2013 Dairy Update
There has been a move to recombining by large fresh dairies such as Almarai and Al Safi Danone to cater to increasing demand for their products in local and export markets. Rising world dairy prices and production costs brought about significant retail price increases in several dairy categories since 2008. However, increase in retail prices by suppliers has been strongly opposed by consumers and is, therefore, unpopular with the authorities.
“Value growth has been mostly in the form of downsizing of pack volumes at existing prices.”
Continuing changes and investment in packaging, partly driven by suppliers‟ attempts at differentiating themselves from competitors. In this regard, the major development in the past few years has been the move to PET by 
short-life dairies for short-life milk.
2013 Beverage Update
Saudi Arabia is almost entirely self-sufficient in carbonated soft drinks. Pepsi Beverages and Coca-Cola dominate the Saudi Arabian market for carbonated soft drinks, with eight further local producers accounting for a smaller share of the market. Imports of carbonated soft drinks are insignificant. The packaged water industry is very fragmented, particularly dispenser water. However, only a few suppliers have a substantial share of the total market as most companies operate on a regional basis only. An expected wave of consolidations and closures has yet to commence. At present there are around 70 companies active in this sector. There are now over 40 local manufacturers of juice products in the Kingdom. These are either dedicated beverage producers, or dairy companies whose packaging machinery and distribution networks are complementary to (especially short-life) juice business. Dairy companies have been gaining market share in this sector in recent years. The majority of juice product brands in the Kingdom are local concepts without international affiliation. 
2013 Dairy and Beverage Update
Compared to other regions in the GCC, UAE is by far the most peaceful and has now become the most favored tourist destination. There have been some interesting events with local dairies, two leading local dairies have merged in 2012 and what will this mean for the industry? UAE markets have recovered from the slowdown but a cautious look is not without reason as there is something to be said about the fact that the total debt of the Dubai government and Government Related Entities (GRE) still remains large. The GRE debt restructuring in relation to the 2009 crisis are nearly complete and maturities are coming up between 2014 and 2018. Will this spike up inflation in the future?
2013 Beverage Update
Despite being the richest economy in the GCC construction had been slow in the last few years until 2012, by early 2013 construction has picked up speed and there has been inflow of laborers and construction professionals. What does this mean for the dairy and beverage industry as a whole? Moreover price controls through government owned Al Meerah Holdings have not really helped the local industry, so does this mean that the Qatar market will be the first in the GCC to eventually be supplied by imports or will there be a new local player.As in all other GCC countries, Pepsi Beverages and The Coca-Cola Company dominate the Qatari market for carbonated soft drinks. In the juice products sector, market supply is highly fragmented with an array of imported brands currently representing over 90% of all juice products consumed in Qatar. There are only two domestic producers in the country, Dandy Co and AQCDP, with the former now increasingly focusing on their new ice cream business. Dispenser water is dominated by Nestle Waters with its own local production and there is significant local filling of bottled water as well, with one company (Rayyan) dominating the still bottled segment.
“Moreover, the recent ban on water exports from Saudi Arabia, the UAE and Oman has boosted demand for Qatari bottled water brands.”
2013 Dairy Update
2012 has been yet another difficult year for the local Qatari Dairy industry. The size of the Saudi competitors as well as the relatively small size of the Qatari market makes life difficult for the local producers. To protect the local dairy suppliers and their market share in Qatar, in late 2011 Qatar government created Al Meerah Holdings and took over a few local retail chain stores such as Giant Stores and Dasman Centre to dictate pricing and storage terms. However this has not worked in favour of local milk suppliers since these suppliers are unable to meet market demand. It is very clear that Qatar cannot survive without imports of liquid milks.
2013 Beverage Update
As in all other GCC countries, Pepsi Beverages and The Coca-Cola Company dominate the carbonated soft drinks market in Bahrain. All Pepsi-Cola brands are consolidated under Ahmadi Industries – the franchised local bottler, while Coca-Cola brands are filled by a wholly owned subsidiary, the Coca-Cola Bottling Company of Bahrain (CCBCB – formerly called National Food & Beverage Company). There were five manufacturers of juice products in the country up until early 2011 but by the end of 2011, two local companies shut down operations. This leaves Bahrain with only three suppliers, of which Awal Dairy Company (ADC – previously known as Bahrain Danish Dairy – BDD1) remains the only key supplier. The situation continues more or less the same way as in 2011. How are distributors and suppliers managing in this scenario? How have all these challenges affected demand and supply of various categories in the country? How soon will weekend tourism return back to Bahrain?
2013 Dairy Update
For the first time in 2012 ambient white milks were brought under the Tamwin tenders and how has this affected the market? Iraq being a lucrative market for Kuwaiti companies have now imposed a new legislation demanding Arabic labeling for their ingredients. How has this affected exports? Moreover the Kuwaiti government have decided to repatriate 100,000 expats each year until 2023 it is unclear whether this is applicable to new/old visas. How will this affect skilled manpower and overall growth of the Dairy and beverages category?
2013 Dairy and Beverage Update
Due to the commencement of several construction projects in Oman, the population of blue collar South Asian workers is on the rise since 2010. Between 2010 and 2013, an estimated 1.1 million people have been added to the resident population in the country, amounting to a 44% increase as compared to 2010. This apart from the continued strong growth in population of Omani nationals have strongly impacted demand for key categories such as packaged water and carbonated soft drinks. White collar jobs, however, continue to be Omanised as expatriate professionals either work alongside Omani nationals or are replaced by the latter.
While developments on the demographic and economic areas have been highly encouraging, labour laws and inflation control measures stipulated by the government have brought about a lot of pressure on supplier margins. Minimum wages for Omani workers in the private sector have been increased twice; once in early 2011 from OR 140 (US$ 363) to OR 200 (US$ 520) and from there in July 2013 to OR 325 (US$ 842). While this has increased the disposable incomes of Omani nationals, a lot of the additional cash is fuelling growth in lifestyle categories such as mobile phones, cigarettes, energy drinks etc. unlike grocery products such as milk, rice, vegetables and so on. At the same time, suppliers are unable to pass on the increase in cost of operations to consumers due to a price freeze imposed by the government disabling producers from pursuing any price increases. The end result is that deliveries of short-life products, both dairy and beverage, have been affected especially, as staff turnover among Omanis is very high vis-a-vis their formerly Asian counterparts. To cut back against losses, most producers have retrenched their operations by limiting supplies to unprofitable outlets/ regions, while some others have exited from the market.
In the dairy and beverage publications, ManSci establishes the market size in volume and value terms and establishes key trends that have evolved during the review period. Click here to check price and availability. To place an order, mail us at marketing@mansci.net.