Saudi milk exports beat Germany as production soars

The firm’s annual Dairy Index report, released this month, revealed Saudi Arabia exported more than 293,000 tonnes of liquid and powdered milk, compared to 292,000 tonnes from Germany, Western Europe’s largest milk exporter. While its exports have soared, Saudi Arabia still remains a significant importer, bringing in 194,000 tonnes of milk last year.

“Since the 1970s the country has invested a lot into becoming more self-sufficient, especially in terms of food production. Since then it has turned into a major producer of dairy, exporting to countries like Jordan, Iraq, Yemen and Syria,​” said Dennis Jönsson, president and CEO of Tetra Pak.

“Due to an increased demand in dairy products, both locally and in the Middle East as a whole, Saudi Arabia has been able to capitalise on this to drive further development in their dairy industry. Purely at a domestic level, they are set to see demand in Liquid Dairy Products (LDP) climb by 4.3% CAGR between 2013 and 2016​,” he added.

Consumers demand diversity​

According to Jönsson, the Saudi dairy market is seeing a shift towards more diverse product ranges, driven by an increasingly health-conscious population. Nutrient-enriched and lactose-free dairy products are now becoming increasingly popular, along with flavoured milk, targeted at children.

These trends can also be seen across the GCC, said Jönsson: “Consumers across the region are becoming more health conscious and will therefore look for products that match their changing lifestyles and attitudes; this includes higher interest in organic milk, dairy alternatives and dairy products with a value-added nutritional focus. This shift will also give rise to premium dairy products which are becoming increasingly popular with the more affluent younger generations.​”

Demand strains suppliers​

In the coming years, the biggest challenge for regional milk exporters will be the increasingly strong growth in dairy demand across emerging markets, according to the Tetra Pak report. While Saudi Arabia now fulfils more than half its demand with domestic production, increasing it further may be challenging with its resource-poor land.

“As demand for LDP continues to rise with emerging dairy markets such as South East Asia, Africa and South America demanding not only more dairy but more from their dairy, they will have to find ways to expand their production capacity​,” said Jönsson.

Signs of a tightening market in Saudi Arabia may already be appearing – last week Saudi press reported a backlash to price rises across milk products by three Saudi producers, with wholesale prices of small milk cartons up by 37.5%. According to reports, consumers have made complaints to the Ministry of Commerce, saying the price increases are coming on the back of reductions in package sizes.