||This article contains content that is written like an advertisement. (July 2015)|
|Traded as||LSE: GLB, ISEQ: GL9|
|Founded||Waterford, Ireland (1997)|
|Liam Herlihy (Chairman)
SiobhánTalbot (Group Managing Director)
|Revenue||€ Total Group 2.4 billion (2013)|
Number of employees
Glanbia plc (//)[a] is a global performance nutrition and ingredients group with operations in 32 countries. It has leading market positions in sports nutrition, cheese, dairy ingredients, speciality non-dairy ingredients and vitamin and mineral premixes. Glanbia products are sold or distributed in over 130 countries. While Europe and the USA represent the biggest markets, the Group are continuing to expand into the Middle East, Africa, Asia Pacific and Latin America. Glanbia is listed on the Irish and London Stock Exchange (Symbol: GLB). The Group has four segments; Global Ingredients, Performance Nutrition, Dairy Ireland and Joint Ventures & Associates. Including Joint Ventures & Associates, Glanbia has over 5,200 employees worldwide in 32 countries.
- 1 History
- 1.1 Emerging from Ireland's dairy consolidation in the 1960s
- 1.2 International expansion in the 1980s
- 1.3 A merged dairy giant for the new century
- 1.4 Reorganisation in the late 1990s
- 1.5 New corporate identity
- 1.6 The new millennium
- 1.7 Entering the "nutritional" foods segment
- 1.8 Proposal to sell Irish dairy division to farmers' co-op
- 2 Segments
- 3 Notes
- 4 See also
- 5 External links
||It has been suggested that Premier Dairies be merged into this article. (Discuss) Proposed since February 2015.|
Emerging from Ireland's dairy consolidation in the 1960s
Dairy products have long formed the backbone of Ireland's agricultural sector. In the early 19th century, the country was amongst the world's largest producers of dairy products. In 1848, Ireland accounted for two thirds of butter imports into the port of London. Irish butter came under pressure by competitors which were modernising their systems with the newly developed cream separators. As a consequence, Irish butter imports to London dropped to under one per cent in the early 1880s.
The new technologies and their introduction into Ireland fundamentally transformed the country's dairy sector, which had previously been operated by small independent farmers. In order to support the costs of acquiring the new equipment, dairy farmers grouped together and built centralised dairy processing facilities – which became known as ‘creameries’. In the late 1880s, dairy farmers began adopting the cooperative format, often to enter into direct competition with the private creameries. Farmers who supplied milk to the co-ops were better served than those who sold it to the private creameries. In time, most of those businesses found that they were unable to compete with the farmer co-operatives, and many sold their premises and businesses to the co-ops.
The numbers of creameries increased dramatically by 1900, and by the eve of World War I, the country counted nearly 800 plants. In spite of the scarcities, political unrest and violent incidents, the World War I era had been a very prosperous period for farmers. The crisis in the country's agricultural market following the war led to a large number of creameries to shut down.
Government policy intervened in the 1920s with the aim of further consolidating the dairy market. The number of individual creameries was reduced to just 17 large-scale facilities in the years following World War II. At the same time, the number of cooperatives in Ireland had shrunk back to less than 220. Butter remained the Irish dairy industry's core product, accounting for the vast majority of the creameries' production.
The members of five co-operatives agreed to join forces and become Waterford Co-operative Society Limited in 1964. The formation of Waterford Co-operative in 1964 was the first of the major amalgamations and it was the beginning of a story that would be repeated throughout Ireland over the next 40 years. The size of the co-operative gave them the opportunity to produce a bigger range of products. With its head start, Waterford was able to grow and a decade later, in 1974, this scale of operation would help in winning the French Yoplait franchise to produce the prestige range of yogurts at Inch, County Wexford – an association that continues to this day. Waterford continued growing throughout the 1970s, amalgamating with a number of other, smaller creameries.
In the meantime, 25 other cooperatives agreed to merge to establish the Avonmore Creameries Federation in 1966. Backed by the British dairy giant Unigate, the new federation began the construction of a new multi-purpose dairy plant in Ballyragget, County Kilkenny. The plant was the biggest processing facility in Europe at that time. Today, the Ballyragget facility is the largest integrated dairy site in Europe, processing about 20% of the Irish milk pool. Avonmore originally focused on the production of butter and powdered skim milk. On 1 September 1973, 20 societies amalgamated, thus creating Avonmore Farmers Ltd. As time moved on, Unigate’s involvement changed and, in 1978, the cooperative bought back Unigate's stake in the Ballyragget facility.
International expansion in the 1980s
Both Avonmore and Waterford expanded into the 1980s. At home, both companies established brand names, while Waterford continued with its Yoplait franchise. The two co-operatives continued to add product lines. Avonmore, for example, launched Avonmore Fresh Milk on the Dublin market on 1 June 1981.
The two companies, Avonmore and Waterford, went public in the 1980s. Avonmore went first, becoming Avonmore Foods plc on 6 September 1988. Waterford Foods plc was launched on the Irish Stock Exchange (ISEQ) on 6 October 1988. Both groups remained majority controlled by the dairy farmers that had formed the original co-operatives. With new access to capital, both companies embarked on a programme of expansion.
