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GCC DAIRY PRODUCTS 2009

SAUDI ARABIA










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June 2009
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Middle East Dairy Products 2009 Saudi Arabia"




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TABLE OF CONTENTS Page


A1. MARKET OVERVIEW 1

A1.1 INTRODUCTION 1
A1.2 POPULATION 2
A1.3 KEY MACRO-ECONOMIC DRIVERS 3

A2. EXTERNAL INFLUENCES 4

A2.1 EXCHANGE RATE MOVEMENTS 5
A2.2 EU EXPORT REFUNDS 7
A2.3 WORLD MARKET PRICES 9
A2.4 WORLD MILK SUPPLY 11

A3. DAIRY MARKET 13

A3.1 DAIRY INDUSTRY DEVELOPMENT 13
A3.2 KEY SUPPLIER PROFILES 17
A3.3 CONSUMPTION OF DAIRY PRODUCTS A SUMMARY 42

B1. LIQUID MILK 52

B1.1 OVERALL DEMAND LEVELS 52
B1.2 KEY SEGMENTATIONS 55
B1.3 SUPPLIER/BRAND SHARES 67
B1.4 PRICING AND DISTRIBUTION 77
B1.5 FIVE-YEAR FORECASTS 79

B2. LABAN 81

B2.1 OVERALL DEMAND LEVELS 81
B2.2 KEY SEGMENTATIONS 85
B2.3 SUPPLIER/BRAND SHARES 94
B2.4 PRICING AND DISTRIBUTION 100
B2.5 FIVE-YEAR FORECASTS 101

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B3. YOGHURT 102

B3.1 OVERALL DEMAND LEVELS 102
B3.2 KEY SEGMENTATIONS 105
B3.3 SUPPLIER/BRAND SHARES 109
B3.4 PRICING AND DISTRIBUTION 115
B3.5 FIVE-YEAR FORECASTS 117

B4. LABNEH 118

B4.1 OVERALL DEMAND LEVELS 118
B4.2 KEY SEGMENTATIONS 121
B4.3 SUPPLIER/BRAND SHARES 125
B4.4 PRICING AND DISTRIBUTION 131
B4.5 FIVE-YEAR FORECASTS 132

B5. CREAM 133

B5.1 OVERALL DEMAND LEVELS 133
B5.2 KEY SEGMENTATIONS 136
B5.3 SUPPLIER/BRAND SHARES 139
B5.4 PRICING AND DISTRIBUTION 148
B5.5 FIVE-YEAR FORECASTS 150

B6. DAIRY DESSERTS 151

B6.1 OVERALL DEMAND LEVELS 151
B6.2 KEY SEGMENTATIONS 155
B6.3 SUPPLIER/BRAND SHARES 159
B6.4 PRICING AND DISTRIBUTION 162
B6.5 FIVE-YEAR FORECASTS 163

B7. CANNED CONCENTRATED MILK 164

B7.1 OVERALL DEMAND LEVELS 164
B7.2 KEY SEGMENTATIONS 168
B7.3 SUPPLIER/BRAND SHARES 173
B7.4 PRICING AND DISTRIBUTION 179
B7.5 FIVE-YEAR FORECASTS 181
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B8. MILK POWDER 182

B8.1 OVERALL DEMAND LEVELS 182
B8.2 KEY SEGMENTATIONS 188
B8.3 SUPPLIER/BRAND SHARES 194
B8.4 PRICING AND DISTRIBUTION 199
B8.5 FIVE-YEAR FORECASTS 204

B9. BUTTER GHEE 205

B9.1 OVERALL DEMAND LEVELS 205
B9.2 SUPPLIER/BRAND SHARES 208
B9.3 PRICING AND DISTRIBUTION 211
B9.4 FIVE-YEAR FORECASTS 213

B10. BUTTER 215

B10.1 OVERALL DEMAND LEVELS 215
B10.2 KEY SEGMENTATIONS 219
B10.3 SUPPLIER/BRAND SHARES 226
B10.4 PRICING AND DISTRIBUTION 230
B10.5 FIVE-YEAR FORECASTS 233

B11. CHEESE 234

B11.1 OVERALL DEMAND LEVELS 234
B11.2 PROCESSED CHEESE 239
B11.3 WHITE CHEESE 261
B11.4 NATURAL CHEESE 267

APPENDIX: Directory of Importers and Local Dairy Producers,
2009 273

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

A1. MARKET ENVIRONMENT
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A1.1 INTRODUCTION


With one-fourth of the world's proven oil reserves and some of the lowest production
costs, Saudi Arabia is the world's largest net oil exporter, and will remain so for the
foreseeable future. It is by far the largest economy in the GCC, representing
approximately half of the combined US$ 857 billion GDP of the six member countries. The
second largest economy (the UAE) accounts for almost a quarter of the GCCs combined
GDP.


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A1.2 POPULATION


The population data for Saudi Arabia used in this report is summarised in Table A1, and is based on US Census Bureau /
International Data Base information which is slightly higher than the official Saudi. These are the figures used to calculate per capita
consumption levels. It should be pointed out that there is little consensus among international sources on the size of the Saudi
population and for the sake of continuity and consistency the following set has been used in the absence of updated census
information.


Table A1: Saudi Arabia Population, 2004-2013

Million Persons
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Population 25.8 26.4 27.0 27.6 28.2 28.7 29.2 29.7 30.3 30.7


Key Points:

Population has grown by an estimated 9.3% since 2004 to an estimated 28.2 million in 2008. If the recent growth rate
continues the population will reach 30.7 million in 2013.

Expatriates now comprise around 23% (6.6 million) of the total population. These are mainly Arabs from other nations
(notably Egypt) followed by workers from the Indian subcontinent.
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June 2009 IMES Consulting

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A1.3 KEY MACRO-ECONOMIC DRIVERS


The slowdown in the global economy has had its effects on Saudi Arabia as well. Oil prices have receded from their historical highs
of US$ 140 per barrel in July 2008 to under US$ 50 per barrel by April 2009. This has brought an end to the era of large current-
account surpluses for Saudi Arabia. OPEC response in the form of production cuts has done little to shore up the price of crude oil.
The drop in oil prices has had its impact on the pace of implementation of projects in the energy sector.

Additionally, losses in investment portfolios of high net-worth individuals and the drying up of credit in the banking system has put
many of the Kingdoms projects in the construction and real estate sectors on hold. Investor sentiment too has been affected in the
current economic climate. The official response to the crisis is very similar to what other governments across the world have done:
cutting down interest rates and increasing spending on infrastructure projects to prime the economy. Inflation is expected to come
down from a high of 10% in 2008 to under 6% in 2009.

The following table shows selected key economic indicators for the Kingdom:


Table A2: Saudi Arabia: Key Economic Indicators 2004 - 2008

2004 2005 2006 2007 2008
GDP Real ($ bn) 251 316 349 374 397
GDP per Capita - PPP ($) 12,872 13,761 14,475 15,132 21,320
GDP per Capita - Real ($) 9,718 11,952 12,921 13,567 14,095
Inflation (%) 0.4 0.7 2.2 3.0 10.3

Source: IMES estimates based on UNDP, World Bank, IMF, EIU, Country watch, SAMA, National Data.
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A2. EXTERNAL INFLUENCES
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With the increasingly global nature of the dairy industry, it is important to consider the external influences impacting on the
development of the market for dairy products in Saudi Arabia. These have a direct effect on both the supply of and demand for
products ranging from UHT milk to processed cheese.

A number of these factors are examined briefly in this section to help subscribers put recent developments in an international
context. These include:

Exchange rate movements

European Union export refunds

World market prices for dairy commodities

World milk supply

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A2. EXTERNAL INFLUENCES
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A2.1 Exchange Rate Movements

Given that imports account for a very large share of Saudi dairy products consumption, be they finished products or raw materials,
the importance of a stable exchange rate to importers is self-evident. However, this most certainly has not been the case over the
last five years as the US dollar (and consequently the Saudi Riyal) weakened considerably against the currencies of all major dairy
products supplying countries/regions.

Table A3 summarises the main exchange rate movements since early 2005.

Table A3: Saudi Arabia: Exchange Rate Movements: Saudi Riyal Against Major Dairy Currencies, January 2005 to
January 2009


Country (Currency)
Jan
2005
Jan
2006
Jan
2007
Jan
2008
Jan
2009
Index
(2005=100)
EURO (1) 4.97 4.53 4.86 5.52 5.27 106
Denmark (Dkr1) 0.67 0.61 0.65 0.74 0.71 106
UK (1) 7.06 6.61 7.36 7.51 5.45 77
Australia (A$ 1) 2.93 2.81 2.90 3.30 2.60 89
New Zealand (NZ$1) 2.63 2.58 2.60 2.91 2.18 83
USA (US$1) 3.75 3.75 3.75 3.75 3.75 100

Source: OANDA
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Key Points:

Stock markets across the world were pulled down by losses incurred by banks and financial institutions in the wake of the
US sub-prime mortgage crisis in 2008. To stave off bankruptcy, banks and financial institutions initiated massive job-cuts
which unravelled a cut in spending by US consumers which further triggered a slowdown not only in the US but also in
the global economy and further job losses in global non-financial sectors as well. Investors
spooked by stock market losses have taken refuge in cash and dollar-denominated US
government bonds. This has resulted in a strengthening of the US dollar since the latter half of
2008 against all other major currencies reversing a trend of weakening dollar that was observed
for the last several years.

The Saudi Riyal which is pegged to the US dollar has tracked the dollars movement and has also
strengthened against the currencies of all the major dairy exporting countries, bringing down the
cost of dairy industry imports to some extent.

Most international dairy trade is conducted in US dollars and, as can be seen in this table, there
have been significant shifts in the Dollar-Euro exchange rate since 2001. Firstly, the dollar
strengthened to January 2002 making imports from the Euro-zone considerably cheaper than
before. Then, between January 2002 and January 2008, the Euro strengthened hugely, more than reversing any previous
dollar gains and sparking concern among European dairy manufacturers. Those with a strong export bias were
particularly vulnerable as they found their domestic Euro-costs increasing and, at the same time, their export prices
looking less and less attractive to customers particularly those in areas like the GCC where the local currencies are
pegged to the US Dollar. However, since the second half of 2008, the dollar has again begun to strengthen against the
Euro.

Jan '01 $1 = 1.09
Jan '02 $1 = 1.12
Jan '03 $1 = 0.95
Jan 04 $1 = 0.79
Jan 05 $1 = 0.74
Jan 06 $1 = 0.83
Jan 07 $1 = 0.77
Jan 08 $1 = 0.68
Jan 09 $1 = 0.71

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A2.2 EU Export Refunds


The European Union reintroduced dairy export refunds in January and February 2009, to protect its dairy industry from prevailing
low international prices of dairy commodities. Until 2007, the European Union had supported prices of dairy products in its member
states by a combination of subsidy mechanisms and tariff barriers. These included:

subsidies on exports outside the EU

intervention buying (i.e., centrally-funded storage of dairy products)

subsidies for the consumption of butter for pastry and ice cream manufacture within member states (Regulation
2571/97), and for the consumption of SMP in the animal feed sector (Regulation 1725/79)

support payable for the manufacture of casein

high tariff barriers which effectively prohibited imports from countries other than those having special quotas agreed.

Between June 2006 and July 2007, EU subsidies, both internal and for export, were gradually eliminated. The subsidy on butter for
food manufacturing and concentrated butter was reduced to zero on 26 April 2007. The subsidy on SMP for animal feed was reduced
to zero on 19 October 2006 and the skim for casein subsidy was reduced to zero on 10 October 2006. However, on 22 January
2009, export subsidies were reintroduced for the export of butter, WMP, SMP and cheddar. These were further raised on 19
February 2009. Currently the subsidies for butter, WMP, SMP and cheddar are set at Euros 550 per tonne, 290 per tonne, 190 per
tonne and 198 per tonne, respectively.
The reintroduction of dairy subsidies is feared by the industry as a measure that will eventually suppress dairy product prices further
and delay natural market recovery.
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Table A4 summarises movements in export refunds between December 2003 and December 2008.


Table A4: EU Export Refund Movements, 2003 to 2008 (Euro/100 kg)

Product

Dec 03

Dec 04

Dec 05 Dec 06

Dec 07

Dec 08
2003 to 2008
Change (%)
Butter 82% 168 131 92 97 0 0 -100.0
Butter Oil 222 164 115 121 0 0 -100.0
SMP 57 27 10 0 0 0 -100.0
WMP 26% 90 70 50 21 0 0 -100.0
Cheese 105 71 56 43 0 0 -100.0


Source: Irish Dairy Board.

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A2. EXTERNAL INFLUENCES
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A2.3 World Market Prices

Chart A1 summarises how world market prices of selected dairy products have moved between February 2005 and December 2008.

Global dairy prices rose sharply between early 2007 and early 2008 before plateauing for a period of approximately 6 months. In
mid to late 2008 the market changed course and by the end of the year, dairy prices had fallen by more than 40%. The trend in
dairy commodity prices closely mirrored the trend in the global economy which too experienced a sharp downturn from late Summer
onwards.

Global demand for dairy products is expected to rise in 2009, due to growth in the emerging economies; the Russian Federation and
in Asia (but also in Africa, Latin America and the Caribbean). In Asia, though, the fear of melamine contaminated dairy products has
undermined consumer confidence. On the supply side, a rebound in New Zealand milk production and to a lesser extent Australian
output is ensuring the availability of ample exportable supplies, helped by favourable exchange rate movements versus the Dollar.

While raw milk prices have softened considerably in the last several months, feed prices have not, affecting profitability in many
feed intensive dairy sectors. Finally, policy decisions in the European Union have resulted in a huge reduction in public stocks of
dairy products, although EU export subsidies, have been reintroduced.

Looking at the extent of the movement of world prices over the period, we see that West European SMP prices remained at a high of
about US$ 3,600 per tonne to US$ 4,000 per MT from January to July 2008 before falling back to US$ 2,150 per tonne by year end.
WMP prices moved in a broadly similar fashion, staying at a high of about US$ 4,700 per tonne before falling back to below US$
3,000 per tonne at year end a level some 43% lower than at the years outset.

Butter prices too remained at highs of about US$ 4,300 per tonne to US$ 4,600 per tonne, then crashing to US$ 2,900 by year end:
a level 55% lower than its peak of US$ 6,300 tonne MT in the third quarter of 2007.

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Cheddar cheese began the year at a high of US$ 5,800 per MT but declined consistently throughout the year to end at a level of US$
3,500 per tonne. Given how prices developed over the past year or so, it is not surprising that many importers faced financial
difficulty in late 2008 having bought ahead at high prices only to see competitors steal market share at significantly lower prices.
Little could be done until stock levels reduced.

Chart A1: World Market Prices for Selected Dairy Products, 2005 to late 2008

1,000
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4,000
5,000
6,000
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F
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)
SMP WMP Butter Cheese

Source: USDA (Western Europe FOB basis for SMP, WMP and Butter; Oceanica FOB for Cheese)
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A2.4 World Milk Supply


World supply of raw milk reached 560 million tonnes in 2007, 8.1% higher than in 2003. As one might expect, there are regional
variations with, for example, China showing growth of around +16% year on year, whilst elsewhere growth has been more modest,
or, static. Significantly, milk production in the EU is slowly declining, but it still accounts for more than a quarter of world supply in
2007.

Table A5: World Production of Raw Cows Milk, 2003-2007 (million tonnes)

Source 2003 2004 2005 2006 2007
1

World 518 523 531 550 560
of which
European Union (27) 150 148 149 148 147
USA 77 77 80 82 84
India 37 38 39 41 42
Africa 22 21 22 24 25
China 18 23 27
2
32 33
New Zealand 14 15 15 15 16
Australia 10 10 10 10 10
Argentina 8 8 8 10
10

Sources: FAO, IMES Analysis.

1
2007 is the latest available information.
2
Re-stated
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Table A6: World Production of Raw Cow Milk, 2003-2007 (% breakdown)

Source 2003 2004 2005 2006 2007
World 518 523 531 550 560
of which
European Union (27)
29% 28%
28% 27% 26%
USA
15% 15%
15% 15% 15%
India
7% 7%
7% 7% 8%
Africa
4% 4%
4% 4% 4%
China
3% 4%
5% 6% 6%
New Zealand
3% 3%
3% 3% 3%
Australia
2% 2%
2% 2% 2%
Argentina
2% 2%
2% 2% 2%


Sources: FAO, IMES Analysis.
IMES Consulting Group - Middle East Dairy Products 2009 KSA

A3. DAIRY MARKET
June 2009 IMES Consulting

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A3.1 DAIRY INDUSTRY DEVELOPMENT


Recombining dairies were established in Saudi Arabia from the early 1960s. Initially they focussed on liquid milk and later expanded
into yoghurt and other products. The number of dairies grew significantly during the 1970s with fresh dairies beginning to establish
from the middle of the decade onwards. By the mid-1980s, fresh dairies had surpassed the recombining sector in terms of combined
milk/laban volume - although with a notably different product pattern. Initially, fresh producers generally restricted themselves to
supplying pasteurised (i.e., short-life) dairy products, while recombining dairies positioned themselves mainly as suppliers of long-
life milk and related products. This positioning remained in place until surplus raw milk encouraged fresh dairies to expand into UHT
(with significant success) in the 1990s, and any distinctions between the two have since been blurred.

By far the most important factor influencing the pattern of supply during the recent past, has been the 2006 boycott of Danish
products because of the widespread offence felt in the Muslim world as a result of the cartoon depiction of Prophet Mohamed in
some European print media. This had a very serious impact on sales of established (often category-leading), imported brands such
as LURPAK and PUCK, as well as local brands with no links to Denmark, in particular SAUDIA - the leading brand of liquid milk.
Indeed, many non-Danish imported brands were affected to some extent (including ANCHOR, NESTL, etc), though most suppliers
were quick to dissociate themselves from Denmark and recovered very quickly. Clearly, the withdrawal of a number of market
leading brands presented other suppliers with an unforeseen opportunity to boost volumes significantly. The Danish brands have
now largely returned to the market but, in many instances, with market shares that are considerably below where they stood pre-
boycott. It remains to be seen whether, with the passage of time, the affected brands will attain their previous sales levels.

The trends highlighted in previous studies are ongoing, with continuing investment on the part of leading suppliers in expanding and
upgrading production facilities, in new product development, and in maximising profit.

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The three leading local dairy organisations (measured in LME terms) Almarai, SADAFCO and Al Safi-Danone have quite different
approaches to the market:

Almarai appears to be pursuing a lowest-cost-producer strategy that has involved significant investment at all levels of
its operation from raw milk production through to processing and distribution. It is the largest fresh dairy in the Middle
East. In an important move for the company Almarai had a much over-subscribed Initial Public Offering of shares (IPO)
in mid 2005. 2005 also saw the successful introduction of new short-life and long-life packaging formats for the company
- PET bottles and SIG Combibloc aseptic cartons respectively. This was followed in 2006 by the introduction of a new
shaped Elopak carton for its laban range. Almarai continues to invest at farm level, with a new so-called super farm
commissioned in 2006 (Al Badiah), and a similar sized farm (Al Danah) which came on stream in 2007. If revenues from
its newly acquired Western Bakeries subsidiary are included, sales passed the US$ 1 billion mark for the first time in
2007, and currently stand at US$ 1.34 billion, with double digit growth across all dairy categories.

Having established itself as the leading dairy and juice supplier in the GCC, Almarai has now set its sights to becoming
the leading food company in the Middle East. Suppliers are increasingly targeting large markets such as Iran, Iraq and
Egypt. With this view, Almarai made a series of investments inside and outside the Kingdom. It has initiated steps to
acquire 100% of Hail Agriculture Development Company (HADCO) and 100% of Beyti, an Egyptian dairy and juice
company, and 75% of Teeba, a Jordanian dairy and juice company. In addition, it has plans to enter the infant formula
market. Approval has been obtained to set up a SR 650 million facility in Riyadh. The company has also formed a joint
venture with Pepsi International to invest in dairy and juice processors in Southeast Asia, Africa and the Middle East. The
venture is called International Dairy and Juice Limited and will be 52 percent owned by PepsiCo and the rest by Almarai.
Geographically, the venture will not cover the six GCC countries. Almarai aims to benefit from the distribution network
and capabilities, market knowledge and insights of Pepsico in the markets outside the GCC. While PepsiCo aims to benefit
from Almarai's dairy and non-carbonated fruit juice product line.
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SADAFCO was the first Saudi dairy to go public, with an IPO in April 2005 which was also many times over-subscribed.
Again, this was a mechanism for some existing shareholders to reduce their holdings and the company itself did not
benefit in cash terms. SADAFCO had a very difficult year in 2006 when it was wrongly linked to the popular boycott of
Danish products. Despite the companys best efforts, sales were hit badly, and whilst the company has regained some
lost share during 2007, its SAUDIA milk brand share is still short of its 2005 standing. Despite these difficulties,
SADAFCO is still by far the largest supplier of long-life milk in the Kingdom but has been less successful in other dairy
products. In 2008, Sadafco lost the market leadership position in the overall liquid milk category to Almarai, after it
raised retail prices substantially by SR 0.50 on each of its long-life carton offerings. The companys undoubted strength is
its SAUDIA brand, which will no doubt be further exploited in the coming years. However, it is increasingly vulnerable to
fluctuations in international dairy commodity prices. In 2009, Sadafco entered the milk powder market and launched jar
cheese and triangle cheese. It had already entered the canned cream sector in 2008 and is doing reasonably well. The
company increasingly seems to be focusing on its core strength which is long-life and a number of smaller volume niche
products have been withdrawn (at least temporarily).

While Almarai appears to be concentrating mainly on sectors it can be sure of achieving high volumes in, Al Safi-
Danones prime focus is in value-added niches. The Danone influence is now well established as evidenced by the very
successful launches of the DANAO range of milk-juice blends, DANETTE dairy desserts, DANINO fromage frais, ACTIVIA
laban and yoghurt, ACTIMEL probiotic drink etc. Danones acquisition of a majority holding in Al Safi for an investment of
SR 500 million at the end of 2000 represented a milestone for the company and provided ready access to a wealth of
technical know-how and dairy product formulations. The last few years has seen an increased focus on export markets,
including the establishment of a depot and distribution network in the UAE. It remains to be seen if more products from
the Danone stable will be launched in the region.

Another noticeable trend, perhaps reflecting the growing maturity of the Saudi dairy market and Saudi consumers, is suppliers
increasing focus on margin. Managers are increasingly questioning the profitability of the core products they are supplying. A re-
balancing of product portfolios and product pricing has been happening as the larger dairies look to extract the maximum margin
from their available milk pools.
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The Dairy Association remains active and plays an important role in maintaining order on pricing and controlling the nature and
frequency of promotions.

Some of the important recent and ongoing developments include:

Rising world dairy prices and production costs have brought about significant retail price increases in several
categories during 2007 especially in milk powder, canned concentrated milk, butter and ghee. In 2008, all other dairy
products increased in price. As a consequence the market suffered significant declines in consumption across several
categories. Although price increases were partly rolled back in late 2008, this did not lift consumer sentiment.

The unravelling of the global financial crisis has stemmed growth across the world, including Saudi Arabia. Several
projects in the construction sector have been put on hold, with the consequent effects on employment and the outflow of
expatriate population.

Continued polarisation of supply, with the larger well-resourced dairies increasingly dominant. With few exceptions
(i.e., United National Dairy), efforts to negotiate a merger between some of the second-tier dairies have met with limited
success. Al Mazrah and Qassim Agricultural did merge towards the end of 2006 (Qassims plant had been leased to
Najdiyah). Almarai has been buying up farms (some of which were also involved in limited processing). These include Al
Safwah, Suneidi, Shaghdali, and Khodra.

Continuing changes and investment in packaging, partly driven by suppliers attempts at differentiating themselves
from competitors. In this regard, the major development in the past few years has been the move to PET by Almarai,
NADEC, Al Othman and most recently Najdiyah (for short-life milk and, in a more limited way, short-life laban). This has
been a particular success in milk.

Increasing importance of the larger retailers, with important implications for suppliers and doing business with key
accounts.
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A3.2 KEY SUPPLIER PROFILES

Most of the dairies profiled in this section are also handling other (non-dairy) products which are not included (juices, ice cream,
water etc).

Almarai Group

Contacts:
PO Box 8524 Riyadh 11492 Tel: (01) 470 0005 Fax: (01) 470 1555 www.almarai.com

Products:

Product Brand Pack Type Pack Size Notes
Short-life milk ALMARAI HDPE, PET

2 litre, 1 litre, 500ml, 200ml 1 litre and 500 ml PET launched mid-2005
with 200 ml following in 2006. Skim, Low Fat
and Full Cream varieties offered. ALMARAI
SUPERMILK is a lower fat, higher calcium/
protein product (available in 1 litre PET also).
Flavoured
short-life
ALMARAI PET 1 litre, 500ml, 200ml Available in chocolate and strawberry flavours.
Plain long-life
milk
ALMARAI Carton 1 litre, 200ml Low fat as well as full fat UHT milk is offered.
A lactose-free milk was introduced at the end
of 2007 it is priced at a SR1 premium to its
other milk offerings.
Flavoured
long-life milk
ALMARAI Carton 150ml In 2008, Almarai downsized its 200 ml
flavoured milk to 150 ml at SR 1.00.
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Almarai Group continued

Product Brand Pack Type Pack Size Notes
Laban ALMARAI HDPE
Carton
2 litre, 200ml
1 litre, 500ml
White PET launched mid-2005 (1 litre & 500
ml) but new shaped carton introduced in
2006. In 2008, Almarai launched TRIM laban
in 1 litre cartons, containing an active
ingredient beneficial to losing weight,
targeting consumers on a diet.
Plain yoghurt ALMARAI Pot 400ml, 180ml, 170 ml Skim yoghurt changed to 170 ml in 2008.
Fruit/flavoured
yoghurt
ALMARAI ZADY
flavoured, Stirred,
Layered Fruit
yoghurt
Pots 125ml, 140 ml, 150 ml Flavoured yoghurt is in 125 ml, real fruit
stirred yoghurt is in 140 ml and real fruit
layered yoghurt is in 150 ml.
Labneh ALMARAI Pots 400g, 200g Labneh pack updated in 2008. 430g is now
400g and 180g is 200g.
Cream long-life ALMARAI Carton
Can
250 ml, 500 ml, 1 litre
170g
Canned cream launched in 2003
Cream
short-life
ALMARAI Pots 100g
Desserts ALMARAI, BON
SWEET
Pots 60g, 125g Custards, crme caramel, mousse and
fromage frais. BON SWEET range of custards
launched in 2006 followed by crme caramel
and chocolate mousse under same brand
name. Fromage frais downsized to 60g from
90g in 2008.
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Almarai Group continued


Evaporated
milk
ALMARAI Cans 170g
Butter ALMARAI Packet 1000g, 400g, 200g, 100g Now packed in KSA
Ghee ALMARAI Cans 1.82 kg, 908g, 454g Sourced in KSA and UAE
Cheese ALMARAI Processed,
Naturals,
White
Various Almarai produces much of its own processed
cheese as well as outsourcing certain types.
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Saudia Dairy & Foodstuff Co (SADAFCO)

Contacts:
PO Box 5043 Jeddah 21422 Tel: (2) 629 3366 Fax: (2) 629 3380 www.sadafco.com

Products:

Product Brand Pack Type Pack Size Notes
Long-life milk SAUDIA
JUNIOR fortified

Carton 1.5 litre, 1 litre, 500ml,
200ml, 125ml

Sadafco increased retail prices for 200 ml,
500 ml and 1 litre cartons by SR 0.50 each in
2008. Likely to rework pricing in 2009.
Long-life
flavoured milk
SAUDIA Carton 200ml

Flavoured milk was re-launched in November
2007 using cartoon characters in keeping
with other key brands on the market. SHAKA
in 250 ml discontinued.
Milk powder SAUDIA Cans 900g, 2.5kg Launched in April 2009.
Cheese SAUDIA Jars, Feta,
Triangles
Processed various
Feta 10kg, 16kg blocks
Mostly manufactured by SADAFCO/New
Zealand Milk Plant in Dammam.
Cream SAUDIA Can 170g Breakfast cream in cans was launched during
2007

IMES Consulting Group - Middle East Dairy Products 2009 KSA

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June 2009 IMES Consulting

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Al Safi-Danone Co Ltd.

Contacts:
PO Box 10525 Riyadh 11443 Tel: (1) 211 9999 Fax: (1) 211 9990 www.alsafidanone.com.sa
Products:
Product Brand Pack Type Pack Size Notes
Short-life milk AL SAFI HDPE 1.9 litre, 1 litre, 500ml,
200ml
Reverted to plastic in 2004 following a period
in carton
Long-life milk AL SAFI plain
SAFIO flavoured
AL RASHAKA
Carton
Carton
Carton
1 litre, 200ml
200ml
200ml, 1 litre
AL RASHAKA is a skimmed milk range
Laban AL SAFI

ACTIVIA probiotic

ACTIMEL
HDPE
Carton
HDPE

HDPE
2 litre, 1.9 litre, 200ml
1 litre, 500ml Tetra Top
180 ml, 375 ml, 850 ml,
1.75 litre
93ml
There has been a lot of experimentation with
laban packaging in recent years. ACTIVIA
moved to shaped HDPE during 2007 from
Tetra Top. Packs have been downsized in
order to catch price points.
Plain yoghurt AL SAFI
RASHAKA,
ACTIVIA
Pots
Pots
Pots
170g, 400g
180g
150g
ACTIVIA probiotic yoghurt launched in 2005.
AL SAFI 180g downsized to 170g in 2008.
Flav. yoghurt ACTIVIA Pots 125g (stirred) Launched in 2008.
Dairy drink DANINO HDPE 93ml Similar to ACTIMEL in presentation
Desserts DANETTE
DANINO
Pots
Pots
4 x 90g, 4 x 80g
4 x 40g
DANETTE is a range of crme caramel,
chocolate, vanilla & caramel desserts; Crme
caramel downsized to 80g. DANINO fromage
frais downsized to 40g from 50g in 2008.
Cream Al SAFI Pots 100g
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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June 2009 IMES Consulting

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National Agricultural Development Co (NADEC)

Contacts:
PO Box 2557 Riyadh 11461 Tel: (1) 404 0000 Fax: (1) 405 5522 www.nadec.com.sa

Products:

Product Brand Pack Type Pack Size Notes
Short-life milk NADEC

HDPE
PET
2 litre, 3 litres
1 litre, 500ml, 200ml
NADECs most recent major development was
the launch of PET in short-life. Available in a
range of fat contents. An IRON FORTIFIED
SKU also offered.
Short-life
flavoured milk
NADECCINA
NADEC
PET
PET
225ml
500ml, 200ml
Ice coffee milk launched in 2008.
Long-life plain
milk
NADEC Carton 1 litre, 200ml Available in a range of fat contents

Long-life milk
flavoured
CAPTAIN NADEC Carton 200ml The flavoured milk was subject to a re-launch
in 2007 which boosted volumes.
Laban NADEC HDPE
PET
2 litre, 200ml
500ml, 1 litre
Available in a range of fat contents including
skim. In early 2007, plain laban and HADI
laban (for stress relief) were launched in Tetra
Top packs, however, were again discontinued
in 2008. PET launched in 2008.
Plain yoghurt NADEC Pots 180g, 400g, 1 kg, 2 kg Available in a range of fat contents including
skim
Fruit yoghurt DELIGHT Pots 120g and 70g DELIGHT was launched at the end of 2005
(120g aimed at adults)
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National Agricultural Development Co (NADEC) continued

Product Brand Pack Type Pack Size Notes
Labneh NADEC Pots 200g Also supplying to catering (5kg, 10kg sizes)
Desserts PUDDY
TWISTER
Pots
Pots
75g
150g
PUDDY pudding is available vanilla, caramel
and chocolate flavours.
TWISTER is a combination of two flavours in
layers.
Short-life
cream
NADEC Pots 180g, 100g
Butter NADEC Tub Various packet butter sizes
plus 1 kg and 500g tubs

Cheese NADEC jars, slices,
feta, mozzarella
Jars, Tub Various Jars and shredded mozzarella introduced in
2006
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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National Food Industries Company Ltd

Contacts:
PO Box 32040 Jeddah 21428 Tel: (2) 608 1515 Fax: (2) 636 7938 www.nfic.com.sa

Products:

Product Brand Pack Type Pack Size Notes
Evaporated
milk
LUNA,
GREEN FARMS
Can 170g, 410/ 450g In a range of case sizes (48 no., 96 no.) and
opening types standard or easy-open
Milk Powder LUNA, BUSTAN,
GREEN FARMS,
Can/alubag 400g, 900g, 1.8 kg, 2.5 kg 2.25 kg, 900g and 450g sachets also supplied
in certain markets.
Cream LUNA,
GREEN FARMS
Can
UHT
120g, 170g
125ml
Plain and flavoured varieties. Benefited from
the boycott on PUCK. UHT thick cream in
125ml launched in 2008.
Flavoured milk LUNA Can
Carton
190ml
200ml
Ice coffee and mocha flavours.
Strawberry, Chocolate and Banana.
Sweetened
condensed milk
LUNA Can 1 kg, 395g, and 25g portions Very small quantities
Liquid milk LUNA Carton 1 litre, 500ml, 200ml Plain and flavoured UHT milk were launched in
February 2007
Processed
Cheese
LUNA Jars 140g, 240g, 500g, 900g Cheddar cheese launched in November 2007
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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United Food Industries Corporation (UFIC)

Contacts:
PO Box 64 Al-Khobar 31952 Tel: +966 9200 07111 Fax: +966 9200 07222 www.unitedgroup.com.sa

Products:

Product Brand Pack Type Pack Size Notes
Butter PRESIDENT Packet 100g, 400g
Whipping
Cream
PRESIDENT SL Carton 1 litre
Cheese PRIDE Slices
Blocks,
Shredded
mozzarella
Various Following Lactalis investment in UFIC in early
2006, production of various PRESIDENT lines
commenced soon after. As well as copacking
for a number of companies, UFIC also supplies
McDonalds, Burger King & Herfy regionally.
PRESIDENT Jars
Triangles
Slices,
Shredded
mozzarella
Various Introduced in 2006. PRIDE and PRESIDENT
brands are now generally merchandised
alongside each other on shelf.

IMES Consulting Group - Middle East Dairy Products 2009 KSA

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Forsan Foods Factories

Contacts:
PO Box 8103 Riyadh 11482 Tel: (1) 465 9144 Fax: (1) 465 6892 www.forsan.com.sa

Products:

Product Brand Pack Type Pack Size Notes
Butter FORSANA Blocks 100g, 200g, 400, and 1 kg Forsan is strong in co-packing butter.
The companys main focus is foodservice
Cheese FORSANA Slices
Mozzarella
Various (200g IWS, 250g,
500g)
The only GCC company making (as distinct
from repacking) mozzarella. 1 kg blocks
mainly, also shredded.

