Arla Foods on the rise in Lebanon

Following a tough and dramatic 2006 with boycotts and bombings, Arla Foods' new joint venture in Lebanon has had a great start to 2007 with rising sales.

Lebanon is situated in the heart of the Middle East.The staff of Arla Foods' new joint venture company had barely finished decorating the newly-opened head office in Beirut when the company suddenly found itself in the midst of a fiery international crisis, which turned all launch strategies upside-down. As it turned out, the company's first year was marked by events which no one could have foreseen nor prepared for, but more than a year into its existence the office in Beirut can now send home some more positive reports to Arla Foods' headquarters in Scandinavia.

"Currently, we are 16 pct. above budget. The positive trend more or less covers all products and all regions. We're enjoying a real boost and we are all proud of what we've achieved after the first year, which was extremely tough," says Rasmus M. Kjeldsen, head of the joint venture company Arla Kalassi Foods in Lebanon.

The company, which employs a local staff of 37 people, is now aiming to further increase its sales staff and launch new products, thereby laying the groundwork for further growth. Among the planned products is a low-fat variety of Puck processed cheese designed to meet the strong demand in Lebanon for "lighter" products.

Rasmus Kjeldsen.
Consumer boycott and bombing campaigns
Although Arla Foods' brands have been available in Lebanon for many years, it was not until January 2006 that the joint venture with Kalassi, the local partner, was formed. A few weeks later, the boycott of Danish products hit the entire Middle East region, also leading to an attack on the Danish Consulate in Beirut as well as a dramatic decrease in sales.

When the boycott finally ended, however, a new crisis began: the war between Hezbollah and Israel. As the bombs rained down on Beirut, the safety of the personnel was much more important than maintaining high sales rates. Consequently, many employees were sent home to take care of their families throughout the bombing campaign. Once the smoke cleared, Arla Kalassi Foods had to face the challenge of a ruined infra-structure, which put heavy limitations on distribution.

"Not until September 2006 could we begin to look ahead and plan our strategy. Some consumers continue to buy from our competitors. This is not because they boycott us, just that they are happy with their current choice. Enticing them back is one of our big challenges," says Rasmus M. Kjeldsen.