Glanbia caught out on home turf

Glanbia has transformed its business by using protein removed from whey – once the discarded waste product of cheese-making and a major headache for the company – to make a number of high-value performance sports nutrition products.

The Kilkenny-based group was a first mover in a market that has rocketed in value since 2010. It is now estimated to have around 10 per cent of the €13 billion sports nutrition market, which manufactures protein powders for gym-goers and dieters, primarily through its Optimum Nutrition brand.

However, the company’s trailblazing performance nutrition unit hit something of a speed bump last year, reporting a near 30 per cent drop in earnings in the first half. The under-performance was put down to several things, including geopolitical trade tensions, slowing global growth and supply chain issues.

The company was also caught out by the increased preference for buying product online rather than through retail outlets.

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Publishing its latest annual results on Wednesday, managing director Siobhán Talbot added another element to the list – "increased local competition". About 70 per cent of its sport nutrition sales are in North America where the industry has spawned dozens of local players, all potentially eating into Glanbia's market share.

In response the company has undertaken a number of corrective actions, including a review of its brand strategy and a restructuring of its North American business, which have been received positively by investors.

Nonetheless it appears to have been wrong-footed by several developments in a market it helped create. The preference for buying online seems like an odd thing to get caught out on, particularly for a company which has done so much of the early running.

That said, it now appears to have gone away and done its homework, revamping the business model to better suit its customers. It is now confident it has hit upon the right formula to regain momentum.