Danone, the French food giant, is entering the yoghurt and liquid milk market in Saudi Arabia. Last week the group signed an agreement with the second largest Saudi dairy company, Al Safi, for a joint company to be owned 50.1 per cent by Danone and 49.9 per cent by Al Safi. The new company, which will sell yoghurt to the 20 million Saudi population, will bring together Danone’s expertise and Al Safi’s local production and distribution network. Although Danone is already represented in Saudi Arabia through a range of drink and biscuit products, this is the first time for Danone to invest in yoghurt production in Saudi Arabia.
Peter Guldager, General Manager of Arla Foods’ Saudi Arabian subsidiary, does not expect Danone’s move to have any immediate impact on Arla Foods’ activities in the country.
“Our strength is in cheese and butter where Lurpak is the market leader. Danone’s presence may even help to raise overall consumption of dairy products,” said Peter Guldager.
Last month Danone, which has an annual turnover of DKK 97 billion, entered into partnership with Skånemejerier for a joint platform for the Scandinavian market. According to the UK’s Dairy Industry Newsletter, the French food group is planning to purchase a share in China’s largest yoghurt dairy.