Avonmore’s strategy included growing the dairy business in the UK and US. They also decided to grow the business through acquisition. Over the next nine years they made 28 acquisitions in Ireland, the UK, the US, Hungary, Germany and Belgium. The major developments were in the UK with liquid milk and mozzarella cheese and in the US with cheese production in Wisconsin, Illinois and Idaho. In the years following flotation, Avonmore also invested in the meat business in Ireland.
In 1989, the year after the establishment of Waterford Foods plc, the Group bought Galloway West in the US heartland dairying state of Wisconsin. The company manufactured cheese, condensed milk and food ingredients. Later in the year, Waterford bought A.Heald Limited of Manchester, a company that operated in the liquid milk and fruit juice business. Waterford also expanded in Ireland with the move into the prized Dublin milk market. In 1995, Waterford bought The Cheese Company, one of the two largest cheese manufacturers in Great Britain.
Both organisations were focused on similar growth strategies at home and overseas. Speculation was, therefore, rife as to a possible merger between the two dairy giants. The talks began in 1991. However, the two sides were unable to reach an agreement at that particular time.
A merged dairy giant for the new century
Waterford's expansion came at a cost however, and the group struggled to maintain profitability in the mid-1990s. By 1997, after Waterford posted a profit warning, the group once again found itself in merger talks with Avonmore. On 13 April 1997, Waterford confirmed in a media statement that it had received a formal approach from Avonmore Foods plc and Avonmore Creameries Limited and advised that the Waterford Board was considering this approach. The prize for a successful merger would be significant: an Irish based, world-scale food company. This proposed coming together would represent the biggest amalgamation in the history of the Irish dairy industry and possibly of Irish agribusiness.
Intensive dialogue took place between Avonmore and Waterford throughout April and May 1997. On 26 May, the Boards of Waterford Foods plc and Waterford Co-operative Society met to consider amended proposals from Avonmore Foods plc and Avonmore Creameries Ltd. The merger proposals provoked serious debates at numerous shareholder meetings throughout Waterford and Avonmore. Some shareholders had strong reservations and among their concerns were issues such as perceived loss of identity, dominance by one party over another, relative valuations of the two organisations, size and scale of the new entity, representation and weakening of farmer control. However, the overwhelming majority of shareholders believed that the merger was the right option for both organisations.
The first vote took place on 11 July 1997, exactly three months after the merger was formally proposed. The first vote followed an intensive six-week programme of shareholder information meeting throughout the Waterford and Avonmore areas. The successful merger of Avonmore Creameries Limited and Waterford Co-operatives Society, on 4 September 1997, formed the new Avonmore Waterford Co-operative Society. On the same date, the merger of Avonmore Foods plc and Waterford Foods plc, formed the new Avonmore Waterford Group (AWG) plc.
Reorganisation in the late 1990s
The result of the 1997 Avonmore Waterford merger was to create the fourth biggest dairy processor in Europe and the fourth biggest cheese producer in the world. Consequently the Avonmore Waterford Group announced a reorganisation programme, following a post-merger business review. The target was to increase the Group's competitiveness. The Group strategy was to concentrate food ingredients activities in large-scale facilities in Ireland and the US.
In the US, the development strategy was to focus on the Avonmore West operation in Idaho which benefited from scale, location in an expanding milk field. Following the completion of a US$20 million investment programme, Avonmore West was a global supplier of advanced dairy food and nutritional ingredients. As a direct result, the decision was taken to dispose of the smaller cheese business in Wisconsin.
In Ireland, food ingredients activities were to be located mainly at Ballyragget and Virginia. Within the consumer food business, liquid milk operations were to be located at Ballytore, Waterford and Drogheda. These decisions resulted in the closure of smaller facilities.
In the UK, the Group closed its Appleby cheese facility and also disposed of the Manchester-based juice business during 1997. The cost-saving measures targeted to save £20 million in 1998 and £40 million in 1999. It was anticipated that the programme would reduce jobs in AWG from 11,900 to 10,600. Job losses would be 750 in Ireland and 550 in the UK.
By May 1999, the reorganisation programme, announced in November 1997, was virtually complete. The Ballyragget site had been enhanced to accommodate the additional milk volumes. In the US, the Group was investing US$36 million in Idaho to increase cheese production by 30 per cent and dairy-based food ingredients production by 22 per cent. On 1 June 1999, the Group announced two important strategic sales. The first was the disposal of the UK liquid milk operations to Express Dairies, for £125 million. The second was the sale of its Irish beef processing operations to Dawn Meats for £10 million.
New corporate identity
On 15 February 1999, an Extraordinary General Meeting and Special General Meeting were held to seek the necessary approval for the introduction of a new name. The result was that shareholders gave the Glanbia name an overwhelming endorsement. The change of title from Avonmore Waterford Group to Glanbia became official on 4 March 1999. The name Glanbia has its roots in the Irish language – Glanbia means "pure food" in Irish.
