Gulfood Manufacturing Dairy

Dairy

Here's what’s trending in the dairy industry:

Gulfood Manufacturing Dairy

Overview

  • The dairy sector in the MENA region is the third fastest growing in the world, and has far exceeded Eastern Europe.
  • Saudi Arabia is the MENA region’s largest dairy producer. 
  • With fast-growing populations, rising income levels and traditional significance of consuming dairy, countries in Middle East and North Africa are experiencing rapid expansion of their dairy markets.
  • The dairy market in the region will grow at a CAGR of 4.9% over the next 5 years, much higher than the global growth which will be 2.3% over the same period.*
  • Milk, yogurt, cream, cheese, butter and ice cream within the dairy categories constitute the biggest part of diets across all MENA countries. 
  • The MENA region is the second-largest dairy importing region in the world and relies heavily on dairy imports as raw materials for production. 
  • Sprung by rising local demand, dairy manufacturers are cashing in by setting up dairy production plants locally, to reduce dependence on imports from leading international exporters such as New Zealand, Australia, Europe and Argentina. 
  • Cheese products are better represented in wealthier markets in the region – in Iran, Egypt, United Arab Emirates and Saudi Arabia. These countries have a highly developed retail environment, making it easier to sell perishable dairy in refrigerated stores.
  • Yogurt and sour milk products has seen a strong performance across all markets.
  • The old practice of consuming loose/unpackaged products such as rice, bread, oils and cheese is slowly being replaced by the consumption of packaged items, especially in key urban areas, and mainly as a result of the widespread activities of key suppliers.
  • In line with increased urbanisation, demand for on-the-go dairy solutions will continue to increase due to consumers having less time to prepare food, especially with female participation in the workforce on the rise.
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Milk Alternatives

  • Value sales of milk alternatives are seeing a rapid growth in the Middle East and Africa, with a 7% CAGR between 2012 and 2017, far above the pace of the global growth, at 1%.
  • It also surprisingly outperforms the overall dairy category, which is recording a 3% CAGR.
  • The most popular markets for milk alternatives are Ghana and the United Arab Emirates.
  • Soy milk, the most popular type of milk alternative, accounts for an estimated 90% of milk alternatives sales in the Middle East and Africa in 2017.
  • In Morocco and Saudi Arabia, milk alternatives have recently started to appear in the market and represent a rapidly growing niche.
  • There is increased interest from consumers in milk alternatives, and as a result of the greater availability of milk alternatives at supermarkets and hypermarkets.
  • Milk alternatives register the highest growth rate in current value terms in 2017 in the United Arab Emirates, with current value growth of 16%. It benefits from starting from a very low base, along with a growing interest in healthy eating in the country since milk alternatives products, such as soy or almond milk are often considered healthier dietary options.
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Unpackaged Hard Cheese

  • Unpackaged hard cheese is a popular type of dairy product in the Middle East and Africa, whose sales are expected to account for over 8% of world value sales in 2017.
  • The Middle East and Africa is recording a stronger performance than the global average, with an 11% growth between 2012 and 2017 in value sales, compared to a 3% rise globally.
  • The majority of hard cheese sales in the Middle East and Africa are derived from unpackaged hard cheese.
  • Egypt is the largest market in the Middle East and Africa for unpackaged hard cheese, and with a 3% CAGR for the 2012-2017 period is also the largest growth contributor. 
  • In Saudi Arabia, although unpackaged cheese sales remain low compared to packaged cheese, the growth was driven by rising health awareness among consumers, as they increasingly opt for unpackaged over processed and packaged cheese.
  • Consumers in the United Arab Emirates tend to purchase packaged cheese, as this is generally cheaper than unpackaged cheese, particularly in the growing hard cheese category. Although hard cheese shows great growth prospects, unpackaged hard cheese generally remains the preserve of higher-income European consumers, who are able to afford its higher prices relative to the packaged variety.
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Ice cream and frozen desserts

  • Value sales growth of ice cream and frozen desserts in the Middle East and Africa outperforms the global average, with a 14.5% CAGR between 2012 and 2017, compared to a 4.2% CAGR recorded globally.
  • Iran, the largest market, accounted for 26% of the region’s sales in 2017, and the second largest market was Egypt at 8%.
  • In both markets, growth was high despite challenging macro-economic environments.
  • In Iran, packaged ice cream is gaining ground over artisanal ice cream, largely as a result of the increasing popularity of packaged products among young adults seeking new tastes and packaging.
  • A diversification of ice cream ranges among key brands such as Mihan, Domino and Kalleh contributed to boost sales growth.
  • In Egypt, growth was driven by continuous new product developments from leading brands such as Mega from Nestlé, with the launch of new flavours and ingredients, as well as due to the introduction of new brands. 
  • Niche flavours and varieties of products in ice cream and frozen desserts continued to become more readily available to all customers in the United Arab Emirates in 2017.
  • In order to further attract local consumers, players within this category launched flavours aimed at the large segment of the expatriate population, such as Indian-style ice cream or flavours inspired by local sweets such as baklava, making them more widely available to all consumers in the United Arab Emirates.

Key trends and sales drivers include

 

  • Lactose-free dairy which aims at minimizing the effects of food intolerances and allergies
  • Organic and functional fortified dairy products
  • Flavoured variants of dairy products
  • Products that incorporate convenience within their packaging
  • Dairy products marketed to children, providing nutritious solutions for lunchboxes and car journeys in-line with the burgeoning on-the-go snacking movement
Source: Euromonitor International

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