From Desert Dates to State-of-the-Art Dairy Farms

Camel meat and dates may still be very popular, especially among the more traditional families, but the new generation of Saudis is ever ready to pay for Western convenience and style when it comes to food. Walk into any class-A supermarket of Riyadh and you could be anywhere in Los Angeles, with even better stocked shelves.

“Ours is a young society which likes fast food and expects quality in return for its money,” says Mohammad Al-Ammari, chairman and managing director of Food Production Company (FPC). Al-Ammari studied in Denver and worked for five years as a banker in New York: he knows the value of a good food at a reasonable price.

But while consumer industry giants like Procter & Gamble and Gillette are forming joint ventures to expand their reach in international markets, local companies like FPC make the best of their local portfolio, relying on focus rather than scale.

“When I joined FPC in 1999 the first thing I did was to close down the loss-making entities and concentrate on our core business,” says Al-Ammari, confident that the company's flagship brand Wafra is excellent value for money.

FPC, which boasts annual sales of $50 million, produces a wide range of high-quality foods. Each of the four factories has its own quality control laboratory, able to meet the very stringent demands of the Saudi Food and Drug Authority.

Another company that focuses on base products with strong appeal to the local market for milk and yogurt is Alsafi-Danone. Alsafi, which is part of the Al Faisaliah Group, was established in 1984 and merged with the French dairy giant in 2000. Together they run and distribute the products of the largest integrated dairy farm in the world.

“I believe that it was Prince Abdullah Al-Faisal who made this project possible back in 1982, when he bought the first 3,000 cows from Holland and the U.S.,” says Karim Mansour Dahbi, general manager of Alsafi-Danone.

Today, Alsafi-Danone boasts a herd of 35,000 cows at its 8,648-acre state-of-the-art farm in Kharaj, and earned a place in the Guinness Book of World Records in 1998.

Although most Saudis still quench their thirst with water sourced from the sea, thanks to a network of desalination plants, sales of beverages are growing fast. “Annual consumption per capita is only 34 liters [71 pints], but the potential for bottled water is huge and growing at 6 percent a year,” says Al-Ammari.

Desalinated water is also a key issue for the agriculture industry. “Irrigation costs can be as high as 75 percent of all expenditure for some companies, a level far above Europe or North America,” says Engr. Abdulaziz Al-Babtain, general manager of the National Development Company (NADEC).

The food industry in Saudi Arabia is worth around $26 billion and is increasing. But international competition for the modern consumer's attention is ferocious. Home-grown companies aim to satisfy the needs of the low-middle market to stay competitive.

Producing and packaging for other private labels is also a growing business in Saudi Arabia. “Hypermarket chains have recognized that by sourcing locally instead of importing, they can make huge savings in inventories and in logistics,” says Al-Ammari, who would like to partner and produce for leading foreign brands, particularly from the U.S.

“If Americans or other foreign companies want to come to the Saudi market, it is much better for them to choose a local manufacturer. It saves them time and money to produce fresh products here instead of shipping them,” he says.