Pictured: John Jordan, CEO, Ornua
Ornua has been at the forefront of the Irish food industry for the last 60 years. Starting out as government agency and eventually becoming Ireland’s first food company worth €1 billion, Ornua have had a remarkable journey. During the pandemic, Ornua thrived under John Jordan as they tried to navigate the global upheaval. Jordan wrote a guest article for Business and Finance magazine exploring the future of business and how they made it through the pandemic.
Note: This piece was originally published in Business & Finance magazine, vol. 59, no. 1, available to read, with compliments, here.
Constant change and complex disruption aptly describe the environment that many businesses, including Ornua, operate in today. And while at times it can feel relentless, particularly as we navigate another Covid-19 wave, our 60 years in business is a reminder that managing difficult change is not new, and often brings out the best in our people.
A story to tell
Ornua is a global dairy company with a rich history and a wonderful story to tell. We were established in 1961 as a government agency with responsibility for the marketing of Irish dairy in export markets. The first CEO was Sir Anthony O’Reilly, who is responsible for the creation of the Kerrygold brand. I had the pleasure of meeting Sir Anthony a few years ago, and his passion for Ireland, for Ornua and for Kerrygold was very evident.
The desire at the time of creating the brand was to launch Kerrygold into the “Liverpool and Manchester markets”. The world was such a big and disconnected place in the early 60’s that the scale of the ambition was two UK cities with strong Irish roots. In 1973, with Ireland’s entry to the EU, Ornua (then called An Bord Bainne and later the Irish Dairy Board) became a co-operative, with no further state involvement. Over the past 60 years, our business has grown into a global dairy company with annual sales of €2.5 billion, exporting to over 110 countries around the world and employing over 2,800 people across local market offices and 16 production facilities.
The jewel in our crown is Kerrygold. We take great pride in it being Ireland’s first €1 billion food brand and an icon of Ireland’s rich and unique dairy heritage. My own story with Ornua started in 1993 as a graduate trainee. It’s hard to imagine that less than 30 years ago, email was just catching on, and we were on the cutting edge with two computers to share among 14 people. Most of our business was done in person or by talking to people on the phone. The floors were noisy with phones ringing all day long. There was a lunchtime rota to ensure that someone was always available to answer the phones, just in case a customer called in. When we travelled, we had a phone card, for reduced rate calls, which we could use on pay phones or from hotels. The virtual world of today wasn’t even imagined.
A changing business landscape
Over the past 25 years the world has changed a lot. There is a level of connectivity and a pace of change that seems to accelerate at lightning speed. The expectations on business leaders today are demanding, with a huge amount of time now spent on managing complex issues at an incredible pace.
At Ornua we have a long history of facing big trade issues, from country dairy embargos, foot and mouth, Chernobyl, and the fodder crisis, to name just a few, however the level and pace of disruption over the past few years has been unprecedented.
In December 2019 there was an enormous focus on Brexit – how it would impact our trade with the UK (our largest export market), what it meant for continuity of supply to our customers, and our cost competitiveness. Like many businesses we spent months planning and preparing to mitigate the risk as best we could. Today, while Brexit is still ongoing, it is no longer dominating the agenda, and we are focused on many other challenges and disruptions. We have had to navigate a global trade war between the EU and the US which resulted in a 25% tariff on Kerrygold into the US, a substantive change in the import regulations into Nigeria (a major milk powder export market for our BEO brand) where only six companies are allowed to import dairy products, and of course, dealing with the Covid-19 pandemic.
Covid-19 has fundamentally changed so many aspects of our business. Some of the key impacts include changes to how consumers purchase food, the surge in retail demand, the decline or disappearance of some of the “out of home” sectors, a global supply chain slow down as we continue to feel the effects of Suez Canal incident, a war on talent at all levels, and finally, inflation across almost every input to our business. As a business, we have navigated these challenges with positive outcomes measured by the rewards for our shareholders, our financial results and positive feedback from our customers and our people.
When reflecting on why Ornua has been successful throughout this period, working through Covid-19 over the past two years has highlighted some of the best attributes of our organisational culture – the same attributes that I experienced as a young graduate trainee in Ornua. And probably one of the main reasons why I, and so many others, have built lifelong careers at Ornua. There is a great culture of teamwork and resilience that allows the business to take on each challenge, work through it and continue to deliver for our customers and consumers.