IMES Consulting Group - Middle East Dairy Products 2009 KSA

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June 2009 IMES Consulting

27
Al Othman Agricultural Products & Processing Establishment (NADA)

Contacts:
PO Box 402 Al Khobar 31952 Tel: (3) 532 0000 Fax: (3) 532 3335 www.nadadairy.com

Products:

Product Brand Pack Type Pack Size Notes
Short-life milk NADA


HDPE
PET
2 litre
1 litre, 500ml, 200ml

Available in a range of fat contents. PET
launched in 2006. Cartons discontinued in
2008. MAMAS LOVE fortified milk aimed at
mothers is currently on hold.
Short-life
flavoured milk
NADA

PET 1 litre, 500ml, 200ml PET is new (200ml launched in early 2007)
Long-life plain
& flav milk
NADA
NADA JUNIOR
Carton 1 litre, 200ml
125ml
125 ml grew very strongly during 2007
Laban NADA
RAHA
HDPE
HDPE
Carton
2 litre, 1 litre, 500ml, 200ml
1 litre
200ml
RAHA (means relief in Arabic) probiotic
laban was launched in 2005. PET discontinued
in 2008.
Yoghurt NADA Pots 380g, 180g, 125g Fruit yoghurt in 125g
Labneh NADA Pots 180g Main strength is in catering (4kg size)
Cheese NADA Jars,
portions,
Feta
Various Sourcing for a variety of suppliers in KSA,
Egypt and Europe.
Butter NADA Packets Various Co-packed in KSA
Cream NADA Pots 100g, 200g Again, large sizes supplied to catering
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Jamjoom Foremost Ltd. (Friesland)

Contacts:
PO Box 6905 Jeddah 21452 Tel: (2) 636 4007 Fax: (2) 637 5191

Products:

Product Brand
Pack
Type Pack Size Notes
Long-life milk JAMJOOM RAINBOW Carton 1 litre, 500ml, 200ml

The co-branded JAMJOOM RAINBOW is
scheduled to be phased out in Saudi Arabia by
the end of 2008 to leave RAINBOW as the
stand-alone brand name. Full fat and low fat
varieties are offered. A no sugar added
strawberry milk was introduced during 2007.
Long-life
flavoured milk
JAMJOOM Carton 185ml (5 SKUs) Flavoured milk downsized to 185 ml in 2008.
Also produces GALAXY flavoured milk under
contract for Masterfoods.
Cream BILADI
JAMJOOM RAINBOW
Pots 180g, 100g
180g
Products have slightly different formulations
Plain yoghurt JAMJOOM Pots 400g, 180g
Cheese JAMJOOM Pots 400g Cottage cheese
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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Danya Foods Ltd (Arla)

Contacts:
PO Box 53164 Riyadh 11583 Tel: (1) 498 1414 Fax: (1) 498 0628

Products:


Product Brand Pack Type Pack Size Notes
Long-life
flavoured milk
POWERCOW Carton 200ml Discontinued in 2008.
Labneh PUCK Pots 5 kg, 650g packs, 200g Long-life product (Turkish style)
Cheese PUCK, POWERCOW
PUCK
Portions
Jars
324g, 216g 108g
910g, 690g, 500g, 240g,
140g
PUCK cream spread still sourced in Denmark.
Cheddar variety produced in Riyadh. Also
packs for other companies.
Shreds mozzarella (notably its own THREE
COWS brand).
Evaporated
Milk
OMELA, FOUR
COWS
Cans 170g, 410g
Sweetened
Condensed
Milk
RAINBOW Cans 397g

IMES Consulting Group - Middle East Dairy Products 2009 KSA

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Najdiyah Marketing & Co Ltd

Contacts:
PO Box 88612 Riyadh 11672 Tel: (1) 477 6324 Fax: (1) 479 0591 www.najdiyah.com

Products:

Product Brand Pack Type Pack Size Notes
Short-life milk NAJDIYAH HDPE
PET
3 litre, 2 litre, 500ml
200ml, 350 ml, 1 litre
Strong in Central Region. Outsourcing UHT production.
PET launched in areas outside Riyadh during 2007. 350
ml and 1 litre changed to PET in 2008.
Long-life milk NAJDIYAH Carton 1 litre and 200ml Plain and flavoured
Laban NAJDIYAH HDPE

PET
3 litre, 2 litre, 500ml, 350
ml, 200 ml
1 litre
PET launched during 2007. However, 200 ml changed
back to HDPE in 2008 due to high costs.
Plain yoghurt NAJDIYAH Pots 150g, 180g, 1 kg, 2kg
5 kg, 10kg
400g size stopped. Has a traditional roub yoghurt as
well as a zabadi yoghurt. 5kg & 10kg in catering.
Labneh NAJDIYAH Pots 180g, 1 kg, 2 kg, 3 kg, 5 kg,
10 kg
Small quantities
Cream NAJDIYAH Pots 100g, 1 kg, 2 kg, 5 kg, 10 kg Small quantities
Sterilised cream NAJDIYAH Cans 170g
Evaporated milk NAJDIYAH Cans 170g
Butter ghee NAJDIYAH Pots 700g, 2.5 kg, 5kg, 10 kg Samnah
Cheese NAJDIYAH Triangles
Jars
Various Triangles outsourced from Egypt and jars from KSA.
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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June 2009 IMES Consulting

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Halwani Bros

Contacts:
PO Box 690 Jeddah 21421 Tel: (2) 636 6667 Fax: (2) 637 6667 www.halwani.com.sa

Products:

Product Brand Pack Type Pack Size Notes
Drinking
Yoghurt
HALWANI HDPE 2 litre, 1 litre
Cream HALWANI Clay pot 250g
Plain yoghurt HALWANI Tubs 2 kg, 1 kg
Labneh HALWANI Clay pot 450g, 750g, 900g
White Cheese HALWANI Can 15kg
Processed
Cheese
HALWANI Jars
Tubs
Blocks
Slices
825g, 550g, 250g, 140g

500g
Stopped triangles.
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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United National Dairy

Contacts:
PO Box 97 Al Khobar 31952 Tel: (3) 856 0000/581 6700 Fax: (3) 856 0212

Products:

Product Brand Pack Type Pack Size Notes
Short-life milk
(plain)
RAYAN HDPE 2 litre, 1 litre, 250ml Company resulted from merger of Al Matrood
and Al Reef. Major investment in farm and
production facilities is still underway. The
dairy herd is being significantly expanded.
Some packaging changes expected in 2008.
Short-life milk
(flavoured)
RAYAN HDPE 250ml Chocolate flavour
Laban RAYAN HDPE 2 litre, 1 litre, 250 ml Also has a mango flavoured laban in the
250ml size
Laban Drink KOOL-UP HDPE 2 litre, 250 ml A diluted, salted product. 1 litre has been
withdrawn.
Yoghurt - plain RAYAN Pots 180g
Yoghurt
fruit
RAYAN Pots 125g
Labneh RAYAN Tubs Various 200g as well as 1.5 kg tubs
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Al Bandariyah Group

Merged with Qassim Agricultural in 2006

Contacts:
PO Box 11 Riyadh 11312 Tel: (1) 475 0001 Fax: (1) 475 0006

Products:

Product Brand Pack Type Pack Size Notes
Short-life milk AL MAZRAH HDPE 2 litre, 1 litre, 500ml, 200ml
Flavoured
short-life milk
AL MAZRAH HDPE 200ml and 1 litre Flavoured milk launched in 2004
Long-life milk AL MAZRAH Carton 1 litre, 200ml Plain and flavoured launched 2005
Laban AL MAZRAH HDPE Gallon, 2 litre, 1 litre, 500ml,
200ml
Gallon size launched early 2005
Yoghurt AL MAZRAH Pots 180g, 150g, 120g The 120g flavoured yoghurt was launched in
2004 (strawberry, peach and mixed red fruit).
Labneh AL MAZRAH Pots 1 kg and 180ml
Desserts AL MAZRAH Pots 120g Crme Carmel and chocolate desserts.
Ghee AL MAZRAH Bucket 1 kg
White Cheese AL MAZRAH Carton 500g Tetra Brik Sometimes produce feta when surplus milk
available
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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Al Rabie Saudi Foods Co. Ltd, Recombiner, Ice cream producer

Contacts:
PO Box 42787 Riyadh 11551 Tel: (1) 498 1234 / 498 0000 Fax: (1) 498 2064 / 498 2874 www.alrabie.com

Products:

Product Brand Pack Type Pack Size Notes
Long-life milk AL RABIE Carton 1 litre, 200ml

Full cream and low fat
250ml UHT cartons are also supplied for
export (330ml stopped). The company was
co-packing 1 litre plain milk for Azizia Panda,
now stopped. Al Rabie also exports 250 ml
TBA plain milk to Yemen.
Flavoured
long-life milk
AL RABIE Carton

200ml

Al Rabies premium chocolate and coffee
drinks in 330ml Tetra Prisma cartons were
withdrawn during 2007. 200ml cartons
continue to be supplied.
Laban UHT AL RABIE Carton 1 litre Withdrawn during 2007
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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Al Aziziah Dairy

Contacts:
PO Box 54246 Riyadh 11514 Tel: (1) 463 0531 Fax: (1) 4643368

Products:

Product Brand Pack Type Pack Size Notes
Short-life milk AZIZIAH HDPE
Carton
2 litre,
1 litre, 500ml, 250ml, 200ml
Moving from carton to plastic.
Long-life milk AZIZIAH Carton 200 ml, 1 litre 200 ml flavoured milk, 1 litre plain milk
Laban AZIZIAH HDPE
HDPE
2 litre, 1 litre, 500ml
200ml
Also available in low fat
Plain yoghurt AZIZIAH Pots 400ml, 180ml Also available in low fat
Labneh AZIZIAH Pots 500ml, 150g
Cheese AZIZIAH Various 2 kg, 1 kg Small volumes of Feta, Akkawi, Halloumi and
Roumy
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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Al Rai Food Industries

Contacts:
PO Box 232 Hofuf Al Hasa 31982 Tel: (3) 597 5449 Fax: (3) 597 5397 www.alrai.com.sa

Products:

Product Brand Pack Type Pack Size Notes
Long-life milk AL RAI Carton 1 litre, 250 ml, 200ml Also co-packs 200 ml plain & flavoured and 1
litre plain for Aziziah Panda & 200 ml plain &
flavoured for Al Othaim.
Flavoured
long-life milk
AL RAI
AL RAIO
Carton 200ml, 250 ml, 1 litre AL RAIO flavoured milks in 200 ml TBA were
introduced during the second half of 2007.
Slim cartons were introduced in 2006
Laban/Ayran AL RAI Carton
Pouch
Cups
1 litre, 500ml, 200ml
1 litre and 500ml
250 ml
Plain and butter variety in pouches. Laban
was stopped in mid-2007 though the ayran
variety continues to be produced. 250 ml
laban-up & mint laban in cups.
Plain yoghurt AL RAI Pots 400g, 270g, 180g
Labneh AL RAI Pots 2kg, 180g
UHT Cream AL RAI Cartons 250 ml
Cream AL RAI Pots 5 kg, 2 kg, 180g
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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June 2009 IMES Consulting

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Al Hana Dairy Company

Contacts:
PO Box 64986 Riyadh 11546 Tel: (1) 419 2000 Fax: (1) 419 0042 www.alhanadairy.com

Products:

Product Brand Pack Type Pack Size Notes
Short-life milk AL HANA HDPE 2 litre, 1 litre, 500ml, 200ml New bottle shape introduced in early 2006
Long-life milk AL HANA Carton 200ml
Flavoured
long-life milk
AL HANA Carton 200ml
Laban AL HANA HDPE 2 litre, 1 litre, 500ml, 200ml
Desserts AL HANA Pots 180g Muhallabia
Plain yoghurt AL HANA Pots 180g
Labneh AL HANA Pots 10 kg, 1 kg, 500g
White Cheese AL HANA Tubs 7 kg, 1 kg, 500g The company ceased production of cheese
during 2007, but has again restarted.
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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Cortina Food Industries Company, Recombiner

(changed name in 2006 - was previously known as Modern Dairies Company)

Contacts:
PO Box 3981 Jeddah 21481 Tel: (2) 637 2965 Fax: (2) 637 7873

Products:

Product Brand Pack Type Pack Size Notes
Long-life milk CORTINA Carton 1 litre, 200ml Full fat and low fat. Mainly 1 litre.
Flavoured
long-life milk
CORTINA

Carton 200ml ESPECIAL premium range has been withdrawn
Plain yoghurt CORTINA Pots 380g, 180g, 1 kg and 2 kg 150g pots are also supplied during Hajj
Cream CORTINA Pots 150g, 250g 1kg, 2kg, and 10kg catering packs are also
supplied

Cortina was doing limited UHT milk co-packing for other companies.
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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June 2009 IMES Consulting

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Taif National Dairy (Dhabet), Recombiner (some fresh)

Contacts:
PO Box 123 Taif Tel: 725 4436

Products:

Product Brand Pack Type Pack Size Notes
Laban TAIF HDPE
Cups
Carton
2 litre, 1 litre
220ml
1 litre

Plain yoghurt TAIF Pots 180g
Breakfast
Cream
TAIF Pots 100g, 180g, 220g
Dairy Dessert TAIF Pots 120g Very small volumes
IMES Consulting Group - Middle East Dairy Products 2009 KSA

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Modern Dairy Plant (Badr Dairy)

Contacts:
PO Box 3367 Riyadh 11471 Tel: (1) 265 1402 Fax: (1) 265 1282

Products:

Product Brand Pack Type Pack Size Notes
Laban (Sharb) BADR Pot 200 ml
Plain yoghurt BADR Pots 10 kg, 5 kg, 280g
Labneh BADR Pots 5 kg, 280g
Cheese
(akkawi)
BADR Various 10 kg, 5 kg, 380g
IMES Consulting Group - Middle East Dairy Products 2009 KSA

A3. DAIRY MARKET
June 2009 IMES Consulting

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Najran Dairy Plant

Contacts:
PO Box 305 Najran Tel: 07 544 1009

Products:

Product Brand Pack Type Pack Size Notes
Long-life milk NAJRAN Carton 1 litre, 200ml
Flavoured
long-life milk
NAJRAN Carton 200ml Unusual in that uses both Tetra Pak and
Combibloc packaging.
Laban NAJRAN HDPE
Carton
2 litre, 1 litre
1 litre, 500ml, 200ml

Plain yoghurt NAJRAN Pots 180g, 400g
Cream NAJRAN Cups 180g



There are a number of smaller regional processors which make small volumes of milk, laban, yoghurt and cheese mainly. These are
Al Searah, Al Jouf, Al Khabrah, Zamil Food and Astra Farms.
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A3.3 CONSUMPTION OF DAIRY PRODUCTS A SUMMARY


Table A7: Saudi Arabia: Estimated Total Consumption of Dairy Products by VOLUME, 2004-2008 (tonnes)

Sector 2004 2005 2006 2007 2008 CAGR (%)
Liquid Milk 439,115 489,815 495,975 574,400 597,200 8.0%
Laban 359,380 378,450 397,175 403,000 432,000 4.7%
Yoghurt 104,645 110,400 116,350 122,570 127,150 5.0%
Labneh 7,730 8,400 8,775 9,695 11,250 9.8%
Cream 26,880 28,705 28,950 29,750 28,600 1.6%
Dairy desserts 8,775 9,425 10,300 11,050 11,950 8.0%
Evaporated milk 71,800 73,000 75,500 71,950 71,100 -0.2%
Condensed milk 3,695 3,780 4,500 5,050 5,400 9.9%
Retail milk powder 43,600 43,000 42,500 42,250 38,870 -2.8%
Retail butter 10,150 10,350 10,160 10,175 10,280 0.3%
Butter ghee 3,360 3,290 2,850 2,800 2,750 -4.9%
Cheese 108,275 116,760 121,960 133,520 132,750 5.2%
Grand total 1,187,405 1,275,375 1,314,995 1,416,210 1,469,300 5.5%
Volume growth 5.4% 7.4% 3.1% 7.7% 3.7% -

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Table A8: Saudi Arabia: Estimated Total Consumption of Dairy Products by LME VOLUME, 2004-2008 (LME tonnes)

Sector LME factor 2004 2005 2006 2007 2008 CAGR (%)
Liquid Milk 1.0 439,115 489,815 495,975 574,400 597,200 8.0%
Laban 1.0 359,380 378,450 397,175 403,000 432,000 4.7%
Yoghurt 1.0 104,645 110,400 116,350 122,570 127,150 5.0%
Labneh 2.0 15,460 16,800 17,550 19,390 22,500 9.8%
Cream 7.0 188,160 200,935 202,650 208,250 200,200 1.6%
Dairy desserts 1.0 8,775 9,425 10,300 11,050 11,950 8.0%
Evaporated milk 2.5 179,500 182,500 188,750 179,875 177,750 -0.2%
Condensed milk 2.5 9,238 9,450 11,250 12,625 13,500 9.9%
Retail milk powder 8.0 348,800 344,000 340,000 338,000 310,960 -2.8%
Retail butter 23.0 233,450 238,050 233,680 234,025 236,440 0.3%
Butter ghee 26.0 87,360 85,540 74,100 72,800 71,500 -4.9%
Cheese varies
1
1,350,850 1,451,240 1,523,110 1,666,880 1,664,120 5.4%
Grand total - 3,324,733 3,516,605 3,610,890 3,842,865 3,865,270 3.8%
Volume growth 4.8% 5.8% 2.7% 6.4% 0.6% -


1
14.0 for processed cheese, 10.0 for white cheese and 12.0 for natural cheese
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Table A9: Saudi Arabia: Estimated Total Consumption of Dairy Products by RETAIL VALUE, 2004-2008 (US$ million)

Sector 2004 2005 2006 2007 2008 CAGR (%)
Liquid Milk 428.9 474.4 478.2 678.0 695.2 12.8%
Laban 319.0 338.0 357.0 430.0 461.6 9.7%
Yoghurt 155.5 164.0 172.9 182.1 191.2 5.3%
Labneh 37.1 42.4 45.7 50.6 68.4 16.5%
Cream 129.0 145.0 154.9 158.8 189.6 10.1%
Dairy desserts 23.7 25.3 27.7 29.6 32.6 8.3%
Evaporated milk 154.0 162.5 168.4 240.7 188.5 5.2%
Condensed milk 10.3 12.0 14.3 18.1 19.6 17.5%
Retail milk powder 230.0 251.0 249.0 391.0 318.5 8.5%
Retail butter 53.80 54.20 51.70 87.20 83.40 11.6%
Butter ghee 19.7 21.1 18.1 19.1 26.4 7.6%
Cheese 622.9 682.5 718.4 1,055.2 975.0 11.9%
Grand total 2,183.9 2,372.4 2,456.3 3,340.4 3,250.0 10.4%
Growth 9.6% 8.6% 3.5% 36.0% -2.7% -

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Table A10: Saudi Arabia: Estimated PER CAPITA CONSUMPTION of Dairy Products, 2004-2008 (kg)

Sector 2004 2005 2006 2007 2008 CAGR (%)
Liquid Milk 17.0 18.6 18.4 20.8 21.2 5.6%
Laban 13.9 14.3 14.7 14.6 15.3 2.4%
Yoghurt 4.1 4.2 4.3 4.4 4.5 2.7%
Labneh 0.3 0.3 0.3 0.4 0.4 7.4%
Cream 1.0 1.1 1.1 1.1 1.0 -0.7%
Dairy desserts 0.3 0.4 0.4 0.4 0.4 5.7%
Evaporated milk 2.8 2.8 2.8 2.6 2.5 -2.4%
Condensed milk 0.1 0.1 0.2 0.2 0.2 7.5%
Retail milk powder 1.7 1.6 1.6 1.5 1.4 -5.0%
Retail butter 0.4 0.4 0.4 0.4 0.4 -1.9%
Butter ghee 0.1 0.1 0.1 0.1 0.1 -7.0%
Cheese 4.2 4.4 4.5 4.8 4.7 2.9%
Grand total 46.0 48.3 48.7 51.3 52.1 3.2%
Volume growth 2.9% 5.0% 0.8% 5.4% 1.5% -
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Table A11: Saudi Arabia: Estimated PER CAPITA SPEND on Dairy Products, 2004-2008 (US$)

Sector 2004 2005 2006 2007 2008 CAGR (%)
Liquid Milk 16.62 17.97 17.71 24.57 24.65 10.4%
Laban 12.36 12.80 13.22 15.58 16.37 7.3%
Yoghurt 6.03 6.21 6.40 6.60 6.78 3.0%
Labneh 1.44 1.61 1.69 1.83 2.43 14.0%
Cream 5.00 5.49 5.74 5.75 6.72 7.7%
Dairy desserts 0.92 0.96 1.03 1.07 1.16 5.9%
Evaporated milk 5.97 6.16 6.24 8.72 6.69 2.9%
Condensed milk 0.40 0.45 0.53 0.66 0.70 14.9%
Retail milk powder 8.91 9.51 9.22 14.17 11.29 6.1%
Retail butter 2.09 2.05 1.91 3.16 2.96 9.1%
Butter ghee 0.76 0.80 0.67 0.69 0.94 5.2%
Cheese 24.14 25.85 26.61 38.23 34.57 9.4%
Grand total 84.65 89.86 90.97 121.03 115.25 8.0%
Growth 7.0% 6.2% 1.2% 33.0% -4.8% -

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Table A12: Saudi Arabia: Forecast Total Consumption of Dairy Products by VOLUME, 2008-2013 (tonnes)

Sector 2008 2009 2010 2011 2012 2013 CAGR (%)
Liquid Milk 597,200 642,200 678,900 716,400 754,700 793,700 5.9%
Laban 432,000 452,600 473,500 494,000 514,600 535,000 4.4%
Yoghurt 127,150 133,600 140,150 146,800 153,650 160,700 4.8%
Labneh 11,250 12,250 13,250 14,250 15,250 16,250 7.6%
Cream 28,600 30,600 31,840 33,080 34,310 35,390 4.4%
Dairy desserts 11,950 12,800 13,650 14,500 15,350 16,200 6.3%
Evaporated milk 71,100 73,950 76,350 78,200 79,900 81,600 2.8%
Condensed milk 5,400 5,560 5,730 5,900 6,080 6,260 3.0%
Retail milk powder 38,870 40,000 40,750 41,500 42,250 43,000 2.0%
Retail butter 10,280 10,330 10,385 10,435 10,490 10,540 0.5%
Butter ghee 2,750 2,709 2,668 2,628 2,589 2,550 -1.5%
Cheese 132,750 138,090 143,380 148,700 154,120 159,550 3.7%
Grand total 1,469,300 1,554,689 1,630,553 1,706,393 1,783,289 1,860,740 4.8%
Volume growth 3.7% 5.8% 4.9% 4.7% 4.5% 4.3% -

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Table A13: Saudi Arabia: Forecast Total Consumption of Dairy Products by LME VOLUME, 2008-2013 (tonnes)

Sector 2008 2009 2010 2011 2012 2013 CAGR (%)
Liquid Milk 597,200 642,200 678,900 716,400 754,700 793,700 5.9%
Laban 432,000 452,600 473,500 494,000 514,600 535,000 4.4%
Yoghurt 127,150 133,600 140,150 146,800 153,650 160,700 4.8%
Labneh 22,500 24,500 26,500 28,500 30,500 32,500 7.6%
Cream 200,200 214,200 222,880 231,560 240,170 247,730 4.4%
Dairy desserts 11,950 12,800 13,650 14,500 15,350 16,200 6.3%
Evaporated milk 177,750 184,875 190,875 195,500 199,750 204,000 2.8%
Condensed milk 13,500 13,900 14,325 14,750 15,200 15,650 3.0%
Retail milk powder 310,960 320,000 326,000 332,000 338,000 344,000 2.0%
Retail butter 236,440 237,590 238,855 240,005 241,270 242,420 0.5%
Butter ghee 71,500 70,434 69,368 68,328 67,314 66,300 -1.5%
Cheese 1,664,120 1,730,180 1,795,760 1,861,660 1,929,060 1,996,640 3.7%
Grand total 3,865,270 4,036,879 4,190,763 4,344,003 4,499,564 4,654,840 3.8%
Volume growth 0.6% 4.4% 3.8% 3.7% 3.6% 3.5% -

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Table A14: Saudi Arabia: Forecast Total Consumption of Dairy Products by RETAIL VALUE, 2008-2013 (US$ million)

Sector 2008 2009 2010 2011 2012 2013 CAGR (%)
Liquid Milk 704.9 758.0 801.3 845.6 890.8 936.9 5.9%
Laban 460.9 482.9 505.2 527.1 549.1 570.8 4.4%
Yoghurt 188.9 198.5 208.2 218.1 228.3 238.7 4.8%
Labneh 58.7 63.9 69.2 74.4 79.6 84.8 7.6%
Cream 152.7 163.3 170.0 176.6 183.1 188.9 4.4%
Dairy desserts 32.0 34.3 36.6 38.8 41.1 43.4 6.3%
Evaporated milk 237.9 247.4 255.4 261.6 267.3 273.0 2.8%
Condensed milk 19.4 19.9 20.5 21.1 21.8 22.4 3.0%
Retail milk powder 359.7 370.2 377.1 384.1 391.0 397.9 2.0%
Retail butter 88.1 88.5 89.0 89.4 89.9 90.3 0.5%
Butter ghee 18.8 18.5 18.2 17.9 17.7 17.4 -1.5%
Cheese 975 1,013.9 1,052.5 1,091.4 1,131.2 1,171.1 3.7%
Grand total 3,296.9 3,459.4 3,603.2 3,746.2 3,890.9 4,035.7 4.1%
Growth -1.3% 4.9% 4.2% 4.0% 3.9% 3.7% -

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Table A15: Saudi Arabia: Forecast PER CAPITA CONSUMPTION of Dairy Products, 2008-2013 (kg)

Sector 2008 2009 2010 2011 2012 2013 CAGR (%)
Liquid Milk 21.2 22.4 23.3 24.1 24.9 25.9 4.1%
Laban 15.3 15.8 16.2 16.6 17.0 17.4 2.6%
Yoghurt 4.5 4.7 4.8 4.9 5.1 5.2 3.0%
Labneh 0.4 0.4 0.5 0.5 0.5 0.5 5.8%
Cream 1.0 1.1 1.1 1.1 1.1 1.2 2.6%
Dairy desserts 0.4 0.4 0.5 0.5 0.5 0.5 4.5%
Evaporated milk 2.5 2.6 2.6 2.6 2.6 2.7 1.1%
Condensed milk 0.2 0.2 0.2 0.2 0.2 0.2 1.3%
Retail milk powder 1.4 1.4 1.4 1.4 1.4 1.4 0.3%
Retail butter 0.4 0.4 0.4 0.4 0.3 0.3 -1.2%
Butter ghee 0.1 0.1 0.1 0.1 0.1 0.1 -3.2%
Cheese 4.7 4.8 4.9 5.0 5.1 5.2 2.0%
Grand total 52.1 54.2 55.8 57.5 58.9 60.6 3.1%
Volume growth 1.5% 4.0% 3.1% 2.9% 2.4% 3.0% -

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Table A16: Saudi Arabia: Estimated PER CAPITA SPEND on Dairy Products, 2008-2013 (US$)

Sector 2008 2009 2010 2011 2012 2013 CAGR (%)
Liquid Milk 25.00 26.41 27.44 28.47 29.40 30.52 4.1%
Laban 16.35 16.83 17.30 17.75 18.12 18.59 2.6%
Yoghurt 6.70 6.92 7.13 7.34 7.53 7.78 3.0%
Labneh 2.08 2.23 2.37 2.50 2.63 2.76 5.8%
Cream 5.41 5.69 5.82 5.95 6.04 6.15 2.6%
Dairy desserts 1.14 1.19 1.25 1.31 1.36 1.41 4.5%
Evaporated milk 8.43 8.62 8.75 8.81 8.82 8.89 1.1%
Condensed milk 0.69 0.69 0.70 0.71 0.72 0.73 1.3%
Retail milk powder 12.76 12.90 12.92 12.93 12.90 12.96 0.3%
Retail butter 3.12 3.08 3.05 3.01 2.97 2.94 -1.2%
Butter ghee 0.67 0.64 0.62 0.60 0.58 0.57 -3.2%
Cheese 34.57 35.33 36.04 36.75 37.33 38.15 2.0%
Grand total 116.91 120.54 123.40 126.13 128.41 131.46 2.4%
Growth -3.4% 3.1% 2.4% 2.2% 1.8% 2.4% -

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B1. LIQUID MILK

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Tables B1 to B2 below summarise the development of the liquid milk market in Saudi Arabia during the period 2004-2008.


Table B1: Liquid Milk, Million Litres, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 439.1 489.8 496.0 574.4 597.2 6.0% 11.5% 1.3% 15.8% 4.0%
Litres per capita 17.0 18.5 18.4 20.8 21.2 3.3% 8.9% -1.0% 13.4% 1.9%


Table B2: Liquid Milk, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 451 502 511 678 695 5.7% 11.2% 1.8% 32.6% 2.5%
Sales per capita $ 17.50 19.00 18.92 24.55 24.65 3.1% 8.6% -0.4% 29.8% 0.4%

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0
100
200
300
400
500
600
700
2004 2005 2006 2007 2008
M
i
l
l
i
o
n

L
i
t
r
e
s
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Key Points:

Milk consumption in Saudi Arabia has grown by an average annual rate of 8.0% since 2004 to reach 597.2 million
litres in 2008. In value terms, this is worth around US$ 695 million at retail level. Per capita consumption at 21.2 litres
in 2008 is 25% more than the 17.0 litres registered in 2004. This would have been higher but for the dip in consumption
in 2006 following the boycott of Danish products which had a severe effect on sales of SAUDIA milk (despite having no
connections with Denmark), the most important brand in volume terms and the largest UHT brand overall. The impact on
the milk market in general was also significant as other suppliers were unable to make up the shortfall and year-on-year
growth all but stagnated. A strong recovery was registered in 2007 (+16% on the previous year). However, with retail
prices increasing by an average 14.5% in early 2008, growth in consumption has been subdued in 2008.

Consumption of value-added and niche milks, is relatively insignificant in the overall context of the milk market. It is
also understood to be declining due to rising milk prices. Indeed the 2007 withdrawal of the AL RABIE SR 2 range (in
Tetra Prisma carton) underlines the difficulties suppliers face breaking away from the long established formats. Examples
of such non-standard offerings include ALMARAI VETAL (high in calcium and protein, low in fat), ALMARAI LACTOSE FREE
milk, NADEC IRON FORTIFIED, Al Othmans MAMAS LOVE (now withdrawn) and Al Safi-Danones RASHAKA range (0%
fat). While such products are very niche and hard to justify in volume terms, they do have the benefit of enhancing the
image of suppliers and building consumer respect generally.

It is important to note that the above table is based on milk sold into the market excluding subsequent returns.

The key trends underlying these broad developments are explored in the following sections.

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B1.2.1 LONG-LIFE VS SHORT-LIFE


Table B3: Liquid Milk, Long-life and Short-life, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Long-life 316.7 353.7 338.7 395.6 379.0 4.6% 6.4% 11.7% -4.2% 16.8% -4.2%
Short-life 122.5 136.2 157.3 178.9 218.2 15.5% 5.0% 11.2% 15.6% 13.7% 22.0%
Total 439.1 489.8 496.0 574.4 597.2 8.0% 6.0% 11.5% 1.3% 15.8% 4.0%


Share of Total (%)
2004 2005 2006 2007 2008
Long-life 72% 72% 68% 69% 63%
Short-life 28% 28% 32% 31% 37%
Total 100% 100% 100% 100% 100%
0
50
100
150
200
250
300
350
400
450
2004 2005 2006 2007 2008
Long-life Short-life

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Key Points:

The years 2007 and 2008 were characterised by high international commodity prices. Recombiners as well as fresh dairy
suppliers faced increasing pressures on margins. The prices of skimmed milk powder (SMP), cattle feed and packaging
materials such as PET forced suppliers to raise liquid milk prices. For example, Sadafco, which is the leading recombining
dairy in Saudi Arabia, raised prices of its SAUDIA plain UHT milk, from SR 1.0 to 1.5 for 200 ml carton, 2.0 to 2.5 for 500
ml carton and 4.0 to 4.5 for 1 litre carton. This was followed by similar increases by other recombining dairies. At the
same time, fresh milk suppliers increased prices of fresh milk in 500 ml PET from SR 2.0 to 2.5 and 1 litre PET from 3.5
to 4.0 and 2 litre HDPE from SR 6.0 to 7.0. While there had been no difference in the prices of 200 ml UHT cartons and
200 ml short-life milk in PET/ HDPE until 2008, often consumers preferred long-life cartons over PET due to the obvious
advantages of long-life milk over short-life, however, the 2008 increase in prices changed the value equation in favour of
short-life milk. As a result, 2008 volumes of short-life milk, which is mostly fresh milk increased by 22%, while long-life
milk saw a 4.2% decline.

Short-life milk was also the main beneficiary of the Danish products boycott in 2006, although other UHT suppliers
benefited to some extent (in particular recombining dairy Jamjoom Foremost, a Friesland company). Short-life milk was
also helped by initiatives such as the launch of PET by Almarai, NADEC and Al Othman in 2006.

Overall, ambient milk still dominates the market, representing 63% by volume (around 379 million litres) of all liquid
milk, plain and flavoured, in 2008. However, while long-life milk consumption grew by an average of 4.6% per annum
since 2004, consumption of short-life products increased by 15.5% per annum. As a result, short-life milks share of the
market has increased from 28% in 2004 to 37% in 2008. However, supplier margins have been under significant
pressure as raw material prices (milk powder, butterfat, animal feed etc) remain high and the costs of doing business
increase.
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The advance of short-life milk has also been helped by the changing market environment, with urbanisation (and access
to a cold chain) increasing steadily, the growing importance of A-class retail outlets, including the recent rapid increase in
hypermarkets in Saudi Arabia, as well as the relatively low prices offered by fresh dairies. Virtually all short-life supply is
from the fresh dairies though negligible quantities of chilled recombined milk are also supplied through certain catering
channels. Packaging changes such as the introduction of PET have helped maintain interest in the sector (though most
probably at the expense of other short-life brands, rather than UHT).

Milk supply in Saudi Arabia was traditionally divided into two broad categories recombined milk in long-life packaging
and fresh milk in short-life packaging. The move by fresh milk suppliers into long-life packaging began in earnest in 1995
as companies recognised the significant benefits offered by aseptically processing milk. Not only did long-life processing
enable fresh dairies to increase volumes by extending distribution to smaller groceries and bagalas and outside the main
urban areas, but it also offered a way of smoothing seasonal raw milk surpluses. The supply of milk in UHT packaging is
now an established offering from the main fresh dairies and indeed most second-tier dairies, with an estimated 42% of
fresh milk packed in long-life cartons in 2008. New export markets such as Iraq (in addition to the GCC), have opened up
further avenues to increase long-life milk sales for Saudi dairies. Indeed, long-life milk from suppliers such as Almarai, Al
Safi-Danone, NADEC, Al Othman, Sadafco, Najdiyah and Al Rai was encountered in Iraqi stores during early 2009
research.

However, for most fresh dairies long-life milk is of secondary importance, and often view ambient cartons as a useful way
of balancing supply and demand. For some leading fresh suppliers UHT milk will continue to be of secondary importance
as more profitable uses for their raw milk emerge. Such uses include dairy desserts or juice blends in the case of Al Safi-
Danone, or evaporated milk or sterilised cream in the case of Almarai. The situation is of course quite different for
recombining dairies for whom long-life milk remains core.
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B1.2.2 PLAIN MILK VS FLAVOURED


Table B4: Liquid Milk, Plain and Flavoured, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Plain 373.1 416.0 418.5 485.1 506.1 7.9% 4.4% 11.5% 0.6% 15.9% 4.3%
Flavoured 66.0 73.9 77.5 89.3 91.1 8.4% 15.7% 12.0% 4.9% 15.3% 2.0%
Total 439.1 489.8 496.0 574.4 597.2 8.0% 6.0% 11.5% 1.3% 15.8% 4.0%

Share of Total (%)
2004 2005 2006 2007 2008
Plain 85% 85% 84% 84% 85%
Flavoured 15% 15% 16% 16% 15%
Total 100% 100% 100% 100% 100%

Plain Flavoured

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Key Points:

Some 85% of milk consumption is plain milk, with flavoured milk making up the remaining 15%. Interestingly, despite a
noticeable step up in new flavoured product launches in the last few years most have met with limited success,
undoubtedly partly because of an absence of marketing support and brand-building on the part of most suppliers, who
(with few exceptions) adopt the same marketing approach as with plain one litre UHT milk. Additionally of course the
requirement to not exceed the established one riyal price point is a severe constraint on suppliers trying to launch new
products. Consumers appear unwilling to pay SR 2 for flavoured milk as evidenced by Al Rabies recent withdrawal of its
premium SR 2 range.

