Arla Foods holds firm in Gulf markets

Danish dairy producer Arla Foods is determined to re-build its business in the Middle East.

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By  Roger Field Published  March 5, 2006

Despite the official Danish pavilion having pulled out of the Gulfood exhibition amid the region’s consumer boycott of goods from the country, three Danish companies, including dairy producer Arla Foods, decided to attend the event in a bid to start rebuilding business. “At an early stage we decided we would come,” Louis Honnore, Arla’s chief of communications, told RNME. “We have been here in the past and it is natural for us to be here to discuss business with our business partners. We have been in the Middle East for 40 years and we have run a dairy in Saudi Arabia for 20 years, so we don’t give up easily.” He added that Arla also wanted to attend the event to put forward its side of the story, and to this end the company placed leaflets at its stand explaining that it had nothing to do with the offensive cartoons, did not condone them in anyway, and understood peoples’ reaction to them. The statement also added that the company employs one thousand Muslims worldwide. At the time of the Gulfood exhibition, the boycott of Danish products was estimated to be denying Arla a turnover of about US $1.3 million a day, although Honnore said that many of its business partners are keen to re-start business with the company. “We are in touch with our customers more or less every day,” he said. “We talk to all of the big supermarket chains every day and some of them say they would like to stock our products, but as long as the customers don’t want them they don’t want to place them on the shelves.” Furthermore, Arla has received some positive feedback from its key account holders and Honnore thinks the company has a good chance of regaining business in region once the boycott ends, although he admits it is likely to be on a reduced scale. “Our business partners…tell us that they think we have a future, and that if we hang on, business will pick up again,” he said. In the meantime, the frustration for Arla and other Danish companies in the region is a lack of control over the situation, according to Honnore. “It’s frustrating for our company not being able to act. If they [consumers] don’t like our products, we can change that,” he said. “If they don’t like our products, well we can make other products for them. But in this situation, unfortunately we don’t hold the key for the solution. That’s very frustrating for us, not being able to act.”

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