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Nestlé moves to dodge Middle East boycotts

By Chris Mercer , 07-Feb-2006

Nestlé, the world's biggest food firm, has taken out adverts in Saudi Arabia to refute rumours that two of its dairy products are Danish, as unlucky Arla Foods continues to suffer from 'those cartoons'.

A Nestlé spokesperson told DairyReporter.com the firm had paid for adverts in a Saudi Arabian newspaper to assure consumers there that its Nido and Klim milk powder brands had nothing to do with Denmark.

He said the move came "after a flurry of e-mails and sms messages had circulated telling consumers that these brands originated from Denmark".

 

A couple of supermarkets had also begun removing Nido and Klim products, but Nestlé said the situation had been rectified. "People running the supermarkets were victims of the same misinformation," it said.

 

The situation in the Middle East has become precarious for European food brands and businesses, indeed European people generally, as mass protests continue in the region over the publication of 12 cartoons caricaturing the Muslim Prophet Muhammad. One cartoon depicts Muhammad wearing a bomb-shaped head-dress.

 

The cartoons, originally published in Danish newspaper Jyllands-Posten last September, were re-printed across the Middle East and in several European countries last week.

 

Their Danish origins, however, have led to boycotts on all Danish products in the Middle East - causing chaos for Danish dairy group Arla Foods, which counted the region as a key emerging dairy market.

 

Arla stopped production for the Middle East last Tuesday, warning the boycotts across several countries were shaving around €1m per day off its €348m annual sales for the area.

 

The firm, whose Lurpak butter brand leads the Middle East butter sector, said Friday that boycotts had spread into Egypt, Lebanon and Sudan. It was informed by its distributor that Sudan's president had forbid the population from buying Danish products.

 

The bad news there counteracted the small nugget of good news emerging from United Arab Emirates and Oman.

 

Arla said two supermarkets there had returned its products to shelves, after a shortage of butter. "Lurpak has a market share of 70% in the Emirates. Arla's competitors have limited stocks," the firm said.

 

Finn Hansen, Arla's executive director, said last week it would take a long time for the Danish dairy firm to re-establish the business and good trading relations it had in the Middle East for 40 years until one week ago.

 

Peder Tuborgh, the group's managing director, agreed: "This could take years, but we want to see a dialogue that can solve the conflict and allow us to work towards re-establishing Arla's business in the Middle East."

 

Consumer boycotts against Arla continued Tuesday across Saudi Arabia, Yemen, Qatar, Kuwait and Bahrain.