Recently, however, suppliers have begun downsizing pack volumes to improve price returns per unit volume, the most
significant being the launch of ALMARAI flavoured milk in 150 ml cartons at SR 1 in November 2008, which replaced the
then available 200 ml cartons. Similar moves were initiated in 2007 in the short-life juice category by Al Rabie and
Almarai, when they replaced their 2 litre HDPE pure juices with 1.75 litre PET, and Al Safi-Danone in laban when it
replaced its 200 ml, 500 ml, 1 litre and 2 litre HDPE laban packs with 180 ml, 375 ml, 850 ml and 1.75 litre packs. Other
long-life flavoured milk suppliers that have already downsized include KDD (200 ml to 180 ml) and Friesland (200 ml to
185 ml). This trend is likely to continue with more flavoured milk suppliers moving to smaller sizes. With the downsizing
trend continuing, returns from flavoured milk are likely to improve, though volume growth will of course be impacted in
the short-term. The downsizing trend has not affected the plain milk category as most suppliers there enjoy economies
of scale and also plain milk is cheaper to produce than flavoured milk. Case configurations for 200 ml cartons have also
been changed to mask the increase in milk prices with most suppliers now selling 18 cartons to a case compared to the
previous standard of 24 to a case.
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Long-life flavoured milk consumption is estimated at 82.3 million litres in 2008 and represents 90% of all flavoured milk
sales. 53 million litres of this is fresh milk (mainly SAFIO
1
), with the remaining 29.3 million litres recombined. Fresh
flavoured long-life milk has been growing at an average rate of around 10.3% per annum since 2004 (up from 35.8
million litres in 2004 to 53 million litres in 2008), compared with recombined flavoured long-life milk growth of 9.2% per
annum on average (20.6 million litres in 2004 and 29.3 million litres in 2008).

Chilled flavoured milk is a small but relatively fast growing segment (compound annual growth of 14.5% per annum
since 2004), accounting for a further almost 10% of all flavoured milk in 2008. Al Othmans NADA was the only
significant player in the segment until the entry of ALMARAI in 2002, with both brands accounting for around 95% of
volume by 2008 (the remainder is made up by suppliers such as NADEC, UND etc).

1
SAFIO has been included under Fresh, even though it is made partly from milk powder.
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B1.2.3 FRESH VS RECOMBINED

Table B5: Liquid Milk, Fresh and Recombined, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Fresh 226.0 248.3 275.5 320.9 375.7 13.5% 5.9% 9.8% 11.0% 16.5% 17.1%
Recombined 213.1 241.6 220.5 253.5 221.5 1.0% 6.0% 13.4% -8.7% 15.0% -12.6%
Total 439.1 489.8 496.0 574.4 597.2 8.0% 6.0% 11.5% 1.3% 15.8% 4.0%

Share of Total (%)
2004 2005 2006 2007 2008
Fresh 51% 51% 56% 56% 63%
Recombined 49% 49% 44% 44% 37%
Total 100% 100% 100% 100% 100%

Fresh Recombined

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Key Points:

For the first time consumption of fresh milk overtook that of recombined milk during 2003 and by 2008 it accounted for
63% of total consumption, boosted in particular by the downturn in SAUDIA sales in 2006 and by the increase in
recombined milk prices in 2008. Not surprisingly, short-life milk remains the priority for fresh dairies and the recombiners
have traditionally been better at supporting their UHT offerings (i.e., UHT is less of a priority for fresh dairies). The
following table illustrates how the manufacture of long-life and short-life milk breaks down by fresh and recombining
dairies.

Table B6: Liquid Milk, Fresh and Recombined by Long-life/Short-life, 2004-2008

Million litres
2004 2005 2006 2007 2008 CAGR
Fresh total 226.0 248.3 275.5 320.9 375.7 13.5%
Long-life 103.6 112.4 118.5 142.2 157.7 11.1%
Short-life 122.5 135.9 157.0 178.7 218.0 15.5%
Recombined total 213.1 241.6 220.5 253.5 221.5 1.0%
Long-life 213.1 241.3 220.2 253.3 221.3 1.0%
Short-life - 0.3 0.3 0.2 0.2 -
Total 439.1 489.8 496.0 574.4 597.2 8.0%
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B1.2.4 PACK TYPE

Table B7: Liquid Milk, Pack Type, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
HDPE 117.9 121.3 124.7 129.3 147.2 5.7% 7.3% 2.8% 2.8% 3.7% 13.8%
Carton 319.0 353.4 335.3 391.7 376.4 4.2% 5.5% 10.8% -5.1% 16.8% -3.9%
PET - 11.5 31.6 49.3 70.1 9.2% - - 174.4% 56.3% 42.2%
Can 2.2 3.7 4.4 4.1 3.5 12.3% -2.2% 70.1% 20.1% -7.1% -14.6%
Total 439.1 489.8 496.0 574.4 597.2 8.0% 6.0% 11.5% 1.3% 15.8% 4.0%

Share of Total (%)
2004 2005 2006 2007 2008
HDPE 27% 25% 25% 23% 24%
Carton 73% 72% 68% 68% 63%
PET - 2% 6% 9% 12%
Can 0% 1% 1% 1% 1%
Total 100% 100% 100% 100% 100%

Key Points:
Cartons, though still by far the most popular
packaging format due to its importance in UHT
milk packaging, suffered a decline in 2008 due to
an increase in prices of long-life recombined milk.
Plastic, both HDPE and PET, benefited most and
by 2008 accounted for 36% of supply (up from
32% in 2007).
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Key Points:

Plastics 36% share includes PET which was launched during 2005 (Almarai and NADEC), a little after in neighbouring
UAE, followed by Al Othman in 2006 and Najdiyah in 2007.

The expansion in PET by some of the largest fresh KSA dairies is an important development and has significantly altered
the dynamics of the short-life market. Not only have dairies moved away from HDPE in favour of PET but the breakdown
of consumption by pack size has also been affected (PET is not available in sizes greater than 1 litre). Given the very
high costs associated with investing in PET, it is likely to be beyond the reaches of many smaller dairies and may
therefore further polarise suppliers. In 2005 PET accounted for less than 9% of short-life plastic sales, compared with an
estimated 32% by 2008. Most suppliers now pack short-life milk in PET for sizes up to 1 litre and in HDPE for 2 litres and
above.

HDPE had a strong year in 2008 with 13.8% growth over 2007. HDPE mainly benefited from the migration of consumers
from carton packs as they sought better value in times of high inflationary pressures.

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B1.2.5 PACK SIZE

Table B8: Liquid Milk, Pack Size, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Portions (<1 litre) 224.0 238.2 234.8 278.3 254.3 3.2% 3.6% 6.3% -1.4% 18.5% -8.6%
1 litre 142.9 170.2 172.9 200.2 218.7 11.2% 11.0% 19.1% 1.6% 15.8% 9.2%
>1 litre 72.2 81.4 88.3 95.9 124.2 14.5% 4.1% 12.8% 8.5% 8.6% 29.5%
Total 439.1 489.8 496.0 574.4 597.2 8.0% 6.0% 11.5% 1.3% 15.8% 4.0%


Share of Total (%)
2004 2005 2006 2007 2008
Portions (<1 litre) 51% 49% 47% 48% 43%
1 litre 33% 35% 35% 35% 36%
>1 litre 16% 17% 18% 17% 21%
Total 100% 100% 100% 100% 100%

Key Points:

Portion sizes, mainly 200 ml and 500 ml (but also
including 125 ml and 250 ml), are still the most
popular packs, accounting for 43% of supply in 2008.
Almarais launch of a 150 ml flavoured milk carton in
November 2008 has done well (SADAFCO and Al
Othman are the only other companies in the 125 ml
category). However demand for larger sizes of one
litre and over continue to advance strongly and
accounted for 57% of supply in 2008 against 49% in
2004.
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B1.2.6 DETAILED SUMMARY BREAKDOWN

Table B9: Liquid Milk, Detailed Summary Breakdown, 2004-2008 (
1
Totals may not tally due to rounding)

Million litres
1
Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Total Long-life: 316.7 353.7 338.7 395.6 379.0 4.6% 6.4% 11.7% -4.2% 16.8% -4.2%
HDPE 0.3 0.3 0.3 0.3 0.0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Carton
Portions (<1 litre) 200.8 215.2 201.9 236.4 211.9 1.4% 4.2% 7.2% -6.2% 17.1% -10.4%
1 litre 111.8 132.4 130.0 152.3 161.3 9.6% 10.5% 18.5% -1.8% 17.2% 5.9%
>1 litre 1.7 2.1 2.1 2.4 2.3 7.8% 26.9% 26.2% -1.6% 17.1% -4.2%
Cans 2.2 3.7 4.4 4.1 3.5 12.3% -2.2% 70.1% 20.1% -7.1% -14.6%
Total Short-life: 122.5 136.2 157.3 178.9 218.2 15.5% 5.0% 11.2% 15.6% 13.7% 22.0%
HDPE
Portions (<1 litre)
16.7 14.5 17.7 14.5 7.8 -17.3% 3.9% -13.0% 21.6% -18.2% -46.2%
1 litre
30.4 27.1 20.5 21.0 17.5 -12.9% 19.3% -10.8% -24.6% 2.7% -16.7%
>1 litre
70.5 79.4 86.3 93.5 121.9 14.7% 3.7% 12.5% 8.7% 8.4% 30.4%
Carton
Portions (<1 litre)
4.1 0.7 0.8 0.4 0.7 -35.7% -17.3% -82.5% 3.4% -53.3% 75.0%
1 litre
0.7 2.9 0.6 0.2 0.2 -26.9% -68.3% 348.5% -79.4% -75.0% 0.0%
PET
Portions (<1 litre) - 3.9 9.9 22.8 30.4 - - - 154% 131% 33.3%
1 litre - 7.6 21.7 26.5 39.7 - - - 184.8% 22.3% 49.8%
Total
439.1 489.8 496.0 574.4 597.2 8.0% 6.0% 11.5% 1.3% 15.8% 4.0%
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Table B10 details how the Saudi milk market breaks down by local and imported brands.


Table B10: Liquid Milk, Local vs Imports, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 436.7 487.4 493.4 571.6 594.0 8.0% 6.0% 11.6% 1.2% 15.9% 3.9%
Imports 2.4 2.4 2.6 2.8 3.2 7.5% -4.0% 0.0% 8.3% 7.7% 14.3%
Total 439.1 489.8 496.0 574.4 597.2 8.0% 6.0% 11.5% 1.3% 15.8% 4.0%

Share of Total (%)
2004 2005 2006 2007 2008
Local 99.5% 99.5% 99.5% 99.5% 99.5%
Imports 0.5% 0.5% 0.5% 0.5% 0.5%
Total 100% 100% 100% 100% 100%

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Key Points:

Of all the GCC countries, Saudi Arabia is the most self sufficient as far as liquid milk is concerned, with just 0.5% of
consumption imported (around 3.2 million litres) in 2008. These mostly consist of canned flavoured milks, the most
important of which is Hochwalds BONNY (formerly Nestl). Sales are concentrated in selected regional pockets (e.g., the
Southern borders), with distribution confined to a limited number of traditional wholesalers.

Some flavoured sterilised milk packed in plastic bottles such as BRIDEL sterilised milk from France is also encountered
but volumes are very limited. Milk from other GCC markets is only rarely encountered, with KDD UHT milk from Kuwait
traditionally the most significant. However, this along with BDD (from Bahrain), were badly affected by the 2006 boycott
and are much less visible than before.
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Table B11: Liquid Milk, Total Liquid Milk Supplier Shares, 2004-2008
Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 17.4% 17.0% 19.5% 21.5% 27.5%
SADAFCO 33.3% 33.3% 25.7% 28.9% 21.5%
Al Safi-Danone 13.7% 13.8% 14.0% 13.0% 14.9%
Jamjoom Foremost 9.6% 10.2% 11.0% 8.6% 9.2%
NADEC 6.0% 6.1% 7.1% 7.3% 8.6%
Al Othman 9.5% 8.3% 7.8% 8.5% 6.3%
NFIC 0.2% 0.4% 0.5% 1.4% 2.0%
United National 1.5% 1.6% 1.8% 1.7% 1.8%
Al Rabie 2.5% 2.5% 2.5% 2.3% 1.7%
Najdyah 1.5% 1.7% 1.8% 1.6% 1.7%
Al Rai 1.1% 1.2% 1.4% 1.0% 0.7%
Others 3.6% 3.9% 7.0% 4.3% 4.0%
Total 100% 100% 100% 100% 100%
Total (m litres) 439.1 489.8 496.0 574.4 597.2



Key Points:
Almarai is now the market leader in the Saudi Arabian
milk market with a share of about 27.5% following a
strong year in 2008. It not only made inroads into the 1
litre long-life carton market, but also achieved
spectacular growth in its short-life milk volumes, at a
time when price inflation forced some long-life consumers
to shift to short-life because of its better value per Riyal.
In mid-2005 Almarai became the first Saudi company to
launch short-life PET (following successful trials in UAE),
which was a bold move by the company. Sales of
ALMARAI short-life milk grew particularly strongly in 2008
and these now account for 63% of its milk sales.
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SADAFCO, which has traditionally been the largest supplier of liquid milk in Saudi Arabia ceded its market leadership
position to Almarai in 2008. The decision to increase the price of its 200 ml, 500 ml and 1 litre plain UHT milk by SR 0.50
each did not go very well with the consumers, at a time when inflation was biting hard. While the increase on the 200 ml
carton was psychologically the most significant, what made a difference in volumes, was the price increase on the 1 litre
pack. Almarai, NADEC and Al Safi-Danone made strong inroads into the growing 1 litre carton market, while SADAFCO
declined. SADAFCO was also badly affected in 2006 when it was wrongly perceived as a Danish brand and boycotted. In
2008 SADAFCO supplied around 58% of all recombined milk, down from 65% in 2006. It is particularly strong in plain
milk.

Al Safi-Danone is the next most important supplier of milk in Saudi Arabia accounting for a further 14.9%. Since
Danones involvement in 2000, the company has successfully focussed on more profitable value-added products (e.g.,
desserts, juice/milk blends, probiotic drinks). In 2008, like Almarai, Al Safi-Danone too had a strong performance in the
short-life milk market.
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0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
2004 2005 2006 2007 2008
M
a
r
k
e
t

S
h
a
r
e
(
%
)
Almarai SADAFCO Al Safi-Danone Jamjoom Foremost
NADEC Al Othman NFIC United National

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Table B12: Liquid Milk, Short-life Milk Supplier Shares, 2004-2008


Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 40.0% 39.2% 38.8% 41.3% 47.3%
Al Safi-Danone 23.3% 23.0% 21.3% 20.0% 20.9%
NADEC 12.1% 12.5% 13.3% 13.5% 11.3%
Al Othman 10.7% 10.5% 10.5% 9.7% 8.4%
United National 5.1% 5.9% 5.6% 5.4% 4.9%
Najdiyah 3.8% 4.0% 4.1% 4.0% 2.7%
Mazrah 2.2% 2.1% 2.2% 1.7% 1.6%
Al Hana 0.8% 0.9% 1.5% 1.3% 1.0%
Others 2.0% 2.0% 2.8% 3.2% 2.0%
Total 100% 100% 100% 100% 100%

Total (m litres) 122.5 136.2 157.3 178.9 218.2



Key Points:

Almarai is the leading supplier of short-life milk in Saudi
Arabia, with 47% of supply in 2008. Recent performance
has benefited from its introduction of PET in an attractive
shaped bottle and the launch of other innovative products
under the ALMARAI umbrella (laban, juice etc). In 2008,
the low-cost strategy helped Almarai make significant
market share gains.
Al Safi-Danone remains in second position overall with a
further 21% of supply. While this is down almost two and a
half percentage points over the period, volumes have
continued to grow which is quite good given the companys
experimentation with different packaging formats, its
decision not to launch PET, and stated focus on value-
added potted products, in particular dairy desserts.
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NADEC is the next most important, accounting for a further 11.3% of short-life sales (down from 13.5% in 2007).
Although, sales have grown helped by a revamp of its brand and graphics, the successful PET launch and investments in
expanding distribution, and in installing fridges, it has not matched the blistering pace of growth of Almarai.

Al Othman short-life volumes also grew in 2008, though not as strongly as other suppliers. Like other leading suppliers,
the company has also invested in expanding distribution, both within KSA and in neighbouring Gulf markets where the
company has registered some very strong growth (particularly in the UAE). It is the most recent company to venture into
PET, with different SKUs introduced between October 2006 and February 2007.
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Table B13: Liquid Milk, Long-life Milk Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
SADAFCO 46.2% 46.1% 37.7% 42.0% 33.9%
Almarai 8.6% 8.5% 10.6% 12.5% 16.2%
Jamjoom Foremost 13.3% 14.1% 16.1% 12.5% 14.6%
Al Safi-Danone 10.0% 10.3% 10.6% 9.9% 11.5%
NADEC 3.2% 3.6% 4.2% 4.4% 7.1%
Al Othman 9.0% 7.4% 6.5% 8.0% 5.1%
NFIC 0.2% 0.5% 0.7% 2.0% 3.2%
Al Rabie 3.5% 3.5% 3.6% 3.3% 2.6%
Al Rai 1.5% 1.7% 2.1% 1.5% 1.1%
Others 4.3% 4.3% 7.9% 4.0% 4.8%
Total 100% 100% 100% 100% 100%

Total (m litres) 316.7 353.7 338.7 395.6 379.0
Key Points:

SADAFCO continues to dominate long-life milk with 34%
of supply in 2008, although it is down 8% compared to
2007, due to its decision to raise retail prices in 2008.
Quite apart from the boycott it experienced in 2006, the
company has undergone a significant restructuring
involving a major rationalisation of its product offering.
Niche products have been withdrawn, enabling the
company to better focus on its core products and high
potential sectors such as flavoured milk. Despite the
strength of the SAUDIA brand in white milk, SADAFCO is
weak in flavoured, which accounts for less than 3% of its
volume.
Almarai is a clear second in 2008, benefited mainly by the
fall in SAUDIA sales. Frieslands JAMJOOM RAINBOW
recombined milk is the third leading supplier with a
14.6% share. Al Safi-Danone and NADEC too have
increased their shares to 11.4% and 7.1% respectively.
Al Othman has not been able to focus well on the Saudi
market due to its growing export business. The remaining
dozen or so suppliers account for a further 12%.
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Table B14: Liquid Milk, Plain Milk Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 18.5% 18.4% 20.9% 22.2% 28.0%
SADAFCO 37.8% 38.3% 29.8% 33.4% 24.8%
Al Safi-Danone 10.6% 11.0% 11.6% 10.7% 13.1%
Jamjoom Foremost 9.0% 10.0% 10.8% 8.7% 9.8%
NADEC 6.2% 6.3% 7.6% 7.2% 9.2%
Al Othman 8.7% 7.2% 7.0% 7.7% 5.8%
United National 1.8% 1.9% 2.1% 2.0% 2.1%
Najdiyah 1.5% 1.7% 1.9% 1.7% 1.8%
NFIC 0.0% 0.0% 0.0% 1.2% 1.4%
Others 5.9% 5.3% 8.4% 5.3% 4.2%
Total 100% 100% 100% 100% 100%

Total (m litres) 373.1 416.0 418.5 485.1 506.1
Key Points:

When the total market for white milk is examined
(ignoring the distinction between long-life and short-
life), Almarai is market leader with 28% of supply in
2008. SADAFCO is now number two in the market with
24.8%, followed by Al Safi-Danone and Jamjoom
Foremost (Friesland) with 13.1% and 9.8%
respectively.

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Table B15: Liquid Milk, Flavoured Milk Supplier Shares, 2004-2008


Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 10.3% 9.1% 11.9% 17.7% 25.2%
Al Safi-Danone 33.2% 29.8% 27.1% 25.7% 24.9%
Al Othman 14.6% 14.6% 12.0% 12.9% 9.3%
Al Rabie 9.9% 10.2% 9.7% 9.5% 7.9%
Friesland 13.0% 11.5% 12.3% 8.3% 6.4%
NADEC 4.8% 4.5% 4.6% 7.4% 5.5%
NFIC 1.3% 2.6% 3.2% 2.5% 5.5%
SADAFCO 5.7% 5.5% 3.8% 4.5% 3.5%
Najran 1.8% 1.4% 1.5% 1.3% 1.6%
Al Rai 1.6% 1.2% 1.9% 2.0% 1.2%
Danya 2.3% 2.3% 1.9% 1.6% 0.0%
Others 1.6% 7.3% 10.2% 6.6% 5.8%
Total 100% 100% 100% 100% 100%

Total (m litres) 66.0 73.9 77.5 89.3 91.1
Key Points:

Almarai displaced Al Safi-Danone to become the leading
flavoured milk supplier in Saudi Arabia in 2008. It
achieved excellent performance in long-life as well as
short-life flavoured milk formats. The November 2008
introduction of flavoured milk in 150 ml cartons has gone
down well with consumers. There has been no change in
off-take though volume in litres is likely to be affected.
Al Safi-Danones SAFIO has been losing share to Almarai
since 2004 and is now the number two brand of flavoured
milk, with 24.9% of supply in 2008 (or 27.6% if only
long-life flavoured milk is considered).
Al Othman is next with 9.3% in 2008, which includes both
long-life and short-life milk followed by Al Rabie and
Friesland, with 7.9% and 6.4%, respectively. While Al
Rabie withdrew its 330 ml packs, Friesland downsized
from 200 ml to 185 ml. NADEC and NFIC are tied at
5.5%. In 2008 NFICs share relates to cans as well as
long-life cartons which are doing well.
There are at least another dozen brands making up the
remainder of supply, in what is a very competitive sector.
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Table B16: Liquid Milk, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
SAUDIA 1 litre UHT plain 3.75-4.00 3.75-4.00 3.75-4.00 4.50 4.50
SAUDIA 12 x 1 litre UHT plain 39.00-41.50 39.00-41.50 39.00-41.50 41.50-43.50 47.00
SAFIO 200 ml UHT flavoured 1.00 1.00 1.00 1.00 1.00
ALMARAI 2 litre plain HDPE 6.00 6.00 6.00 7.00 7.00
AL SAFI 1 litre plain 3.00 3.00 3.00 4.00 4.00
NADEC 500 ml plain 2.00 2.00 2.00 2.50 2.50


Key Points:

Following the price wars of 2001 and 2002 milk retail prices settled down and remained largely unchanged to 2007,
when an across the board increase was implemented in response to rapidly rising input costs. As a result the average
price per litre in 2007 increased by more than 14% compared with 2006 (SR 3.86 per litre to SR 4.42 per litre). In 2008,
prices remained largely unchanged with respect to 2007, though there were some downsizing in the 200 ml long-life
flavoured milk category, that pushed the price per litre up. Consumer response to the increase in prices was sharp.
Consumption of long-life milk fell while that of short-life milk in larger sizes (2 litre and above), that offered better value-
for-money grew.
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Suppliers continue to experiment with case sizes in an effort to effectively increase prices (e.g. from 24 x 200 ml UHT to
21 x 200 ml to 18 x 200 ml). In long-life milk, the SAUDIA brand is still priced at a premium up to SR 47.00 for a 1
litre case. Four-packs are also increasingly visible e.g., 4 x 1 litre of ALMARAI selling for SR 14.5.

Own-label milk is still not an important feature of the Saudi market, despite the 2004 launch of the countrys first own-
label brand, PANDA (co-packed by Al Rabie and Al Rai), and later followed by Al Othaims Al SAFFORI and SHAHAD (co-
packed by Al Hana and Al Rai). Priced at SR 2.00-2.25 for one litre when it first appeared, PANDA has not made the
impact hoped for.

The distribution pattern varies between long-life and short-life products as well as from supplier to supplier. Not
surprisingly, smaller producers of both fresh and recombined milk are much more dependent on institutional sales. An
estimated 60% of long-life milk sales are through medium and small grocers with supermarkets accounting for 20%,
wholesalers 10%, and catering and institutions the remaining 10%. For short-life milk, medium and small groceries are
even more important, accounting for 65-70% of supply, while supermarkets account for around 25% and
catering/institutions a further 5% of supply.

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Table B17: Liquid Milk, Five-Year Detailed Forecasts, 2008-2013

Million litres Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Total long-life 379.0 410.5 433.8 457.8 482.6 508.1 8.3% 5.7% 5.5% 5.4% 5.3%
Plain 296.7 328.9 345.7 363.0 380.7 398.9 10.9% 5.1% 5.0% 4.9% 4.8%
Flavoured 82.3 81.6 88.1 94.8 101.9 109.2 -0.9% 8.0% 7.6% 7.5% 7.2%
Total short-life 218.2 231.7 245.2 258.6 272.1 285.6 6.2% 5.8% 5.5% 5.2% 5.0%
Plain 209.4 222.4 235.4 248.3 261.3 274.3 6.2% 5.8% 5.5% 5.2% 5.0%
Flavoured 8.8 9.3 9.8 10.3 10.8 11.3 5.7% 5.4% 5.1% 4.9% 4.6%
Total 597.2 642.2 678.9 716.4 754.7 793.7 7.5% 5.7% 5.5% 5.3% 5.2%


Key Points:

The market is likely to reach 794 million litres by 2013 at an average growth rate of 5.9% per annum in the next five
years. With skim milk powder prices receding to levels of US$ 2,000/ tonne in May 2009 from highs of US$ 5,500/ tonne
in mid-2007, it is expected that recombining dairies would roll-back some of the price increase effected last year. This is
likely to give a boost to long-life plain milk (which is 65% recombined).
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B1. LIQUID MILK

B1.5 FIVE-YEAR FORECASTS

June 2009 IMES Consulting

80

However, with the global economy in a downturn, market growth rates could be lower than expected. While Saudi Arabia
has sufficient cash reserves which are being used to prime the economy, the state of affairs in the world economy and
the impact it would have on crude oil prices shall have a strong bearing on the local economic environment and the
(positive or negative) flow of foreign construction workers.

Long-life flavoured milk is expected to decline slightly in 2009, as the result of the downsizing actions by major brands
such as ALMARAI and Frieslands RAINBOW. Thereafter growth is expected to return to currently existing levels.

The sudden shift in market from long-life to short-life induced by a large increase in long-life milk prices, has lowered the
2008 base for long-life milk and correspondingly increased the same for the short-life milk. Therefore average growth
rates calculated on the basis of 2008 market segmentations will indicate a slightly lower growth rate at 5.5% per annum
for short-life milk as compared to 6.0% per annum for long-life milk. Short-life milk will, however, continue to grow
strongly during the forecast period due to the following reasons:

continuing replacement of milk powder, and more recently canned concentrated milk
greater retail development and urbanisation, which facilitate the distribution of short-life products in particular
a young and fast growing population (growth averaged 2.2% between 2004 and 2008)
supplier initiatives such as ongoing investment in new packaging, both cartons and plastic, and the launch of
increasingly sophisticated formulations
general increased awareness of the health benefits of liquid milks.

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

81

Laban is consumed mainly as a refreshing drink, often by older Saudis, with sales noticeably concentrated during the hot season and
during Ramadan. This contrasts with milk, which is mostly consumed during the winter, and mainly by women and children.

There are individual preferences for different cultures. Suppliers report that a significant portion of laban is purchased on impulse
as a quick thirst-quencher/refresher and distribution has been more concentrated in smaller retail outlets than milk. Twenty one per
cent of total volume is supplied in packs of less than one litre in size (a lot more than 21% in number of packs). There is however,
increased competition from other impulse thirst-quenchers as well as growing acceptance of large take-home formats (e.g., 2 litre
plastic bottles).

Freshness of laban is very important and consumer market research indicates a high propensity to purchase on the day of
production with consumers taking careful note of the date of stamping. The probability of purchase falls off dramatically on
subsequent days as the acidity of the product increases and the taste invariably changes.

Tables B18 to B19 below summarise the development of the laban market in Saudi Arabia during the period 2004-2008.

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

82

Table B18: Laban, Million Litres, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 359.4 378.5 397.2 403.0 432.0 4.3% 5.3% 4.9% 1.5% 7.2%
Litres per capita 13.9 14.3 14.7 14.6 15.3 1.7% 2.8% 2.6% -0.7% 4.8%


Table B19: Laban, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 319 338 357 430 462 4.7% 6.1% 5.5% 20.6% 7.4%
Sales per capita $ 12.36 12.80 13.20 15.58 16.37 2.1% 3.6% 3.2% 18.0% 5.1%
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

83
0
50
100
150
200
250
300
350
400
450
500
2004 2005 2006 2007 2008
M
i
l
l
i
o
n

L
i
t
r
e
s

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

84

Key Points:

Laban consumption in Saudi Arabia has grown by an average annual rate of 4.7% since 2004 to reach 432 million litres
in 2008. Consumption is highest during the warm summer months and during Ramadan when it is used as a fast-
breaking drink. In value terms, the market is worth around US$ 462 million at retail level. Per capita consumption has
grown over the period from 13.9 litres in 2004 to 15.3 litres by 2008.

The few non-standard labans that have been launched have met with mixed success, oftentimes because consumers
have not been fully informed of their benefits. Among the products available in early 2008 were:

o The ACTIVIA range (Bifidus culture added) and ACTIMEL probiotic drinks (relatively niche), from Al Safi-Danone,
which have carved out an important position in the market. In addition DANINO flavoured yoghurt drink, which is
more significant than ACTIMEL in volume terms, has also been included in this section.

o Almarais real fruit laban under the ALMARAI brand and ZADY flavoured laban. Almarai introduced SUPERLABAN in
2003, an ultra-filtrated high calcium/protein and low fat product.

o Al Othmans RAHA probiotic range which was launched in 2005 (RAHA means relief in Arabic), and is priced the
same as its regular laban.

o NADECs stress relieving HADI laban.

Saudi consumers are by nature conservative and standard varieties continue to dominate supply.

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

85
B2.2.1 LONG-LIFE VS SHORT-LIFE

Table B20: Laban, Long-life and Short-life, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Long-life 1.1 1.2 0.8 0.1 0.0 - 14.0% 5.3% -37.5% -86.7% -100%
Short-life 358.2 377.3 396.4 402.9 432.0 4.7% 4.3% 5.3% 5.1% 1.6% 7.2%
Total 359.4 378.5 397.2 403.0 432.0 4.7% 4.3% 5.3% 4.9% 1.5% 7.2%


Share of Total (%)
2004 2005 2006 2007 2008
Long-life 0.3% 0.3% 0.2% 0.0% 0.0%
Short-life 99.7% 99.7% 99.8% 100% 100%
Total 100% 100% 100% 100% 100%

Key Points:

Following the withdrawal of AL RABIE UHT laban in 2007,
the Saudi market is 100% short-life. AL RABIE from the
Riyadh based recombiner had been the only brand
consistently in the market for many years though there had
been a few other attempts at launching long-life laban
(diluted as well as full strength) elsewhere in the Middle
East in cartons as well as plastic pouches, none of which
lasted. Technically, of course, aseptically packed laban is
something of an oddity as the heat process kills what
should be a live cultured product.
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

86
B2.2.2 PLAIN LABAN VS FLAVOURED


Table B21: Laban, Plain and Flavoured, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Plain 356.7 375.5 394.0 399.7 427.5 4.6% 4.2% 5.3% 4.9% 1.4% 7.0%
Flavoured 2.7 2.9 3.2 3.3 4.5 13.6% 26.2% 10.9% 8.5% 4.9% 36.4%
Total 359.4 378.5 397.2 403.0 432.0 4.7% 4.3% 5.3% 4.9% 1.5% 7.2%


Share of Total (%)
2004 2005 2006 2007 2008
Plain 99.3% 99.2% 99.2% 99.2% 99.0%
Flavoured 0.7% 0.8% 0.8% 0.8% 1.0%
Total 100% 100% 100% 100% 100%

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

87

Key Points:

The vast majority of supply is plain laban, with flavoured and fruit varieties accounting for just 4.5 million litres in 2008
or just 1% of total supply. Al Safi-Danone with its ACTIMEL and DANINO brands and Almarai with its ALMARAI real fruit
laban in gable-top as well as ZADY flavoured laban in HDPE are the leading players in this category. Al Safi-Danone
launched ACTIMEL flavoured probiotic drink and DANINO yoghurt drink (included under the laban umbrella) in 2004
accompanied by significant marketing support. They, however, are very niche products targeted at an informed and
health conscious audience.

Experience suggests that this is a difficult category in which to innovate. Unlike in Western markets where consumers
typically drink probiotics in small shots once a day, Saudi consumers regard laban more as a thirst quencher and it is
consumed in larger quantities throughout the day.

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

88
B2.2.3 FRESH VS RECOMBINED

Table B22: Laban, Fresh and Recombined, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Fresh 339.6 360.8 382.2 391.0 425.0 5.8% 3.6% 6.2% 5.9% 2.3% 8.7%
Recombined 19.0 17.7 15.0 12.0 7.0 -22.1% 13.4% -7.1% -15.0% -20.0% -41.7%
Total 359.4 378.5 397.2 403.0 432.0 4.7% 4.3% 5.3% 4.9% 1.5% 7.2%


Share of Total (%)
2004 2005 2006 2007 2008
Fresh 94.7% 95.3% 96.2% 97.0% 98.4%
Recombined 5.3% 4.7% 3.8% 3.0% 1.6%
Total 100% 100% 100% 100% 100%

Key Points:

Unlike the neighbouring UAE market, fresh full
strength laban dominates supply in Saudi Arabia,
accounting for 98.4% of consumption in 2008 in the
UAE recombined (predominantly diluted) laban
accounted for 65% of volume in 2008. In KSA, Taif
National and Al Rai are the principal suppliers of
recombined product, with small quantities also
supplied by Al Rabie until 2007 (long-life). Al Rai also
dropped production of full strength laban in 2007
though it is continuing to supply small quantities of
diluted product.
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

89
B2.2.4 PACK TYPE


Table B23: Laban, Pack Type, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
HDPE 227.5 251.5 257.0 262.6 283.3 5.6% 9.4% 10.5% 2.2% 2.2% 7.9%
Carton 131.9 125.5 137.2 133.7 123.7 -1.6% -3.4% -4.9% 9.4% -2.5% -7.5%
PET 0.0 1.5 3.0 6.7 25.0 - 0.0% n/a 100.0% 123.3% 273.1%
Total 359.4 378.5 397.2 403.0 432.0 4.7% 4.3% 5.3% 4.9% 1.5% 7.2%

Share of Total (%)
2004 2005 2006 2007 2008
HDPE 63% 66% 65% 65% 66%
Carton 37% 33% 35% 33% 29%
PET 0% 0% 1% 2% 5%
Total 100% 100% 100% 100% 100%
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

90

Key Points:

Despite the introduction of PET by a number of Saudi dairies, laban is still sold largely in HDPE. HDPE accounts for 66%
of the market in 2008 (which includes small quantities of pouches from Al Rai), compared to 65% in the previous year.
While growth in HDPE packs has continued, the last few years were somewhat unsettled for some suppliers, switching
between plastic and cartons (and back again in certain cases).

After Almarais launch of laban in Elopak Pure-Pak Curve Carton in 2006, cartons received a significant boost in laban
packaging, though their main drawback was that they were not available in sizes greater than 1 litre (the same can
however be said of PET). In 2008, the share of cartons in total laban volumes has fallen from 33% in 2007 to 29%. This
is explained by the fact that some suppliers have begun phasing out cartons in favour of HDPE. These suppliers include
NADEC and Al Othman, who have discontinued 200 ml and 1 litre laban in cartons, respectively in 2008. It must also be
remembered that Al Rabie had discontinued 1 litre long-life laban in cartons and Al Safi-Danone had discontinued 500 ml
ACTIVIA in cartons in 2007.

Other suppliers have experimented with PET in laban though the benefits are less tangible than in milk. While PET bottle
transparency can lead to faster degradation of the product, suppliers also report significant cost differential compared
with HDPE. Almarai had launched laban in opaque PET, though it has now reverted back to HDPE. Also Al Othman had
introduced laban in 500 ml and 1 litre PET, which has now been changed back to HDPE. NADEC is currently the most
important supplier of laban in PET.