At the start of this pandemic, we saw orders from some of our key global retail partners jump by an incredible 100%, as we all switched to eating at home. For those of you that manage operations and factories, you will appreciate that typically we would have our factories running at about 85% – 90% of total capacity. That means in theory we could only increase another 10% – 15%. The agility, creativity and resilience of our teams really came to the fore. During this period our sales team, procurement team, operations team and insights team built a case for the retailer that would see us reduce product items from 90 to 60, whilst meeting their consumer needs. By agreeing to cease production of the slower selling lines that took longer to produce, we were able to focus on delivering 170% output of the key product lines.
The teamwork and focus on what’s right for the customer delivered a fantastic ‘win win’ for our retailer partners and their consumers. Ensuring their shelves were fully stocked allowed our retailers win market share in those early months of “panic buying”. So many of our people have stepped up throughout this turbulent time. Their response to the crisis has made Ornua a stronger business, and against of backdrop of gloomy headlines and tough business decisions, their commitment has been a shining light.
Our ICT team ensured all our people were fully equipped to work from home within days of the first lockdown. Office chairs, printers and monitors were quickly dispatched to homes – teams pivoted all meetings online. Our Irish based supply chain team exported over 100 containers per day this December despite the well-publicised challenges facing exporters currently. Our Ingredients business concluded Ornua’s largest ever acquisition in the US in September, at a time when Covid-19 restrictions complicated so many aspects of closing the deal. Something as simple as flying to the US for a plant visit was a challenge. These are just a few examples of the unwavering commitment and incredible resilience our teams have shown.
Alongside teamwork and resilience, another important attribute of our culture is nurturing and supporting a culture of belonging. At Ornua, it is important that people can feel they belong, that they are included and that they can be themselves. It is a matter of fact that diverse teams deliver better financial results, so if for no other reason, this is an imperative for all business leaders. I am passionate about supporting an environment where people can come to work, without the stress of having to hide their true selves or pretend to be someone different in work than who they are outside of work. We have a strong Diversity & Inclusion (D&I) programme with a broad range of initiatives which appeal to a wide cross section of our community. Earlier this year we introduced a Fertility & Miscarriage policy which was very well received as a progressive support for those who need it.
These are the types of critical areas we are committed to investing in into the future. Looking out to 2022, we can already see that there are significant challenges ahead for our business, and the wider sector. The Climate Action Bill has set legally binding sustainability targets for Ireland. The dairy sector will have a major role to play in delivering those targets and it will require enormous effort and close collaboration from all stakeholders. Irish dairy families are passionate about wanting to do what is right for the environment, to ensure that their business and way of life can be sustained long into the future. While they are hugely committed to the climate challenge, we need to ensure that we leverage the best scientific knowledge and offer appropriate financial support to assist in the delivery of the changes that are required at farm level.
We can also clearly see that the inflation on raw materials, packaging, fuel, energy, and salaries are going to put significant competitive pressure on many Irish businesses in 2022. Covid-19 will continue to play a major role in all our lives, whether that relates to how we engage with work, where we consume our calories or how we interact with our communities. While as a business we have embraced hybrid working and recognise the important role it plays in work life balance, it does present new challenges for businesses, particularly in career development. The past two years has been very difficult for our new joiners. They have missed many of the benefits of being in the office to learn the business, build your network and make friends with new colleagues. For young people starting their career, so much is learnt by observing behaviours, by having a more experienced colleague help you work through an issue or just someone to bounce ideas off. The creative energy when a group of people are in a room debating an issue or a challenge is invaluable. We need to find ways to nurture these in-person collaborative processes.
The freedom and ease of travel is also a concern looking into the future. As a global business, we need to be able to meet with our customers and teams in market. It is important that our teams meet with their customers in the markets of Lagos, get to attend in tradeshows in Dubai, meet with retailers or food manufacturers in the US, or our foodservice customers across Europe. We want our leadership teams in the same room debating the opportunities and solving the challenges in each of our key markets. It is also important to be able to relocate our people around the world – for both business development and their professional development. I sincerely hope that 2022 will allow improved international movement of people as we learn to live with Covid-19.
I have learned through my career, that as you face into the challenges in front of you, there is rarely one simple fix, a Silver Bullet. In my experience, to solve a major challenge, to turn a business around, or to deliver long term sustainable growth, it takes hundreds of small actions, layered on top of one another. It’s more like Silver Shrapnel.
As a business leader, if you can create an environment where people belong, where teamwork is valued and where people make the right decisions for the long term, then I believe the business can take on any challenge. In the last 60 years, Ornua has responded to a lot of change and proven itself to be an agile and resilient business. While I have no doubt that 2022 will present many new challenges, I am confident that the Ornua team will rise to each one and continue to build on the great success we have had to date.