The region's dairy producers are increasing production to cater to growing demand and developing new milk products to attract customers.
Fresh products to draw consumers
The region's dairy producers are increasing production to cater to growing demand and developing new milk products to attract customers. Milk producers say the key to sales growth is in targeting consumers with specific health concerns. Fonterra Middle East will launch a milk product in the region that is fortified to help women who have osteoporosis, said Amr Farghal, its marketing general manager.
In a related move, Al Ain Dairy will offer a special low-sugar, low-calorie milk product in two to three months, said Shashi Kumar, the company's head of sales and marketing. "I think it's a need for this place and time," he said. "People are very heath conscious and especially in the UAE, where health issues such as diabetes are on the rise." He said milk retailers were looking for new segments in which to cater.
Almarai, which already has fortified milk and low-calorie products, recently introduced a fermented milk product called "Trim" aimed at helping people lose weight and break down fat cells, said Hussam Abdul Qader, its general manager. "In milk, we already have a 60 per cent market share (in Saudi Arabia)," he said. "So the way to expand is to start looking for all these issues within drinkers and non-drinkers of milk."
Fonterra has experienced "strong double-digit growth" in the UAE this year and has doubled its revenues since 2006, said Mr Farghal. To cash in on the growing demand, the company bought the final 51 per cent stake of a plant in Saudi Arabia this month from Saudi New Zealand Dairy Products to gain full ownership. Its competitors are not standing still. Al Ain Dairy has spent Dh4 million (US$1.1m) on two new production systems at its plant, boosting its production of yogurt and fermented milk products by 40 per cent. Almarai signed a joint venture deal with the US foods company PepsiCo earlier this year that will result in its milk products being distributed across the MENA region as well as South East Asia.
Mr Kumar said Al Ain Dairy had 9 per cent sales growth in milk so far this year compared with the same period last year. The company has experienced slowing demand late in the year, he said. "After the Formula One race [in November]demand sort of settled down," he said. "We do not see an encouraging trend in the last two months." Profits at Almarai have risen at least 22 per cent in the first three quarters compared with the same period of last year, said Mr Abdul Qader. The near-record growth stems from increased investment in distribution and marketing as well as higher demand, he said.