dairy industry in saudi arabia
TRANSCRIPT
Dairy Industry in Saudi Arabia
MORDOR INTELLIGENCE
Topic’s CoveredIntroduction
Fresh Milk Sector
Butter Sector
Yogurt Sector
Cream Sector
UHT Sector
Cheese Sector
Major Companies
Best Opportunity
IntroductionMonarchical government, much more stable than some neighbors
$1.6 trillion GDP, growth rate at 5.8%
Budget deficit at 1.7%, low compared to most of world
Currently exporting more than importing
Population of above 27 million
Saudi Arabia has the best fresh milk
• High industry standards
• Government investment in technology, packaging, distribution
• Investment in top cattle, highest yields
Considered to have best fresh milk in Gulf region
• Increasing per capita
• Health conscious population
• Estimated growth at 11.62% per year to 2020
Consumption of fresh milk increases tremendously
• Production growth expected to increase by 4.9% per year to 2020
Allows an opportunity for domestic production
• Huge difference between consumption and production
• High level of imports provide the difference in demand
Self sufficiency goal not achieved0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000
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Imports help support fresh milk demand (tons)
Consumption Production Imports
Farmers escape butter production
Declining production
•Low output
•High technology costs
•Increased prices per unit
•Results in lower exports
Consumption has been growing
•Expected to grow at 4.69% per year up to 2020
•Higher per capita income allows purchases of costly domestic butter
•Peak demand during Ramadan and Hajj
Imports rising as they are cheaper than homegrown butter
•96% of cheese consumed in the country are provided through imports
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Ailing Butter Manufacturing Industry (tons)
Consumption Imports Production Exports
Health benefits spur demand for yogurt
Yogurt (labaney) a traditional diet in Saudi Arabia and Middle East
Saudi Arabia focuses on increasing production with expected annual growth rates of 5.39%
Consumption increasing
•Younger generations want to remain healthy
•Demand peaks in April, but very stable throughout the year
•Companies increase product line of yogurt to attract consumption with newer flavors and varieties
Imports rising since consumption growing faster than production
68.64 tons
48.4 tons
consumption production
Cream is an irreplaceable part of the Saudi diet
Production growth is expected to rise even further
•Growing at 28.9%
Consumption is expected to grow even faster than production
•Growing at 34.73%
•Consumption growth higher than production growth
• Imported goods required to meet demand
Peak period between March to May
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45%
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Growth rates gradually increasing production, consumption
Production Consumption Production Growth Consumption Growth
Cream growing strong, consumers going stronger
UHT faces stiff competition from fresh milk
UHT has longer shelf
life
Fresh milk is consumed more
• More available
• Healthier
Production of UHT milk
growing at 8% per year upto
2020
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Fresh Milk growing faster than UHT (metric tons)
Fresh Milk Production UHT Milk Production
3 month moving avg. Fresh Milk 3 month moving avg. UHT
High cheese production allows increasing exports
Cheese production
growing over 17% per year
Consumption is decreasing by 9% per year
•Health concerns have led to decline
Surplus in market, allows
increase in exports
Demand higher in
winter months
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Majority of Production exported (in ton)
Production Consumption
Major Companies in Saudi ArabiaAl Safi Danone
• Known for producing all dairy products from 100% fresh milk
• High quality products with a strong, experienced management.
Almarai
• Largest vertically integrated dairy company in the world
• Leader in processed and unprocessed cheese market, 23% market share
• Holds 31% market share in drinking milk sector, 47% market share in retail value of yogurt sector
• Fresh dairy has seen profitability increase by 14% in 2012
Halwani
• Expansion in operations in Jeddah
• Specializes in tahina and cheese products
Saudi Arabia shows the strong potential
Goal to be Self Sufficient in Dairy• Highest producer of dairy in region• Produces fresh milk, yogurt, cream, cheese• Growing in the sectors
Government support• Providing newest technologies• Subsidies
Fresh Milk Sector Growing • Production CAGR at 10.38%• Consumption CAGR at 11.62%• Demand stronger than supply
Consumption of yogurt well above production• Health benefits• Traditional diet• Consumption CAGR at 12.25%• Production CAGR at 5.39%
Imports Production
Consumption
Cream is becoming a necessity• Part of diet, irreplaceable• Peaks in March-May• Larger growth in consumption than production• Imports increasing
Saudi Arabia has bright prospects• Stable government• GDP of $1.6 trillion, growing at 5.9%• Low unemployment, 5.6%• High per capita, $53,000
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