Arla expands in Lebanon, Qatar and Kuwait

Following three joint-venture agreements with local partners in Lebanon, Qatar and Kuwait, Arla Foods will now have direct responsibility for sales and distribution of the Group’s dairy products in the three Middle Eastern countries.

The aim of the move is to treble production at Arla’s Saudi Arabian dairy to 80-100,000 tons per year within the next five years, an objective which requires increasing the Group’s workforce in the region from 1,000 til 2,000. Over the same period, turnover is expected to rise from DKK 2.9 billion to DKK 4.1 billion.

”We have acquired the management rights for the agencies which have, until now, handled sales of butter, cheese and cream in the three countries” explains Executive Director Finn Hansen, Overseas Division. “Since we’re currently expanding our dairy in Riyadh, we wanted to take responsibility for the larger volumes passing through the supply chain - all the way to the consumers in the region.”

By and large, the Middle East functions as one market with similar customs regulations, language and cultural background. Of the 100 million inhabitants who have no natural access to milk - half are below the age of 15.

The local middle classes are gradually becoming wealthier and younger people are increasingly acquiring western habits and want to buy quality food products from the rapidly growing supermarkets.
“Arla’s cheese and butter products are frequently advertised on satellite TV across several countries in the region and consumer awareness of our brands is on a par with, say, Coca Cola. Nevertheless, in several areas consumers look in vain for our products. This is what we’re addressing now,” said Finn Hansen.

Once the three joint ventures are up and running , Arla will benefit from a fully integrated business system for Saudi Arabia, the United Arab Emirates, Oman, Kuwait, Lebanon and Qatar.

As well as the gradual increase in production at the dairy in Saudi Arabia, Arla is establishing a pilot plant attached to the dairy for the development of new products and consumer-friendly packaging.

Arla has preliminarily allocated DKK 240 million for the expansion of the Saudi dairy – an investment which is expected to pay off within four years. In addition is the cost of acquiring and developing sales and distribution in Lebanon, Qatar and Kuwait and a further multi-million kroner sum for expanding capacity at the Riyadh dairy.