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Middle East unrest fosters market for fat blends

By Ankush Chibber , 11-Mar-2014

MENA customers are turning to cheaper fat blends in milk powder
MENA customers are turning to cheaper fat blends in milk powder

The strife in Syria and the broader Arab upheaval means growing demand for fat blends among dairy manufacturers in the Middle East and North Africa (MENA), industry sources say.

Herve Lanoe, CEO of Fit, a France-based dairy ingredients maker, told FoodNavigator that within the region, they have seen high growth in demand for fat blends recently, the end products for which are of good quality but cheap for the market.

“There has been a crisis in the purchasing power. People are a little bit scared. They are uncertain. So they say, why don’t I buy this milk product, which is almost as good but a little bit cheaper?” said Lanoe.

It’s all about cost

Fit is a supplier of dairy ingredients such as butter, fat blends, milk powders, cheeses, lactose and whey powder to dairy product makers in the region.

Lanoe pointed out that the demand for fat blends is stronger in countries with less of a culture of milk consumption, such as Sudan, than countries which do have a long tradition of milk, such as Egypt.

According to many sources at the recent Gulfood trade show, the MENA customer has become more cautious since late 2010, when the first sparks of the Arab Spring were lit.

Ryan Harter, sales officer with US-based James Farrell & Co., told FoodNavigator: “There is a demand for high quality products but at a very low price. People are looking for dairy alternatives and blends such as fat-filled milk powder, where we blend vegetable fat with dairy. That is one of the biggest trends that we see here.”

James Farrell and Co. has been a provider of dairy ingredients such as dry milk powder and whey powder in MENA for about 20 years—it is the exclusive export partner for Darigold, Inc., the fourth-largest American dairy agricultural marketing cooperative. 

The demand is so high that players not in the business are also being pushed by their existing and new clients for fat blends. Cecilia Autran, product manager with France-based Ingredia SA said that manufacturers in the region were asking more and more about these products in their interactions with them.

Looking at you, China

“Savings is a big issue for our customers,” she said. “They want to offer savings on the end-product to their customers.”

Ingredia is a manufacturer of milk proteins, milk powder and bio-actives for the dairy industry in the region and works with players in Jordan and Saudi Arabia, among others.

However, Vipul Bahl, general manager, Middle East for ingredients and consumer foods at Irish Dairy Board, said that the once high–margin Middle East market has also changed because of the worldwide situation with dairy prices.

“What we have seen that is that dairy prices are going up year after year. Though to an extent the demand for value products is forcing manufacturers to use fat-filled milk powder, the real reason is that a lot of the dairy is flowing to China,” said Thota. “When the supply is low, the prices are high and consumers look for value products.”

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