Middle East/North Africa (MENA) dairy import demand has come back very strong in 2018. In the first eight months of the year, imports of milk powder, cheese, butterfat and whey were up 15 percent from the prior year, and U.S. volume was up 62 percent.

The region is characterized by rapid industrialization and urbanization, fast-growing populations, young demographics and rising disposable income. These factors have driven a significant shift towards western food tastes. For instance, MENA's extruded snack market is expected to reach $2.5 billion in 2023, expanding at more than 4 percent/year, increasing demand for cheese, butterfat and dairy ingredients.

Here's an update on what's happening in some of the top dairy-importing markets.

General market update: The Egyptian economy continues to improve, particularly in the non-oil private sector. New business inflows, from both domestic and foreign sources, are evident. UAE has expressed interest in strengthening food and agricultural production partnerships with Egypt. Egypt’s current economic situation is stable, but people are still hurting from inflation and subsidy cuts on utilities.

SMP: European SMP (mostly from Sweden) has the largest share of the market, at offering prices of $1,950/ton. German SMP and Danish Arla brand also are available. U.S. SMP prices are about $150/ton higher than Swedish prices.

WMP: Most WMP comes from New Zealand (from Fonterra and Synlait), at prices of $2,750-2,850/ton.

Whey powders: Demand for sweet whey powder is strong in the Egyptian market. Turkey and Ukraine are the major suppliers, selling product with protein content of 11-13 percent at $865/ton. Turkish brands found in the marketplace are Bahcivan and Kempostar. The latter is preferred by consumers for its quality attributes: moisture no more than 2 percent; protein at least 11 percent; lactose at least 75 percent; titratable acidity no more than 0.13 percent; pH (in 10-percent solution) at least 6.0; fat density at least 0.60 g/cm3. Sweet whey powder from Italy also is available at $1,060/ton.

Butter: Butter for the industrial sector is being imported mainly from New Zealand and to a lesser extent from Uruguay and India. New Zealand butter is selling for $137 for 25-kg blocks ($5480/ton). Little if any European product is moving into the market due to higher prices.

Just 10 percent of the Egyptian population is consuming butter. The vast majority opts for margarine instead because it is locally produced, available in retail stores and is less expensive.

Cheese: Most of the mozzarella and white cheese on the market is locally produced. Mozzarella made with vegetable oil, from Turkey, is available as well. These imports are gaining interest because of their lower price and longer shelf-life.

Demand for cheese blocks is still evident in Egypt. Imports of cheddar, mozzarella and emmental from Europe and the United States in 20-25 kg blocks are steady. These are further processed into smaller blocks (2.5 kg and 5 kg) and distributed to the retail sector.

Foodservice cheese use is slightly lower during the school year, as families eat out less, though the decline is not significant.

General market update: Increased local dairy production and an increased emphasis on health and wellness are factors in the marketplace. Recent developments include:

SMP: Most of the product on the market is coming from Europe, selling for $1,950/ton.

WMP: New Zealand WMP is dominating in the market, at a price of $3,000/ton.

Whey powders: Most demineralized whey is coming from Eastern Europe. Ukraine product is selling for $850/ton, Polish product for $1,000-$1,100/ton. Permeate from the Netherlands and Switzerland is selling for $850-$900/ton.

Butter: Imported butter is coming from New Zealand and from Europe (mostly France). It is selling for $185-190 for 25-kg blocks ($7400-$7600/ton). There is no U.S. butter on the market. Blended butter made with palm oil and yellow-colored to look like margarine is coming from Malaysia at just $66 for 25-kg blocks ($2640/ton).

Cheese: With the success of American chains and quick-service restaurants, Saudi importers are showing more interest in U.S. cheeses. Premium artisan U.S. cheeses also are making their way to the retail sector, offering high-end products catering to a specific target audience. Convenience stores and gas stations have begun to display U.S. cheese as well.

General market update: The food and beverage industry continues to grow throughout the UAE, with 473 new food outlets opening in the first half of 2018 in Dubai, up 7 percent over the same period last year. The number of new F&B locations is expected to grow in the city ahead of Expo 2020, with a significant increase in the immediate run-up to the world event.

Expansion is not only taking place in Dubai but spreading to other Emirates. For instance, Nando's newest branch at Fujairah City Centre Mall is the company's first restaurant in the Emirate. The new restaurant represents a move by Nando's into a currently under-served market within the UAE, with only a handful of international restaurant chains operating in Fujairah as compared to neighbouring emirates. In addition, American chains, namely Dickey's, a family-operated Texas barbecue restaurant, has undertaken its first international expansion to the UAE in Abu Dhabi.

Health and wellness issues are shaping market demands as well.

Interest in clean-label ingredients and organic food is more prevalent. Ulrick & Short, a UK-based supplier of clean-label ingredients, is in talks with distributors and food manufacturers to enter and expand in the UAE and GCC market. The firm is looking to supply the bakery and confectionery sectors with replacers for fat, sugar and salt.

The organic food segment is gathering pace, bolstered by consumers' growing interest in health and wellness. Consumers are increasingly looking out for more natural foods, and Arla's new organic milk line meets this need.

The market also is seeing more emphasis on camel milk. Camelicious, a local UAE camel farm and camel dairy company is considering restarting its own in-house camel cheese production operation, to cater to demand from Europe and further afield. With consumers willing to spend more on fitness-related products, the company is also currently developing camel milk protein bars.

In this environment, local dairy companies continue to do well. Al Rawabi, the largest UAE-based dairy company, reported a 12-percent increase in revenue in the first half of 2018. Growth was driven by strong retail performance from the introduction of a series of new products, the company says.

SMP: Most SMP on the market is coming from Western and Eastern Europe. The United States is supplying some powder as well, while New Zealand suppliers are absent from the market. SMP from Western Europe is selling for $1,900/ton.

Whey powders: Whey powder is being supplied to the UAE from Canada, Europe and Turkey. Turkish whey powders are about $200/ton less expensive, appealing to price-conscious buyers.

Butter: Butter of various origins are available in the market. The choice depends on users' requirements and preference. Users requesting yellowish butter are sourcing it from New Zealand, Australia and Ireland. Those in need for a whiter butter source it from the United States.

Cheese: The quick-service sector is buying U.S. cheeses, namely cheddar, Monterey jack, mozzarella, parmesan and jalapeño jack. However, New Zealand mozzarella (Anchor brand) is preferred by pizzerias for its quality attributes.

Nina Bakht Halal is USDEC’s Middle East/North Africa representative. Global Dairy eBrief Exclusives are confidential, password-protected articles for USDEC members only.

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