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Cheese is an important component of the Saudi Arabian diet. Whether used as a breakfast item in the form of spreads or bread fillings, or in cooking as well as a salad item, Saudi Arabian women use the product extensively. For this reason, a large variety of cheese is found in the country. It is particularly a highly consumed product during Ramadan due to a particular delicacy in Ramadan called “cheese sambosa” which is basically pastry leaves filled in with cheese. The growing demand for cheese has spurred intense competition among the leading cheese players to reduce prices and offer a variety of new promotional packs. A number of companies have resorted to slashing prices in stores for their products. Puck and Kraft are two brands which have been heavily engaged in price wars with discount offers of up to 35% on their glass jar cheese. For this reason, cheese witnessed a sharp drop in retail value growth which slipped to 7% in 2016 from an 11% CAGR in relation to the review period as a whole. Strong consumption, however, has kept retail volume growth steady with 2016 witnessing only a slight drop to 5% compared to a 6% CAGR for the entire review period.
Almarai Co Ltd leads cheese with a 27% retail value share in 2016. The local dairy giant has very strong loyalty among consumers which has been built over several years of delivering high-quality products which consumers trust. The increasingly renowned distribution network that ensures the timely supply of its products has further strengthened its name. Finally, the company invests rigorously in communications through all media and, in particular, through digital media. It interacts with its consumers regularly through various social media portals. Point-of-sale promotion is an additional contributor to the company’s growing retail value share of cheese.
Saudi Arabia is experiencing a turbulent time as regards its economy as oil prices continue to fall globally. The country whose economy is 80% reliant on oil exports revenue is left struggling as the domestic cost of goods is starting to rise. There are more layoffs happening in companies and a number of these companies have not been able to pay out salaries to their regular employees. This is likely to continue as many forecast experts are not expecting oil prices to quickly return to their regular level. This will eventually hurt the economy and have an effect on people’s spending. Consumers are more likely to downgrade to lower-priced products and look more for discounts and sales than ever.
DRINKING MILK PRODUCTS
Saudi Arabia is witnessing a gradual increase in health awareness among a select group of consumers, most notably females. They are more tuned into global health and lifestyle trends as they closely follow them through digital media. As employment rates among women are rising, so are women more desirous of keeping their bodies in shape and health in check. For this reason, the demand for healthier food alternatives such as fresh milk is growing because this type of milk is considered healthier and more nutritive than shelf stable milk. For this reason, fresh milk is growing faster than shelf stable milk in retail volume terms, despite the former’s slower retail value growth.
Almarai Co Ltd leads drinking milk products with a 28% retail value share in 2016. The company has strong presence in every type of drinking milk product including both ambient and chilled flavoured milk drinks. In 2016, it entered powder milk with Almarai powder milk which further strengthened its position in overall drinking milk products. Almarai benefits from its exceptional distribution network which ensures timely supply of its dairy products across Saudi Arabia and GCC countries, thus making it always available to its customers. Finally, it invests heavily in marketing communications through all channels such as TV, outdoor and digital media, with its Facebook page attracting over four million likes. Such effective strategies have helped the company to stay significantly ahead of its competitors.
The consumption of drinking milk products is expected to continue growing in the long term as the population grows. Milk is nearly a staple in the country and although prices are likely to increase as the government is planning to remove caps, it will hardly affect consumption. Moreover, better availability of healthcare practitioners means that people are actively advised about various nutrition deficiencies such as calcium and vitamin D and the negative consequences. Hence, in general, people are likely to up their dairy intake, with milk being the primary source of these nutrients.
YOGHURT AND SOUR MILK PRODUCTS
In order to create more excitement in relatively dull yoghurt and sour milk products, as well as with the intention to outdo the competition, manufacturers significantly paced up new product developments in 2016. Yoghurt and sour milk products has been faced with some stagnation and maturity and it is to break this stagnation that newer varieties have been introduced. National Agricultural Development Co (NADEC) launched new savoury flavours of Cumin and Cucumber Mint within its popular Ayran laban (sour milk) in early 2016, whereas Almarai Co Ltd launched Mango flavour within its laban during the same period. Almarai’s Vetal laban also witnessed packaging changes in early 2016. Meanwhile, Almarai Co Ltd also introduced a sour yoghurt version within its plain yoghurt in late 2015 and NADEC overhauled the packaging of its plain yoghurt in early 2016. Such developments successfully contributed to the growth of yoghurt and sour milk products in 2016.
Almarai Co Ltd dominates yoghurt and sour milk products with a 50% retail value share in 2016. It has continued to grow its share aggressively, not only through its established brand name but also through regular activities that keep yoghurt and sour milk products from slipping into stagnation. Late 2015 witnessed the launch of sour yoghurt which is a new type of plain yoghurt. In 2016, the company launched mango-flavoured laban, which increased its variety of laban offerings as strawberry already existed. It revamped its packaging for probiotic Vetal laban in 2016 making the label more attractive and highlighting all the health benefits associated with it. The company has a renowned distribution network with over 8,000 vehicles delivering across the country and GCC region. This ensures timely availability of all products across all channels, thus ensuring the brand’s visibility. Finally, Almarai’s large investments in marketing, which includes communications through TV and outdoor advertising as well as a growing focus on digital media, mean that the brand name is strengthened day by day.
Although the Saudi Arabian economic outlook is slightly pessimistic owing to falling oil prices, yoghurt and sour milk products is not expected to be affected by this. The consumption of these products will always be on the higher side owing to the extremely hot weather of the country for most of the year. Since yoghurt and sour milk products are expected to bring cooling relief, demand will remain high. Furthermore, Ramadan will keep falling in summertime. This will further boost the consumption of these products as they are supposed to suppress thirst and provide relief from heat.