With pricing becoming an increasingly important issue packaging decisions will become more and more important in the
short term and further experimentation is likely. Indeed, one interesting development in this regard is Al Safi-Danones
recent reduction of standard sizes for its ACTIVIA HDPE range (the 2 litre size has been reduced to 1.75 litres, 1 litre is
now 850 ml, 500 ml is now 375 ml and 200 ml is now 180 ml) in order to limit price increases.
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

91
B2.2.5 PACK SIZE

Table B24: Laban, Pack Size, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Portions (<1 litre) 76.7 78.6 84.7 85.6 92.5 4.8% 3.3% 2.6% 7.7% 1.1% 8.1%
1 litre 113.5 118.0 129.2 127.5 124.9 2.4% 4.7% 4.0% 9.5% -1.3% -2.0%
>1 litre 169.2 181.8 183.3 189.9 214.6 6.1% 4.5% 7.5% 0.8% 3.6% 13.0%
Total 359.4 378.5 397.2 403.0 432.0 4.7% 4.3% 5.3% 4.9% 1.5% 7.2%

Share of Total (%)
2004 2005 2006 2007 2008
Portions (<1 litre) 21% 21% 21% 21% 21%
1 litre 32% 31% 33% 32% 29%
>1 litre 47% 48% 46% 47% 50%
Total 100% 100% 100% 100% 100%

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

92


Key Points:

The late 2007/early 2008 increase in retail prices has made a significant impact on the breakdown by size, with
consumers attracted to the lower price per litre of the larger formats. As a result, while 1 litre packs declined by 2% over
2007, large size packs (over one litre) increased by 13% in 2008. Large size packs now account for 50% of demand, up
from 47% in 2007. However, the fastest growing single format over the past five years has been 200 ml HDPE bottles
(not shown separately in the above table) which have averaged growth of around 17% per annum.

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

93
B2.2.6 DETAILED SUMMARY BREAKDOWN

Table B25: Laban, Detailed Summary Breakdown, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Total Long-life: 1.1 1.2 0.8 0.1 0.0 - 14.0% 5.3% -37.5% -86.7% -100%
Carton
1 litre 1.1 1.2 0.8 0.1 0.0 - 14.0% 5.3% -37.5% -86.7% -100%
Total Short-life: 358.2 377.3 396.4 402.9 432.0 4.7% 4.3% 5.3% 5.1% 1.6% 7.2%
Plastic
Portions (<1 litre) 35.8 46.4 52.0 54.2 63.4 15.4% 21.5% 29.6% 12.1% 4.3% 17.0%
1 litre 22.5 24.8 24.7 25.2 30.3 7.7% 25.7% 10.1% -0.2% 1.9% 20.2%
>1 litre 169.2 181.8 183.3 189.9 214.6 6.1% 5.4% 7.5% 0.8% 3.6% 13.0%
Carton
Portions (<1 litre) 40.9 32.3 32.7 31.4 29.1 -8.2% -8.6% -21.1% 1.3% -4.0% -7.3%
1 litre 89.9 92.0 103.8 102.2 94.6 1.3% 0.4% 2.4% 12.8% -1.5% -7.4%
>1 litre 0.0 0.0 0.0 0.0 0.0 - -100% 0.0% 0.0% 0.0% 0.0%
Total 359.4 378.5 397.2 403.0 432.0 4.7% 4.3% 5.3% 4.9% 1.5% 7.2%
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.3 SUPPLIER/BRAND SHARES

June 2009 IMES Consulting

94

Table B26: Laban, Local vs Imports, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 359.4 378.5 397.2 403.0 432.0 4.7% 4.3% 5.3% 4.9% 1.5% 7.2%
Imports 0.0 0.0 0.0 0.0 0.0 - - - - - -
Total 359.4 378.5 397.2 403.0 432.0 4.7% 4.3% 5.3% 4.9% 1.5% 7.2%

Share of Total (%)
2004 2005 2006 2007 2008
Local 100% 100% 100% 100% 100%
Imports 0% 0% 0% 0% 0%
Total 100% 100% 100% 100% 100%

Key Points:

Imported laban is rarely encountered and volumes
are negligible. UAE company AL RAWABI supplied
the market in late 2003/early 2004 but withdrew
after a short time, unable to make an impact.
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.3 SUPPLIER/BRAND SHARES

June 2009 IMES Consulting

95
Table B27: Laban, Total Laban Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 34% 35% 37% 40% 44%
Al Safi 25% 23% 21% 20% 20%
NADEC 13% 14% 15% 14% 15%
Najdiyah 5% 6% 6% 7% 6%
Al Othman 5% 5% 5% 5% 4%
United National Dairy 4% 4% 3% 4% 3%
Aziziah 3% 4% 3% 3% 3%
Al Mazrah 3% 4% 3% 2% 2%
Taif National 2% 2% 2% 2% 1%
Al Hana 1% 1% 1% 1% 1%
Others 4% 3% 3% 3% 1%
Total 100% 100% 100% 100% 100%

Total (m litres) 359.4 378.5 397.2 403.0 432.0
Key Points:
Almarai continues to perform strongly in laban and in 2008
accounted for 44% of the market, up from 34% in 2004. It
offers a large number of SKUs including fruit and flavoured
varieties, skim/semi-skim/full fat varieties, as well as more
value-added varieties (e.g., SUPERLABAN).
Al Safi-Danone is the clear number two with 20% of supply in
2008. Al Safi has begun to focus on HDPE for its laban
packaging, though 500 ml and 1 litre cartons are also
available. Value-added ACTIVIA laban continues to perform
strongly. Al Safi-Danones decision to downsize its pack sizes
breaking away from the standard 200 ml, 500 ml, 1 litre and
2 litre HDPE packs is acting as a dampener to its growth.
NADEC accounts for a further 15%. It discontinued 200 ml
cartons in 2008. However, its PET laban is doing well. Its
functional HADI range is very niche and volumes are small as
yet.
Al Othman lost some share due to its decision to discontinue
1 litre cartons in 2008.
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.3 SUPPLIER/BRAND SHARES

June 2009 IMES Consulting

96
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2004 2005 2006 2007 2008
M
a
r
k
e
t

S
h
a
r
e
s

(
%
)
Almarai Al Safi NADEC Najdyah Al Othman Others

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.3 SUPPLIER/BRAND SHARES

June 2009 IMES Consulting

97
Table B28: Laban, Short-life Laban Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 34% 35% 37% 40% 44%
Al Safi 25% 23% 21% 20% 20%
NADEC 13% 14% 15% 14% 15%
Najdiyah 5% 6% 6% 7% 6%
Al Othman 5% 5% 5% 5% 4%
United National Dairy 4% 4% 3% 4% 3%
Aziziah 3% 4% 3% 3% 3%
Al Mazrah 3% 4% 3% 2% 2%
Taif National 2% 2% 2% 2% 1%
Al Hana 1% 1% 1% 1% 1%
Others 4% 3% 3% 3% 1%
Total 100% 100% 100% 100% 100%

Total (m litres) 358.2 377.3 396.4 402.9 432.0
Key Points:

With Al Rabie the only supplier of long-life laban (now
no longer available), short-life shares are effectively the
same as those in the previous table.
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.3 SUPPLIER/BRAND SHARES

June 2009 IMES Consulting

98

Table B29: Laban, Long-life Laban Supplier Shares, 2004-2008


Supplier Shares (%)
2004 2005 2006 2007 2008
Al Rabie 100% 100% 100% 100% 0%
Total 100% 100% 100% 100% 100%

Total (m litres) 1.1 1.2 0.8 0.1 0.0

Key Points:

As noted earlier AL RABIE was effectively the only long-
life laban supplier over the last five years. However,
following its withdrawal in 2007, the laban category is
now entirely short-life.

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.3 SUPPLIER/BRAND SHARES

June 2009 IMES Consulting

99

Table B30: Laban, Flavoured Laban Supplier Shares, 2004-2008


Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 38% 34% 32% 33% 51%
Al Safi-Danone 55% 57% 60% 60% 42%
Others 8% 9% 8% 7% 7%
Total 100% 100% 100% 100% 100%

Total (m litres) 2.7 2.9 3.2 3.3 4.5

Key Points:
Almarai is now the leading flavoured laban supplier with an
estimated 51% of supply. Almarais ZADY was for a long time
the only flavoured product in the market (it was originally a
real fruit laban but was later reformulated as a flavoured
product at a one riyal price point). More recently the company
relaunched a real fruit laban under the ALMARAI brand in 1 litre
gable top and 200 ml HDPE bottle and in three flavours
(mango, strawberry and peaches/ apricots).
If DANINO yoghurt drink is included along with ACTIMEL, Al
Safi-Danone is the second most important supplier of flavoured
laban with an estimated 42% of the market in 2008. While
Almarais products are more mainstream, Al Safi-Danones
DANINO and ACTIMEL are niche products growing at a slower
pace.
Other products have failed to make an impact by and large.
Volumes were small and returns high and most have now been
withdrawn. These include RASHAKA skimmed fruit flavoured
laban (Al Safi-Danone), NADECs YOO drinking yoghurt
(withdrawn in late 2003) and Al Rawabis juice labans
(available for a short time in 2004).
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.4 PRICING AND DISTRIBUTION
June 2009 IMES Consulting

100

Table B31: Laban, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
Almarai 2 litre plain HDPE 6.00 6.00 6.00 7.00 7.00
Al Safi-Danone 1 litre plain 3.00 3.00 3.00 4.00 4.00
Almarai 200 ml plain HDPE 1.00 1.00 1.00 1.00 1.00
Almarai ZADY 200 ml flavoured 1.00 1.00 1.00 1.00 1.00


Key Points:

Although a more expensive product to produce than short-life milk (due to higher processing and raw material costs)
retail prices are generally the same. This is partly due to the fact that laban appeals mainly to Arab consumers who are
typically more price sensitive than the expatriates which are a significant component of short-life milk demand.

As with milk pricing, during 2006 the Dairy Association played an important role in maintaining pricing order in the
market and prices remained unchanged until 2007, when an across the board increase was implemented in response to
rapidly rising input costs. As a result the average price per litre increased by more than 18% compared with the year
before (SR 3.37 per litre to SR 4.00 per litre). There has been no change in prices in 2008 over 2007. However, the
effects of the price increase in 2007 were also felt in 2008 with higher value per litre packs (2 litre and above) increasing
rapidly at the expense of other packs (mainly 1 litre sizes).
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B2. LABAN

B2.5 FIVE-YEAR FORECASTS
June 2009 IMES Consulting

101


Table B32: Laban, Five-Year Forecasts, 2008-2013

Million litres Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Total 432.0 452.6 473.5 494.0 514.6 535.0 4.8% 4.6% 4.3% 4.2% 4.0%


Key Points:

Laban consumption is forecast to grow at about 4.4% per annum for the next 5 years, reaching 535 million litres in
2013. Laban is regarded as a healthy drink by consumers, but with very little room for innovation in taste, laban is often
overshadowed by other heavily promoted products such as carbonated soft drinks, juices etc. By 2013, HDPE is forecast
to account for approximately 70% of supply, cartons 26% and PET 4% (assumes no new suppliers entering the market).

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B3. YOGHURT

B3.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

102

Tables B33 to B34 below summarise the development of the yoghurt market in Saudi Arabia during the period 2004-2008.

Table B33: Yoghurt, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 104,645 110,400 116,350 122,570 127,150 8.2% 5.5% 5.4% 5.3% 3.7%
Kg per capita 4.1 4.2 4.3 4.4 4.5 5.6% 3.1% 3.0% 3.1% 2.3%


Table B34: Yoghurt, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 155.5 164.0 172.9 182.1 191.2 8.0% 5.5% 5.4% 5.3% 5.0%
US$ per capita 6.03 6.21 6.40 6.60 6.78 5.5% 3.1% 3.1% 3.1% 2.7%
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B3. YOGHURT

B3.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

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0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2004 2005 2006 2007 2008
T
o
n
n
e
s

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

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B3.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

104

Key Points:

Yoghurt consumption in Saudi Arabia has grown by an average annual rate of 5.0% since 2004 to reach 127,150
tonnes in 2008. In value terms, this is worth around US$ 191.2 million at retail level or US$ 6.78 per capita.

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B3. YOGHURT

B3.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

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B3.2.1 PLAIN YOGHURT VS FLAVOURED


Table B35: Yoghurt, Plain and Flavoured, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Plain 101,195 107,100 113,150 119,320 123,700 5.1% 8.4% 5.8% 5.6% 5.5% 3.7%
Flavoured 3,450 3,300 3,200 3,250 3,450 0.0% 1.5% -4.3% -3.0% 1.6% 6.2%
Total 104,645 110,400 116,350 122,570 127,150 5.0% 8.2% 5.5% 5.4% 5.3% 3.7%










Share of Total (%)
2004 2005 2006 2007 2008
Plain 96.7% 97.0% 97.2% 97.3% 97.3%
Flavoured 3.3% 3.0% 2.8% 2.7% 2.7%
Total 100% 100% 100% 100% 100%

Plain Frui t/Flavoured

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B3. YOGHURT

B3.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

106

Key Points:

Yoghurt, primarily plain set yoghurt, is widely consumed by all sectors of the population including consumers from the
Indian sub-continent.

Fruit/flavoured yoghurts (referred to as flavoured yoghurts hereafter), are quite a different product in terms of target
consumers and usage pattern. Flavoured yoghurts include stirred real-fruit yoghurts, layered fruit yoghurts and fruit-
flavoured yoghurts. Almarai is the key player in this category; though Nada and Al Safi-Danone are also present, while
NADEC is no longer active.

In 2008, some excitement returned to the flavoured yoghurt category with the launch of Al Safi-Danones ACTIVIA 125g
stirred yoghurt, which is now pitted against Almarais stirred yoghurt in a 140g pack, both at SR 1.50. Almarai also has
ZADY flavoured yoghurt in 125g pack and layered fruit yoghurt in 150g pack.

Flavoured yoghurts grew very strongly to 2001 but have since fallen back. This is attributable to strong growth in dairy
desserts, in particular following the launch of Al Safi-Danones range of products in 2002. The interaction of flavoured
yoghurt and dairy desserts is an established pattern across the region, with growth rates in the former suffering as
desserts take off (see the Dairy Desserts section for a detailed analysis).

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B3.2.2 FRESH VS RECOMBINED

Table B36: Yoghurt, Fresh and Recombined, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Fresh 98,495 103,900 109,500 115,680 122,250 5.6% 7.9% 5.5% 5.4% 5.6% 5.7%
Recombined 6,150 6,500 6,850 6,890 4,900 -5.5% 11.8% 5.7% 5.4% 0.6% -28.9%
Total 104,645 110,400 116,350 122,570 127,150 5.0% 8.2% 5.5% 5.4% 5.3% 3.7%

Share of Total (%)
2004 2005 2006 2007 2008
Fresh 94.1% 94.1% 94.1% 94.4% 96.1%
Recombined 5.9% 5.9% 5.9% 5.6% 3.9%
Total 100% 100% 100% 100% 100%
Fresh Recombined

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B3.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

108

Key Points:

Fresh yoghurt has been growing at around 5.6% per annum since 2004. Recombined yoghurt lost its pricing edge in
2007 and 2008 when milk powder prices sky-rocketed. As a result, recombined yoghurt has fallen by 29% in 2008 over
2007. The stronger growth in fresh products also comes about as a result of companies such as Almarai, Al Safi-Danone,
NADEC, Al Othman etc., expanding their operations and fresh milk supply improving considerably in 2008. By the end of
2008 recombined yoghurt accounted for just 3.9% of supply.

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Table B37: Yoghurt, Local vs Imports, 2004-2008

Million litres Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 104,345 110,100 116,050 122,270 126,850 5.0% 8.2% 5.5% 5.4% 5.4% 3.7%
Import 300 300 300 300 300 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total 104,645 110,400 116,350 122,570 127,150 5.0% 8.2% 5.5% 5.4% 5.3% 4.4%

Share of Total (%)
2004 2005 2006 2007 2008
Local 99.7% 99.7% 99.7% 99.8% 99.8%
Import 0.3% 0.3% 0.3% 0.2% 0.2%
Total 100% 100% 100% 100% 100%

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Key Points:

The absence of any notable imports of yoghurt in Saudi Arabia is a reflection of the significant economies of scale the
leading KSA dairies enjoy over competitors in neighbouring Gulf markets as well as the difficulties bringing product to
market in the Kingdom (sheer geographic size, low prices etc). In addition, commercial yoghurt is usually a short-life
product allowing little time for distribution before sale. Indeed, importers of product from outside the region sometimes
resort to (expensive) airfreight to maximise available shelf life for the landed product. This, combined with the number of
high quality locally produced products, means that there are few opportunities for imports. Total yoghurt imports are
tentatively estimated at some 300 tonnes per year. These are sourced from neighbouring countries (e.g. in the past AL
RAWABI from the UAE) and indeed from Europe (e.g. ELLE & VIRE).
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Table B38: Yoghurt, Total Yoghurt Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 38% 39% 39% 40% 45%
Al Safi-Danone 19% 18% 16% 16% 21%
NADEC 13% 13% 15% 15% 13%
Al Othman 9% 9% 8% 9% 6%
Najdiyah 5% 6% 6% 6% 4%
United National 2% 3% 3% 3% 2%
Al Mazrah 3% 3% 3% 3% 2%
Jamjoom 2% 2% 2% 2% 1%
Others 8% 7% 8% 6% 6%
Total 100% 100% 100% 100% 100%

Total (tonnes) 104,645 110,400 116,350 122,570 127,150


Key Points:

Almarai now accounts for an estimated 45% of supply,
five percentage points more than in 2007. An important
factor in the growth of Almarai in the yoghurt category is
the availability of adequate quantities of raw milk, as a
result of its recent investments in dairy farms and herds.
Al Safi-Danone accounts for a further 21% share, up from
16% in 2007. In plain yoghurt the ACTIVIA probiotic
range has been performing well, while it launched
ACTIVIA stirred fruit yoghurt in 125g in 2008.
NADEC has not been able to hold on to its share. It
accounts for 13% of supply in 2008. No other supplier
has a share greater than 10%. Hofuf based, Al Othman,
is down to 6%, followed by Najdiyah with 4% (Najdiyah is
one of the very few companies to offer a Rob variety, a
more traditional yoghurt with no stabilisers which is
looser in texture).
Other suppliers are losing focus on the yoghurt category
due to declining profitability.
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2004 2005 2006 2007 2008
M
a
r
k
e
t

S
h
a
r
e
(
%
)
Almarai Al Safi-Danone NADEC Al Othman Najdyah

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Table B39: Plain Yoghurt Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 37% 38% 38% 39% 44%
Al Safi-Danone 20% 18% 17% 16% 21%
NADEC 12% 14% 15% 15% 13%
Al Othman 7% 7% 7% 9% 6%
Najdiyah 6% 6% 6% 6% 4%
United National 2% 3% 3% 3% 2%
Al Mazrah 3% 3% 3% 3% 2%
Jamjoom 2% 2% 2% 2% 1%
Others 10% 9% 8% 7% 7%
Total 100% 100% 100% 100% 100%

Total (tonnes) 101,195 107,100 113,150 119,320 123,700
Key Points:

As 97% of yoghurt is plain there are no major
differences between total market shares and plain
yoghurt shares.
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B3. YOGHURT

B3.3 SUPPLIER/BRAND SHARES

June 2009 IMES Consulting

114

Table B40: Flavoured Yoghurt Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 62% 65% 69% 73% 82%
Al Othman 14% 14% 13% 15% 11%
Al Safi-Danone 0% 9% 5% 4% 4%
NADEC 22% 8% 9% 1% 0%
Others 2% 4% 5% 7% 3%
Total 100% 100% 100% 100% 100%

Total (tonnes) 3,450 3,300 3,200 3,250 3,450

Key Points:

Almarai is the leading supplier of flavoured yoghurts,
accounting for an estimated 82% of the market in
2008.
Al Othmans NADA is the only other significant brand
available accounting for an estimated 11% share of
supply in 2008.
Al Safi-Danone launched ACTIVIA stirred yoghurt in
2008 and it now has 4% share of the market. It
withdrew its FRUITY brand in 2006 and the company
had been focusing more on desserts until recently.
NADEC is now essentially out of the sector.
Other suppliers include United National Dairy and Elle &
Vire, as well as small volumes of other European
imports.
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B3. YOGHURT

B3.4 PRICING AND DISTRIBUTION
June 2009 IMES Consulting

115

Table B41: Yoghurt, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
ALMARAI Plain
(regular/low fat/skimmed)
400g 2.00 2.00 2.00 2.00 2.00
ALMARAI Plain
(regular/low fat/ skimmed)
1

180g 1.00 1.00 1.00 1.00 1.00
ALMARAI
(Stirred/Layered real fruit)
125g
(140g/150g)
1.00 1.00 1.00 1.00 1.50
2


Key Points:

As can be seen from market leader ALMARAI, the price of plain yoghurt has remained unchanged since 2004. Historically,
in times of surplus milk, suppliers resorted to promotions such as six for the price of five, four for the price of three.
These promotions have now effectively disappeared. Instead suppliers are now moving away from established price
points, as can be seen in the case of Almarais stirred and layered fruit yoghurts. Because of cost pressures, downsizing
is also a dominant trend.


1
Low fat and skimmed are now in 170g packs at SR 1.00.
2
Stirred is now 140g and layered is 150g at SR 1.50. Changes were made in early 2008.
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116


In the first round of downsizing some years back, suppliers had changed their 500g packs to 400g and their 200g packs
to 180g. In the current round, 180g packs are becoming 170g or even 150g, and 400g packs are changing to 380g. Al
Safi-Danones plain yoghurt is in a 170g pack, compared to other suppliers who are in a 180g pack. Similarly Almarais
skimmed yoghurt and NADECs 0% fat yoghurt are 170g. Nada has introduced plain and flavoured yoghurt in a 125g
pack at SR 1 and also downsized its 400g pack to 380g. Najdyah and Al Safi-Danone (ACTIVIA) have launched plain
yoghurt in a new 150g pack.
IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B3. YOGHURT

B3.5 FIVE-YEAR FORECASTS
June 2009 IMES Consulting

117


Table B42: Yoghurt, Five-Year Detailed Forecasts, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Plain 123,700 130,000 136,400 142,900 149,600 156,500 5.1% 4.9% 4.8% 4.7% 4.6%
Flavoured 3,450 3,600 3,750 3,900 4,050 4,200 4.3% 4.2% 4.0% 3.8% 3.7%
Total 127,150 133,600 140,150 146,800 153,650 160,700 5.1% 4.9% 4.7% 4.7% 4.6%


Key Points:

Yoghurt consumption will increase by just under 5% per annum over the next five years. Flavoured varieties are likely to
experience slower growth as compared to plain at about 4.0% per annum compared to 4.8% for plain yoghurt.

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B4. LABNEH

B4.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

118
Tables B43 to B44 below summarise the development of the labneh market in Saudi Arabia during the period 2004-2008.

Table B43: Labneh, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 7,730 8,400 8,775
1
9,695 11,250 7.1% 8.7% 4.5% 10.5% 16.0%
Kg per capita 0.29 0.30 0.33 0.35 0.40 4.6% 6.2% 2.1% 8.1% 14.3%


Table B44: Labneh, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 37.1 42.4 45.7 50.6 68.3 5.4% 14.3% 7.8% 10.7% 35.0%
Sales per capita ($) 1.44 1.61 1.69 1.83 2.42 2.9% 11.7% 5.4% 8.3% 32.2%


1
Re-stated in light of new information becoming available
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B4. LABNEH

B4.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

119
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2004 2005 2006 2007 2008
T
o
n
n
e
s


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B4.1 OVERALL DEMAND LEVELS

June 2009 IMES Consulting

120

Key Points:

Labneh consumption in Saudi Arabia has grown by an average annual rate of 9.8% since 2004 to reach 11,250 tonnes
in 2008. In value terms, this is worth around US$ 68 million at retail level. Per capita consumption at 400g per capita is
relatively low, compared for example to neighbouring Kuwait where consumption is close to 930g per capita. This
suggests considerable potential for continued market growth.

Imported Turkish brands continue to make good progress in the Saudi market. These are particularly strong in catering
establishments for their bake-stable characteristics.


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B4. LABNEH

B4.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

121
B4.2.1 FRESH VS RECOMBINED


Table B45: Labneh, Fresh and Recombined, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Fresh 7,205 7,925 8,325 9,230 10,800 10.6% 7.6% 10.0% 5.0% 10.9% 17.0%
Recombined 525 475 450 465 450 -3.8% 0.0% -9.5% -5.3% 3.3% -3.2%
Total 7,730 8,400 8,775 9,695 11,250 9.8% 7.1% 8.7% 4.5% 10.5% 16.0%


Share of Total (%)
2004 2005 2006 2007 2008
Fresh 93% 94% 95% 95% 96%
Recombined 7% 6% 5% 5% 4%
Total 100% 100% 100% 100% 100%

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B4. LABNEH

B4.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

122

Key Points:

Fresh products account for some 96% of total consumption in 2008 (an estimated 10,800 tonnes) up from 93% in 2004.
The leading brands discussed below are all fresh products. Recombined products include HALWANI, AL RAI and BADR
brands. Imported Turkish fresh labneh (PINAR), with its distinctive texture and taste, has helped to grow the market
since it was originally introduced in the mid-1980s. It was the first Turkish dairy to commercialise the traditional
Lebanese product, producing a very distinctive taste (reportedly less sour than Lebanese labneh). This is apparently
achieved by heating in an oven after production. Ironically, there is little consumption of labneh in Turkey itself, where
the product is marketed more as a cheese spread, with the vast majority of the companys production exported.

It is also possible to segment the market into low fat and regular fat labneh though the former is still very small and
somewhat of an oddity given the nature of the product itself. Pinar and Halwani were among the first few companies to
offer low fat SKUs, they have been joined by lker and Almarai since 2007.

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B4.2 KEY SEGMENTATIONS

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123
B4.2.2 LONG-LIFE VS SHORT-LIFE


Table B46: Labneh, Long-life and Short-life, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Long-life 4,200 4,250 5,150 5,800 7,000 13.6% 16.0% 1.2% 21.2% 12.6% 20.7%
Short-life 3,530 4,150 3,625 3,895 4,250 4.7% -1.9% 17.6% -12.7% 7.4% 9.1%
Total 7,730 8,400 8,775 9,695 11,250 9.8% 7.1% 8.7% 4.5% 10.5% 16.0%


Share of Total (%)
2004 2005 2006 2007 2008
Long-life 54% 51% 59% 60% 62%
Short-life 46% 49% 41% 40% 38%
Total 100% 100% 100% 100% 100%
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B4.2 KEY SEGMENTATIONS

June 2009 IMES Consulting

124

Key Points:

Although not necessarily merchandised or positioned as such, it is also possible to segment the labneh market by shelf-
life i.e., whether long-life or short-life. In reality this is a segmentation more relevant in terms of the associated taste.
Imported Turkish labneh is a long-life product with a shelf life of four months providing it is stored at 2
o
to 8
o
C at all
points in its distribution compared with traditional standard local products which have a shelf life of around 14 days.
Arlas PUCK (now produced in Saudi Arabia) and lkers LKER (also from Turkey) have very clearly produced products
closer to the longer established PINAR (rather than local Saudi dairies) in both taste and presentation, with both also
having the same four months shelf-life.

Long-life brands have enjoyed much stronger growth over the five year period (CAGR of 13.6% versus 4.7%). Long-life
products accounted for 62% of supply in 2008, up from just 54% in 2004.

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B4. LABNEH

B4.3 SUPPLIER/BRAND SHARES

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Table B47: Labneh, Local vs Imports, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 4,230 4,850 3,975 4,545 4,850 3.5% -0.5% 14.7% -18.0% 14.3% 6.7%
Import 3,500 3,550 4,800 5,150 6,400 16.3% 17.8% 1.4% 35.2% 7.3% 24.3%
Total 7,730 8,400 8,775 9,695 11,250 9.8% 7.1% 8.7% 4.5% 10.5% 16.0%

Share of Total (%)
2004 2005 2006 2007 2008
Local 55% 58% 45% 47% 43%
Import 45% 42% 55% 53% 57%
Total 100% 100% 100% 100% 100%

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June 2009 IMES Consulting

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Key Points:

Imported products experienced a significant jump in 2006 thanks to increased demand following the cessation of supply
of PUCK and AL SAFI. (Note: in the above table PUCK has been included under local even though it was supplied from
Denmark for a period). Although PUCK has been back in the market, its acceptance has been difficult, due to a
continuing feeling of dislike for Danish products among some Saudi consumers. On the other hand, preference for
Turkish labneh is growing and demand from the catering sector is also helping Turkish brands PINAR and LKER to grow
at a brisk pace compared to other local brands. Imports accounted for more than half of supply in 2008 - some 56% by
volume.
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Table B48: Labneh, Total Labneh Brand Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Pinar 34% 30% 36% 35% 34%
lker 12% 12% 18% 18% 21%
NADEC 14% 13% 15% 14% 11%
Almarai 5% 5% 5% 5% 9%
Al Othman 11% 10% 9% 9% 8%
Arla 9% 9% 4% 6% 5%
United National 6% 11% 5% 5% 4%
Al Safi-Danone 6% 6% 1% 1% 0%
Others 4% 6% 6% 5% 8%
Total 100% 100% 100% 100% 100%

Total (tonnes) 7,730 8,400 8,775 9,695 11,250

Key Points:

Turkish brands PINAR and LKER together account for 55%
of supply. PINAR, the brand leader, is available in 750g,
400g and 200g regular, and 400g and 200g light (low fat)
varieties. It is now also available in a 10 x 20g multipack
regular only. Catering (2.75kg packs) continue to perform
strongly.
Almarai has grown strongly and is now the fourth leading
brand, only a shade below NADEC. NADA (Al Othman) is
next with 8% share. PUCK has gone down to 5% market
share in 2008.
Interestingly, although Turkish labneh is more expensive
than Saudi labneh, it is still widely used by bakeries/ pastry
shops (which one might expect to seek lowest cost options)
as it is said to maintain its white colour better and is more
stable when baked.
Generally however, because of the limited market, labneh
is not regarded as a key category for any of the Saudi
dairies.
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2004 2005 2006 2007 2008
M
a
r
k
e
t

S
h
a
r
e
(
%
)
Pinar lker NADEC Almarai Al Othman Others

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Table B49: Labneh, Short-life Labneh Supplier Shares, 2004-2008


Supplier Shares (%)
2004 2005 2006 2007 2008
NADEC 30% 26% 36% 36% 27%
Almarai 11% 9% 12% 13% 25%
Al Othman 23% 20% 22% 23% 22%
United National 13% 22% 13% 12% 12%
Al Safi-Danone 13% 11% 3% 3% 0%
Other 10% 11% 14% 14% 14%
Total 100% 100% 100% 100% 100%

Total (tonnes) 3,530 4,150 3,625 3,895 4,250
Key Points:

Almarai, which is strong in the retail sector, has
displaced NADA from the second spot. Almarai now
accounts for 25% market share compared to NADAs
22% market share. NADA however, continues to be
strong in catering, hotels, restaurants and supermarket
deli counters. Almarai is also within striking distance of
NADEC, which is the current market leader at 27%. Al
Safi-Danone has withdrawn from the market in 2006.
UND has an unchanged share at 12%.
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Table B50: Labneh, Long-life Labneh Supplier Shares, 2004-2008


Supplier Shares (%)
2003 2004 2005 2006 2007
Pinar 62% 60% 62% 59% 54%
lker 21% 24% 31% 30% 34%
Arla 17% 16% 7% 11% 9%
Others - - - - 3%
Total 100% 100% 100% 100% 100%

Total (tonnes) 4,200 4,250 5,150 5,800 7,000

Key Points:
For many years PINAR (now distributed by Arabian Trading
Services part of Arabian Food Supplies) dominated the
labneh market and was the only long-life product available.
However, two new long-life products were launched in 2000
and 2001 Arlas PUCK, and LKER from the Turkish
company of the same name. PINARs share fell following
their introduction but is still well ahead of LKER
(distributed by Al Munajem). PINAR consumers apparently
believe that its different character is especially good for
upset stomachs. Low fat varieties are also offered and have
reportedly grown to satisfactory levels. During 2007 an
additional Turkish brand entered the market MERSIN
from Akbel.
PUCK is positioned slightly higher in price than PINAR, while
LKER is positioned slightly lower. It is available in two
retail SKUs as well as a 5 kg catering pack. As mentioned
earlier, PUCK volumes took a significant hit in 2006 as a
result of the Danish boycott. PUCK is continuing to feel
residual effects of this crisis. PUCKs share declined to 9%
in 2008.
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Table B51: Labneh, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
Pinar 750g 14.95 17.95 16.95 16.95 19.50
Pinar 200g 5.00 4.95-5.00 5.50 5.50 7.00
Almarai 430g 6.50 6.50 6.50 6.50 7.50
1



Key Points:

Labneh prices on an average increased by about 16% in 2008. The price of PINARs 750g pack increased by 15% to SR
19.50. Also the price of its 200g pack increased to SR 7.00 from SR 5.50 in 2007. Almarai downsized its 430g pack to
400g and also raised the retail prices by SR 1.00. Prices for other brands have also increased by similar extent.


1
Now downsized to 400g
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Table B52: Labneh, Five-Year Forecasts, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Long-life 7,000 7,700 8,400 9,100 9,800 10,500 10.0% 9.1% 8.3% 7.7% 7.1%
Short-life 4,250 4,550 4,850 5,150 5,450 5,750 7.1% 6.6% 6.2% 5.8% 5.5%
Total 11,250 12,250 13,250 14,250 15,250 16,250 8.9% 8.2% 7.5% 7.0% 6.6%


Key Points:

Consumption of labneh is forecast to grow at an average rate of 7.6% per annum over the next five years. Long-life
imported brands are expected to have the edge over local short-life brands for two reasons a relative lack of focus on
the part of local dairies as well as the slightly different formulations which are reportedly preferred by catering users.
While long-life brands are expected to grow by 8.4% per annum on average, short-life growth is forecast at 6.2% per
annum. By 2013 labneh consumption is forecast to reach 16,250 tonnes, with long-life varieties accounting for more than
65% of this.

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Cream remains a very significant product in the Saudi dairy market. The variety of creams available in the country is considerable
and comprises both long and short-life variants.

Tables B53 to B54 below summarise the development of the market during the period 2004-2008.


Table B53: Cream, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 26,880 28,705 28,950 29,750 28,600 2.9% 6.8% 0.9% 2.8% -3.9%
Litres per capita 1.04 1.09 1.07 1.08 1.01 0.5% 4.4% -1.4% 0.5% -6.5%


Table B54: Cream, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 129.0 145.0 154.9 158.8 189.6 9.2% 12.4% 6.8% 2.5% 19.4%
Sales / capita ($) 5.00 5.49 5.74 5.75 6.72 6.7% 9.8% 4.5% 0.2% 16.9%
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23,000
24,000
25,000
26,000
27,000
28,000
29,000
30,000
31,000
32,000
33,000
2004 2005 2006 2007 2008
T
o
n
n
e
s

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Key Points:

Consumption of cream (all types) in the Kingdom was estimated at 28,600 tonnes in 2008, worth an estimated US$
189.6 million at retail level. Cans account for 63% of volume sales (down from 66% in 2007), falling to 60% when values
are taken into consideration.

Growth has averaged just 1.6% per annum since 2004 which is disappointing compared with other products. It can be
seen that per capita consumption levels grew slowly to 2005 but then dipped slightly, partly related to supply disruptions
caused by the boycott of Danish products in early 2006 but no doubt also linked to factors such as increased health
concerns and rising prices.

In 2008, volumes fell sharply by 3.9% as compared to 2007. This was on the back of an unprecedented increase in
prices of cream. The average increase in prices was over 24% as compared to 2007. Canned cream, the largest segment
by volumes, saw market leader AL-TAJ (GOLDEN CROWN), cutting pack sizes to limit increase in prices. Per capita
consumption fell 6.5% to 1.01 litres. With international prices of cream coming down in 2009, suppliers will reverse some
of the price increases effected in 2008. Some growth can be expected thereafter.

The majority of cream purchased is eaten by Arab consumers as a dip for breakfast, often with honey added. A smaller
proportion of total cream consumption is used in the preparation of desserts and cream pastries both in the home and in
hotels/restaurants/pastry shops. Consumption of fresh cream is more widespread among higher income consumers for
whom the higher price is less of an obstacle fresh cream at SR 30/ kg (if purchased in 100g pots) versus approximately
SR 23.6/ kg for canned cream purchased in 170g tins.

