Baladna CEO Exclusive Part I: Portfolio innovation and forward planning key to surviving and thriving says dairy giant
Baladna is well-known for helping Qatar achieve dairy self-sufficiency as a country as the nation faced a diplomatic crisis and blockade when its neighbouring countries blocked its access to the outside world over claims of it supporting terrorism activities. It now not only provides dairy for Qatar, but is one of the biggest dairy firms in the Middle East and exports to several countries too.
Now the firm can add the successful navigation and even prospering through the COVID-19 pandemic to its list of achievements, having seen tremendous growth in both profit and revenue in its FY2020 annual results (Revenue: 68% year-on-year growth from QAR486mn/US$133.5mn to QAR815mn/US$223.8mn; Profit: 152% year-on-year growth from QAR60mn/US$16.5mn to QAR152mn/US$41.7mn) even through the darkest times of the pandemic.
Baladna continued its success in its recently-announced Q1 2021 results, revealing a 54% growth year-on-year in net profits to hit QAR44mn, even in the face of reinstated lockdown restrictions in the region.
“One of the key reasons we have managed to achieve this success is due to our product portfolio management – Improving our portfolio has always been a major strategic objective, and in Q1 2021 alone we launched an additional 13 SKUs and grew our product portfolio by 5%,” Jordan told FoodNavigator-Asia.
“Product innovation is a very important part of this portfolio improvement, and we also attribute part of these gains to our newer categories which we consciously added to the portfolio, especially creams and cheese.
“One major new product line we invested in was long-life creams, which did not exist in Q1 2020 (only fresh creams were available then) – this is a very important category and new innovation for us, and despite it being so new and competing with various international products, we have seen this capture about 27% or 28% of market share already.
“Another area is cheeses, where we launched into processed and spreadable cheeses at the end of 2020. Basically we did a whole portfolio review last year to plug major gaps and make these improvements, and I think these have served us well.”
Apart from product innovation, Jordan also highlighted forward planning with regard to operational improvements as having given the company a major boost this year.
“We placed a lot of focus on operational efficiencies early on when COVID-19 hit and have worked hard to deliver on this from herd management to facility management – For instance, improved herd management resulted in higher milk yield per cow of 38.4 liters per day [which could then be used for portfolio expansion],” said Jordan.
“There are a lot of other examples such as improving efficiencies and yields in the manufacturing process or reducing sales wastage through improved controls and systems [but overall] it was an effort to make end-to-end improvement across the entire value chain early on.
“Additionally, like many companies out there we have essentially learnt to work with COVID-19 for over a year and now know where and how to streamline costs – all of these is good for securing our bottom line, and we’re also confident about our top line due to our many new products.”
Building on success
Hoping to ride on this immense success, Jordan said Baladna is already proceeding with plans to build new operational infrastructure which will help to improve production capacity and continue to build up the nation’s food security.
“The new facility will be an evaporated milk processing factory, and will be our main major CAPEX investment for the year,” he told us.
“This facility is part of our commitment to work on local dairy self-sufficiency and food security as evaporated milk is actually a very big category here. In addition, the factory will also allow us to go into things such as sterilised creams and other long-shelf-life products which we will need to ramp up exports.”
The aim is for this site to start running in 12 to 15 months, so it can be operational by next summer.
“I believe that there is also still a lot of opportunity for further growth in categories we are presently in – for example in things like juices we’re still at less than 20% of the market, same for cheeses – and I think we can continue to grow these by a lot locally, in addition to looking at new categories,” said Jordan.
‘We need the people back’
Despite all of this, it’s not to say that the firm hasn’t been hit by its share of COVID-19 challenges though – according to Jordan, one of the major issues the company is facing due to a decrease in population and also tourists.
“A lot of food industry issues these days are all dominated by COVID-19, no different for us. Here, it’s population-related where there has been a decrease in population [and thus consumers] – Qatar’s population has basically decreased by about 6%, and it’s basically the same across the Middle East due to COVID-19,” he said.
“So as the population declines, the impacts are most dramatically seen by staples such as milk, labneh, yoghurt and the like, and that’s not counting the hit we’ve taken due to the loss of the tourism industry – these are all short term challenges, but for sustainable, long-term growth, I would say we really need the people, the tourists back in the country.
“The hope here of course is that as vaccinations increase, there is light at the end of the tunnel. We hope to see growth of course, but I feel we are not yet at a stage to discuss ‘post-COVID-19’ yet, and won’t be until everyone is vaccinated so people can return and get infrastructural and other projects back in gear.”
