The dairy industry in UAE
United Arab Emirate’s population in 2007 was an estimated 4.3 million with one of the world’s best per capita GDP, at an average of USD49,500 [1]. The absence of favourable production conditions generates limited output in the agricultural sector, just above a million tons of food crop. The major proportion of this output is occupied by dates. This limited agricultural production compels UAE to import 85-90 percent of its food requirements.
Growing industries in UAE
Apart from the oil and gas sector, the good processing industry attracted the highest investments among all industries under the processing sector in 2005. It accounted for almost half the total investments at $19 billion. Industries such as textiles, chemicals, metals and equipment are included in this category. In the span of three years starting 2002, the number of establishments in this category went up from 225 to 3001. The value of processed food imports continues to surpass the value of raw materials, nevertheless by a significant margin.
Processors depend wholly on imports for raw material requirements, which U.S. suppliers have viewed as an opportunity for export of high-quality intermediate and bulk food products in the wake of stunted agricultural production. In the absence of the exact trade statistics, it becomes difficult to map the value of food ingredients imported into the UAE.
The dairy industry in the UAE
In the Dairy sector, the local production is concentrated on the largest segments- Milk, Yoghurt and Laban. For these products, there is minimal reliance on imports as compared to other food products. 24% [2] of the liquid milk market is contributed by imports, 13% in the case of yoghurt and 11% for laban. On the other hand, exports in these segments are healthy. Almarai’s entrance in the Saudi Arabian market has boosted production in recent years mainly because of their decision to have certain SKUs’ contract-packed locally rather than being imported from neighbouring Saudi Arabia. Other dairy products like ghee, butter, labneh, canned concentrated milk, cream are produced to a less extent.
1. Liquid milk
The production of milk in the UAE has been almost steady at 8% since 2001, reaching 140 million litres in 2007. Rapidly expanding population at approximately 6% annually has driven the industry to the recent growth level. Domestic consumption of milk has also increased by a firm 9.7% p.a. since 2001.
Increase in local milk production is:
(Production figures in million litres)
|
Year |
Local Consumption |
Imports |
Exports |
Local production |
| 2001 | 81.7 |
18.9 |
22.3 |
85.1 |
| 2002 | 91.2 |
16.2 |
24.2 |
99.2 |
| 2003 | 99.6 |
16.1 |
24.2 |
108.3 |
| 2004 | 108.4 |
20.3 |
27.5 |
115.6 |
| 2005 | 118.4 |
30.4 |
28.0 |
116.0 |
| 2006 | 129.9 |
37.8 |
30.1 |
122.2 |
| 2007 | 143.4 |
40.2 |
32.0 |
135.2 |
Source: IMES Consulting
Major local producers of liquid milk in UAE are as follows:
| Manufacturer |
% Share |
| NFPC |
33% |
| Al-Ain Dairy |
28% |
| Al Rawabi Dairy |
26% |
| Dubai Dairy Company |
6% |
| Marmum Dairy |
5% |
| United Kaipara (UNIKAI) |
2% |
| Total |
100% |
Source: IMES estimates
NFPC’s advantageous share of domestic production is due to the fact that Almarai has significant portions of its product contract-packed by Milko Dairy, Abu Dhabi, a subsidiary of NFPC. Without this packing contract, NFPC’s position would fall down to the third place, after AL Ain and Al Rawabi.
In addition to satisfying the local demand for liquid milk, these local producers also export milk mostly to neighbouring countries of Oman, Saudi Arabia, etc. Al Rawabi, UNIKAI and NFPC are the leading exporters of milk.
2. Laban and diluted laban
The production of Laban and Diluted Laban has reached 78 million litres in 2007, growing at an average annual rate of 6.5%+ since 2001. Again, the increase in the population (more than 6%) and the growing popularity of UAE as a tourist destination has driven the growth. The large influx from the Indian subcontinent of manual workers has also led to increased consumption of diluted products since laban drinks are the most popular of standard items attending to the typical labour camp packed lunch.
(Figures in tons)
|
Year |
Local Consumption |
Imports |
Exports |
Local production |
|
2001 |
39.3 |
10 |
4.3 |
45.0 |
|
2002 |
41.1 |
10.5 |
4.3 |
47.0 |
|
2003 |
44 |
11.5 |
5 |
50.5 |
|
2004 |
48.4 |
11 |
5.5 |
54.1 |
|
2005 |
53.4 |
10.5 |
5.1 |
55.0 |
|
2006 |
58.7 |
10 |
5.4 |
54.14 |
|
2007 |
63.6 |
10.6 |
5.9 |
58.9 |
Source: IMES Consulting
- Dubai Dairy Company is the leading producer of laban products with a 45% market share in the year 2007. United Kaipara Dairies (UNIKAI), Al Rawabi and Milco (National Food Products Company) are other main local players with a 33% cumulative market share.
- On the export front, however, United Kaipara Dairies (UNIKAI) and Al Rawabi are the biggest exporters to other Gulf countries, most notably to Qatar and Oman.
- Diluted laban accounts for 87% of UAE’s dairy market share in 2008 (up from the 83% in 2004), hence producers in the UAE do not face a threat from Saudi Dairies as they do for milk. The irony is that Saudi Dairies are fully active in the manufacture of fresh laban but not so is diluted laban. This has cut down on imports of diluted Laban.
3. Yoghurt and labneh
The production of yoghurt in the UAE has increased by an average annual rate of a little more than 9.3% year on year basis since 2001. On the contrary, its production has remained more or less stagnant over these years.
Local production of labneh and yoghurt is estimated to have progressed as follows:
(Production in tones)
|
Year |
Local Consumption |
Imports |
Exports |
Local production |
|
2001 |
34480 |
6050 |
5990 |
34740 |
|
2002 |
37610 |
6048 |
6128 |
37530 |
|
2003 |
41250 |
6051 |
6481 |
40820 |
|
2004 |
46300 |
6051 |
6251 |
46100 |
|
2005 |
49120 |
7210 |
6460 |
49870 |
|
2006 |
54378 |
7300 |
6513 |
53591 |
|
2007 |
59887 |
7456 |
6634 |
60709 |
Source: IMES Consulting
- Milco (National Food Products Company), Dubai Dairy Company, Marmum, United Kaipara Dairies (UNIKAI) and Al Ain are the most significant producers of yoghurt in the UAE. In the labneh category, Lebanese dairy company and Dubai Dairy Company are the leading producers.
- Besides producing the products for the local markets, some of these companies are also playing a role in exports, mainly to GCC countries of Oman and Qatar, among others. In the case of companies exporting yoghurt, Al Rawabi and United Kaipara Dairies (UNIKAI) are reportedly the leaders.
Reference
- USDA Foreign Agriculture Gain Report, Report No.: TC7004 http://www.chilealimentos.com/medios/servicios/infodemercado/Investigacion_mercado_2007/Marzo_2007/emiratos_arabes_foodProcessing_SectorUSDA.pdf.
- IMES Consulting report, http://www.impz.ae/wp-content/files/File/Packaging-for-Consumer-Goods-in-the-UAE-2006-Report-.pdf.
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