Egypt’s Arab Dairy Products faces sharp decline in fortunes

EGYPT – The Arab Dairy Products Company, a leading dairy producer, is encountering a significant setback due to rising competition and shifting consumer demands.

According to the company, known for its popular cheese and dairy offerings, this has weakened its market position, sparking concerns among experts about its future in Egypt’s competitive dairy sector

In recent years, Arab Dairy Products, once a dominant player in the Egyptian market, has struggled to maintain its foothold. 

The company, which was acquired by FrieslandCampina, a Dutch dairy giant, in 2019, had ambitious plans to expand its operations and boost sales both locally and internationally. 

However, economic challenges in Egypt, including inflation and currency fluctuations, have impacted the firm’s profitability. 

A spokesperson from FrieslandCampina noted that while the acquisition initially showed promise, the company has faced “unexpected hurdles” in adapting to the local market dynamics.

The Egyptian dairy industry has witnessed rapid changes, with foreign and domestic players vying for dominance. 

According to industry analysts, five major companies, including Arab Dairy, have historically controlled much of the market. 

Yet, a report by Euromonitor International highlights that smaller, local producers are gaining traction by offering affordable alternatives, putting pressure on established brands. 

Arab Dairy’s export director, Wael Morsy, had previously outlined a goal in 2015 to grow sales by 30-35% annually over five years, a target that now seems out of reach given the current downturn.

Economic factors have played a significant role in the company’s struggles. Egypt’s rising production costs, coupled with a devalued currency, have squeezed margins for dairy firms reliant on imported ingredients.

 “The cost of raw materials has skyrocketed, and we’re finding it hard to pass that on to consumers,” said a senior manager at Arab Dairy, speaking on condition of anonymity. 

This sentiment reflects broader challenges in the sector, where balancing quality and affordability has become increasingly difficult.

Despite these setbacks, some experts remain cautiously optimistic. 

A report by Statista forecasts growth in Egypt’s dairy market, projecting a 9.63% increase between 2024 and 2029, potentially reaching a value of US$38.42 billion. 

Analysts suggest that Arab Dairy could recover if it adapts its strategy to focus on cost-effective products tailored to local tastes. 

“There’s still a chance to turn things around, but it requires quick action,” said Ahmed Khalil, a Cairo-based market researcher.