The Saudi Arabian economy is undergoing a turbulent phase as oil prices keep plummeting. The country derives 80% of its revenues from oil exports and the steep downfall in oil prices has started to hurt its economy as the cost of various products has started going up, with fuel price increases. However, dairy in general and other dairy in particular have not been affected much by the slowdown in the economy as many products are almost staple foods in the Saudi Arabian diet. Labneh, a traditional product which constitutes most of the fromage frais and quark category, is an essential everyday item used for breakfast and snacks. Similarly, condensed/evaporated milk is a must-have item owing to high tea consumption, whereas cream is also used in many ways from being a breakfast item to a cooking ingredient. The only difference that the economic slowdown has brought is perhaps people downgrading to lower-priced products. Nevertheless, demand for these products remains strong.
National Food Industries Co Ltd leads other dairy with a 20% retail value share in 2016. The company derives its strength from sweetened condensed milk where it enjoys a 39% retail value share in 2016, thanks to its brand, Luna. It has been able to continuously increase its value share thanks to its products’ widespread availability, which is growing in line with retail growth. In addition, attractive point-of-sale advertising and key shelf position has helped the brand maintain its loyalty among consumers and hence increase its share.
The economy of the country is expected to remain somewhat grim in the forecast period as oil prices are predicted to hit their lowest. While this will have manifestations in a number of areas, with consumption patterns slowing down, other dairy will continue to witness strong growth, mainly as these products will continue to remain a key staple in the diet of Saudi Arabians. The consumption of these products, hence, will keep on growing along with population growth. However, people may start looking for cheaper alternatives or shop around the time of sales season in order to save some money on the purchase.
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The Dairy in Saudi Arabia market research report includes:
Analysis of key supply-side and demand trends
Detailed segmentation of international and local products
Historic volumes and values, company and brand market shares
Five year forecasts of market trends and market growth
Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
What is the market size of Dairy in Saudi Arabia?
What are the major brands in Saudi Arabia?
How has the economic downturn impacted sales performance given its staple food status?
Given mounting obesity concerns, are consumers moving from full-fat to reduced fat/fat-free offerings?
How are volatile farmgate prices for milk impacting retail prices and sales performance?
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Al Safi Danone Ltd in Packaged Food (Saudi Arabia)
Summary 1 Al Safi Danone Ltd: Key Facts Summary 2 Al Safi Danone Ltd: Operational Indicators
Summary 3 Al Safi Danone Ltd: Competitive Position 2016
Almarai Co Ltd in Packaged Food (Saudi Arabia)
Summary 4 Almarai Co Ltd: Key Facts Summary 5 Almarai Co Ltd: Operational Indicators
Summary 6 Almarai Co Ltd: Competitive Position 2016
National Agricultural Development Co (NADEC) in Packaged Food (Saudi Arabia)
Summary 7 National Agricultural Development Co (NADEC): Key Facts Summary 8 National Agricultural Development Co (NADEC): Operational Indicators
Summary 9 National Agricultural Development Co (NADEC): Competitive Position 2016
Saudi Dairy & Foodstuff Co Ltd (SADAFCO) in Packaged Food (Saudi Arabia)
Summary 10 Saudi Dairy & Foodstuff Co Ltd (SADAFCO): Key Facts Summary 11 Saudi Dairy & Foodstuff Co Ltd (SADAFCO): Operational Indicators
Summary 12 Saudi Dairy & Foodstuff Co Ltd (SADAFCO): Competitive Position 2016
Packaged Food in Saudi Arabia - Industry Overview
Packaged food records slower but still positive growth
Saudi Arabian economy slows down
Artisanal players lead sales, but lose share to other manufacturers
Modern grocery retailers continue to compete aggressively with traditional retailers
Packaged food volume growth set to increase over forecast period
KEY TRENDS AND DEVELOPMENTS
Saudi Arabian economy hit by falling oil prices
Growing number of working women fuelling growth
Health awareness continues to grow
Strong influx of religious visitors helps maintain positive growth
FOODSERVICE: KEY TRENDS AND DEVELOPMENTS
Trends: Sales to foodservice
Trends: Consumer foodservice
Table 1 Foodservice Sales of Packaged Food by Category: Volume 2011-2016 Table 2 Foodservice Sales of Packaged Food by Category: % Volume Growth 2011-2016 Table 3 Forecast Foodservice Sales of Packaged Food by Category: Volume 2016-2021 Table 4 Forecast Foodservice Sales of Packaged Food by Category: % Volume Growth 2016-2021
Table 5 Sales of Packaged Food by Category: Volume 2011-2016 Table 6 Sales of Packaged Food by Category: Value 2011-2016 Table 7 Sales of Packaged Food by Category: % Volume Growth 2011-2016 Table 8 Sales of Packaged Food by Category: % Value Growth 2011-2016 Table 9 GBO Company Shares of Packaged Food: % Value 2012-2016 Table 10 NBO Company Shares of Packaged Food: % Value 2012-2016 Table 11 LBN Brand Shares of Packaged Food: % Value 2013-2016 Table 12 Penetration of Private Label by Category: % Value 2011-2016 Table 13 Distribution of Packaged Food by Format: % Value 2011-2016 Table 14 Distribution of Packaged Food by Format and Category: % Value 2016 Table 15 Forecast Sales of Packaged Food by Category: Volume 2016-2021 Table 16 Forecast Sales of Packaged Food by Category: Value 2016-2021 Table 17 Forecast Sales of Packaged Food by Category: % Volume Growth 2016-2021 Table 18 Forecast Sales of Packaged Food by Category: % Value Growth 2016-2021
Summary 13 Research Sources
Why buy this report?
Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.