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Table B55: Cream by Type, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Canned 18,555 19,200 19,150 19,600 18,000 -0.8% 1.0% 3.5% -0.3% 2.4% -8.2%
Fresh 4,650 5,440 5,650 5,900 6,400 8.3% 1.1% 17.0% 3.9% 4.4% 8.5%
Recombined 1,475 1,615 1,750 1,700 1,500 0.4% 34.1% 9.5% 8.4% -2.9% -11.8%
UHT 2,200 2,450 2,400 2,550 2,700 5.2% 7.3% 11.4% -2.0% 6.3% 5.9%
Total 26,880 28,705 28,950 29,750 28,600 1.6% 2.9% 6.8% 0.9% 2.8% -3.9%

Share of Total (%)
2004 2005 2006 2007 2008
Canned 69% 67% 66% 66% 63%
Fresh 17% 19% 20% 20% 22%
Recombined 5% 6% 6% 6% 5%
UHT 8% 9% 8% 9% 10%
Total 100% 100% 100% 100% 100%
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Key Points:

Some 63% of cream consumption (i.e. 18,000 tonnes) is packed in cans, down from 66% in 2007. The sharp decline in
demand for canned cream in 2008 is only a short term aberration, and not a long term trend. It is linked to the sharp
31% spike in retail prices in 2008. With much of the canned cream sourced from Europe, the adverse movement in the
Euro/ US Dollar exchange rate had put considerable pressure on supplier margins, which combined with increasing bulk
cream prices, resulted in prices of imported products trending upwards since mid-2006. For example, the price of a 170g
can of GOLDEN CROWN cream at SR 3.00 in 2005 increased to about SR 4.66 in 2008 (SR 4.25 for a 155g pack). Growth
in canned cream was also affected in 2006 due to the decline in sales, linked to the boycott - Danish brand PUCK was
boycotted though others such as KDD UHT cream (from Kuwait) were also affected.

Short-life fresh cream is the second most important cream category accounting for 22% of consumption (27% by value),
with short-life recombined cream accounting for a further 5% (5% by value). While prices of short-life cream remained
more or less unchanged, prices of recombined cream were affected due to a sharp increase in prices of dairy
commodities in the international market. As a result, while short life cream has recorded a 8.5% growth, recombined
cream has declined by 11.8%.

It can be seen that UHT cream was also affected by the boycott, with volumes down 2% in 2006. Until then, sales had
been growing strongly, up an estimated 11.6% per annum on average between 2002 and 2005. Growth has recovered as
expected during 2007 and 2008, mirroring trends in other countries in the region. It now accounts for under 10% of total
consumption (excludes vegetable based products). Cream for cooking has been growing particularly strongly (35% fat
content typically) reflecting strong growth in the foodservice sector. Almarai has upgraded its range of whipping cream
with the addition of a 500 ml carton it also has 250 ml and 1 litre cartons.

As is evident in the following table, per capita consumption of canned cream has declined sharply during 2008, but still
outstrips that for all other cream types by a considerable margin.
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Table B56: Cream, Tonnes, 2004-2008

Litres per capita
2004 2005 2006 2007 2008
Canned 0.72 0.73 0.71 0.71 0.64
Fresh 0.18 0.21 0.21 0.21 0.23
Recombined 0.06 0.06 0.06 0.06 0.05
UHT 0.09 0.09 0.09 0.09 0.10
Overall 1.04 1.09 1.07 1.08 1.01


Canned cream can also be segmented by plain and flavoured, with the latter accounting for less than 10% of volume sales. The
leading suppliers of flavoured canned cream are Nestl, Arla (PUCK), Nashar (GOLDEN CROWN), BONNY (Hochwald) and NFIC
(LUNA and GREEN FARMS). Small quantities of cholesterol-free cream are also encountered (e.g., LUNA and GREEN FARMS) and
light lower fat cream (i.e., 50% fat content) e.g. GOLDEN CROWN, PUCK and LUNA.

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Table B57: Cream, Local vs Imports, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 9,005 10,455 12,300 11,950 11,990 7.4% 14.2% 16.1% 17.6% -2.9% 0.3%
Imports 17,875 18,250 16,650 17,800 16,610 -1.8% -2.0% 2.1% -8.8% 6.9% -6.7%
Total 26,880 28,705 28,950 29,750 28,600 1.6% 2.9% 6.8% 0.9% 2.8% -3.9%

Share of Total (%)
2004 2005 2006 2007 2008
Local 34% 36% 42% 40% 42%
Imports 66% 64% 58% 60% 58%
Total 100% 100% 100% 100% 100%


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Key Points:

Since 2004 consumption of locally packed cream has grown by 7.4% per annum on average compared with a decline of
1.6% per annum for imported product. It can be seen that imports were essentially flat to 2005, but fell by almost 9% in
2006 as PUCK sales were hit and again 7% in 2008, with the increase in prices of sterilised cream, which is largely
imported. Some 42% of cream consumption in 2008 was packed locally, up from just 34% in 2004. Strong sales growth
by local company NFIC (LUNA and GREEN FARMS) which also launched LUNA cream in 125 ml UHT cartons, combined
with growth in short-life sales by local companies were mainly responsible (Almarais expansion into sterilised and UHT
cream of course also helped).

Whilst imports saw some resurgence in 2007, the general trend is away from imports and towards the locally sourced
alternatives. With rising international dairy commodity prices, the elimination of EU dairy export refunds and a weak US
Dollar making imports more and more expensive, the move in favour of locally manufactured (or regionally
manufactured) products should continue.
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Table B58: Cream, Total Cream Brand/Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
GOLDEN CROWN 30% 29% 32% 30% 26%
Almarai 7% 8% 9% 9% 13%
Arla (PUCK) 25% 23% 12% 14% 11%
NFIC 9% 10% 14% 13% 10%
Al Safi-Danone 6% 7% 7% 7% 8%
SADAFCO - - - - 4%
Al Othman 3% 3% 3% 3% 2%
Nestl 3% 1% 1% 2% 1%
Friesland 2% 1% 1% 2% 1%
Others 16% 18% 21% 20% 24%
Total 100% 100% 100% 100% 100%

Total (tonnes) 26,880 28,705 28,950 29,750 28,600
Key Points:

The traditional three leading suppliers of cream Nashar
(GOLDEN CROWN and AL SAFEER), Arla (PUCK) and NFIC
(LUNA mainly) - are primarily suppliers of canned cream. In
2008, all of them registered a sharp decline in sales, as
consumption of canned cream fell, on account of a 31%
increase in retail prices. GOLDEN CROWN fell to a 26% share in
2008, though it is still by far the leading supplier of cream.
Arlas share had almost halved in 2006, pushing it into third
place. In 2008, Arla further declined to 11%. NFIC, which had
taken a leap forward during 2006, dropped to 10% during
2008.
Almarai and Al Safi-Danone are mainly suppliers of fresh
cream. However Almarai also supplies some canned and UHT
product. Almarai registered good growth in all three categories,
taking its overall share to 13% in 2008.
SADAFCO was a new entrant in 2008 in the canned cream
category and has acquired a 4% share due to its highly
competitive price at SR 3.25 for a 170g can. Brand share
development is discussed in greater detail below.
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0%
5%
10%
15%
20%
25%
30%
35%
2004 2005 2006 2007 2008
M
a
r
k
e
t

S
h
a
r
e
(
%
)
GOLDEN CROWN Almarai Arla (PUCK) NFIC
Al Safi-Danone SADAFCO Others

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Table B59: Cream, Cans Brand/Supplier Shares, 2004-2008


Supplier Shares (%)
2004 2005 2006 2007 2008
GOLDEN CROWN 43% 43% 48% 46% 42%
NFIC (LUNA) 13% 15% 22% 19% 17%
Arla (PUCK) 35% 33% 17% 19% 15%
SAUDIA - - - - 6%
ALMARAI 2% 2% 3% 2% 5%
Nestl 4% 2% 2% 2% 2%
Others 3% 6% 8% 12% 13%
Total 100% 100% 100% 100% 100%

Total (tonnes) 18,555 19,200 19,150 19,600 18,000
Key Points:

Nashars GOLDEN CROWN, NFICs LUNA and Arlas PUCK all
lost share in 2008, declining by a total 10% combined. The
main beneficiaries were new entrant SAUDIA and ALMARAI
which gained share as a result of competitive pricing.
However, GOLDEN CROWN is still the most popular brand
among Saudi consumers with a 42% share of supply.
Commonly referred to as AL-TAJ it is one of the longest
established brands of any product. It now offers one of the
largest choices of SKUs, with plain, flavoured and light
varieties. A vegetable oil based cream mix is offered under
a lower priced brand AL SAFEER which typically sells at
25-30% discount to GOLDEN CROWN.
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With Arla sales almost halving in 2006, NFIC was among the key beneficiaries. In 2007 and 2008, however, NFIC has
slipped back. However, it is still ahead of Arla, as NFIC has a slight edge over Arla in terms of pricing, in that, while Arla
is an imported product, NFIC is locally produced. Launched in 1998, LUNA has grown steadily thanks to a combination of
competitive pricing and below the line brand support. It also benefits from brand recognition based on LUNAs market
leadership in evaporated milk. GREEN FARMS was launched in 2001, and now accounts for close to one sixth of total
NFIC volumes. In addition to its regular cream, NFIC also offers a lower fat variety, 3 flavoured SKUs and a cholesterol
free pack. LUNA is also available in a smaller 120g can.

In contrast to AL-TAJ, PUCK and NESTL are reportedly more popular with non-Saudi Arabs, who use them as a topping
on desserts and fruit salads rather than as a breakfast dip. PUCK had seen some recovery in 2007 but has again lost
share in 2008 and is still some way short of its previous 33% market share.

Locally produced ALMARAI was launched in 2003 and accounts for 5% of 2008 supply. SADAFCO launched canned cream
last year and was priced at a highly competitive SR 3.25 for 170g can. SAUDIA and ALMARAI have benefited largely from
the loss of AL-TAJ, LUNA and PUCK. Included under Others are private label brands which have grown in 2008
accounting for 13% of volumes. Selling mainly on price these include brands such as AL-KHAIR, AL-SAFEER, SUNBULAH,
BAITY, AL-BAKHERAH, FRESHCO, NAJDIYAH, BONNY and AL-MITHALI. Several of these are vegetable oil based filled
products. AL-BAKHERAH, FRESHCO, AL-SAFEER and NAJDIYAH are packed by UAE based Al Hassani.

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Table B60: Cream, Short-life Fresh Cream Brand/Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 34% 33% 34% 34% 38%
Al Safi-Danone 33% 34% 35% 34% 34%
Al Othman 17% 14% 13% 16% 11%
NADEC 10% 15% 11% 10% 9%
Others 7% 5% 8% 6% 8%
Total 100% 100% 100% 100% 100%

Total (tonnes) 4,650 5,440 5,650 5,900 6,600

Key Points:
Almarai has steadily become the leading supplier of
fresh short-life cream displacing Al Safi-Danone from
the top spot after a gap of 4 years. Almarai is now at
38% while Al Safi-Danone is at 34% market share.
Al Othman and NADEC account for a further 20% share
between them. This is down from 26% in 2007.
NADECs share had jumped significantly in 2005 thanks
mainly to a 100g+100g free promotion undertaken in
the early part of the year. However volumes fell back
when the promotion ended in 2006.
Brands included under the Others category have
increased their share during 2008 gaining mainly from
reduced activity from recombined short-life cream
producers.
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Table B61: Cream, Short-life Recombined Cream Brand/Supplier Shares, 2004-2008


Supplier Shares (%)
2004 2005 2006 2007 2008
Taif 31% 39% 37% 40% 40%
Friesland 29% 25% 24% 26% 27%
Al Rai 24% 24% 25% 16% 17%
Cortina 8% 6% 6% 6% 3%
Others 8% 6% 8% 12% 13%
Total 100% 100% 100% 100% 100%

Total (tonnes) 1,475 1,615 1,750 1,700 1,500
Key Points:

Taif Dairy, Jamjoom Foremost (a Friesland Arabia
company) and Al Rai dominate the supply of
recombined cream in Saudi Arabia, with a combined
share of 84% in 2008, up from 82% in 2007. This
includes bulk product (2 kg and 5 kg packs typically)
supplied to larger retailers (and caterers) for selling on
loose in-store. Modern Dairies (CORTINA) accounts for
a further 3% approximately.
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Table B62: Cream, UHT Brand/Supplier Shares, 2004-2008


Supplier Shares (%)
2004 2005 2006 2007 2008
Various 100% 100% 100% 100% 100%
Total 100% 100% 100% 100% 100%

Total (tonnes) 2,200 2,450 2,400 2,550 2,700

Key Points:
The UHT cream market is fragmented with a wide selection of
mainly imported brands available. Source countries (and
brands) include France (EVEN, ELLE & VIRE and BRIDEL),
Denmark (ARLA), and Kuwait (KDD). KDD has been doing well
in the market with its thick cream. NFIC also introduced LUNA
thick cream in 125 ml cartons.
In 2008 it is estimated that ELLE & VIRE is the leading brand
with around a third of volume, followed by BRIDEL and
PRESIDENT with a further 20-25% share each, ahead of
Almarai and Arlas brands.
A high proportion of UHT whipping cream is supplied to the
foodservice sector hotels, pastry shops etc (as much as
three-quarters of some suppliers total sales, though others,
such as Almarai, are sold almost exclusively in retail channels).
For local UHT suppliers (Almarai and previously Al Safi-Danone)
fat supply is something of an issue, with high demand from
more important products such as dairy desserts, breakfast
cream and (for Almarai) evaporated and sterilised cream.
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Table B63: Cream, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
UHT:
ALMARAI 1 litre - - 16.95 N/A 20.00
Can:
GOLDEN CROWN
1
100g (regular) 2.25 2.25-2.50 2.50 2.50 3.25
GOLDEN CROWN 170g 2.95 2.95-3.00 3.50 3.25-3.50 4.25
PUCK 170g 2.50 2.50 3.00 3.00 N/A
Recombined:
TAIF 200g - 4.00 4.00 4.00 N/A
Fresh:
ALMARAI Breakfast cream 100g 3.00 3.00 3.00 3.00 3.00

1
GOLDEN CROWN 100g can was downsized to 95g, 170g to 155g and 286g to 274g in 2008
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Key Points:

Due to adverse currency movements against the Euro (most canned cream is sourced from Europe) and sharp increases
in the international price of dairy commodities, the price of canned cream has increased significantly over the past 2-3
years. Prices held steady during 2007 but increased strongly during 2008.

Fresh cream prices have changed little over the course of the five year period but, like canned creams and others, were
increased by around 4% during 2008.

In cans, GOLDEN CROWN and NESTL have a premium positioning in terms of price, and were sold at around SR 4.25 to
the consumer in 2008 (155g/ 170g size). GOLDEN CROWN increased prices by some 20-30% in early 2008 and also
downsized pack volumes.


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Table B64: Cream, Five-Year Detailed Forecasts, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Canned 18,000 19,500 20,300 21,100 21,900 22,600 8.3 4.1 3.9 3.8 3.2
Fresh 6,400 6,750 7,100 7,450 7,800 8,150 5.5 5.2 4.9 4.7 4.5
Recombined 1,500 1,450 1,390 1,330 1,260 1,190 -3.3 -4.1 -4.3 -5.3 -5.6
UHT 2,700 2,900 3,050 3,200 3,350 3,450 7.4 5.2 4.9 4.7 3.0
Total 28,600 30,600 31,840 33,080 34,310 35,390 7.0 4.1 3.9 3.7 3.1

Key Points:

Total consumption of cream will grow at an average rate of around 3.4% per annum over the next five years to reach
35,390 tonnes by 2013. UHT will remain one of the highest growth categories (up on average 5.0% per annum) over the
next five years. Growth in UHT will be boosted by strong demand from the foodservice sector, while cans will grow by
4.7% per annum, albeit from a lower base in 2008. Despite rising costs of European canned cream, strong competition
from locally canned product will keep canned cream prices competitive overall, thus helping maintain the popularity of
the format.

Recombined short-life creams are forecast to decline at an average annual rate approaching -4.5% per annum, whilst its
fresh counterpart is expected to grow at an average annual rate of +5.0% over the forecast period.

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Given the significant resources of the larger Saudi processors and the fact that KSA is by far the largest dairy market in the GCC, it
is surprising that dairy desserts, as a category, only really became established in the early 1990s - at least as far as local production
is concerned. Particular credit is given to Almarai and, more recently, Al Safi-Danone, for showing that this was a category worth
developing. Other dairies, large and small, throughout the region have since launched their own products, or, are looking seriously
at the sector.

Defining the category is not straightforward however and terminology such as desserts and puddings often have different
meanings from supplier to supplier. Consumed mainly as a snack by school children, it can be argued that fruit/flavoured yoghurts
should also be included as dairy desserts. However, they remain in the main yoghurt section in keeping with standard practice in
western markets, though some comparisons are made below. Fromage frais is, however, included here, as are ready-to-eat (RTE)
crme caramels, rice puddings, custards, jelly custards, chocolate puddings etc. In addition, long-life (imported) RTE desserts are
also included - such as those supplied by Elvir (ELLE & VIRE brand).

Tables B65 and B66 below outline development of the RTE dairy desserts sector since 2004, though it must be remembered that
imports are not isolated in the official trade statistics and, therefore, the historical data shown should be regarded as somewhat
speculative.

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Table B65: Dairy Desserts, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 8,775 9,425 10,300 11,050 11,950 4.6% 7.4% 9.3% 7.3% 8.1%
Litres per capita 0.34 0.36 0.38 0.40 0.42 2.2% 5.0% 6.9% 4.9% 5.8%


Table B66: Dairy Desserts, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 23.7 25.3 27.7 29.6 32.6 8.2% 6.8% 9.5% 6.9% 10.2%
Sales per capita (US$) 0.92 0.96 1.03 1.07 1.16 5.7% 4.3% 7.1% 4.5% 7.9%
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4,000
6,000
8,000
10,000
12,000
14,000
2004 2005 2006 2007 2008
T
o
n
n
e
s


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Key Points:

While various companies including Al Safi (now Al Safi-Danone), Al Aziziah, and Al Hana launched RTE products during
the 1990s they never really took off. Indeed it was not until Almarai launched RTE crme caramel in 2000 (full roll-out in
2001) that the true potential of the category became apparent.

Consumption of RTE dairy desserts is estimated at some 11,950 tonnes in 2008. Average annual growth over the period
was 8%. Growth was in fact significantly higher each year from 2000 to 2003 (inclusive), as new suppliers and products
came to market, but has slowed to between 5% and 10% per annum since then. The indications now are that the market
is fast approaching maturity and further growth rates will most likely remain in single figures.

In value terms, the market was worth almost US$ 32.6 million at retail level in 2008. Per capita consumption has grown
from 0.34 litres in 2004 to 0.42 litres by 2008.

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B6.2.1 DESSERT TYPE


Table B67: Dessert Type, Fromage Frais and Others, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Fromage Frais 1,100 1,325 1,525 1,705 1,900 14.6% 7.8% 20.5% 15.1% 11.8% 11.4%
Other types 7,675 8,100 8,775 9,345 10,050 7.0% 4.1% 5.5% 8.3% 6.5% 7.5%
Total 8,775 9,425 10,300 11,050 11,950 8.0% 4.6% 7.4% 9.3% 7.3% 8.1%

Share of Total (%)
2004 2005 2006 2007 2008
Fromage Frais 13% 14% 15% 15% 16%
Other types 87% 86% 85% 85% 84%
Total 100% 100% 100% 100% 100%
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Key Points:

Dairy desserts as defined by IMES include fromage frais, RTE crme caramels, rice puddings, custards, jelly custards,
chocolate puddings etc. They are consumed mainly as a snack by school children, but also after dinner. While fromage
frais has grown most strongly in the last five years, thanks in particular to the success of DANINO from Al Safi-Danone,
other types (crme caramel and custards in particular) are more important in volume terms accounting for 84% of
volume in 2008. Overall, we estimate that crme caramel is the largest single dessert product accounting for in excess of
39% of desserts volume in 2008, followed by chocolate flavours.

In contrast to consumption of flavoured yoghurt, there has been a long tradition in Saudi Arabia of consuming crme
caramel as a dessert. Powder mix is very much a traditional Ramadan product, though home-prepared product is eaten
throughout the year (generally eaten chilled straight from the fridge) and consumption of crme caramel has always
been less seasonal than its pattern of purchase. Almarais decision in 2001 to launch RTE crme caramel paved the way
for other suppliers and indeed other arguably less familiar products such as jelly custards, chocolate puddings, mousses
etc. Unlike in some neighbouring markets (in particular the UAE), European dessert products did not have a significant
presence in KSA supermarkets prior to the launch of local products. With the arrival of European hypermarket concepts
(Carrefour, Gant etc) European direct imports are starting to grow.

It is interesting to examine the combined development of fruit/flavoured yoghurts with RTE dairy desserts as both are
arguably targeting the same consumers see next section.
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B6.2.2 DAIRY DESSERTS VS FRUIT/FLAVOURED YOGHURT


Table B68: Dairy Desserts vs Fruit/Flavoured Yoghurt, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Dairy Desserts 8,775 9,425 10,300 11,050 11,950 8.0% 4.6% 7.4% 9.3% 7.3% 8.1%
Fruit/Flavoured 3,450 3,300 3,200 3,250 3,450 0.0% 1.5% -4.3% -3.0% 1.6% 6.2%
Total 12,225 12,725 13,500 14,300 15,400 5.9% 3.7% 4.1% 6.1% 5.9% 7.7%


Share of Total (%)
2004 2005 2006 2007 2008
Dairy Desserts 72% 74% 76% 77% 78%
Fruit/Flavoured 28% 26% 24% 23% 22%
Total 100% 100% 100% 100% 100%

Key Points:

Although flavoured yoghurt is a longer established
category, demand for dairy desserts surpassed it for
the first time in 2002. Indeed while demand for dairy
desserts has grown by 8% per annum on average over
the period, demand for fruit and flavoured yoghurt has
been stagnant. In 2008, dairy desserts accounted for
78% of the combined category, up from 72% in 2004.
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The following chart clearly illustrates the inter-relationship of fruit/flavoured yoghurts and dairy desserts, underlining how they
target essentially the same market. As dairy desserts were launched in the Kingdom, sales of yoghurt declined.

Combined, consumption has grown at a respectable 5.9% per annum since 2004, to reach 15,400 tonnes by 2008.

Chart: Dairy Desserts and Fruit/Flavoured Yoghurt Consumption, 1999-2008

0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
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2
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2
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7
2
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8
T
o
n
n
e
s
Combined Desserts Flavoured Yoghurt

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Table B69: Dairy Desserts, Local vs Imports, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 8,700 9,325 10,175 10,900 11,775 7.9% 4.3% 7.2% 9.1% 7.1% 8.0%
Imports 75 100 125 150 175 23.6% 50.0% 33.3% 25.0% 20.0% 16.7%
Total 8,775 9,425 10,300 11,050 11,950 8.0% 4.6% 7.4% 9.3% 7.3% 8.1%

Share of Total (%)
2004 2005 2006 2007 2008
Local 99% 99% 99% 99% 99%
Imports 1% 1% 1% 1% 1%
Total 100% 100% 100% 100% 100%

Key Points:

Like yoghurt, dairy desserts are usually short-life
products allowing little time for distribution before
sale. This, combined with the number of high quality
locally produced products, means there are few
opportunities for imports. Total RTE dessert imports
are somewhat tentatively estimated 175 tonnes per
annum (predominantly European, with a significant
share imported directly by supermarkets/
hypermarkets).
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Table B70: Dairy Desserts, Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Al Safi-Danone 67% 66% 67% 67% 67%
Almarai 25% 27% 26% 27% 27%
NADEC 3% 2% 2% 2% 2%
Aziziah 2% 2% 2% 2% 2%
Others 2% 3% 3% 2% 2%
Total 100% 100% 100% 100% 100%

Sum (tonnes) 8,775 9,425 10,300 11,050 11,950

Key Points:
Al Safi-Danone remains the undisputed leader of the category
thanks to the success of DANETTE crme caramel, and
chocolate, vanilla, toffee and cookie desserts, and DANINO
fromage frais. Al Safi-Danone benefits from the Danone
Groups international product development effort and the
established Danone range of dessert products. It accounted for
more than two thirds of supply in 2008. The most recent
addition to the DANETTE range was the cookie flavour in
early 2006, which is now believed to be second only to
chocolate.
Almarai is the second most important supplier with 27% of the
market in 2008, down from 52% in 2002. Until 2006, its
desserts offering included ALMARAI crme caramel, custard
(regular and chocolate flavours), chocolate mousse and
fromage frais. However, 2006 saw the introduction of its new
range of custard puddings (vanilla and chocolate), and
subsequently chocolate mousse and crme caramel, under the
BON SWEET brand. This significantly expanded the number of
facings in retail outlets.
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In addition to NADEC (2%) and Aziziah (2%), suppliers included in the Others category are Al Hana, Taif, Al Mazrah,
and the ELLE & VIRE brands (which is the most important import). For many suppliers, desserts is a difficult sector.
Danya and Al Rai both withdrew from the segment after a short time while others have as yet failed to develop a
significant presence. Dessert products require greater marketing support than other dairy items and many (particularly
smaller) companies simply dont have the financial resources to do so.


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Table B71: Dairy Desserts, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
ALMARAI crme caramel 125g pot 1.0 1.0 1.0 1.00 1.00
DANINO fromage frais
(2002 launch)
6 x 50g pot
5.0 5.0 5.0 5.0 4.0
1



Key Points:

It can be seen that no change took place in key SKUs until 2007, with prices fixed at SR 1 per piece or possibly SR 5 for
a six piece multi-pack. In 2008, Al Safi-Danone downsized its individual 60g DANINO to 40g and reduced the number of
packs in a multi-pack from six to four. Almarais Zady dairy snack is also available in a four-piece multi-pack with each
pack of 60g. Al Safi-Danone has also downsized its crme caramel from 90g to 80g pack at the same price (SR 1.00).

Suppliers are also breaking away from established price points such as SR 1.00 to SR 1.50. Almarais now offers a 125g
chocolate with cream dessert at SR 1.50. NADECs triolay dessert and chocolate twister pudding are also 150g at
SR 2.00. NADECs vanilla and chocolate puddings are now 75g packs at SR 1.00.

1
6 x 50g now downsized to 4 x 40g
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Table B72: Dairy Desserts, Five-Year Forecasts, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Total 11,950 12,800 13,650 14,500 15,350 16,200 7.1% 6.6% 6.2% 5.9% 5.5%


Key Points:

With such a new and emerging category it is impossible to confidently predict how volumes will develop over the next
five years - particularly in view of the fact that supplier production capacities are changing and there may be chiller
cabinet restrictions. Also, the very different growth rates experienced in the last five years make accurate forecasting all
the more difficult. Nevertheless, we tentatively expect consumption to reach 16,200 tonnes by 2013. This is equivalent to
average growth of 6.3% per annum over the period. Whilst modest by historical standards, this is a respectable rate of
growth compared with some of the other dairy categories covered in this report.

IMES Consulting Group - Middle East Dairy Products 2009 - KSA

B7. CONCENTRATED MILK

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Tables B73 to B74 below summarise the development of the Saudi concentrated milk market during the period 2004-2008.

Table B73: Concentrated Milk, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 75,495 76,780 80,000 77,000 76,500 4.4% 1.7% 4.2% -3.7% -0.6%
Litres per capita 2.93 2.91 2.96 2.79 2.71 2.0% -0.6% 1.9% -5.8% -2.9%


Table B74: Concentrated Milk, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 164.3 174.5 182.7 258.8 208.1 21.7% 6.2% 4.7% 41.7% -19.6%
Sales per capita ($) 6.4 6.6 6.8 9.4 7.38 18.9% 3.8% 2.4% 38.6% -21.5%
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60,000
65,000
70,000
75,000
80,000
85,000
90,000
2004 2005 2006 2007 2008
T
o
n
n
e
s

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Key Points:

Prices of evaporated milk have gone through significant ups and downs in the last two years. First, there was a
(+30%) increase in prices in the second-half of 2007 and the first half of 2008, then prices fell (-19%) in the second
half of 2008. Consumption of canned concentrated milk declined for a second consecutive year during 2008. The large
ups and downs in price prompted the trade (especially the wholesale sector with the LUNA brand) to carry lower levels
of stock so as to minimise their exposure to losses caused by price turbulence; and some consumers to switch to
substitutes namely, liquid milk. As a result of this, the market has shown little growth as compared to 2004.
Consumption stands at 76,500 tonnes in 2008. In value terms, this is worth almost US$ 208 million at retail level, a
decline of 19.6% compared to 2007. Per capita consumption at 2.71 litres in 2008 is significantly down from 2.93
litres in 2004.

Consumption had grown particularly strongly during 2006 (up 4.2%), partly compensating for an indifferent 2005
when there was significant disruption due to the transfer of the BONNY brand from Nestl to Hochwald. There remain
some important factors influencing demand for CCM including:

o underlying strong growth in regular milk, both long-life and short-life
o steadily increasing prices
o a strong Euro (Europe has traditionally been the leading supplier of canned concentrated milks).

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Nowadays, evaporated milk is used in Saudi Arabia predominantly as a whitener for tea or coffee. The plethora of
alternative milk formats now available in the market, have robbed the product of additional earlier uses - such as infant
feeding, for example. The caramelised taste of canned evaporated milk has become an accepted part of coffee or tea
when taken with milk. Indeed, the taste of either when whitened, for example, with fresh milk, is significantly different.
Suppliers believe from their consumer research, that at least 80% of volume is used as a beverage whitener, with Saudis
using it mainly in coffee and expatriate workers using it mostly in tea. Up to 30% of product is thought to be consumed
in tea-rooms and coffee shops.
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B7.2.1 EVAPORATED VS SWEETENED CONDENSED MILK


Table B75: Concentrated Milk, Evaporated and Sweetened Condensed, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Evaporated milk 71,800 73,000 75,500 71,950 71,100 -0.2% 4.5% 1.7% 3.4% -4.7% -1.2%
Sweetened
condensed milk
3,695 3,780 4,500 5,050 5,400 9.9% 1.8% 2.3% 19.0% 12.2% 6.9%
Total 75,495 76,780 80,000 77,000 76,500 0.3% 4.4% 1.7% 4.2% -3.8% -0.6%


Share of Total (%)
2004 2005 2006 2007 2008
Evaporated milk 95% 95% 94% 93% 93%
Sweetened
condensed milk
5% 5% 6% 7% 7%
Total 100% 100% 100% 100% 100%
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Key Points:

Canned concentrated milks comprise both evaporated milk and sweetened condensed milk. Evaporated milk is by far the
more important, accounting for 93% of consumption in 2008. Evaporated milk has traditionally been one of the more
important dairy products in Saudi Arabia and was, in fact, the first major liquid dairy product to be imported.

Between 2004 and 2006, demand for evaporated milk grew by an average annual rate of 2.5% to reach 75,500 tonnes in
2006. However, thereafter the market has declined for two consecutive years and is now 5.8% lower than 2006 levels.
Because evaporated milk is used predominantly as a beverage whitener, it faces competition from both liquid and
powdered milks. Increased consumption of liquid milk in Saudi Arabia over the past decade has clearly had an adverse
impact upon demand.

Thanks to the marketing efforts of market leader Nestl in particular, sweetened condensed milk has outperformed
evaporated milk since 2004. It remains very much a commodity however, with sales strongly influenced by supplier
promotional deals. Consumption grew by an average annual rate of 9.9% per annum over the period to reach 5,400
tonnes in 2008. The product is mainly used in cooking, with sales increasing during Ramadan and other holiday periods
when demand for desserts rises.

Nestl has invested heavily in TV advertising (pan-Arab as well as local) and in educating consumers on the versatility of
condensed milk in cooking. The product has also been actively promoted in cooking magazines and books, and
detachable recipes have regularly been placed at point of sale. There has been little innovation in the sector since 2003
when Nestl introduced a chocolate variety in an attempt to reinforce the products versatility as a cooking ingredient.
However, demand was disappointing and it has since been withdrawn. The main challenge currently facing condensed
milk is its rising price and how to move the product away from the commodity status it arguably currently has - thanks to
its long association with evaporated milk.
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B7.2.2 PACK TYPE

Table B76: Concentrated Milk, Pack Type, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Cans 75,365 76,430 80,000 77,000 76,500 0.4% 4.3% 1.4% 4.7% -3.7% -0.6%
Other 130 350 0 0 0 - 160% 169% -100% 0.0% 0.0%-
Total 75,495 76,780 80,000 77,000 76,500 0.3% 4.4% 1.7% 4.2% -3.7% -0.6%

Share of Total (%)
2004 2005 2006 2007 2008
Cans 100% 100% 100% 100% 100%
Other 0% 0% 0% 0% 0%
Total 100% 100% 100% 100% 100%
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Key Points:

Evaporated milk has traditionally been supplied in cans predominantly, the only variation being the size of the can -
either 170g or 410g - and opening type i.e., standard or easy-open (EOE). Some interesting attempts at breaking the
dominance of cans have been made in the region in the last few years however building on the pioneering (albeit failed)
efforts of SADAFCO, Al Rai, and Nadfood (Yemen) to launch UHT cartons in 1990s and early 2000s. Firstly, in mid-2003
National Food Products (LACNOR) launched a 125 ml UHT carton pack in the UAE, followed in 2004 by Al Rabie and
SADAFCOs launch of 200 ml UHT cartons (pull-tab and screw-top respectively). The latter two have been discontinued.
Also in 2004, UAE recombining dairy Unikai trialled a 500 ml long-life pillow pouch targeting catering and institutional
users in the UAE and Oman but off-take was disappointing and the product was later withdrawn. The only recent
innovation in sweetened condensed milk was in late 2005 when NFIC launched LUNA in one-shot mini-portions. The
product was targeted at children mainly. However, the one-shot mini-portions were not available at the time of research
in early 2008.

In summary, while the size of the evaporated milk market is very attractive to suppliers, experience suggests that this is
a notoriously difficult sector in which to innovate unless there are clear advantages by way of price.

While in 2005 we estimated that around 350 tonnes of evaporated milk were supplied in packaging other than cans,
primarily associated with the launches of SAUDIA and AL RABIE, this reduced effectively to zero in 2006 and 2007. No
major change is expected as far as packaging is concerned in the short term. Easy-open (EOE) 170g cans are mainly sold
in larger retail outlets and as this end of the retail universe continues to expand, a gradual shift away from standard cans
is expected.

Low fat and flavoured versions have been available for some years but still account for less than 5% of volume. Friesland
offers the broadest range of product types with its RAINBOW LIGHT (low fat), RAINBOW CARDAMOM (flavoured),
RAINBOW CHOLESTEROL FREE, RAINBOW HIGH CALCIUM as well as its regular variety.
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B7.2.3 PACK SIZE

The following table examines how the market breaks down by pack size i.e., 170g or 410g (and similar).

Table B77: Concentrated Milk, Pack Size, 2004-2008 (Evaporated)

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
170g etc 54,385 55,250 56,900 53,400 54,163 -0.1% 5.6% 1.6% 3.0% -6.2% 1.4%
410/450g 17,415 17,750 18,600 18,550 16,937 -0.7% 1.4% 1.9% 4.8% -0.3% -8.7%
Total 71,800 73,000 75,500 71,950 71,100 -0.2% 4.5% 1.7% 3.4% -4.7% -1.2%

Key Points:

From the table it can be seen that the 170g size is by far the most important in volume terms, accounting for 70% of
supply in 2008. For expatriate workers from India and South East Asia, the 170g can is a convenient source of small
quantities of milk and they have a long tradition of using evaporated milk in tea in the home setting. As mentioned
above, the lower end of the retail trade is more price sensitive and standard, as opposed to easy-open ends, are
preferred.

