Glanbia says controversial price cut will not harm milk farmers

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IFA accuses ingredients giant Glanbia of starting a race to the bottom

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15 November 2009 | 0

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The Irish Farmers Association hit out at Glanbia last month when it announced a wholesale price reduction for its branded milk portfolio. The food group has lowered the price of two litre packs of Avonmore, Premier, CMP and Snowcream milk by 10% or 10c/litre, which Glanbia intends to see passed on to the consumer.

However, chairman of the IFA National Liquid Milk Committee, Eamonn Bray said the price cut will not stem the sales of private label milk and may provoke a retail price war, to the detriment of liquid milk farmers. Bray criticised the strategy and claimed that previous similar cuts this year had not succeeded in protecting market share from private label gains.

“I estimate that the Glanbia move has just squandered around €10 million of the value added to their suppliers’ milk. Had this money been delivered to farmers in improved milk prices, it would have significantly reduced the massive losses producers stand to make this year,” Bray said.

Speaking to ShelfLife, marketing director at Glanbia Joseph Collum said that, on the contrary, the company is “the highest payer in the market,” adding: “We pay premium price for premium quality milk, for all of our milk brands, and I don’t see that changing any time soon.”

Collum said he believes the criticism from the IFA is premature at this stage. He said the company feels the price cut is “the right thing to do in the face of competition,” and previous similar strategies have returned increased sales, “not just in milk but across our portfolio of products.”

“We believe this will work as a strategy in terms of driving further demand for branded milk,” he said, which will create an “upside” for the suppliers. According to Collum, the price drop has already caused “some uplift” in sales.

 

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