According to the report, dairy product sales grew by more than 50% between 2007 and 2012 to US$5.8 billion in the GCC, which comprises Saudi Arabia, Qatar, Bahrain, UAE, Kuwait and Oman.
The report revealed that Saudi Arabia is the biggest dairy market among GCC states, accounting for 74% of volume. Saudi Arabia also leads the way in consumption per person, whereas consumers in Kuwait spend the most on dairy.
The largest product category is fresh unflavoured white milk with a 41% volume share, followed by laban on 21%. In terms of value, cheese is the leading category with a 22% share, closely followed by fresh white milk.
Supply cannot meet demand
Esther Renfrew, market intelligence director at Zenith International, told FoodNavigator that consumers in GCC countries are catching up with the global trends, by slowly moving away from carbohydrate-based foods to protein-rich foods such as meat, dairy and eggs.
“The key catalyst behind this shift is a growing awareness and drive about healthy living, which is an aftermath of high obesity rates and diabetes in the region,” she said. “As a consequence, the demand is now high for such foods that offer healthy nutrition and adequate amount of energy, enabling a healthy lifestyle.”
According to Renfrew, the rate of urbanisation is high in GCC countries and as a result, there are employment opportunities, which pave the way for hectic lifestyles.
“With the majority of the population finding less time for cooking, the demand for processed and packaged food is ever increasing,” she added. “But there is a supply deficit because of the high dependency on imports. This offers a substantial investment opportunity to both local companies and multinationals.”
Laban fastest growing segment
Among other findings in the 2013 Zenith report, 80% of dairy sales come from four key product categories—fresh unflavoured white milk, laban, yoghurt and cheese.
Renfrew said the most popular dairy product in the GCC is fresh unflavoured white milk, which is locally regarded as the ultimate wellness drink because it contains essential nutrients such as vitamin D, potassium and calcium.
“The GCC level consumption of fresh unflavoured white milk was almost 1.5 billion kgs in 2012, a growth of 6.8% over 2011,” she pointed out.
However, the strongest growth in 2012 was for laban, the second most popular dairy product in the GCC region—a year-on-year growth of 9%, albeit with consumption volume only half that of unflavoured white milk.
“Laban is seen as a healthy alternative to milk for the lactose intolerant and is increasing popularity across the region due to its perceived digestive health benefits,” she added.
Renfrew said that yoghurt, both drinking and spoonable, is an important dietary component in the GCC, with consumption supported by hot weather throughout the year—it saw 7.7% growth in 2012 and is expected to continue witnessing healthy sales growth in the coming years.
Healthy perception drives flavoured milk consumption
She said that even though consumption volume has yet to reach 100 million kgs, flavoured milk is continuing strong advancement in the region, owing to the growing perception that it is nutritionally better for children and a more ‘natural’ product than carbonates.
“The flavoured milk market is in different stages across the GCC states. In the UAE it is a mature market with high per capita consumption of 3.8kgs in 2012 as compared to 1.7kgs in the whole of GCC,” she said.
“However in other GCC states the flavoured milk market is a younger market growing in popularity. The most popular flavours are strawberry, banana and chocolate. It is more popular amongst the younger generations and there are specific flavoured milk products that are marketed towards children.”