The larger size (410g or 450g) is particularly popular in teashops as it offers better value for money. In addition, a factor
not reflected in the above table, is the relatively stronger growth of easy-open ends (EOE) which suppliers are attributing
to the changing nature of retailing in the Kingdom i.e., the growing importance of supermarkets and hypermarkets.
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Table B78: Concentrated Milk, Local vs Imports, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 31,900 31,225 33,000 27,000 28,020 -3.2% 15.4% -2.1% 5.7% -18.2% 3.8%
Imports 43,595 45,555 47,000 50,000 48,480 2.7% -2.4% 4.5% 3.7% 6.4% -3.0%
Total 75,495 76,780 80,000 77,000 76,500 0.3% 4.4% 1.7% 4.2% -3.8% -0.6%

Share of Total (%)
2004 2005 2006 2007 2008
Local 42% 41% 41% 35% 37%
Imports 58% 59% 59% 65% 63%
Total 100% 100% 100% 100% 100%
Key Points:

A strong trend towards locally packed product is
observed in recent years (driven primarily by NFIC -
LUNA and GREEN FARMS brands - and more recently
by Almarai). Overall, local brands accounted for 37%
of supply in 2008 (28,020 tonnes) compared with
35% in 2007 (27,000 tonnes).
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Table B79: Concentrated Milk, Evaporated Milk Brand Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
NFIC (LUNA, GREEN FARM) 39.4% 37.2% 38.1% 30.9% 30.8%
Hochwald (BONNY)
1
21.6% 21.8% 22.5% 23.6% 22.8%
Friesland (RAINBOW, OMELA) 13.4% 13.7% 14.1% 18.7% 18.7%
Bamujally (WADI FATMA, GLORIA) 17.4% 17.1% 16.6% 18.5% 18.1%
Almarai (ALMARAI) 4.9% 5.1% 5.3% 5.7% 7.3%
Others 3.3% 5.1% 3.4% 2.6% 2.3%
Total 100% 100% 100% 100% 100%

Total (tonnes) 71,800 73,000 75,500 71,950 71,100

1
Note: BONNY is shown as a Hochwald brand for the full five year period even though the purchase from Nestl was completed only in January 2006.
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0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
2004 2005 2006 2007 2008
M
a
r
k
e
t

S
h
a
r
e
(
%
)
NFIC (LUNA, GREEN FARM) Hochwald (BONNY) Friesland (RAINBOW, OMELA)
Bamujally (WADI FATMA, GLORIA) Almarai (ALMARAI) Others


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Key Points:

Local manufacturer NFIC remains the leading supplier, albeit with a diminished 31% of supply in 2008, down 0.1% over
2007. As indicated earlier, NFIC undertook a rationalisation of its distribution set up in order to directly service a larger
tranche of the retail trade. This factor, combined with significant price hikes during 2007 and early 2008, has led to the
wholesale trade carrying much lower inventories of its main LUNA brand. GREEN FARM, NFICs other brand, is still
available but sales have declined significantly in recent years as the company focused primarily on LUNA. Since its launch
in Saudi Arabia more than ten years ago, LUNA has succeeded on a marketing platform of aggressive pricing, the
attainment of widespread distribution, and heavyweight above and below-the-line support. It has also been innovative in
its approach to packaging and was one of the first to introduce non-standard pack sizes (e.g., a 450g can), which helped
increase sales to the trade and consumers alike. With NFIC investing heavily in building up a direct distribution capability
and expanding into long-life regular milk, the company clearly recognises that the KSA market is undergoing some
fundamental changes and that a less traditional approach is required in order for its brands to prosper in the long term.

NFIC has launched the AL HAMRA brand in Oman, with lesser quantities also supplied in the UAE to control parallel
imports. AL HAMRA is filled (i.e., made with vegetable fat instead of butter fat to help reduce costs). This reflects the
increasingly commoditised nature of the evaporated milk market where price takes precedence over taste in the
purchase decision. Fat filled products are not yet a significant feature of the Saudi market however (<5% of supply)
though, with prices of tinplate and dairy commodities steadily increasing and with leading suppliers such as NFIC and
Friesland (OMELA is now made with vegetable fat) now producing, the situation could change quickly if market conditions
require.
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BONNY has lost 0.8% point, Bamujally brands have lost 0.4% points, but Frieslands brands RAINBOW and OMELA have
remained unchanged. The Friesland brands have been helped by improvements in distribution. In contrast, Almarai
gained 1.6% in 2008. Given its low cost source of raw milk and its extensive regional distribution structure, ALMARAI
evaporated milk has the potential to grow into a serious competitor in the future. However, judging by its relatively low
key performance since launch, Almarais main reason for expanding into evaporated milk appears to be as a milk
balancer rather than any desire to take over the sector.

Bamujallys WADI FATMA mainly continues to be imported from Germany and accounted for an estimated 16.9% of
supply in 2008. Because of exchange rate movements, prices and margins are under pressure. WADI FATMA has
traditionally been strong in the West and especially the South West. The brand has a very strong franchise among the
local population. Bamujally has a second brand, GLORIA, which is concentrated mainly in the Central region the brand
adds a further 1.3 percentage points to Bamujallys share of supply.

There has been no major change in the number of brands included in the Others category since 2005, apart from the
withdrawal of SAUDIA and AL RABIE in carton. Brands such as BAITY (Balsharaf), AL TAIE (Nafea Trading), COAST
(Campina), FRISIAN FLAG (mainly in the East), NAJDIYAH, AMERICANA and MOMTAZ are the most frequently
encountered but constituted less than 3% of supply in 2008.

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Table B80: Concentrated Milk, Sweetened Condensed Milk Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Nestl
(NESTL)
91% 84% 78% 78% 78%
NFIC - see others 10% 10% 10%
Hochwald (BONNY) 5% 8% 8% 7% 8%
Others
(RAINBOW mainly)
4% 7% 4% 5% 4%
Total 100 100 100 100 100

Total (tonnes) 3,695 3,780 4,500 5,050 5,400
Key Points:

Nestl, which revamped its packaging in 2006,
dominates the condensed milk market with a share of
around 78% (NESTL brand), down from 91% in 2004.
It is followed by NFICs LUNA in 2008 which has done
well since its launch, particularly through the bottom
end of the market. Hochwalds BONNY accounts for a
further 8% of supply.

As with evaporated milk, there are few other brands of
note available on a year round basis. In Ramadan,
when demand for condensed milk increases, RAINBOW,
GREEN FARMS, COAST, and WADI FATMA are more
visible, with RAINBOW the most important of these.
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Table B81: Concentrated Milk, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
Evaporated
LUNA 170g easy open 1.20 1.25-1.50 1.25-1.50 1.95 1.50
BONNY 410g 2.95 2.95 2.75-3.00 3.75 3.95
Condensed
NESTL 397g 5.25 5.00-5.25 5.25 5.95 6.00


Key Points:
The price of evaporated milk had been creeping up steadily over the past few years. During 2007, however, prices leapt
a significant +25-30% at the retail level. Several factors have come together to compel suppliers to abandon the long-
standing price points, namely, a strengthening Euro, the imposition of the 5% GCC tariff, the disappearance of EU
subsidies, and rising world prices for dairy commodities. The prices stayed high during the first half of 2008, but later
retreated by almost 20%. The magnitude of the rise, however, must have forced some consumers to adopt alternate
beverage whiteners.
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While evaporated milk is still important in the wholesale sector, there is a definite move in favour of direct delivery to A-
class outlets and hypermarkets, with implications for easy open ends and brands i.e., as the retail trade continues to
develop, the more established brands and more sophisticated openings will gain in importance. This trend could also
have important implications for brands traditionally stronger in the wholesale sector and in smaller outlets, which is no
doubt partly behind NFICs current investment programme.

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Table B82: Concentrated Milk, Five-Year Detailed Forecasts, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Evaporated 71,100 73,950 76,350 78,200 79,900 81,600 4.0 3.2 2.4 2.2 2.1
Sweetened
condensed
5,400 5,560 5,730 5,900 6,080 6,260

3.0 3.1 3.0 3.1 3.0
Total 76,500 79,510 82,080 84,100 85,980 87,860 3.9 3.2 2.5 2.2 2.2


Key Points:

Consumption of evaporated milk is forecast to continue growing during the next five years, at an average rate of about
2.8% per annum - as competition from regular liquid milks picks up. By 2013, the market will reach 81,600 tonnes.
Growth is expected to be higher in 2009 and 2010 as the market recovers from the declines of 2007 and 2008,
thereafter the growth in market will slow down.

Condensed milk consumption is forecast to reach 6,260 tonnes by 2013. This reflects strong growth during the last three
years and continuing advertising and promotional support for key brands. Overall, growth is forecast to average 3% per
annum between 2009 and 2013. By 2013 condensed milk will account for slightly more than 7% of the total concentrated
milk market.
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Tables B83 to B84 below summarise the development of the Saudi milk powder market during the period 2004-2008.


Table B83: Milk Powder, Tonnes 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 43,600 43,000 42,500 42,250 38,870 2.0% -1.4% -1.2% -0.6% -8.0%
Kg per capita 1.69 1.63 1.57 1.53 1.38 -0.4% -3.6% -3.4% -2.7% -9.8%
Litres per capita
1
13.5 13.0 12.6 12.2 11.0 -0.4% -3.6% -3.4% -2.7% -9.8%


Table B84: Milk Powder, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 230 251 249 391 319 3.1% 9.1% -0.8% 57.0% -18.4%
Sales per capita ($) 8.91 9.51 9.22 14.17 11.30 0.7% 6.7% -3.0% 53.6% -20.3%


1
Converted to liquid milk equivalent assuming a conversion rate of 1 kg = 8 litres
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36,000
37,000
38,000
39,000
40,000
41,000
42,000
43,000
44,000
2004 2005 2006 2007 2008
T
o
n
n
e
s

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Key Points:

Consumption of milk powder in retail packs declined sharply in 2008. The principal reason being the massive 58%
increase in prices in 2007 which continued until the third-quarter of 2008. As a result of this the average price per
kilogram of milk powder reached SR 30.7 in 2008. If it is assumed that 1 kg of milk powder makes 8 litres of milk, then
the price per litre of reconstituted milk from powder was SR 3.84. This compares with an average price per litre of liquid
milk at SR 4.37 in 2008. With the difference in prices of reconstituted milk and fresh milk narrowing, consumers
responded by reducing the consumption of milk powder and substituting it with liquid milk both long-life and short-life.
While this was not bad enough, the milk powder industry was hit by a serious adulteration scandal involving melamine in
milk powder and infant formula sourced from China. International milk powder suppliers responded quickly to limit
damage to their brands. Products were recalled from the market. Import agreements with Chinese suppliers were
terminated. Fonterra terminated its JV with Sanlu, China, the principal company involved in the melamine scam. Sources
in the trade concur that the Saudi Arabian governments campaign to promote the benefits of liquid milk over milk
powder also hurt milk powder sales in 2008.

Later in 2008, the financial meltdown struck. Dairy commodity prices declined, resulting in a decline in retail prices of
milk powder by nearly 11%. The trade, which was laden with stocks purchased at higher prices, began to reduce
holdings in order to minimise losses caused by further decline in prices. Overall, consumption fell 8% compared to 2007
to about 38,870 tonnes in 2008. Per capita consumption, which was in gradual decline, fell even more by about 9.8%.
Although the KSA market was very tough in 2008, suppliers reported strong growth in sales in early 2009 and this is
expected to continue for the rest of the year. This is clearly testimony to how strongly entrenched milk powder
consumption is with the Saudi consumer. The category continues to face strong competition from direct substitutes in the
form of local liquid milks - both long-life and short-life. There remains, however, an element of ancillary usage in cooking
(and, by some consumers, in the preparation of home-made laban) for which the liquid milk alternatives are not best
suited.
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With the milk powder sector becoming increasingly commoditised, the larger suppliers have become more focused upon
expanding their value-added offerings i.e., growing up milk powders (GUMPs). There has also been a less pronounced
move towards the introduction of other value-added variants. Industry leader Nestl, for example, has forged ahead in
this direction as is evidenced by the recent morphing of its KLIM brand into NESVITA. NESVITA currently has two
prime areas of focus pro-bone and pro-digestion, both targeting adult women. NESVITA has low fat cans in 400g,
900g and 1.8kg sizes, and zero-fat cans in 400g and 900g packs, whereas pro-digestion is in 10 x 25g sachets.

Overall, per capita consumption has declined by 18.5% since 2004 to reach 1.38 kg or 11 litres (LME terms) by 2008.
Milk consumption per capita is calculated assuming 1 kg of powder makes 8 litres of liquid milk. In value terms, the
market is worth approximately US$ 319 million at retail level.

The gradual convergence in the relative cost per litre of milk made from milk powder and that for fresh milk (and, to a
lesser extent, UHT milk), is introducing a stronger price dynamic into the market. In early 2009, the average cost of a
litre of liquid milk was SR 4.36 and the average cost of milk made from milk powder was SR 3.85 i.e., milk reconstituted
from milk powder was 13% cheaper than liquid milk. Prior to 2007, milk powder had maintained a price advantage
against liquid milk of more than 40% at the retail level. Thus, with the erosion of the previously obtaining price
advantage, the shift in consumption away from milk powder and towards liquid milk looks set to continue this is an
established trend encountered in maturing dairy markets. The increasingly sophisticated nature of Saudi consumers,
combined with growing urbanisation, increasing affluence and a rapidly developing retail trade are other factors
contributing to the long term decline in milk powder in per capita consumption terms if not in volume terms.

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There are some important trends emerging in the market which are not evident in the above figures but which will have
a significant bearing on the future of the category. These include suppliers increasing focus on growing up milk powders
(GUMP) - moving ever closer to the segment traditionally dominated by the pharmaceutical companies. At the other
extreme, are the powders that are suffering greatest decline i.e., the mass market, standard, non-fortified powders
which effectively compete only on price. Against this backdrop, supply is likely to become increasingly polarised over the
coming years in these two directions. An important step in this regard was seen in late 2004/early 2005 when Nestl
launched NIDO in a 2.25 kg pouch region-wide. Whilst NIDO in cans continues to be supplied in parallel, when the
market leader takes such a step, this is a clear indication that the market is becoming commoditised. This is further
evidenced by the proliferation of secondary, price-driven brands, such as BAITY, MAWASIM, AL TAIE, AL ALALI, AL
MITHALI, FRESHCO, KANNY, PANDA, VIOLA etc.

The growth in consumption of GUMPs is a relatively recent phenomenon and is an attempt by suppliers to offset growing
downward pressure on volumes and margins for their regular powders. Whilst the exact demarcations of the sector are
somewhat blurred, it certainly appears that the mass market dairy companies such as Nestl and Fonterra are more and
more in competition with pharmaceutical companies such as Abbott, Wyeth, Milupa etc, who have traditionally been
active in infant formula. The latter group presently supplies a more premium and expensive range of GUMPs. If their so-
called specialised GUMP brands are included (e.g. Wyeths PROGRESS, Nutricias DELILAC, Abbotts GAIN PLUS/PEDIA
SURE etc), the total demand for GUMP in Saudi Arabia is probably in excess of 15,000 tonnes in 2008. This estimate
somewhat speculatively assumes that specialised GUMPs accounted for around 60% of the total GUMP market in 2008,
the remainder comprising Nestls NIDO 1+, 3+, 5+, Fonterras ANCHOR 1+ and 3+ etc. Importantly, while regular
GUMPs are included in our market estimate, specialised GUMP brands are not.
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Regular GUMPs declined in 2008, though this is believed to be related more to the increase in prices than a long-term
trend. By way of contrast, infant formulas are believed to have exhibited growth approximating to +12% year-on-year.

Excluded from the above table is bulk powder. While it is difficult to get a detailed understanding of the market for bulk
in the Kingdom, because of significant conflicts in official data, re-exporting etc, total demand is estimated at around
71,000 tonnes in 2008 including usage by recombiners, bakeries, other non-dairy food companies etc. The quantity that
is ultimately used locally is of course less once re-exports are allowed for, and estimated at around 66,000 tonnes in
2008 (see the following table).

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B8.2.1 RETAIL VS BULK


Table B85: Milk Powder, Retail vs Bulk, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Retail 43,600 43,000 42,500 42,250 38,870 -2.8% 2.0% -1.4% -1.2% -0.6% -8.0%
Bulk 56,400 60,000 62,000 64,000 66,000 4.0% 0.3% 6.4% 3.3% 3.2% 3.1%
Total 100,000 103,000 104,500 106,250 104,870 1.2% 1.0% 3.0% 1.5% 1.7% -1.3%


Share of Total (%)
2004 2005 2006 2007 2008
Retail 44% 42% 41% 40% 37%
Bulk 56% 58% 59% 60% 63%
Total 100% 100% 100% 100% 100%
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Key Points:

Total usage of milk powder in 2008 is estimated at 104,870 tonnes of which 66,000 tonnes or 63% is bulk powder. This
does not include bulk powder imported and subsequently re-exported, notably by SNZMP and NFIC. Powder imported in
bulk, repacked in retail formats and consumed locally are included here as retail powder.

While demand for retail powder reduced in 2008, bulk powder continues to grow, driven by expanding demand for
recombined dairy and other food products. Over the past five years, bulk powder usage grew by almost 4.0% per annum
on average.
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B8.2.2 PACK TYPE

Table B86: Milk Powder, Pack Type, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Cans 43,400 40,900 40,000 39,400 35,470 -4.9% 2.0% -5.8% -2.2% -1.5% -10.0%
Sachets 200 2,100 2,500 2,850 3,400 103.1% 0.0% 950% 19.0% 14.0% 19.3%
Total 43,600 43,000 42,500 42,250 38,870 -2.8% 2.0% -1.4% -1.2% -0.6% -8.0%

Share of Total (%)
2004 2005 2006 2007 2008
Cans 99.5% 95.1% 94.1% 93.3% 91.3%
Sachets 0.5% 4.9% 5.9% 6.7% 8.7%
Total 100% 100% 100% 100% 100%

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Key Points:

The year 2005 marked an important development in the packaging of milk powder in the Kingdom, with Nestls launch
of NIDO in 900g and 2.25 kg sachets. By year end, an estimated 5.9% of the market was in sachets. Sachets have
grown thereafter to reach an estimated 3,400 tonnes or just under 9% of total powder consumption in 2008. With
markedly higher retail prices during 2008, the shift to sachets gained momentum with both suppliers and consumers
giving greater attention to the potential savings which these more economical pack types afford.


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B8.2.3 PACK SIZE

Table B87: Milk Powder, Pack Size, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
2.5-3.0 kg 10,900 9,400 9,300 10,140 8,847 -5.1% 2.0% -13.8% -1.1% 9.0% -12.8%
1.0-2.4 kg 21,365 20,550 20,900 21,125 18,593 -3.4% 2.0% -3.8% 1.7% 1.1% -12.0%
900g 6,540 7,500 7,000 6,760 7,274 2.7% 2.0% 14.7% -6.7% -3.4% 7.6%
<450g 4,795 5,550 5,300 4,225 4,156 -3.5% 2.0% 15.7% -4.5% -20.3% -1.6%
Total 43,600 43,000 42,500 42,250 38,870 -2.8% 2.0% -1.4% -1.2% -0.6% -8.0%

Share of Total (%)
2004 2005 2006 2007 2008
2.5-3.0 kg 25% 22% 22% 24% 23%
1.0-2.4 kg 49% 48% 49% 50% 48%
900g 15% 17% 16% 16% 18%
<450g 11% 13% 12% 10% 11%
Total 100% 100% 100% 100% 100%
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Key Points:

Retail powder is available in four main sizes, 2.5 kg, 1.8 kg, 900g and 400g, but only the larger suppliers generally offer
the full range. Some 48% of total sales volume is in packs between 1 kg and 2.4 kg (i.e., mainly 1.8 kg tins and 2.25 kg
sachets), 23% is in packs between 2.5 kg and 3 kg (mainly 2.5 kg), 18% in 900g and the remaining 11% in packs less
than 450g (mainly 400g).

It can be seen from Table B87 that some significant shifts in how the market breaks down by pack size took place in
2008. Volume in 1.8 kg packs declined sharply, despite an increase in volumes in 2.25 kg sachets (details not indicated
in the table). 2.5 kg cans also declined indicating that not only did consumers reduce milk powder consumption, they
also moved to smaller packs to limit increase in monthly grocery bills. Volume in 900g was up due to growth in both cans
and sachets. So also was the decline in 400/ 450g relatively marginal.

Nestl was one of the first to introduce a 2.25 kg NIDO sachet rather than 2.5 kg - which most other suppliers had been
offering at the time. This was clearly motivated by the desire to minimise the perceived price the consumer was paying
for the NIDO variant over its lower-priced competitors. This is a device which has now been widely employed in other
dairy categories (e.g., processed cheese, packet butter etc).
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Table B88: Milk Powder, Local vs Imports, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 9,950 8,900 8,500 7,000 9,420 -1.4% 71.7% -10.6% -4.5% -17.7% 34.6%
Imports 33,650 34,100 34,000 35,250 29,450 -3.2% -8.9% 1.3% -0.3% +3.7% -16.5%
Total 43,600 43,000 42,500 42,250 38,870 -2.8% 2.0% -1.4% -1.2% -0.6% -8.0%

Share of Total (%)
2004 2005 2006 2007 2008
Local 23% 21% 20% 17% 24%
Imports 77% 79% 80% 83% 76%
Total 100% 100% 100% 100% 100%

Key Points:

Locally packed milk powders (notably ANCHOR, LUNA,
and GREEN FARMS) accounted for an increased 24%
of supply in 2008. With inflation at multi-year highs in
2008, consumers shifted from premium price-
positioned brands such as NIDO to more
competitively priced brands such as ANCHOR, LUNA
and GREEN FARMS.
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Table B89: Milk Powder, Supplier/Brand Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Nestl (NIDO, KLIM) 57% 56% 57% 58% 53%
NFIC (LUNA mainly) 12% 9% 10% 8% 13%
ANCHOR 11% 11% 9% 8% 11%
WADI FATMA 5% 6% 6% 6% 6%
RAINBOW 2% 3% 3% 3% 3%
COAST 4% 4% 4% 5% 2%
Arla (PUCK, DANO) 4% 4% 2% 3% 2%
Al ALALI 2% 2% 2% 2% 1%
Others 2% 5% 8% 7% 9%
Total 100% 100% 100% 100% 100%

Total (tonnes) 43,600 43,000 42,500 42,250 38,870

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0%
10%
20%
30%
40%
50%
60%
70%
2004 2005 2006 2007 2008
M
a
r
k
e
t

S
h
a
r
e
(
%
)
Nestl (NIDO, KLIM) NFIC (LUNA mainly) ANCHOR WADI FATMA Others


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Key Points:

Nestl dominates the milk powder market with its NIDO and KLIM / NESVITA
1
brands (CARNATION is not available in
KSA). Its volume share had been steady at around the 56-58% mark from 2004 onwards but in 2008 it has fallen
sharply to 53% - mainly due to the large increase in prices effected in 2007 and the consequent decline in milk powder
market as a whole. However, the company has been able to defend its leading position in the market. The companys
multiple strategies of investing in growing up milk powders and other value-added variants like NESVITA pro-digestion
and pro-bones, while at the same time introducing lower priced offerings in regular powders (i.e., sachets) is clearly
paying dividends. These strategies aim to create a point of differentiation between Nestl offerings and those for other
leading suppliers, while at the same time helping to counter the growth of low priced mass market brands (AL TAIE,
BAITY etc.) which are typically non-fortified and which compete mainly on price. Nestl is still by far the leading supplier
with well over half the market and, given the increasingly commoditised nature of the sector, it is perhaps inevitable that
in the long term a premium priced brand such as NIDO will suffer most as an increasing number of acceptable (and lower
priced) alternatives become available.

Middle East markets continue to be vulnerable to increasing international prices for bulk milk powder and by the
weakening US dollar - to which many GCC currencies are pegged. This, of course, holds true for most of the competitors
in the market and there is unlikely to be any significant change in the relative importance of different brands going
forward.

1
The KLIM brand is migrating to NESVITA, with this transition currently being highlighted on-pack and in support materials.
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NFICs LUNA and GREEN FARMS brands accounted for an increased 13% market share during 2008 up from 8% in the
preceding year. NFICs aggressive pricing strategy helped the company gain significant share in 2008, when consumers
were shopping for value, given the multi-year high inflation (at 10.3%) experienced in Saudi Arabia. NFICs introduction
of LUNA milk powder in 2002 successfully capitalised on consumers familiarity with its LUNA brand (the market leader in
canned milk). It was originally imported from Holland but local packing commenced in early 2004 and grew strongly
(with significant marketing support) to account for 12% of supply that year. Over the years, NFIC was noted for its
aggressive pricing and effective distribution and had a particular strength in the wholesale market. However, in line with
the clear changes taking place in how consumer goods are retailed in the Kingdom, the company has embarked on a
programme of change which, it is envisioned, will position it more strongly going forward. The company is investing
heavily in building a direct distribution capability as well as in expanding its product range - i.e. UHT milk, processed
cheddar cheese and juice drinks are some of its most recent new product introductions.

Fonterras ANCHOR brand regained its lost share in 2008 after two years of fall in 2006 and 2007. ANCHOR stood at 11%
share in 2008 up from 8% in 2007. Like NFIC, Fonterra gained from Nestles decline during 2008. ANCHOR had been
unfairly cited as having links to Denmark when the Danish boycott first broke in 2006 and went on to experience further
disruptions as a result of Fonterra switching distribution from an in-house operation to IATCO. Bamujallys WADI FATMA
and Frieslands RAINBOW were unchanged in 2008 and account for a further 9% of supply between them.

The remainder of supply includes Arlas PUCK and DANO brands (PUCK has a more premium positioning than DANO),
Basamh Marketings AL ALALI, and a number of brands included under the Others category which are growing in
importance. These include brands such as AL TAIE, BAITY, AL KHAIR, AL MAWASIM, AL MITHALI, FRESHCO etc, which
sell mainly on price.

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-
1,000
2,000
3,000
4,000
5,000
6,000
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$
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e
SMP WMP
Chart: World Milk Powder Prices, December 2006 to December 2008

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As depicted in the preceding chart, there have been very significant changes in the international price of milk powder during the last
three years. This fed through to higher retail prices and, put recombining dairies under considerable pressure. Prices have however,
declined since the last quarter of 2008, hit by a downturn in sentiment related to the global financial crisis.


Table B90: Milk Powder, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
NIDO 2,500 49.95 49.50-49.95 49.50-49.95 81.50 67.00
1,800 38.95 37.90-38.95 38.00 63.50 52.50
NIDO 1+ 1,800 52.00 51.50-52.00 53.25 79.95 -
NIDO sachet 1,800 - 37.50 36.95 N/A N/A
LUNA 2,500 44.95 44.95-49.95 45.20-49.95 66.95 61.50
ANCHOR 2,500 45.50 47.95 47.50 69.95 60.00
1,800 28.95
1
36.50 36.50 54.95 50.00
PANDA 2,500 - - 39.95 N/A N/A

1
Promotion Price
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Key Points:

In 2007, the world trend in milk powder prices assumed an unprecedented upward trajectory which resulted in retail
prices increasing, in some instances, by as much as 67%. Prices stayed high from the third-quarter of 2007 until the
third-quarter of 2008; thereafter they declined by as much as 8 to 18%. As previously outlined, larger suppliers are now
adopting a two-pronged approach to the powder sector, offering as low a price as possible on standard powders (in order
to maintain volumes for as long as possible), while at the same time investing heavily in value-added varieties for which
they can command a premium.



Prior to 2007, the price per kg for powders rose steadily between 2004 and 2006 it rose by just over 10%. In 2007, the price rose
by a staggering +58% over that obtaining in 2006, though came down in late 2008 and early 2009 by as much as 11%. This can be
seen in the following table which summarises average retail unit prices for the past five years.
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Table B91: Milk Powder, Average Unit Retail Prices, 2004-2008

US$ per kg
2004 2005 2006 2007 2008
5.28 5.84 5.86 9.25 8.21


It is also interesting to compare the relative costs of liquid milk from different sources as shown in the following table:


Table B92: Milk Powder, Relative Prices of Different Milk Types, 2004-2008

Price per litre of milk (SR)
2004 2005 2006 2007 2008
Plain short-life 3.00 3.00 3.00 4.00 4.00
Plain long-life 3.87 3.87 3.50 4.50 4.50
From milk powder 2.50 2.50 2.50 4.34 3.85

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The prices shown demonstrate that the price differential between the various milk types has changed significantly since
the last survey was undertaken in early 2008. Plain (fresh) short-life milk now costs roughly the same as milk from
powder and long-life milk is now only 12.5% more expensive than fresh milk. The examples shown are based on the
following popular sizes/formats of leading brands:

- short-life milk Al Safi 1 litre
- long-life milk SAUDIA 1 litre
- milk powder average unit retail prices (conversion of 1 kg = 8 litres)


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Table B93: Milk Powder, Five-Year Detailed Forecasts, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Retail 38,870 40,000 40,750 41,500 42,250 43,000 2.9% 1.9% 1.8% 1.8% 1.8%


Key Points:

The milk powder market experienced some disruptions during 2006 - on account of the boycott of Danish products.
Thereafter, as a result of the unprecedented price increases in 2007 and 2008, the market fell sharply. Prices reduced
somewhat in late 2008 and early 2009. At the same time, liquid milk prices have not been completely rolled back after
they were increased in 2008. Suppliers report strong sales in early 2009. Going forward, we expect volumes to recover to
some extent in 2009 and resume a modest rate of growth thereafter. The total market size is expected to grow to 43,000
tonnes by 2013, equivalent to modest average growth of 2.0% per annum. Specialist powders (i.e., GUMPs) are
expected to grow in both share and volume terms, while standard powders will become increasingly commoditised with a
steady trend to sachets and even greater focus on offering the lowest possible price.

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Tables B94 to B95 below summarise the development of the Saudi butter ghee market during the period 2004-2008.


Table B94: Butter Ghee, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 3,360 3,290 2,850 2,800 2,750 -9.2% -2.1% -13.4% -1.8% -1.8%
kg per capita 0.130 0.125 0.106 0.101 0.098 -11.3% -4.3% -15.3% -3.9% -2.9%


Table B95: Butter Ghee, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 19.7 21.1 18.1 19.1 26.4 -1.0% 7.1% -14.2% 5.7% 38.0%
Sales per capita $ 0.76 0.80 0.67 0.69 0.94 -3.3% 4.7% -16.1% 3.4% 35.1%

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0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2004 2005 2006 2007 2008
T
o
n
n
e
s

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Key Points:

Consumption of butter ghee in Saudi Arabia has been in decline for some years. This has been compounded by factors
such as the disruptions to LURPAK and QBB in 2006 LURPAK because of the boycott on Danish products and QBB
because of distribution problems. In addition, a combination of rising butter fat prices characterised by a combination of
tight supply and growing demand, a weakening dollar, growing health concerns and the availability of alternative cooking
oils continue to work to undermine ghee sales. In 2007 and 2008, significant price increases for some brands has
brought about further volume decline. Consumption is estimated at 2,750 tonnes in 2008, compared with 3,360 tonnes
in 2004. This corresponds to a fall of 22.2%, or, -4.9% per annum on average.

In value terms the market grew strongly from $19.1 million in 2007 to $26.4 million in 2008. In per capita terms,
expenditure on ghees increased from $0.69 to $0.94 over the same period. The following analysis of average consumer
prices per kilogram reveals the true extent of the underlying price rises.


Table B96: Butter Ghee, Average Unit Prices, 2004-2008

$ per kg to consumers
2004 2005 2006 2007 2008
5.86 6.42 6.38 6.83 9.61

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With the exception of very small quantities of local ghee (e.g., AZIZIAH brand) which are produced on an artisanal basis from
surplus raw milk and usually packed in either glass or plastic containers, all ghee in Saudi Arabia is imported (excludes some local
repacking e.g., by Almarai). Indeed supply is quite fragmented with product sourced from many countries in Europe, the Middle East
itself and Asia. With prices creeping steadily upwards, suppliers are reviewing sourcing arrangements e.g., production of QBB ghee
has switched to Singapore from Australia. As with other dairy products, we would expect to see an increase in the share Middle East
companies account for (ghee is produced in the UAE, Oman and Egypt for example). Traditional source regions such as Europe and
Australia appear to be increasingly uncompetitive.

The following table summarises supplier shares during the period 2004-2008.

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Table B97: Butter Ghee, Total Butter Ghee Supplier/Brand Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Nashar (FARM) 61% 64% 61% 64% 55%
Almarai 17% 19% 22% 24% 30%
Arla (LURPAK) 4% 6% 4% 4% 2%
Fonterra (COW,
ANCHOR)
8% 3% 3% 3% 2%
QBB 3% 3% 0% 0% 0%
Others 7% 5% 10% 5% 11%
Total 100% 100% 100% 100% 100%

Total (tonnes) 3,360 3,290 2,850 2,800 2,750


Key Points:
Nashars FARM brand is still the leading ghee in Saudi Arabia with
a 55% share in 2008. The period of strong growth in recent years
came on the back of a sustained program of investment in the
brand. Reflecting the changing marketplace, the company launched
a new Rich Blend ghee in 2005 which has 90% less cholesterol (a
blend of butter and vegetable ghee).
Almarai continues to increase steadily thanks to its strong
distribution, brand equity and aggressive pricing. However, at a
30% share it is still well behind Nashar. Arla is at 2% share in
2008.
The decline in Fonterras share in recent years is mainly
attributable to a sharp fall in COW volumes (COW was acquired
when Fonterra increased its shareholding in Bonlac to 50% in 2003
and is responsible for the day to day management of the
company). Small quantities of ANCHOR (from Egypt) and
occasional supply of GOLDEN CHAIR ghee are included.
Included under the Others category are brands such as ASEEL,
BALSHARAF, REIHAN and occasional Indian bands (AMUL, VERKA
etc.).
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0%
10%
20%
30%
40%
50%
60%
70%
2004 2005 2006 2007 2008
M
a
r
k
e
t

S
h
a
r
e
(
%
)
Nashar (FARM) Almarai Others

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Table B98: Butter Ghee, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
ALMARAI 2kg
(1.816 kg since 2003)
34.95 39.95 39.95 52.95 57.00
1kg
(908g since 2003)
18.95 20.50 20.50 27.95 29.50
500g
(454g since 2003)
10.25 11.95 11.95 14.95 16.50
FARM
1
1.8-2.268 kg
(1600 g since 2008)
34.95-39.90
(1.8kg)
32.95-35.00
(1.8kg)
32.95-35.00
(1.8kg)
64.50
(+ 10% free
= 2Kg)
61.50
2

907g
(800 g since 2008)
20.50 20.50 20.50 33.95
(+10% Free
= 1 Kg)
34.00
454g
(400 g since 2008)
10.95-11.50 10.95-11.50 10.95-11.50 18.95
(+10% free
= 500g)
19.50

1
Prices shown for FARM were those obtaining in early 2008, during 2007 they were unchanged over the preceding year.
2
FARM ghee downsized to 400g, 800g and 1600g from 454g, 907g and 1.8kg, respectively.
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Key Points:

Between 2007 and 2008 the average price per kg Saudi consumers paid for butter ghee increased by almost 41%, up
from $6.83 to $9.61 per kg. Although prices for the FARM brand held during 2007, others such as ALMARAI did increase
prices. As a result of cost increases, Nashar has been compelled to increase prices for FARM in early 2008. Nashar also
re-sizing pack sizes to retain attractive price points on the shelf whilst curbing cost per pack. With dairy commodity
prices retreating from historic highs, it is likely that suppliers may roll-back some of the price increases effected in 2008
this could see prices decline by 10-15% in 2009. However, in the long term prices are likely to continue an upward
trend which, combined with health concerns, will continue to dampen demand in the coming years. The introduction of
smaller pack sizes and vegetable/butter ghee blends will of course help matters somewhat, as will suppliers switching
sourcing.



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The long term prospects for butter ghee consumption in the Middle East generally are not good, and Saudi Arabia is no exception.
Factors which continue to impact demand and limit its potential for future growth include:

Pricing - ghee remains an expensive luxury for many and, as we have seen above, is increasingly so. There are
numerous lower cost alternatives such as vegetable ghee (half the price of butter ghee), and corn, sunflower, or other
cooking oils. Clearly, price differentials take on even greater significance in times of economic hardship.

Increasingly, consumers are more aware of health concerns concerning cholesterol in the diet. There is evidence that
many of the population (and particularly people over the age of forty - following the advice of doctors) are now reducing
their intake of these products in favour of healthier alternatives.

Whilst key butter ghee brands, like Nashars FARM brand, receive A&P support stressing the superior taste of foods
prepared with butter ghee, the major promotional effort in the Kingdom for cooking oils and fats has largely concentrated
on locally refined liquid oils such as corn oil and, increasingly, sunflower oil. Whilst, initially, this acted to convert
consumers away from less healthy vegetable oils (e.g., palm oil), it is now also converting butter ghee consumers.
Vegetable/butter ghee blends may serve as an intermediary for consumers moving to vegetable ghee - though the
product is not yet established in the Kingdom.

