PUTTING THE MIDDLE EAST AND AFRICA INTO CONTEXT
At over 3% CAGR, the Middle East and Africa is the third fastest growing region for dairy and has overtaken Eastern Europe to be the fifth largest region as of 2016. The market is highly unsaturated with per capita spend on dairy at just US$25 per head, the lowest in the world. As such, affordability is one of the predominant barriers to increased adoption. If affordability improves, growth could be even more dynamic. That said, the underdeveloped cold chain infrastructure in many MEA markets, makes it a difficult region to reach consumers and manufacturers have to be creative in distributing their perishable products.
JUST THREE MARKETS PROVIDE THE MAJORITY OF THE REGION’S DYNAMISM
While the Middle East and Africa’s growth is impressive - a 3.5% value CAGR was achieved between 2011 and 2016 - 60% of additional sales growth was recorded in just three markets: Egypt, Saudi Arabia and Algeria. In Saudi Arabia, much of this arose from a large contingent of foreign workers as well as strong macroeconomic performance in Algeria. In Egypt, changing family dynamics where female participation in the workforce is increasing has resulted in a stronger demand for convenient foods. Over the last few years, these countries have seen increased interest from international dairy players, such as Arla and Lactalis, seeking to gain access through joint ventures. Seeing the retail landscape is still dominated by small independent retailers, new players are forced to buy into an existing distribution network via partnerships with local players.
STRONG PERFORMANCE FOR DMP AND YOGHURT AND SOUR MILK
Drinking milk products (DMP) have shown a consistent strong performance across all MEA markets over the years. Saudi Arabia, where one of the strongest growths is seen is witnessing a gradual increase in health awareness among a select group of consumers, most notably females. They are more tuned into global health and lifestyle trends as they closely follow them through digital media. The demand for healthier food alternatives such as fresh milk is growing because this type of milk is considered healthier and more nutritious than shelf stable milk. With the exception of Iran, yoghurt and sour milk products has also seen strong performance across all markets. Partly this is due to consumers switching to packaged yoghurt instead of making this at home or buying artisanal types over the counter, due to better convenience