Arla returns to Middle East as KSA boycott ends
After a boycott lasting almost three months, Arla's products are returning to shelves across the Middle East.
Danish dairy producer Arla Foods has restarted business in the Middle East after leading supermarket groups in Saudi Arabia agreed to begin selling the company’s products, including Lurpak and Puk, in May.
Laurent Ponty, Arla’s marketing manager for the UAE and Oman confirmed to Retail News Middle East that the company’s products, including Lurpak butter, are already back on the shelves of supermarkets in Saudi Arabia and that retailers in other countries across the region are following the Kingdom’s lead.
“We’re on our way back slowly but surely and we’re also now on our way back in most of the major retailers, so the situation is looking much better in terms of distribution,” he said.
“It takes a bit of time for everybody to get on board, to cover all the areas and all the regions but the movement has started. In Bahrain we are back in most of the shops. In Kuwait we are also on our way back. We are also getting re-orders, which shows that the products are moving.”
Sales of Arla’s products in the region, which include Lurpak butter, Puck, and Three Cows cheese, have also been promising in the early stages of the company’s comeback, according to Ponty. “The first indications from the shelves are that we are very surprised by the level of sales in the first days since the boycott ended, considering we’ve been out for almost three months.”
While Arla expects its sales to be significantly lower than before the consumer boycott started, it is optimistic that it can re-build its business in the region. “The first consumer signs are positive,” Ponty said. “The way people perceive our products has not changed. People are maybe starting to understand that we are innocent in this issue. We are positive and wait for the next developments.”
The breakthrough follows a campaign by Arla to dissociate itself from the blasphemous caricatures of the Prophet Muhammad (PBUH) that sparked the boycott of Danish goods back in January. The campaign, which has included dialogue with Muslim scholars, started in early April when Arla ran a full-page statement in 25 Arab newspapers detailing its 40-year history in the Middle East and its disapproval of the caricatures.
Arla then re-iterated its message at the International Conference for Supporting the Prophet (ICSP), held in Bahrain in March, and Muslim scholars at the conference recommended that Arla should be exempted from the boycott based on its condemnation of the blasphemous cartoons.
Supermarket groups in Saudi Arabia finally agreed to begin selling Arla’s products again after a press conference held in Riyadh in late March, which was attended by representatives from the country’s leading supermarket groups, as well as Muslim scholars from the ICSP.
“The majority of retailers in Saudi have agreed to take the products back and they came with a common stand that they accepted the statement from Arla Foods and accepted the statement from the Muslim conference,” Ponty said.
He added that the past few months have also taught Arla much about operating in the Middle East, and that this will affect the way it conducts itself in the region. “This whole process has helped us to realise that we have to be a bit more involved in the local societies in the Middle East,” he said.
“In the future we will see companies like ours being much more involved in practical projects where we get ourselves more involved in the local community. We will also try to promote a better understanding between Muslim countries in general and the West.”
Arla estimates that it has lost some US$1.5 million a day since the boycott of Danish products started on January 28.