Michael Hussey, Consumer Foods Division, Bord Bia – Irish Food Board
Milk consumption in Saudi Arabia reached 729.4 million litres in 2012. In value terms this was worth €685 million at retail level.
Consumption has grown by 6% per annum since 2007 and is now 24.6 litres per capita. Ambient milk still dominates the market and accounts for 62%, while fresh milk now makes up 38% of the market. Ambient milk has grown by 3.4% per annum since 2007 but fresh has been growing at 11.3% per annum since 2007. This is being driven by urbanisation, better access to the cold chain, the growth of modern retail outlets and rapid growth in the ownership of domestic fridges. The overall market is forecast to grow by 4.9% per annum to 2016, fresh by 5.6% and long life by 4.5%.
The fresh milk market is dominated by Almarai with 46% market share followed by Al Safi Danone at 21%, Nada Dairy at 13% and Nadec at 9% with others making up the remaining 11%. In the long life category, Sadafco dominates with 47% share followed by Almarai at 17%, Freisland at 12% and Al Safi Danone at 8% and others making up the remaining 16%.
In the second half of 2012, Almarai switched to recombining for all its long life milk, both plain and flavoured. This has been followed by Al Safi Danone. This was due to the continued growth in demand for fresh product in Saudi and some other GCC markets, and concern at Government level over the depletion of their non renewable ground water resources. The Kingdom has already depleted 70% of these sources of water and must now turn increasingly to desalinisation which when factored into the cost of producing fresh milk is very expensive. Experts have estimated that it takes between 500- 1000 litres of fresh water to produce 1 litre of fresh milk if one takes into around the irrigation required to grow the Rhodes grass or Alfalfa required to feed the cows.
The Saudi Government has recently capped the growth in dairy herds which should intensify the move to recombining to satisfy the growth in demand. The growth in the use of milk powders presents an opportunity to Irish exporters. Ireland can position itself as a key partner to Saudi processors and players in the market, on the basis of having a sustainable production model. Bord Bia is planning a market visit to Saudi Arabia in Q3 2013.
For further information on the Saudi dairy market please contact Michael.firstname.lastname@example.org