of Limerick. Founded in 2015, DPTC is a €25m collaboration between Enterprise Ireland and the Irish dairy industry. Enterprise Ireland provided €16m of funding for the centre, while dairy co-ops contributed €9m.

DPTC has a slightly different focus in that it’s more a dairy processing technical centre and works closely with Dairygold’s operational team to achieve the maximum operational efficiency in its dairy processing sites.

“The challenge of processing milk is that it’s always coming and you don’t get a chance to step back and say what am I doing and how can I do it better,” says Conor Galvin, head of commercial and business development at Dairygold.

“One of the things that DPTC does is that it allows our operational teams the chance to get out of their day to day and think differently about how we’re running our processing operations. It’s a hothouse for a better way to do things,” says Galvin.

The challenge of processing milk is that it’s always coming and you don’t get a chance to step back and say what am I doing and how can I do it better

Collaboration

Dairygold’s approach to investing in R&D, has been a balance between internal investment and collaboration with industry partners and Enterprise Ireland. This collaboration spreads the cost of investment across the industry but also allows all Irish dairy farmers to benefit from new breakthroughs in nutritional science and processing technology.

As the expected milk supply growth begins to slow down in the years ahead, Dairygold’s range of investments in innovation will play a crucial role in adding value to Irish milk.