The new millennium
On 11 August 2000, Glanbia announced a joint venture with Leprino Foods. The objective was to increase market leadership for Glanbia and Leprino in the rapidly growing European pizza cheese market. The alliance was soundly based: Leprino was the world’s largest producer of mozzarella cheese. As part of the joint venture, Leprino took a 49 per cent interest in Glanbia Cheese UK and granted exclusive use of Leprino’s patented technology to Glanbia. Leprino paid £27.50m in cash, delivered in 11 suitcases, for the 49 per cent share of the business.
International joint ventures became a key element of the group's growth strategy. Consequently, in October 2003, Glanbia and PZ Cussons plc announced a €20 million joint venture to build a new factory in Nigeria to supply evaporated milk and milk powders to the Nigerian market. PZ Cussons plc had over a century of experience in Nigeria and had a well-developed distribution network. The name selected for the new joint venture company was Nutricima. Glanbia entered into yet another joint venture, this time with the Great Southwest Agency in New Mexico, US. Building commenced at Southwest Cheese in January 2004 and the official opening of Southwest Cheese took place in 2006.
Glanbia continued to refine its focus, targeting the new and fast-growing ‘nutritional’ foods segment. As a result the Group began selling off its non-core segments, including its processed meat business, which was sold in 2002. In 2003, the company announced its intention to exit the fresh meat market which was subsequently sold in a management buy-out in 2008.
Entering the "nutritional" foods segment
After establishing the group's Nutritionals business in January 2003, Glanbia acquired German-based Kortus Food Ingredients Services (KFIS) in 2004 – thus marking the Group’s first nutritionals acquisition. KFIS specialises in the production, research and development of micronutrient premixes. The purchase increased Glanbia’s product range and brought further access to markets in Germany and Central Europe. On 6 September 2006, Glanbia announced the acquisition of the California-based micronutrient premix business, Seltzer Companies Inc. The acquisition of Seltzer was a logical addition to the previously acquired KFIS. Both businesses have since changed their names to Glanbia Nutritionals. In 2007, Glanbia further expanded their micronutrient premix business with the completion of a new premix plant in Suzhou, China.
As part of its international expansion, Glanbia also acquired Canadian nutritionals business Pizzey's Milling in August 2007. Pizzey's, which mills flaxseed, created a way into the North American omega-3 market.
Glanbia further expanded its presence in the North American market in 2008 by acquiring the Illinois-based sports supplement firm Optimum Nutrition. Optimum has a strong presence in the US market for whey-based premium sports supplements. According to Glanbia, Optimum Nutrition is an autonomous and wholly separate division within the Group. In January 2011, Glanbia announced the acquisition of Bio-Engineered Supplements and Nutrition (BSN), extending their sports nutrition portfolio. BSN is a developer and distributor of nutritional products designed for health, training, physique development and performance.
Proposal to sell Irish dairy division to farmers' co-op
In April 2010 Glanbia plc announced plans to sell its Irish dairy and agri-business division to the Glanbia Co-Operative Society. The farmer-led co-op owns 54.6% of the company. The Irish dairy and agri-business includes brands such as Kilmeaden, Avonmore and Yoplait. The deal was aimed at freeing up Glanbia plc to pursue its global cheese and nutritional ambitions, but it failed to achieve the necessary three-quarters approval from the co-op's members on May 10, falling just short at 73%.
On 25 November 2012 Glanbia disposed of 60% of its Irish dairy processing business to Glanbia Co-Operative Society Limited (the "Society"). As a result the Irish dairy processing business, now called Glanbia Ingredients Ireland Limited ("GIIL")became an associate of Glanbia plc.
Global Ingredients is a global B2B ingredients supplier with leading positions in core focus markets.
Global Ingredients comprises three business units; US Cheese, Ingredient Technologies and Customised Solutions. While these business units are distinct, all benefit from the ever increasing focus on health and nutrition and share relationships with common global customers and end-markets.
Global Performance Nutrition
Global Performance Nutrition is the leading sports nutrition provider globally.
Global Performance Nutrition comprises four brands, Optimum Nutrition, Nutramino, BSN and ABB. GPN offer the most comprehensive range of sports nutrition products in the market and cater for a wide range of end user categories. While the USA remains the largest single market, significant international expansion has taken place over recent years.
Dairy Ireland comprises two businesses; Consumer Products and Agribusiness.
Consumer Products is one of the leading branded consumer products companies in Ireland while Agribusiness is the largest supplier of inputs to the Irish agri sector. Both businesses are central to the heritage of Glanbia and have played a key role in the development of the Glanbia of today.
Joint Ventures and Associates
The Joint Ventures & Associates segment comprises Southwest Cheese, Glanbia Ingredients Ireland Limited, Glanbia Cheese and Nutricima.
While each of these businesses is unique, each has a clear rationale in the context of the overall Group strategy. Glanbia has a strong track record with regard to the successful operation of strategic joint ventures and continue to view the joint venture model as a potential option for organic or inorganic growth going forward.
a. ^ The name is derived from the Irish words glan (pronounced [ɡl̪ˠan̪ˠ], "clean"/"pure") and bia ([bʲiə], "food"). However it is not grammatical Irish; the correct translation of "pure food" is tushar.
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