The dairy industry in Saudi Arabia: current situation and future ...

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76 Vol 55, No 2 May 2002 Table 1 Increase in raw milk production in Saudi Arabia between 1986 and 1997; all figures as tonnes × 1000 3 . The figures for the traditional sector include the milk from cows, sheep, goats and camels, but only bovine milk is produced by the modern sector Year Modern Traditional Total 1986 166 266 432 1987 198 252 450 1988 208 243 451 1989 246 229 475 1990 283 233 516 1991 284 236 520 1992 310 238 548 1993 349 238 587 1994 396 237 633 1995 428 270 698 1996 453 296 749 1997 510 306 816 1998 NA NA 883 1999 NA NA 937 2000 NA NA 1039 NA: data not available processing into products such as cheese and butter in order to meet the demand of the local market for these products. This trend is still continuing for, as shown in Table 1, the volume of milk produced in Saudi Arabia continues to rise. 3,4 DAIRY FACTORIES The industrial production of liquid milk only began in Saudi Arabia in the 1970s, and these first milk processors fell into two categories. Namely, those that operated recombining plants working with imported milk powder and those that handled only locally produced raw milk. Today the number of recombining plants has increased dramatically and there are now 17 dairies in Saudi Arabia with recombination facilities to produce liquid milk, or 24 dairies if those using recombined milk for cheese and ice cream production are included. 5 However, the market for recombined liquid milk does appear to have slowed (see Figure 1), because many people prefer the taste of fresh pasteurized milk if it is available. To meet this demand, there are now a number of dairy factories with their own farms, and factories that collect raw milk supplies from farms located throughout the Kingdom. The majority of these factories are in Riyadh Province (approximately 16 factories), and there are 14 in the Eastern Province, eight in the Western part of the Kingdom, with the remainder spread across other areas. Their milk supplies often come from specialized dairy farms, of which there are 24 farms in Riyadh Province, © 2002 Society of Dairy Technology Figure 1 Comparison between fresh milk and recombined milk consumption in Saudi Arabia during 1993–1999. 8 seven in the Eastern Province, three in the northern part of the Kingdom and one in Najran Province. 4 Many of these farms only supply raw milk to large-scale processors, and there are about eight processors marketing significant volumes of branded, commercial dairy products. These are Almarai, Al-Safi, National Agricultural Development Company (NADEC), Al-Othman, Najdyah, Al-Matrood, Al-Hana and Aziziah. These companies account for almost all the sales of fresh, pasteurized milk, and have nearly 90% of the market of laban (a traditional Middle Eastern drink similar to a natural drinking yogurt) and 94% of the market for yogurt. The Al-Safi Dairy holds the distinction, as well as a listing in the Guinness Book of World Records, of being the largest integrated dairy operation in the world. Al-Safi Dairy herds a total of 32 000 cattle (including 24 000 milking cows) which produce 390 000 L of milk daily and 6000 kg of boneless meat annually. Every stage of the production is included in the operation. This covers the growing of forage crops under irrigation, breeding programmes, milk collection and processing, packaging of the finished products and their distribution to retail outlets. The entire operation is handled on-site at the Al-Safi farm located in Al-Kharj about 60 miles south-east of Riyadh. This high degree of integration has enabled Al-Safi to attain control over 30% of the fresh yogurt and milk markets in Saudi Arabia. 6 More recently, Danone International acquired 50.1% of the shares in Saudi Al-Safi Foods— which own the Al-Safi Dairy—and this investment should enable the new Al-Safi Danone Company to enhance its competitive position and allow the company to target the consumers, estimated to be around 40 million, in the neighbouring Gulf States. The Al-Marai dairy was originally established with just 1200 Holstein Friesian cattle at Al-Kharj about 60 miles south-east of Riyadh, but today it is one of the leading dairy companies in the Kingdom with over 32 000 head of cattle at its various farms throughout the region. Before 1996, the company operated four dairy processing plants handling