The make-up of the large expatriate workforce in Saudi Arabia has changed over the years and, as a result, many
expatriate workers with a tradition of butter ghee consumption have been replaced by nationalities for whom ghee is a
less important foodstuff. The ongoing government policy of Saudiisation within the work force, will further contribute
towards dwindling numbers of these ghee consumers.

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Butter ghee does have a traditional, somewhat old-fashioned image, and is not a convenient product that can be used
straight from the tin. It requires a certain degree of expertise in cooking and, in a fast changing society like Saudi Arabia
(early marriages, urbanisation, increasing mobility of families, etc), there is a risk that this expertise is not being passed
on from generation to generation.

The following table summarises our market size forecast for the period 2009 to 2013. It can be seen that a decline averaging -1.5%
per annum is expected for the next five years, as high prices and health concerns take effect. The market is forecast to reach 2,550
tonnes by 2013.


Table B99: Butter Ghee, Five-Year Forecast, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Total 2,750 2,709 2,668 2,628 2,589 2,550 -1.5% -1.5% -1.5% -1.5% -1.5%


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Tables B100 to B101 below summarise the development of the butter market in Saudi Arabia during the period 2004-2008.


Table B100: Butter, Retail Market, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Consumption 10,150 10,350 10,160 10,175 10,280 -0.8% 2.0% -2.8% 0.15 1.0%
Kg per capita 0.393 0.392 0.376 0.369 0.365 -3.1% -0.3% -4.0% -2.0% -1.1%


Table B101: Butter, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 53.8 54.2 51.7 87.2 83.4 0.9% 0.7% -4.6% 68.7% -4.4%
Sales per capita $ 2.09 2.05 1.91 3.16 2.96 -1.4% -1.5% -6.7% 65.0% -6.3%
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10,100
10,150
10,200
10,250
10,300
10,350
10,400
2004 2005 2006 2007 2008
T
o
n
n
e
s

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Key Points:

The boycott of Danish products in early 2006 had a dramatic impact on the traditional pattern of butter supply in the
Kingdom, and led to a significant move in favour of local sourcing. Almarai moved more of its butter in-house, and local
re-packer Forsan increased its share of locally supplied butters. The boycott had a strong impact upon market leader
LURPAK with sales going into freefall. The brand has seen some resurgence but sales volumes are still well below pre-
boycott levels. Whilst there is clearly still a large pool of consumers loyal to the brand, it is unlikely that LURPAK will
regain all of the ground that it has lost some consumers will have moved on to alternative brands and may never
return while, at the same time, there remains some residual anti-European feeling among consumers.

Notwithstanding the events of 2006, consumption of retail butter has remained essentially flat over the last five years
and in 2008 the market was estimated at 10,280 tonnes. Thus, given the steadily growing population, per capita
consumption levels are decreasing steadily from an estimated 393 grams in 2004 to 365 grams by 2008 (-1.8% per
annum on average). As with the market for ghee, the main underlying reason why per capita consumption is in a decline,
is because of consumer health concerns. However, the availability of cheaper alternatives, such as margarine (products
such as FLORA sell well in the Kingdom), which are claimed to be healthier, is not helping either. Since the primary use
for butter throughout the Middle East is as a cooking ingredient rather than as a spread, as is the case in Europe,
vegetable oil can also be seen as a competing product, reducing potential sales further.

In the past few years retail prices had been contained through some suppliers down-sizing packs but in 2007 this came
to an abrupt end as rocketing world prices for butter impacted the market. This resulted in significant price hikes for all
of the key brands. In 2008 though, prices have receded marginally. Although the category has done very well to
maintain volume in light of large price increases, clearly, this is likely to act as a further constraint on growth in the
future.
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The marginal reduction in prices towards the later half of 2008, combined with little growth in volumes, saw retail value
fall 4.4% to US$ 83.4 million - representing per capita spending of US$ 2.96. The launch of spreadable and/or lower fat
products under the LURPAK, ANCHOR, ELLE & VIRE, and KERRYGOLD brands etc., have had limited impact anywhere in
the Middle East because butter simply isnt used as a spread these variants account for less than 1% of sales (by
volume).

Bulk butter has not been included in the above table. We estimate this accounts for roughly 9,600 tonnes (and AMF a
further 11,000 tonnes approximately). Consumption of bulk butter is volatile and therefore hard to quantify, primarily
because industrial users can fairly easily substitute AMF instead - depending on price, convenience and availability.
Similarly, subject to price, recombining dairies can also use WMP instead of skim plus fat, and this too can complicate
detailed analysis. In summary then, if 25 kg blocks are included, total consumption of butter in 2008 is estimated at
approximately 19,880 tonnes. The development of retail and bulk butter over the last five years is examined more
closely in the following section.

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B10.2.1 BULK VS. RETAIL


Table B102: Butter, Bulk and Retail, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Retail 10,150 10,350 10,060 10,175 10,280 0.3% -0.8% 2.0% -2.8% 1.1% 1.0%
Bulk 8,400 8,900 9,000 9,100 9,600 3.4% 2.4% 6.0% 1.1% 1.1% 5.5%
Total 18,550 19,250 19,060 19,275 19,880 1.7% 0.6% 3.8% -1.0% 1.1% 3.1%

Share of Total (%)
2004 2005 2006 2007 2008
Retail 55% 54% 53% 53% 52%
Bulk 45% 46% 47% 47% 48%
Total 100% 100% 100% 100% 100%

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Key Points:

Total consumption of butter in 2008 is estimated at approximately 19,880 tonnes (c.f., 18,550 tonnes in 2004). This
represents annual growth in consumption of 1.7% per annum.

Demand for bulk butter has been boosted in recent times by growth in demand for recombined dairy products and also
by the trend towards local repacking of retail butter, most notably by Forsan. Importantly, to avoid double counting, bulk
butter destined for local repacking is not included above.

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B10.2.2 PRODUCT TYPE

Table B103: Butter, Regular and Spreadable, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Regular 10,085 10,280 9,990 10,105 10,200 0.3% -0.9% 1.9% -2.8% 1.2% 0.9%
Spreadable 65 70 70 70 80 5.3% 8.3% 7.7% 0.0% 0.0% 14.3%
Total 10,150 10,350 10,060 10,175 10,280 0.3% -0.8% 2.0% -2.8% 1.1% 1.0%


Share of Total (%)
2004 2005 2006 2007 2008
Regular 99.4% 99.3% 99.3% 99.3% 99.2%
Spreadable 0.6% 0.7% 0.7% 0.7% 0.8%
Total 100% 100% 100% 100% 100%

Key Points:
The market for spreadable butter is growing faster than the
market as a whole. In addition to tubs offered by Arla, Fonterra
etc, there are additional direct imports by the larger
supermarket groups, in particular those catering to the large
European expatriate community. It remains very much a niche
product accounting for just 0.8% of the market in 2008. Lactic
butter accounts for over 90% of consumption, the major part
of which is unsalted, with sweet cream brands (both salted and
unsalted) making up the remainder (most popular with
Western expatriates).
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B10.2.3 PACK TYPE


Table B104: Butter, Pack Type, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Packet 9,340 9,650 9,475 9,625 9,830 1.3% 0.4% 3.3% -1.8% 1.6% 2.1%
Canned 810 700 585 550 450 -13.7% -13.4% -13.6% -16.4% -6.0% -18.2%
Total 10,150 10,350 10,060 10,175 10,280 0.3% -0.8% 2.0% -2.8% 1.1% 1.0%

Share of Total (%)
2004 2005 2006 2007 2008
Packet 92.0% 93.2% 94.2% 94.6% 95.6%
Canned 8.0% 6.8% 5.8% 5.4% 4.4%
Total 100% 100% 100% 100% 100%

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Key Points:

Retail sales are predominantly of packet butter. Cans have declined in importance in recent years and accounted for just
4.4% of the market in 2008. Retail sales of bulk butter sold loose are negligible and have been ignored.

Canned butter is used as the ghee or cooking butter (samneh) of rural indigenous Saudis, especially the Shiite
communities of Qatif and Al Hasa, which account for more than three-quarters of sales. Yemeni expatriates were once
also important consumers of canned butter but large numbers, based in Jeddah, were expelled after the Gulf War and
have not subsequently returned. There are two main canned butter brands available GOLDEN CHAIR from Bonlac in
Australia (now under the control of Fonterra) and GOLDEN CHURN (from New Zealand), though very small quantities of
other brands are occasionally encountered.
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B10.2.4 PACK SIZE

Table B105: Packet Butter, Pack Size, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
100g/113g 2,760 2,810 2,850 2,925 3,025 2.3% -1.1% 1.8% 1.4% 2.6% 3.4%
200g/227g 4,600 4,750 4,525 4,620 4,770 0.9% 0.9% 3.3% -1.2% 2.1% 3.2%
400g 1kg 1,700 1,800 1,800 1,770 1,710 0.1% 1.6% 5.9% 0.0% -1.7% -3.4%
Portion packs/
others
280 290 300
310 325 3.8%
0.4% 3.5% 3.4%
3.3% 4.8%
Total 9,340 9,650 9,475 9,625 9,830 1.3% 0.4% 3.3% 0.5% 1.6% 2.1%

Share of Total (%)
2004 2005 2006 2007 2008
100g/113g 30 29 30 30 31
200g/227g 49 49 48 48 49
400g 1kg 18 19 19 18 17
Portion packs/
others
3 3 3
3 3
Total
1
100 100 100 100 100

1
Small differences due to rounding
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Key Points:

Foil packed butter was traditionally sold in imperial weight pack sizes i.e. 1lb (454g) and fractions thereof. Nowadays
practically all suppliers have gone metric and now work in 100g, 200g, 400g and 1kg sizes. These include brands
ALMARAI, NADA, NADEC, FORSANA, PRESIDENT, ELLE & VIRE etc. In recognition of the changing market, previous
leader Arla introduced a 100g pack (LURPAK) in 2007 to compete in this most sensitive price segment. Other metric sizes
200g and 400g were introduced in 2008.

Overall, however, the breakdown of sales by size has not changed perceptibly over the period.


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Table B106: Butter, Local vs Imports, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 3,750 4,970 6,950 6,255 6,710 15.7% 114% 33% 40% -10% 7.3%
Imports 6,400 5,380 3,110 3,920 3,570 -13.6% -25% -16% -42% 26% -8.9%
Total 10,150 10,350 10,060 10,175 10,280 0.3% -0.8% 2.0% -2.8% 1.1% 1.0%

Share of Total (%)
2004 2005 2006 2007 2008
Local 37% 48% 69% 61% 65%
Imports 63% 52% 31% 39% 35%
Total 100% 100% 100% 100% 100%
Key Points:
Until recently there was no significant local production
or packing of butter in Saudi Arabia but this changed
in 2002 when Forsan established a packing facility
near Riyadh. As well as packing its own FORSANA
brand, it now contract packs for other companies
including NADEC and Al Othman (NADA).
Following LURPAKs difficulties, locally packed product
jumped to an estimated 69% of consumption in 2006.
With strong growth in Almarai sales as well, the share
of locally packed butter is on the rise.
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Table B107: Butter, Retail Butter Brand Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 24% 26% 40% 34% 41%
Arla (LURPAK) 40% 35% 12% 20% 20%
NADEC 7% 10% 13% 13% 13%
Forsan 5% 7% 9% 9% 7%
Al Othman 2% 5% 7% 5% 4%
Fonterra 9% 6% 3% 3% 2%
Others 14% 11% 15% 15% 13%
Total 100% 100% 100% 100% 100%

Total (tonnes) 10,150 10,350 10,060 10,175 10,280

Key Points:
For over twenty years, LURPAK was the leading packet butter
brand in the Kingdom, distributed by Arlas local subsidiary,
Danya. LURPAK accounted for 35% of the market in 2005 but
tumbled to 12% in 2006 following the boycott of Danish
products. Arla focused on rebuilding consumer confidence in
the brand thereafter and has met with at least partial
success.
The main beneficiary of the boycott was Almarai who
replaced Arla as market leader in 2006. Although Almarai
could not hold on to its gains in 2007, its share has risen in
2008 to 41%. Production of ALMARAI butter has now moved
mainly in-house (it was co-packed by Forsan for a period).
NADEC was the third most important supplier of butter in
2008, with a further 13%. While the company has produced
and marketed its own butter in plastic bucket containers for
a number of years, packets were introduced in the second
quarter of 2006 (co-packed by Forsan).
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Other strong performers include Forsan itself (FORSANA brand), accounting for a further 7% in 2008, down 2% as
compared to 2007. Fonterras brand ANCHOR had a difficult year in 2006 as a result of a change in distributor and
through wrongly being named as a Danish brand; in 2008, the brand has further declined in market share.

French brands (which had been in steady decline for some years) accounted for two thirds of the remaining 15% in 2006.
In 2008, their share diminished to around 37% (500 tonnes). The surge in French brands during 2006 was directly
related to LURPAKs demise. Secondary brands that were only visible in the wholesale market have also declined. Most of
these were offered in the 100g fingers size only.

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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2004 2005 2006 2007 2008
M
a
r
k
e
t

S
h
a
r
e
(
%
)
Almarai Arla (LURPAK) NADEC Forsan Al Othman Fonterra

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In 2007, butter saw the largest increase of any dairy product at one point, trebling from US$ 2,100 per tonne early in the year to
a high of US$ 6,300 per tonne in the third quarter. The price then fell back quite significantly to US$ 4,500 per tonne at the end of
2007 before finishing at around US$ 3,000 by year end 2008. Understandably, suppliers were compelled to pass on some part of the
cost increase to the consumer, with retail prices rising significantly as a consequence.

-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1
2
-
0
6
0
2
-
0
7
0
4
-
0
7
0
6
-
0
7
0
8
-
0
7
1
0
-
0
7
1
2
-
0
7
0
2
-
0
8
0
4
-
0
8
0
6
-
0
8
0
8
-
0
8
1
0
-
0
8
1
2
-
0
8
U
S
$
/
t
o
n
n
e
Butter

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Table B108 details how prices of selected brands and SKUs have developed over the five year period.


Table B108: Butter, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price (SR)
2004 2005 2006 2007 2008
LURPAK
1
400/ 454g 7.95 7.95 8.25 14.95 11.50
200/ 227g 3.95 3.95 3.95 7.95 6.00
100/113g 2.25 2.25 2.25 3.95 3.00
ALMARAI 200/227g 4.00
(200g)
4.00
(200g)
4.00-4.10
(200g)
6.95 6.00
100/114g 2.00
(100g)
2.00
(100g)
2.00
(100g)
2.95 3.00
FORSANA 1kg 13.95 13.95 13.95 N/A 26.00


1
LURPAK changed to metric sizes in 2008.
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Key Points:

Despite rising butter prices on international markets (and unfavourable exchange rates for European sourced product),
butter price points in Saudi Arabia had hardly changed in the 2004-2006 period due mainly to strong price competition
from locally packed product. In 2007, the surge in world dairy prices in general, and butter prices in particular, forced
suppliers to increase prices significantly. At the retail level, increases of as much as +80% were recorded during
fieldwork. In 2008, prices for some brands declined by as much as 25%.

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Table B109: Butter, Five-Year Detailed Forecasts, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Retail 10,280 10,330 10,385 10,435 10,490 10,540 0.5% 0.5% 0.5% 0.5% 0.5%


Key Points:

Little change is expected in consumption of butter over the coming five years, as rising prices and increasing health
concerns encourage consumers to switch to alternative products, in particular vegetable oil based products (butter is
mainly used for cooking).


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Tables B110 to B111 below summarise the development of the Saudi cheese market during the period 2004-2008.

Table B110: Cheese (all Types), Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006
1
2007 2008 2004 2005 2006 2007 2008
Consumption 108,275 116,760 121,960 133,520 132,750 7.8% 7.8% 4.5% 9.5% -0.6%
Kg per capita 4.20 4.42 4.52 4.84 4.71 5.3% 5.4% 2.1% 7.1% -2.7%


Table B111: Cheese, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Market value 623 683 718 1,055 975 16.6% 9.6% 5.3% 46.9% -7.6%
Sales/capita ($) 24.14 25.85 26.61 38.23 34.58 13.9% 7.1% 2.9% 43.7% -9.6%


1
Re-stated in light of new information becoming available for processed cheese.
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0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2004 2005 2006 2007 2008
T
o
n
n
e
s

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Table B112: Cheese By Type, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Processed 62,875 66,510 71,195
1
77,960 79,250 6.6% 5.8% 7.0% 9.5% 1.7%
White 37,100 41,450 41,400 45,640 43,690 10.7% 11.7% 0.1% 10.2% -4.3%
Natural 8,300 8,800 9,365 9,920 9,810 3.8% 6.0% 6.4% 5.9% -1.1%
Total 108,275 116,760 121,960 133,520 132,750 7.8% 7.8% 4.5% 9.5% -0.6%


Table B113: Cheese, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Processed 424.1 452.9 486.4 717.1 651.5 18.9% 6.8% 4.0% 47.4% -9.1%
White 138.8 159.6 157.5 235.5 223.0 13.7% 15.0% -1.3% 49.5% -5.3%
Natural 60.0 70.0 74.5 102.6 100.5 8.1% 16.6% 6.5% 37.7% -2.0%
Total 622.9 682.5 718.4 1,055.2 975.0 16.6% 9.6% 5.3% 46.9% -7.6%

1
Revised upwards in light of new information becoming available.
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Key Points:

The total market for cheese in Saudi Arabia is estimated at 132,750 tonnes in 2008, equivalent to a market value of
US$ 975 million at retail level. In 2008, the cheese category as a whole was weighed down by the price increases made
in 2007 and 2008; although prices were marginally rolled back later in 2008 for some products. As a result, the category
recorded a small decline in volumes but a 7.6% fall in market value.

Cheese consumption has grown by around 5.2% per annum since 2004, which is well ahead of the population growth
rate i.e., per capita consumption is growing (up from 4.2 kg to 4.7 kg per annum over the period). Processed cheese
accounted for around 67% of the value of the total market and 60% in volume terms. In contrast, the white cheese
sector accounted for 23% of total value with a 33% volume share.

Natural cheeses have also shown strong growth over the past five years, increasing by an average of 4.3% per annum
since 2004. The strong growth of foodservice, the countrys buoyant economy and the continued development of the
retail trade have boosted demand for such products.
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Table B114: Cheese, Five-Year Detailed Forecasts, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Processed 79,250 82,170 85,090 88,010 91,060 94,120 3.7% 3.6% 3.4% 3.5% 3.4%
White 43,690 45,620 47,490 49,380 51,250 53,100 4.4% 4.1% 4.0% 3.8% 3.6%
Natural 9,810 10,300 10,800 11,310 11,810 12,330 5.0% 4.9% 4.7% 4.4% 4.4%
Total 132,750 138,090 143,380 148,700 154,120 159,550 4.0% 3.8% 3.7% 3.6% 3.5%


Key Points:

With consumption forecast to grow at an average annual rate of 3.7% per annum, the total cheese market will reach
159,550 tonnes by 2013. Natural cheese is expected to be the best performing category with average annual growth of
4.7%, ahead of white cheese at around 4.0% per annum and processed cheese on 3.5%. By 2012, processed cheese will
account for around 59% of the market, white cheese 33% and natural cheese 8%.

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The development of the processed cheese sector is summarised in the following tables for the period 2004-2008 in both volume and
value terms.

Table B115: Processed Cheese By Type, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Cans 7,000 6,750 6,825 7,050 6,000 -1.4% -3.6% 1.1% 3.3% -14.9%
Jars/ Tubs 24,225 26,250 29,925 34,460 36,300 9.1% 8.4% 14.0% 15.2% 5.3%
Square Portions 6,450 6,860 7,095 7,685 7,700 9.1% 6.4% 3.4% 8.3% 0.2%
Triangle Portions 17,400 18,375 19,025 20,065 20,100 6.6% 5.6% 3.5% 5.5% 0.2%
Slices 4,325 4,575 4,700 5,000 5,350 4.1% 5.8% 2.7% 6.4% 7.0%
Blocks 3,475 3,700 3,625 3,700 3,800 5.9% 6.5% -2.0% 2.1% 2.7%
Total 62,875 66,510 71,195 77,960 79,250 6.6% 5.8% 7.0% 9.5% 1.7%
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Table B116: Processed Cheese, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Cans 56.7 54.0 54.7 73.3 57.2 32.2% -4.8% 1.1% 34.1% -21.9%
Jars/ Tubs 183.0 196.0 223.5 335.7 303.2 36.3% 7.1% 7.1% 50.2% -9.7%
Square Portions 43.5 45.7 47.2 67.7 74.1 21.8% 5.1% 1.1% 43.5% 9.4%
Triangle Portions 95.6 108.5 112.0 171.2 143.3 -3.2% 13.5% 2.2% 52.9% -16.3%
Slices 28.5 30.9 31.7 45.3 45.7 13.3% 8.4% 2.3% 42.9% 0.9%
Blocks 16.8 17.8 17.3 23.7 28.0 -15.2% 6.0% -2.2% 36.9% 17.9%
Total 424.1 452.9 486.4 717.1 651.5 18.9% 6.8% 4.0% 47.4% -9.1%

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Key Points:

Overall consumption of processed cheese has grown by 6.0% per annum on average to reach 79,250 tonnes in 2008.
This is well ahead of average annual population growth over the period (2.3%). Volume growth has been relatively
consistent at between 5% and 7% per annum for the 2004 to 2006 period. In 2006, however, as the effect of the
consumer boycott on Danish products took hold we saw key player Arla lose significant share to Almarai, Kraft and
others. Then, during 2007, there was strong growth in volume and, more markedly, in value the latter coming as a
result of the well-documented increases in world prices for cheese during the year. In 2008, the market was impacted by
multiple economic troubles. Initially, inflation was at a multi-year high of 10.3% and weighing heavily on consumers
finances. Later in the year, the trade was in the grips of a liquidity crisis and was seeing a dramatic decline in prices of
food products. With the financial crisis in full force, consumers became cautious of their monthly grocery bills, while the
trade reduced inventory levels. As a result, consumption of processed cheese grew only 1.7% in 2008 over 2007.

Market value growth averaged over 11% per annum over the period (cf. 6% volume growth). Not only has the mix of
processed cheese moved in favour of more expensive types (i.e., jars), but international prices have also increased,
particularly in 2004 and 2007. With the dollar weakening against the Euro, imports from Europe and Australia/New
Zealand continued to rise in price and suppliers were increasingly sourcing locally or regionally. While the majority of
triangle portions are now sourced in Egypt, Lactaliss acquisition of a significant shareholding in the Al Khobar based
United Group (PRIDE brand) in early 2006 was a significant boost to KSA manufacturing. Similarly, Krafts new factory in
Bahrain is now operational and will contribute significantly to the change taking place in the regional structure of cheese
supply. Overall, average prices of processed cheese declined 11% in 2008 after an increase of about 35% in 2007;
market value has clearly been affected and stands at US$ 652 million in 2008.
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Canned cheese is the most traditional processed cheese product and is consumed mostly as a snack or kept as a
standby. Retail sales have been flat or in slight decline for a number of years now as consumers have migrated to
alternative cheese types. In 2008, volumes dropped sharply as the price increases made in 2007 started impacting. It
must be recalled that prices had increased 30% on an average in 2007 over 2006. Although, prices were rolled back by
8% on an average later in 2008, this did not help in returning growth to the sector. This is not surprising given the
relatively inconvenient nature of the product and its somewhat dated image. Despite the obvious shelf-life advantages,
ongoing promotion and consistently maintained quality standards, consumers are more favourably disposed to
consumption of substitutes such as jars and tubs. These are easier to use and are perceived by consumers to be newer
products and of a higher quality (though this may not necessarily be the case). Despite market trends, new brands are
still launched from time to time e.g., Arla Foods introduction of THREE COWS canned cheese in early 2004, and PUCK
during 2007. Kraft has been driving the sector for a number of years and has been supporting the category, with a
particular focus below the line (promotional packs, price offers etc).

Consumption of cans was estimated at 6,000 tonnes in 2008, and worth around US$ 57 million at retail level. The
sector is expected to see little or no growth at current price levels. We anticipate volumes to reach 6,150 tonnes by
2013.

Consumption of spreads in jars and tubs was estimated at 36,300 tonnes in 2008, which represents a 50% increase on
2004 sales. This is equivalent to average growth of approximately 10.6% per annum during the last four years. Overall,
the jars sector accounts for 46% of all processed cheese consumption (cf., 39% in 2004) and in value terms is worth
some US$ 303 million at retail level. This is equivalent to just over 46% of the total processed cheese market by value,
making it the largest and most valuable sector by far. While consumption grew by 5.3% in 2008 over 2007, revenues
declined by over 9%. After a 30% increase in average prices last year, suppliers rolled-back prices in this highly
competitive sector by as much as 14% in 2008. A high level of supplier marketing activity in-store sampling, shelf
space activity, on-pack premiums etc remains a strong feature of the jars sector.
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Although periodically a number of smaller companies are attracted to the market, traditionally, three companies have
driven the sector - Kraft, Almarai and Arla Foods. The latters misfortune in early 2006 yielded windfall gains for both
Kraft and Almarai. Although, Arla had clawed back some of the lost ground in 2007, but it remains disadvantaged in
market share due to a persisting feeling of dislike among some Saudi consumers. In fact, Arla products were not
available in PANDA stores during research in early 2009.

Among the more important recent developments have been a gradual move to larger sizes away from the 140g and 240g
packs (sizes in excess of 1 kg are available), the steadily growing importance of products sourced in the region, and the
clear distinction between cheddar (gold label typically) and white (blue label typically) varieties. Among the other brands
that were encountered are PRESIDENT, LUNA, KIRI AL JARRA, NADA, HALWANI, NADEC and NAJDIYAH. Sadafco has re-
entered the sector with its SAUDIA brand of jar cheese in April 2009.

Tub spread is a more foreign concept and unsuited for distribution through the wholesale trade, for whom it is more
sensitive in handling terms than glass jar spread. The product is limited to the chilled cabinets of class A outlets.
Companies such as Almarai and Fromageries Bel are no longer active in tubs, leaving just a handful of brands. KRAFT
and to a lesser extent PUCK are the brands most often encountered, and the total market is estimated at around 550
tonnes.

One of the very few attempts at innovation in the jars sector has been Fromageries Bels launch of KIRI AL JARRA,
following the withdrawal of its LA VACHE QUI RIT jar in 2003. Not only is Bel leveraging the not inconsiderable strength
of the KIRI brand but, uniquely for the category, its product is supplied in an attractive and distinctive shaped pack.
However, it remains very much niche and while widely available at the top end of the retail trade, it accounts for an ever
diminishing 1% of the spreads sector.
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Growth of 4.9% per annum is expected for the next five years. By 2013 spreads will have grown to 46,000 tonnes and
should account for around 49% of the processed cheese category (cf. 46% in 2008).

Square portions are synonymous with Fromageries Bels KIRI. This cheese is similar in texture to jar cheeses but is not
as convenient to use and keep. For quite a few years there were just two regular suppliers active in the category -
Fromageries Bel (KIRI and VACHE QUI RIT) and Arla Foods (PUCK). In late December 2006, in what was a very
significant move, Almarai re-entered the sector with a new locally produced range. Currently, priced at a discount of 20-
25% to KIRI, the brand has gone on to capture a significant share of that part of the market not controlled by
Fromageries Bel largely at Arlas expense. Consumption is estimated at 7,700 tonnes in 2008 and is worth an
estimated US$ 74 million at retail level. The sector has, in the main, been driven by the efforts of Bel but, more
recently, also by Almarais market entry. Square portions have been established in the region for more than thirty years
and are popular with local Arab as well as expatriate consumers.

Consumption has begun to level off in 2008, following a 32% increase in prices in 2007 and a further 9% increase in
average prices in 2008. Growth is forecast at around 2% per annum until 2013, at a rate less than the expected rate of
population growth. By 2013, the sector is expected to account for 9.0% of the processed cheese category (some 8,490
tonnes) compared to 9.7% in 2008.

Consumption of triangles is estimated at 20,100 tonnes in 2008, in value terms equivalent to US$ 143 million at
retail level, or just under 21% of the total value of the processed cheese sector. The triangle cheese sector registered
very little volume growth in 2008 over 2007, though market value fell by over 16%. While average prices had increased
45% in 2007, they declined 16% in 2008. Triangles are mainly consumed as a snack by children in all ethnic groups. This
is a particularly price sensitive sector with, traditionally, lots of low-priced European imports competing with a small
number of established brands such as LA VACHE QUI RIT, ALMARAI, PICON etc. However, in an interesting development,
with the noticeable exception of ALMARAI which is produced in KSA, most of the established and indeed secondary
brands are now sourced from Egypt, underlining the price-driven and commodity-like nature of the sector.
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The market has grown by an average annual rate of 3.7% since 2004, equivalent to an increase of approximately 15%
overall. Pricing remains crucial in this category (despite the fact that prices are now at a level considerably higher than
they were in 2006), and suppliers still try to avoid increasing pack prices by reducing portion weights instead. The
standard 8-portion pack has very quickly been down-sized from 140g to 128g and now 120g.

Consumption of triangles is expected to grow by an annual rate of around 2% during the forecast period to reach 22,100
tonnes by 2013.

Consumption of slices in the Kingdom is estimated at 5,350 tonnes in 2008, up from 4,325 tonnes in 2004. In value
terms this is equivalent to around US$ 46 million at retail level, or just over 7% of the total value of the processed
cheese sector. While volumes grew 7% over 2007, market value recorded very little growth. Prices of cheese slices
declined 6% in 2008 after an increase of 34% in the previous year. Cheese slices are used widely in the food service
sector as sandwich fillings or accompaniments to hamburgers. As such, growth is much stronger in the food service
sector than for consumption at home. They are of course often used as sandwich fillings in packed lunches for younger
children.

Again, this is a very price sensitive sector, with branding of lessening importance. A significant share of sales, possibly as
much as half, can be considered as primarily price-driven while, in the quality sector, brands such as CHESDALE,
ANCHOR, ALMARAI, KRAFT and LA VACHE QUI RIT still command a premium. The sector is also heavily promoted at
different times of the year, in particular at back-to-school times.
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Estimates of how sliced cheese consumption breaks down between catering and domestic users vary considerably from
supplier to supplier. The main difficulty in making an accurate estimate is that much of the catering volume is purchased
through retail and wholesale channels and not directly from suppliers. In 2008, our best estimate is that close to two
thirds of volume is consumed in the home (say 3,500 tonnes). Unwrapped slices (i.e. Easy-Pic) are used by smaller
restaurants and sandwich bars, although these will never be an option for very small outlets as the smallest loaf
consists of 150 slices. If an outlet uses less in a day, wastage of unused slices makes them impractical.

After some disruption to the supply of slices during 2006 as a result of Fonterra moving distributor, supply did bounce
back as expected during 2007. Demand is forecast to reach approximately 6,990 tonnes by 2013, equivalent to an
annual average growth rate of 5.5%. Strong growth in foodservice will help drive the market, as will increased levels of
marketing activity by a number of key existing suppliers.

Blocks are mostly used in food service establishments for grating and other cooking applications and to a lesser extent
in the home. The majority of blocks (perhaps 60%) are sold via the wholesale market to cafs and small restaurants
where they are mainly used to make sandwiches for labourers. Blocks are low-priced products and appeal mainly to
price-conscious consumers. However, prices of blocks have increased 34% in 2007 and a further 15% in 2008. In 2008
the market is estimated at 3,800 tonnes, worth just over US$ 28 million in value terms. Consumption is forecast to
reach 4,410 tonnes by 2013, driven mainly by additional demand from the food service sector.


The following table examines the breakdown of processed cheese supply between local and imported brands during the past five
years.

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Table B117: Processed Cheese, Local vs Imports, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 19,850 22,400 26,000 27,800 30,700 11.5% 15.4% 12.8% 16.1% 6.9% 10.4%
Imports 43,025 44,110 45,195 50,160 48,550 3.1% 3.0% 4.0% 2.5% 11.0% -3.2%
Total 62,875 66,510 71,195 77,960 79,250 6.0% 6.6% 5.8% 7.0% 9.5% 1.7%


Share of Total (%)
2004 2005 2006 2007 2008
Local 32% 34% 37% 36% 39%
Imports 68% 66% 63% 64% 61%
Total 100% 100% 100% 100% 100%
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Key Points:

Local production of processed cheese now takes place in six locations in Saudi Arabia:

Halwani in Jeddah
Almarais Al Kharj plant
Arla (Danya) in Riyadh
United Groups plant in Dammam, in which Lactalis made a substantial investment in 2005
the Fonterra/SADAFCO joint venture plant in Dammam
and, since February 2005, the Forsan factory in Riyadh (FORSANA sliced cheese)

In 2008 these six plants supplied an estimated 30,700 tonnes of processed cheese for consumption in Saudi Arabia, or
39% of total consumption. This is a substantial increase from 2004 when just 19,850 tonnes, or 32% of consumption
were locally produced. Imports recovered somewhat during 2007 as Arla returned to the market. However, steeper price
increases for imported products and stronger growth by local brands such as Almarai resulted in an increased share for
locally sourced products. Regional sourcing is likely to receive a significant boost with Krafts new Bahrain factory now in
operation.
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Table B118: Processed Cheese, Overall Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 18.9% 20.1% 24.8% 24.7% 26.9%
Fromageries Bel 25.6% 25.0% 24.5% 23.7% 22.9%
Kraft 18.9% 18.5% 20.3% 19.4% 18.7%
Arla 17.4% 17.2% 11.5% 14.8% 12.8%
United Group 6.0% 6.4% 5.6% 5.3% 7.5%
Fonterra 3.5% 2.9% 2.2% 1.2% 1.1%
Others 9.8% 9.7% 11.1% 11.0% 10.2%
Total 100% 100% 100% 100% 100%

Total (Tonnes) 62,875 66,510 71,195 77,960 79,250
Key Points:

From the adjacent table, the re-shuffle in brand
shares instigated by the Danish boycott in 2006 is
apparent. Arla lost significant share whilst Almarai
and Kraft were the main beneficiaries of Arlas
demise. Arla has not been able to reverse the
generally downward trend, standing at 12.8% in
2008.

During 2008, Almarai has further increased its
market share with its strategy of aggressive
pricing, whereas both Fromageries Bel, Kraft and
Fonterra have lost some share. United Group has
however gained market share.

Overall, while Almarai gained 8% from 2004 to
2008, Fromageries Bel & Arla have together lost
7.3% in the same period.
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Table B119: Processed Cheese in Cans, Brand Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Kraft 64% 63% 62% 63% 62%
Almarai 27% 30% 31% 29% 28%
Cigalah (MELKA) 5% 4% 3% 4% 4%
Arla - - 0% 1% 3%
Fonterra 2% 0% 0% 0% 0%
Others 1% 4% 3% 3% 3%
Total 100% 100% 100% 100% 100%

Total (tonnes) 7,000 6,750 6,825 7,050 6,000

Key Points:
KRAFT continues to dominate the sector with a 62% market
share. Distributed by Gulf Trading Company (Olayan) and
Al Gosaibi Cold Stores, KRAFT is found at all levels of the
trade and is particularly well represented in the smaller
groceries and bagalas.
ALMARAI, lies in second place with a 28% share in 2008 -
down 3% on 2006.
Thereafter, Cigalahs MELKA is the most important with a
4% share of supply in 2008.
Others now includes Arlas PUCK (since 2007) as well as
its THREE COWS brand. The remainder of others supply
divides among a number of brands such as NFICs BUSTAN
(mainly for export), UFICs PRIDE and Australian brand
BEGA (which Cigalah has distributed since 2003). NFIC has
also supplied LUNA in the past though no cans are sold
currently. The aforementioned brands are not regularly
available and are only encountered in the market
intermittently.
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Table B120: Processed Cheese in Jars and Tubs, Supplier/Brand Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 24% 26% 33% 33% 37%
Kraft 29% 29% 32% 29% 29%
Arla 37% 37% 23% 29% 19%
Halwani 4% 4% 4% 3% 1%
Fromageries Bel 2% 1% 1% 1% 1%
Others <5% <5% 6% 5% 13%
Total 100% 100% 100% 100% 100%

Total (tonnes) 24,225 26,250 29,925 34,460 36,300

Key Points:
Arla led the jars sector until 2005 - its PUCK, POWER COW
and MD brands between them accounting for 37% of
supply. In 2006, it fell to third position with a 23% share -
as a direct result of the boycott. Almarai and Kraft were
quick to benefit and, whilst Almarai further increased its
lead in 2007 and 2008, Kraft grew in volume terms but
returned back to 29% share. Both companies have made
major investments in processing capacity Krafts Bahrain
facility is now operational. Krafts share figure includes
PHILADEPHIA tubs which accounts for close to three-
quarters of tubs supply, with PUCK accounting for most of
the remainder.
Brands included under the Others category accounted for
a much higher 13% of supply. These include PRESIDENT,
LUNA, KIRI AL JARRA, NADA, HALWANI, NADEC, NAJDIYAH
etc. With Saudi consumers apparently displaying more
nationalistic loyalties than before, such brands may carve
out a long term foothold in the market.
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Table B121: Processed Cheese in Square Portions, Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Fromageries Bel 85% 87% 90% 88% 88%
Arla 13% 12% 9% 9% 6%
Others 2% 1% 1% 3% 6%
Total 100% 100% 100% 100% 100%

Total (tonnes) 6,450 6,860 7,095 7,685 7,700

Key Points:

For several years Fromageries Bels dominance of the
square portions market has looked unassailable -
maintaining an 80%+ share in each of the last five years,
and peaking at 90% in 2006. KIRI has lost some share
thereafter and is now at 88%.

