Arla dairy creeps back in Middle East

By Chris Mercer

- Last updated on GMT

Related tags: Arla, United arab emirates, Saudi arabia, Arabian peninsula

Arla Foods has said the boycott on its products in the key Middle
East dairy market was slowly lifting, thanks to its dominance in
certain areas of the Middle East dairy market.

Arla said several shops and supermarkets in Qatar, Bahrain, Lebanon and the United Arab Emirates had begun to stock its dairy products again. Some smaller shops in Saudi Arabia have also put Arla back on their shelves.

The group, based jointly in Denmark and Sweden, said this was a sign the region-wide boycott against it may be losing strength.

Consumers in the Middle East stopped buying Arla's products in February in protest at cartoons of the prophet Muhammad published by a Danish newspaper. The dairy firm estimated it would lose €53m of its €429m annual sales in the region this year as a result.

Arla may benefit, however, from its dominance of certain sectors prior to the boycott.

Its Lurpak butter brand, for example, made up half of the Middle East butter market before the boycott and has been sold in the region for nearly 40 years.

On a country-by-country basis, Arla claimed Lurpak had a 50 per cent share of butter in Saudi Arabia, 80 per cent in Qatar, 68 per cent in the United Arab Emirates and 35 per cent in Jordan.

A few supermarkets had begun to re-stock Arla brands some weeks ago due to a lack of alternatives on the market.

Finn Hansen, Arla's executive director, said the stores now re-stocking Arla brands "could well create a chain reaction"​.

The firm said its staff in the Middle East were this week "cautiously optimistic"​. The group's customers also said there was a growing acceptance of Arla products following the group's newspaper advert campaign at the weekend.

Consumer behaviour expert Dr David Marshall, at the University of Edinburgh, told DairyReporter.com​ the strong religious identity in the Middle East could propel the boycott on, but the crux may rest on market choice.

"It will depend on whether people are prepared to sacrifice products. Is there anything else available in the market?"

A spokesperson for Nestlé, one of the most boycotted food firms in the world, said Arla should stay patient.

He told DairyReporter.com​ that consumers had a great amount of power, but would always make decisions based on "the best deal for me at this time"​.

The worry for Arla is what kind of market it will have to return to in the Middle East.

French dairy group Danone, already the regional dairy market leader, could almost double its current market share to 18 per cent by swooping on Arla's cream sales, according to a report by market research group Euromonitor​.

Related topics: Manufacturers, Arla Foods

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