Vol 55, No 2 May 2002 fresh raw milk, and a cheese blending plant with a 70 000 litre per day pilot plant used for new product development. However, in 1996, the Company constructed a factory with a processing capacity of 1.4 million litres of fresh milk per day. 7 The Company now leads the commercial fresh milk industry in Saudi Arabia and it is the first company to have treated the Gulf Co-operation Council (GCC) States as an integrated market for short shelf-life products. As a result, it is now a leading brand name in five national markets, and supplies these markets with pasteurized milk, laban, yogurt, cheese, butter, ghee and processed cheese. It has recently introduced its own real fruit laban and stirred, real fruit yogurt (including a layered fruit product) and it is producing Yoplait fruit yogurts under licence. Other success stories include the expansion of NADEC, which has become the third largest dairy company in Saudi Arabia. Its farms are stocked with more than 25 000 cows which give a total production capacity of 1 million litres per day of fresh milk. Saudi Danish Dairy Co. (Sadafco) is the largest importer of milk powder and, although it is reconstituted rather than fresh milk, Sadafco is the second largest supplier of liquid milk in the Kingdom. Its production makes up 19.6% of the total production of liquid milk in Saudi Arabia, a market share that puts it in second place after Al-Marai. Jamjoom is another major importer of milk powder for reconstitution and the company has a large processing plant, located in Jeddah, which produces around 30 million litres of liquid milk per year. Al-Rabie Saudi Dairy Company, based in Riyadh is also a significant producer of dairy products. It was established in 1980 as a Saudi–Irish joint venture, and now boasts an annual production of 52 000 tonnes of different products using reconstituted milk powder. Overall, Sadafco, Jamjoom, National Food Industries, Al-Rabie, Danya, Al-Rai and United Food Industries account for nearly 90% of the production of dairy products from recombined milks. 8 MILK PRODUCTS Over 60% of all bovine milk produced in Saudi Arabia (fresh and recombined) is fermented into laban, and approximately 25% is pasteurized for direct consumption as liquid milk. The balance is processed into a yogurt-like product called Zabadi, Ghishte (a thick ‘spoonable’ cream), labneh (a concentrated yogurt with around 10% fat), UHT recombined milk with around 3.5% fat (along with a range of flavoured UHT milks), and a wide range of natural and fruit-flavoured stirred and set yogurts. In addition, Unilever has opened a large ice cream plant in the Eastern region of Saudi Arabia to supply all of the GCC markets, and Nestlé has recently taken over the UAE Galadari ice cream operation. Jamjoom in Jeddah makes Mars milk under licence, while the New Zealand Dairy Board has a joint venture with Sadafco to repack Anchor milk powder and to produce Chesdale processed cheese. MD Foods owns Danya and produces processed cheese under the brand name ‘Puck’, and Kraft Foods have involvement in the area as well. CONSUMPTION The consumption of milk products in Saudi Arabia is gradually increasing and, in 1999, the total consumption of liquid milk amounted to 335 million litres. This figures rises to almost 600 million litres if laban is included. This overall figure gives a per capita consumption of around 30 L per annum based on the current official estimate of the population (approximately 20 million). The comparative importance of fresh milk as compared to recombined milk is shown in Figure 1. Canned milk powder (e.g. Nestlé’s NIDO) is still a very important source of milk in most Saudi households. In 1999, this usage accounted for a further 350 million litres of liquid milk equivalent, suggesting a total underlying market for liquid dairy products of approximately 950 million litres. As mentioned earlier, a wide range of dairy products are manufactured in Saudi Arabia, and the pattern of consumption of some different products (in terms of liquid milk equivalents) is shown in Figure 2. Cheese—much of which is imported—is one of the most popular foods, while ice cream is in least demand. MARKET TRENDS Even though imports of milk powder for reconstitution continue (≈ 80 000 tonnes during 2000), as does the importation of pasteurized liquid milk, Figure 2 The Saudi dairy market in 1997. Percentage consumption. 5 © 2002 Society of Dairy Technology 77
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