Arla (PUCK and POWER COW) has been declining since
2006, and now accounts for 6% share. Both Arla brands
are manufactured at the plant in Riyadh while KIRI is
imported (from Poland and France). One of the key
differences between the two suppliers traditionally has
been Fromageries Bels depth of distribution. Arla focuses
more at the top end of the trade.

Other brands include ALMARAI launched in December
2006, and which has been growing strongly.
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Table B122: Processed Cheese in Triangle Portions, Supplier/Brand Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Fromageries Bel 56% 56% 55% 55% 54%
Almarai 18% 19% 22% 21% 24%
Arla 6% 5% 4% 4% 0%
Entremont 8% 7% 4% 0% 0%
Others 12% 13% 15% 20% 22%
Total 100% 100% 100% 100% 100%

Total (tonnes) 17,400 18,375 19,025 20,065 20,400



Key Points:
Fromageries Bel is the leading triangles supplier, accounting
for 54% of the market between its LA VACHE QUI RIT and
REGAL PICON brands. This is down on its 56% share in 2004
due to increased competition. Since 2006, both brands are
sourced mainly in Egypt which offers shorter delivery lead
times than Poland, Morocco or France.
Locally produced ALMARAI has increased its share of supply
but remains well behind Bel.
Entremont (BOY/ACHBAL) were not encountered during 2008
and are now believed to have been withdrawn from the
market.
Arla has lost share due in part to the delisting of the
POWERCOW brand in 2003, with a further hit in 2006 as a
result of the boycott. PUCK was not encountered during 2008
is now believed to be withdrawn from the market.
Others comprise a wide range of brands, many of which are
imported from Egypt (mainly 120g size). Brands include
HAPPYLAND, GREEN RAWDA, DONA brands, YASMIN, NADA,
NAJDIYAH, TEAMA, MEKANO and so on. Egyptian brands are
growing in importance, particularly at the bottom end of the
market.
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Table B123: Processed Cheese Slices, Brand Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
Almarai 22% 23% 28% 33% 34%
UFIC (PRIDE) 24% 25% 24% 23% 22%
Fonterra 30% 26% 20% 10% 12%
KRAFT 7% 7% 7% 7% 7%
Fromageries Bel 8% 6% 7% 7% 2%
Others 9% 14% 14% 20% 23%
Total 100% 100% 100% 100% 100%

Total (tonnes) 4,325 4,575 4,700 5,000 5,350
Key Points:
The sliced cheese sector has further consolidated with the
three leading companies Almarai, United Group and
Fonterra, between them accounting for over 68% share in
2008, compared to 66% in 2007. Fonterra regained some
lost ground in 2008 (it had a difficult year in 2006 as a
result of changing distributor from Binzagr to IATCO).
Fonterra supplies the CHESDALE, ANCHOR, VALUMETRIC
and FALCON brands.
Almarai is now the number one supplier with 34% followed
by United Group, now Lactalis (PRIDE/PRESIDENT), with a
further 22%. Much of the PRIDE volume is supplied through
the wholesale market to small restaurants and other
catering establishments in retail packs. Unbranded sales to
larger foodservice accounts have been included under
others. PRESIDENT slices were launched in late 2006.
KRAFT and LA VACHE QUI RIT account for a further 7% and
2% respectively. Others has increased due to strong growth
in food service accounts.
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Table B124: Processed Cheese in Blocks, Supplier Shares, 2004-2008

Supplier Shares (%)
2004 2005 2006 2007 2008
UFIC (PRIDE) 72% 74% 69% 70% 74%
Friesland (VONK) 9% 8% 10% 9% 11%
Fonterra 14% 13% 12% 11% 5%
Others 5% 5% 9% 9% 10%
Total 100% 100% 100% 100% 100%

Total (Tonnes) 3,475 3,700 3,625 3,700 3,800

Key Points:
United Group dominates the market with an estimated
74% of the sector in 2008. Significant quantities of
PRIDE blocks are sold through non-retail channels.
Following the relaunch of ANCHOR in a 1.7 kg size in
2003 (previously 2 kg), Fonterras share grew to 30%
in that year, however has since then fallen to 5%.
Frieslands VONK (distributed by Sunbulah) accounts for
a further 11% of supply, with others (FRICO, KRAFT,
KIRI CHER etc) comprising the remaining 10% of
supply. KIRI CHER is a cream based white block.
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-
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As can be seen from the chart, international cheese prices are again trending downward after peaking in late-2007. This, combined
with a strengthening dollar (versus the Euro) during 2008 supported prices at retail level. Table B125 which follows, examines how
prices of selected SKUs have developed over the past five years.

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It can be seen that international cheese prices had spiralled upwards during 2007 - from US$ 2,900 early in the year to US$ 5,800
per tonne at the years conclusion
1
. This represented a doubling of the price during the year and, unlike in the cases of milk powders
and butter, cheese didnt experience some price reversion towards year end. Indeed it wasnt until mid to late 2008 that prices
reduced appreciably, finishing the year off at approximately US$ 3,500 per tonne.

Table B125 which follows, examines how prices of selected SKUs have developed over the past five years.

Table B125: Processed Cheese, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price
2004 2005 2006 2007 2008
Cans
KRAFT 226g 5.95 5.95
5.50
(200g)
7.25 7.00
113g 3.50 3.50 3.75 4.75 4.50
Jars/Tubs
PUCK 910g 17.50 17.50 19.25 26.95 22.50
240g 7.50 7.50 7.95 10.95 -
140g 4.95 4.95 5.25 N/A 5.25
200g (tub) 6.95 6.95 7.00 N/A -

1
Cheddar
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Table B125: Processed Cheese, Reference Brands Selected SKU Pricing, 2004-2008 (continued)

Normal Retail Price
2004 2005 2006 2007 2008
Square Portions
PUCK 324g (18 no.) 7.95 7.95 8.00 12.50 N/A
KIRI
1
240g (12 no.) 6.95 6.50 6.50 8.25 8.00
120g (6 no.) 2.95 3.50 3.25-3.50 4.50 4.00
Triangles
ALMARAI 384g (24 no.) 7.00 6.00 6.00 9.00 9.00
256g (16 no.) 4.00 4.00 4.00 6.75 6.00
128g (8 no.) 2.00 2.00 2.00 3.25 3.00
VACHE QUI RIT
2
535g (32 no.) 11.25 11.50-11.75 11.70 14.50 14.25
400g (24 no.) 8.25 8.50 7.50 10.95 10.95
REGAL PICON
3
400g (24 no.) 7.00 (384g)
6.75-7.00
(384g)
6.00 (384g) N/A 10.75
280g (16 no.) 5.00 (256g) 5.00 (256g) 5.00 (256g) N/A 8.00

1
KIRI 240g downsized to 216g and 120g to 108g in 2008
2
VQR 400g downsized to 360g and 535g downsized to 480g in 2008
3
PICON 256g downsized to 240g and 384g downsized to 360g in 2008
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Table B125: Processed Cheese, Reference Brands Selected SKU Pricing, 2004-2008 (continued)

Normal Retail Price
2004 2005 2006 2007 2008
Slices
ALMARAI 200g (10 no.) 6.50 6.75 5.50 6.95 7.00
500g (24 no.) 11.00 11.75 11.95 15.95 14.00


Key Points:

From the above tables, it is evident that retail prices did not return to 2006 levels in 2008 after the increases in 2007.
Prices have been reduced for some products, however, for some others packs have been downsized. While cheese now
has a permanent role in the local diet of the population, the large increases incorporated in 2007 have pulled down
growth in 2008. Suppliers cost structures are becoming more difficult to fathom as there has been switching of sourcing
and, indeed, moves by some to bring production in-house. What is undeniable, however, is the impact that increases in
world prices for animal feedstuffs, energy and other factors of production, have had upon suppliers margins - and the
consequent need for cost increases to be passed on to the consumer.

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Table B126: Processed Cheese, Five-Year Detailed Forecasts, 2008-2013

Tonnes Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Cans 6,000 6,030 6,060 6,090 6,120 6,150 0.5% 0.5% 0.5% 0.5% 0.5%
Jars/ Tubs 36,300 38,200 40,100 42,000 44,000 46,000 5.2% 5.0% 4.7% 4.8% 4.5%
Square
portions
7,700 7,860 8,020 8,170 8,320 8,470

2.1% 2.0% 1.9% 1.8% 1.8%
Triangles 20,100 20,500 20,900 21,300 21,700 22,100 2.0% 2.0% 1.9% 1.9% 1.8%
Slices 5,350 5,670 5,980 6,300 6,640 6,990 6.0% 5.5% 5.4% 5.4% 5.3%
Blocks 3,800 3,910 4,030 4,150 4,280 4,410 2.9% 3.1% 3.0% 3.1% 3.0%
Total 79,250 82,170 85,090 88,010 91,060 94,120 3.7% 3.6% 3.4% 3.5% 3.4%


Key Points:

Processed cheese consumption is forecast to grow by an average annual rate of 3.5% per annum over the next five years
to reach 94,120 tonnes by 2013.

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Tables B127 and B128 summarise how consumption of white cheese has moved during the period 2004-2008 in both volume and
value terms.


Table B127: White Cheese By Type, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Feta/Danish White 33,500 37,750 37,500 41,600 39,500 11.7% 12.7% -0.7% 10.9% -5.0%
Other 3,600 3,700 3,900 4,040 4,190 2.9% 2.8% 5.4% 3.6% 3.7%
Total 37,100 41,450 41,400 45,640 43,690 10.7% 11.7% 0.1% 10.2% -4.3%


Table B128: White Cheese, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Feta/Danish White 125.0 145.0 142.0 213.0 200.0 14.4% 16.0% -2.1% 50.0% -6.1%
Other 13.8 14.6 15.5 22.5 23.0 7.8% 5.8% 6.2% 45.2% 2.2%
Total 138.8 159.6 157.5 235.5 223.0 13.7% 15.0% -1.3% 49.5% -5.3%
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Key Points:

The white cheese sector is notoriously difficult to quantify for a number of reasons. Most importantly, trade statistics are
considered unreliable, given that most European so-called Feta is in fact vegetable fat based analogue and is not
described as Feta in the trade statistics but under the Food Preparations catch all. Also, a significant portion of the
market is packaged in 16 kg tins and supplied via non-retail channels to catering and foodservice accounts (as much as
two thirds of supply according to some sources) i.e., this is essentially a commodity market, with branding relatively
unimportant.

Based on IMES research, the market for white cheese is estimated at some 43,690 tonnes in 2008, worth some US$
223 million. The market recorded a considerable increase in value relative to volume because of significant price hikes
during 2007. Prices have come down only marginally in 2008. While consumption grew strongly to 2005, there was a
significant slowdown in 2006 as the boycott of Danish products took hold. Growth resumed in 2007, but the market has
not been able to sustain volumes in 2008 at high price levels, resulting in a decline in consumption by more than 4%.

Overall consumption of feta has grown at an average annual rate of 4.2% over the period. Feta cheese still accounts for
90% of total white cheese consumption. There are wide differences in the taste and texture of cheeses labelled as Feta,
and names such as Domyati and Double Cream are applied with little discrimination. The distinction between Domyati
and standard Feta is particularly difficult to justify and it is perhaps more practical to define Fetas by their region of
origin. Danish Fetas, or rather, Danish White Cheese made by the ultra-filtration method, continue to fill the role of
standard, every day product. However in recent years, rising prices and the strength of the Euro have encouraged
importers to seek alternative supply sources such as Egypt, and indeed Saudi Arabia itself.
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Cheeses included under the Others category include Akkawi and Halloumi, accounting for around 990 tonnes and 930
tonnes respectively in 2008. Akkawi is mostly used in catering and pastry shops and is an important ingredient in
Kunafa, which is popular during Ramadan. Halloumi cheese is traditionally sourced from Cyprus. The cheese is very
versatile in cooking and is flavoured with fresh mint. The remainder of supply include cottage cheese and other short-life
white cheeses, Egyptian recipe cheeses such as Mich, Ariche and Egyptian loose salted cheese, and Levantine types such
as Shellal and Nabulsi.

Table B129: White Cheese, Local vs Imports, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 CAGR 2004 2005 2006 2007 2008
Local 7,500 9,000 10,750 11,800 12,200 12.9% 36.4% 20.0% 19.4% 9.8% 3.4%
Import 29,600 32,450 30,650 33,840 31,490 1.6% 5.7% 9.6% -5.5% 10.4% -6.9%
Total 37,100 41,450 41,400 45,640 43,690 4.2% 10.7% 11.7% 0.1% 10.2% -4.3%

Share of Total (%)
2004 2005 2006 2007 2008
Local 20% 22% 26% 26% 28%
Import 80% 78% 74% 74% 72%
Total 100% 100% 100% 100% 100%
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Key Points:

Some 31,490 tonnes of white cheese, or 72% of consumption, are imported by numerous cold stores. Two of the most
important of these are Al Munajem in Riyadh and Abbar and Zainy Cold Stores in Jeddah. Feta (all types) is sourced
mainly from Europe (predominantly Denmark) with some also sourced in Egypt; Halloumi is sourced from Cyprus;
Akkawi from the Czech Republic and the Levant while fresh and other white cheeses are imported mainly from Egypt,
Lebanon, Turkey and Syria.

SADAFCO supplies locally produced feta (approximately 60% of it in 16kg cans) and indeed is the dominant local supplier
of white cheese accounting for more than 40% of local product (sold locally) in 2008. Other local brands include NADEC,
ANCHOR, ALMARAI, and HALWANI, with Al Hana, Afandi, Badr, Astra Farms and Jamjoom Foremost supplying other
white cheeses. Like SADAFCOs SAUDIA feta, Fonterras ANCHOR brand is manufactured by SNZMP the
SADAFCO/Fonterra joint venture facility in Dammam.

One consequence of the rising cost of imported feta is that the local product is more competitive. Local white cheese
share of market has increased from 20% in 2004, to 28% in 2008. Local producers received a significant boost in early
2006 with the consumer boycott of Danish products.
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Table B130: White Cheese, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price
2004 2005 2006 2007 2008
THREE COWS Feta 500g Extra Creamy 7.95 8.00-8.25 8.10-8.25 11.25 10.75
Feta 500g
Egyptian flavour
7.95 8.00-8.25 8.10-8.25 11.25 10.75
ALMARAI Feta 500g Aseptic carton - - 7.75-8.00 10.95 10.00
ALMARAI Feta 200g Aseptic carton - - 3.50-4.00 5.95 5.50


Key Points:

From the table it is apparent that Feta prices have increased significantly (35%+) during 2007, but have only marginally
declined in 2008.
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Table B131: White Cheese, Five-Year Detailed Forecasts, 2008-2013


Tonnes
Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Feta 39,500 41,300 43,050 44,820 46,570 48,300 4.6% 4.2% 4.1% 3.9% 3.7%
Other 4,190 4,320 4,440 4,560 4,680 4,800 3.1% 2.8% 2.7% 2.6% 2.6%
Total 43,690 45,620 47,490 49,380 51,250 53,100 4.4% 4.1% 4.0% 3.8% 3.6%


Key Points:

Consumption of white cheese is forecast to grow at just about 4.0% per annum to 2013, by which time the market will
reach 53,100 tonnes. Feta will grow at a slightly faster rate than other white cheese types, driven by a buoyant economy
and strong catering/foodservice sales.
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This category covers the harder, yellow, natural cheeses made to Western recipes but also the softer French types, South East
European Kashkeval and the increasingly important Mozzarella, which has come from nowhere in the last ten years and now
dominates supply. Tables B132 and B133 summarise how consumption of mature natural cheese has moved during the period 2004-
2008.

Table B132: Natural Cheese By Type, Tonnes, 2004-2008

Tonnes Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Mozzarella 6,500 6,950 7,450 7,935 7,850 4.0% 6.9% 7.2% 6.5% -1.1%
Others 1,800 1,850 1,915 1,985 1,960 2.9% 2.8% 3.5% 3.7% -1.3%
Total 8,300 8,800 9,365 9,920 9,810 3.8% 6.0% 6.4% 5.9% -1.1%

Table B133: Natural Cheese, Retail Value, 2004-2008

US$ million Growth (%)
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Mozzarella 47.0 55.3 59.5 82.4 80.8 8.5% 17.6% 7.7% 38.5% -1.9%
Others 13.0 14.7 15.0 20.2 19.7 6.6% 13.0% 2.1% 34.7% -2.5%
Total 60.0 70.0 74.5 102.6 100.5 8.1% 16.6% 6.5% 37.7% -2.0%
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Key Points:

Saudi Arabian supermarkets display a wide selection of natural cheeses sourced from Europe, Australasia and the
USA. With the exception of Mozzarella and Kashkeval, mature natural cheeses are rarely found outside of the larger
supermarkets. Consumption of traditional mature cheeses has yet to be taken up in any significant way by the local
population. There is no tradition in Saudi Arabia of eating cheese at the end of a meal.

The market has grown at an average annual rate of 4.3% per annum since 2004 to reach 9,810 tonnes in 2008. This
is worth an estimated at US$ 101 million at retail price level although a significant share of the Mozzarella volume is
of course used in food service accounts. The market recorded a 1% decline in volumes in 2008. This coupled with a
marginal decline in prices resulted in a 2% decline in market value.

Retail Mozzarella is estimated to have reached 3,600 tonnes in 2008, with 70%+ supplied in shredded form. Previously,
retail packs were mainly small in size, i.e. 200g/250g for both Mozzarella blocks and bags of shredded cheese. Now,
larger sizes are commonplace - going up to 2 kg for bags and the standard 2.2-2.3 kg Mozzarella block. Low fat variants
are also available.

The remaining 4,250 tonnes of Mozzarella is consumed in the form of toppings on pizzas and toast bread as well as in
other catering applications. A large part is sold to bakeries in the form of blocks. These use low cost labour to shred it on
the premises and use it to produce melted cheese toast snacks. Traditionally, Danish Mozzarella was preferred because
of its high elasticity though this appears to be no longer a major issue as supply from other sources (including local)
increases. The bulk of the remainder is channelled through specialist pizza outlets such as Pizza Hut, Dominos, Pizza Inn
etc. Some of the larger chain outlets can consume as much as 20 tonnes of Mozzarella per annum. For use on pizzas,
IQF (Instant Quick Frozen) shredded Mozzarella is preferred as it sprinkles more easily than ordinary grated Mozzarella.
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The following table is IMES best estimate of how the different mozzarella forms have developed over the past five years. The
historical breakdowns should be considered indicative only:


Table B134: Mozzarella, Estimated Breakdown by Type, 2004-2008

Tonnes
2004 2005 2006 2007 2008
Total Retail 3,000 3,250 3,500 3,800 3,600
- Retail Block 1,050 1,100 1,150 1,210 1,080
- Retail shredded 1,950 2,150 2,350 2,590 2,520
Non-retail 3,500 3,700 3,950 4,135 4,250
Total Mozzarella 6,500 6,950 7,450 7,935 7,850


The most important other variety is Cheddar with consumption estimated at some 775 tonnes, followed by Dutch
types at 360 tonnes and Kashkeval at 300 tonnes. Volumes should be regarded as indicative however. The exact
breakdown is difficult to ascertain due to:

substantial use of natural cheese in the production of processed cheese, none of which is shown as cheese
for processing by the exporting countries
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non-separation of mozzarella in the trade statistics (recorded under fresh, unripened cheeses)
fragmented structure of the natural cheese importing sector (cold stores, supermarkets, manufacturers, etc)

A wide range of other cheese varieties is imported for sale to hotels and top retail stores.

Forsan is the only company in Saudi Arabia (and in the GCC) to manufacture Mozzarella, though a number of
companies import bulk product for repacking and shredding. Forsan uses imported pasteurised milk curd, and the
majority of production is supplied to foodservice (mainly 1 kg blocks), capitalising on its longstanding contacts from its
main meat supply business. Sunbulah has shredding equipment and repacks significant quantities of Mozzarella at its
plant in Jeddah, although no local production takes place. Similarly, Arla began to shred and pack Mozzarella at its
Danya plant in Riyadh in 2000 and is now a major supplier. Other companies shredding include Almarai and NADEC.
Mozzarella is mainly imported from Europe while cheddar is now sourced mainly from New Zealand. In the recent
past, European exports have been hit by a combination of the strong Euro, falling export subsidies and, of course, by
the Danish boycott in 2006.
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Table B135: Natural Cheese, Reference Brands Selected SKU Pricing, 2004-2008

Normal Retail Price
2004 2005 2006 2007 2008
ALMARAI Mozzarella Shredded
500g
17.75-17.95 17.00 17.95 23.50 22.50
ALMARAI Mozzarella Shredded
200g
7.95-8.75 7.95-8.75 7.75 9.75 9.00
THREE COWS Mozzarella Shredded
200g
7.25 7.00 7.75 9.95 9.00
SUNBULAH Mozzarella Shredded
500g
17.95 15.95 16.75 21.95 -
SUNBULAH Mozzarella Shredded
200g
8.75 5.75-6.95 6.50 7.95 -


Key Points:

Natural cheese prices had been slowly creeping upwards as suppliers passed on rising costs of dairy ingredients and
(for the significant volumes originating in the Euro zone) adverse exchange rate movements through to the consumer;
in 2007, rising world dairy prices boosted these into an even higher orbit. From the table, year-on-year increases of as
much as +30% are evident in 2007. In 2008, there was only a marginal reduction in retail prices.
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Table B136: Natural Cheese, Five-Year Detailed Forecasts, 2008-2013


Tonnes
Growth (%)
2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Mozzarella 7,850 8,280 8,720 9,170 9,610 10,070 5.5% 5.3% 5.2% 4.8% 4.8%
Other 1,960 2,020 2,080 2,140 2,200 2,260 3.1% 3.0% 2.9% 2.8% 2.7%
Total 9,810 10,300 10,800 11,310 11,810 12,330 5.0% 4.9% 4.7% 4.4% 4.4%


Key Points:

Natural cheese consumption will grow by some 4.7% per annum on average to reach 12,330 tonnes in 2013.
Mozzarella will grow at the faster rate of almost 5.1% per annum to 10,070 tonnes in 2013, or 82% of consumption,
helped by a buoyant economy and an expanding foodservice sector.

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Importer Liquid Canned Chilled Comments
Large trading houses
General Trading Co (Olayan)
PO Box 593
Riyadh 11421
Tel: (1) 233 3111
Fax: (1) 232 9613
Web site: www.olayan.com

KRAFT cheese (West)
FRIENDSHIP sterilised
cream/milk powder

Full range of KRAFT
processed cheese (West)
FRIENDSHIP (Uhrenholdt)
processed cheese,
Mozzarella butter and Feta
Entremont French cheese
eg, BOY and AL ACHBAL.
EMBORG cheese (Denmark)
BOY processed cheese
(France)
Traditional importer of
General Foods in KSA.
Now also partly
responsible for KRAFT
cheese following
acquisition of AET. K A Al
Gosaibi is the other KRAFT
distributor. Group has
Burger King franchise in
Saudi Arabia (and the
master franchise for most
of the Arab Middle East)
and Hagen-Dazs
Abbar & Zainy Cold Stores
PO Box 2495
Jeddah 21451
Tel: (2) 637 1315
Fax: (2) 637 3012

FROMAGERIES BEL
butter ghee
LURPAK packet butter
(Denmark). Also bulk
butter. FROMAGERIES BEL
cheese (France, Poland)
DANLAND and GOLDEN
DANE feta (Denmark)
Hungarian Feta and HAJDU
kashkeval
VALBRESO cheese (France)
Also importing various
other Dutch, Danish,
Cypriot and Czech natural
cheeses. Has introduced
its own brand (ZAINA) for
feta, butter and akkawi
Abbar & Zainy Food Co. Ltd
PO Box 5700
Jeddah 21432
Tel: (2) 647 4000
Fax: (2) 647 0860
E-mail: abzyfood@abbar-zainyfood.com
FRANCE LAIT milk
powder (France)
REGILAIT milk powder
(France)
Note: Abbar & Zainy owns
the Star Markets retail
operation and is also a
shareholder in Al Aziziah
Dairy in Riyadh.
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Importer Liquid Canned Chilled Comments
Large trading houses continued
Abbar & Zainy
Food Supply & Services Company
PO Box 6319
Jeddah 21442
Tel: (2) 627 4912 / 627 4915
Fax: (2) 627 4917
TUXFORD natural cheese
(Ireland)
KOLIOS cheese (Greece)
PARMALAT cheese
Formerly the US Beef
Division of Abbar & Zainy.
Important supplier to food
service sector, in
particular 4 - 5 star
hotels.
Basamh Trading Co
PO Box 427
Jeddah 21411
Tel: (2) 660 6668
Fax: (2) 660 1544
Nestl milk powder
(NIDO), and canned
cream (Netherlands).
GOLDEN CHURN canned
butter (New Zealand)
Other Nestl products
handled by GTC Olayan
(confectionery), Arcoma
(BONNY concentrated milk
and KLIM retail milk
powder).
Khalifa Abdul Rahman
Al-Gosaibi Cold Stores
PO Box 222
Dammam 31411
Tel: (3) 868 1442
Fax: (3) 868 1515
KERRYGOLD milk
powder
KRAFT cheese in the
Eastern and Central regions
(Australia, Germany)
KERRYGOLD butter/
cheese (Ireland)
GTC Olayan is responsible
for KRAFT cheese in the
West.

Nashar Trading Co
PO Box 6697
Jeddah 21452
Tel: (2) 644 0202 / 669 2878
Fax: (2) 642 9879 / 660 8011
www.nashar.com
GOLDEN CROWN
sterilised cream
(Netherlands)
FARM GHEE
(Netherlands)
FARM butter (KSA packed)
GOLDEN CROWN tub cream
(Germany)


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Importer Liquid Canned Chilled Comments
Large trading houses continued
Yousef Ahmed Algosaibi
Trading Est.
PO Box 5540
Dammam
Tel: (3) 826 3457/3731
Fax: (3) 827 3415
FRIENDSHIP sterilised
cream
HOCHLAND processed
cheese (Germany)
Egyptian triangles (DONA
and GREEN RADWA
brands) and Domyati
cheese
FRIENDSHIP cream, butter
and Feta cheese

Cigalah Trading
PO Box 19435
Jeddah 21435
Tel: (2) 629 0000 / 640 1621
Fax: (2) 629 0040
COAST milk powder
(Netherlands and
Germany)
COW GHEE
Singapore/Malaysia)
MELKA and BEGA canned
cheese (Australia)
COAST evaporated milk
and MELKA sterilised
cream discontinued
Cold store importers
Abdullah Al Munajem
PO Box 2395
Riyadh 11451
Tel: (1) 478 7933
Fax: (1) 476 4318
LURPAK butter (Denmark)
PRESIDENT butter (France)
THREE COWS feta and
mozzarella (Denmark)
CHRISTIS Halloumi
(Cyprus)
PRESIDENT cheese
LKER labneh (Turkey)

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Importer Liquid Canned Chilled Comments
Cold store importers continued)
Saudi Cold Storage Co
PO Box 5507
Jeddah 21432
Tel: (2) 647 0643
Fax: (2) 647 4016
CREAM TWO Feta
(Denmark), Mozzarella
Various Nordex cheeses
(Denmark)
FRANCEPAC packet butter
Bulk butter
Mainly West
Halwani Bros
PO Box 690
Jeddah 21421
Tel: (2) 636 6667
Fax: (2) 637 6667
www.halwani.com

White and natural cheeses
(Hungary, Bulgaria,
Cyprus)

Now 80% owned by the
Dallah Group but
operating independently.
Supplying a broad range of
food products with
distribution mainly
through the top end of the
retail trade. Some local
production of dairy
products (HALWANI and
AL FALLAHA brands)
Islam Commercial Enterprises
PO Box 449
Jeddah 21411
Tel: (2) 688 5282
Fax: (2) 680 9445
BACHIVAN white cheese
and kashkeval (Turkey)
GALBANI fresh cheeses
(Italy)
PIEFFE parmesan (Italy)
Mainly food service with
some top end retail
distribution
Shinawani Co
PO Box 5394
Riyadh
Tel: (1) 406 8756
Feta (Denmark/Czech
Republic)
HAPPY CAMEL Akkawi
(Czech Republic)
Nabulsi (Jordan)

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Importer Liquid Canned Chilled Comments
Other importers
Arcoma
PO Box 811
Jeddah 21421
Tel: (2) 644 4212
Fax: (2) 642 0975
www.arcoma.com
BONNY canned,
sterilised
Flavoured milk
(Netherlands)
BONNY evaporated
milk
KLIM milk powder

BONNY brand now owned
by Hochwald.
BONNY powder now
discontinued.
Hamed A Kh. Al Ghamdi Co.
(Almawasim)
P.O. Box 5370,
Dammam 31422
Tel: (3) 834 1256
Fax: (2) 8349660
ALMAWASIM milk
powder

Al Qahtani & Sons
PO Box 20
Dammam 31411
Tel: (3) 826 1477
Fax: (3) 826 9894
FRISIAN FLAG
evaporated milk and
milk powder (Holland)

Saeed Ahmed Almahroos &
Sons Company
PO Box 354
Dammam 31411
Tel: (3) 832 8405
Fax: (3) 833 5495
GOLDEN CHAIR
Canned butter
(Australia)
RAINBOW evaporated
milk and milk powder
(Holland)
OMELA evaporated
milk

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Importer Liquid Canned Chilled Comments
Other importers continued
Fast Food Marketers Co
PO Box 59855
Riyadh 11535
Tel: (1) 241 5072
Fax: (1) 241 3555
Mozzarella (USA)
Processed cheese slices
(USA)
A specialist supplier to the
food service sector. Not
linked to the well-known
US food service company
FFM, although most of its
supplies are sourced
there.
Basamh Marketing Est.
PO Box 16362
Jeddah 21464
Tel: (2) 660 4512 / 667 5180 /
660 8319
Fax: (2) 667 1028
AL ALALI milk powder
(Denmark value
added recipes only)
Sterilised cream
(Denmark),
Butter ghee
(Malaysia)

Arrow Marketing and Distribution
PO Box 5981
Jeddah 21432
Tel: (2) 631 9123 / 630 0184
Fax: (2) 632 0960
ELLE & VIRE UHT cream Fromageries Picon triangle
portions (Morocco, Poland)

Arabian Trading Supplies (formerly
under Arabian Food Supplies)
PO Box 15694
Jeddah 21454
Tel: (2) 660 6408
Fax: (2) 660 7832
www.ats-ksa.com
FALCON processed
cheese (Australia)
FALCON processed and
natural cheese (Australia)
MARS ice cream (Europe)
PINAR Labneh (Turkey)
Will be taking on BEGA
cheese in place of FALCON
during 2008. Also supply
MARS range of flavoured
milks produced under
contract in Saudi Arabia.
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Importer Liquid Canned Chilled Comments
Other importers continued
Family Food Supply Co
PO Box 317
Al Khobar
Tel: (3) 857 9622
SAFETY milk powder
(Netherlands)

Omar Ali Balsharaf Est
PO Box 31116
Riyadh
Tel: (1) 439 2222
Fax: (1) 458 5350
DAIRYLAND sterilised
cream (Denmark)
BAITY milk powder and
canned concentrated
milk
DAIRYLAND Feta,
Halloumi and Domyati
(Denmark)

Saleh & Abdulaziz Abahsain Co Ltd
(Al Bahsain Trading Foodstuff Division)
PO Box 40
Al Khobar 31952
Tel: (3) 8942192
QBB butter ghee
(Australia) not available
in KSA

Ahmad A Abed Trading Est
PO Box 9440
Riyadh 11413
Tel: (1) 4785292
Fax: (1) 4770741
Butter ghee (Holland) Bulk butter (Finland) The leading specialist
supplier to bakeries. Also
major importer of bulk
milk powders
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Importer Liquid Canned Chilled Comments
Other importers continued
Mujally Ahmed Bamujally Est.
PO Box 112
Jeddah 211411
Tel: (2) 647 0708
WADI FATMA
evaporated milk and
milk powder
(Europe). Gloria Milk
Powder. WADI FATMA
Sterilized cream
WADI FATMA Cheese
IATCO
PO Box 227
Jeddah 21411
Tel: 02 6422661
Fax: 02 6432609
ANCHOR milk powder CHESDALE processed
cheese (New Zealand)
ANCHOR butter and cheese
(New Zealand) butter ghee
(Egypt)
Now responsible for
distribution of Fonterra
products in KSA.

Almarai
PO Box 8524
Riyadh 11492
Tel: (1) 4700005
Fax: (1) 4701555
www.almarai.com
Butter ghee (UAE and
Netherlands)

Butter (KSA)
Block Mozzarella
(Germany)
Shredded Mozzarella
(Denmark)
Feta (Denmark)
Halloumi (Cyprus)
Leading local fresh dairy
manufacturing a very
broad range of dairy
products.

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Importer Liquid Canned Chilled Comments
Importers with local manufacturing interests
Danya Foods Ltd
PO Box 53164
Riyadh 11583
Tel: (1) 498 1414
Fax: (1) 498 0628
PUCK sterilised cream
(Denmark)
PUCK Milk Powder
(Denmark)
MD UHT cream
(Denmark)
DANO milk powder
(Denmark)

MD, PUCK and POWERCOW
cheese (various types,
Denmark and Germany)
LURPAK butter (Denmark)

Locally manufactured
products include
recombined milk (plain
and flavoured), shredded
and bagged mozzarella,
processed cheese in jars
and portions, and labneh
previously imported
from Denmark (MD and
POWER COW brands)
Also manufactures
processed cheese under
contract.
United Group
PO Box 64
Dhahran 31952
Tel: +966 9200 07111
Fax: +966 9200 07222
www.unitedgroup.com.sa
BRIDEL UHT cream and
other BRIDEL products
(formerly Saudi Sands)
YASMIN triangle portions
(Egypt)
PRIDE triangle portions now
sourced locally
PRESIDENT processed
cheese

Also producing PRIDE
processed and natural
cheese through its UFIC
associate. UFIC also
supplies cheese to
McDonalds through
United Food Service (UFS)
and others on a contract
basis.
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Importer Liquid Canned Chilled Comments
Importers with local manufacturing interests
Sunbulah Food & Fine
Pastries Manufacturing Co
PO Box 8960
Jeddah 21492
Tel: (2) 636 4469
Fax: (2) 636 4950
SUNBULAH sterilised
cream (Denmark)
VONK Processed and
natural cheese
(Netherlands)
SUNBULAH natural and
white cheese (Denmark)
SUNBULAH butter
(Sweden)
Also shredding and
repacking Mozzarella in
Saudi Arabia
Omar K Alesayi & Co
PO Box 8680
Jeddah 21492
Tel: (2) 644 5121
Fax: (2) 643 6876
GREEN FARM butter
ghee (Belgium). Only
low cholesterol
GREEN FARM milk
powder now packed
locally by NFIC.
Also manufacturing canned
evaporated, sterilised
cream and flavoured milk
in National Food
Industries Company sister
company (NFIC).


Source: IMES research.