Restaurant visits are driving demand in one of Arla’s most important growth markets, where Puck cream cheese and other branded products are gaining ground. The dairy group is now investing in increased production capacity.

Foodservice is growing rapidly in the Middle East and is becoming an increasingly important pillar of the dairy industry’s international business. For Arla, this means a stronger focus on professional kitchens – and investments in local production capacity.

Today, the Middle East is Arla Foods’ largest market outside Europe and plays a central role in the group’s international business. Foodservice is now set to account for an even larger share of the region’s growth, driven by changing consumption patterns and increased restaurant activity.

– Foodservice is one of the areas we will be scaling up in the coming years, as we need to secure a strong market share – also within foodservice – across our markets, both in MENA and across International,” says Lillie Li Valeur, Executive Vice President of Arla International, in an interview with FødevareWatch.

While retail remains an area with significant growth potential for Arla, the company sees particularly strong opportunities in foodservice, where rising restaurant visits – especially in Saudi Arabia – are boosting demand for dairy products for professional kitchens.

The Middle East as a core market
Arla’s International division – which includes all markets outside Northern and Central Europe – accounts for approximately 18 per cent of the group’s total revenue. Within this division, the Middle East represents around 40 per cent of revenue and has contributed significant growth over a number of years.

In addition to Saudi Arabia, Arla is experiencing double-digit growth in several markets across the region, including Iraq and Lebanon. Egypt, Libya and Syria are also highlighted as markets with strong business potential. In Egypt, Arla’s business is currently primarily export-based, supported by a local setup, and the company expects double-digit growth there going forward as well.

Sales in the region are almost entirely driven by branded products, with Puck cream cheese in particular, as well as Lurpak, Kraft and ready-to-drink Starbucks beverages, forming a significant part of the portfolio.

Investment in local production
Rising demand has already resulted in concrete investments. In August, Arla announced an expansion of its production facility in Bahrain, increasing capacity by approximately 30 per cent. The investment is intended to support regional growth and strengthen supply security.

– We will build on the strong foundations we have already established and expand further in the hope of capturing an even larger share of the market,” says Lillie Li Valeur.

Developments in the Middle East thus point to a broader trend in the dairy industry, where foodservice is increasingly viewed as a strategic growth pathway – particularly in international markets with a growing middle class and changing eating habits.

Source: FødevareWatch
By Maja Løvstrup