The outbreak of the deadly lung infection SARS in Asia is starting to impact on Arla Foods' sales in the area, the Scandinavian company reported this week.
Although eating out is part of the South East Asian lifestyle, the outbreak of SARS has meant that many consumers are now eating at home for fear of being infected, and this is beginning to have an impact on Arla Foods' sales in the region.
Bente Christensen from Arla Foods' overseas division said that one order had already been cancelled - a consignment of Danish mozzarella for pizzas.
Lars Møller Henriksen from Arla Foods' sales office in Kuala Lumpur in Malaysia confirmed that consumers are staying at home in increasingly large numbers. "I'm concerned that SARS will affect the food service business most of all. I've received several e-mails from our agents wanting to delay orders. We can only hope that the situation will increase sales from supermarkets."
Henriksen is responsible for sales of butter and cheese in China, Hong Kong and Singapore, the three countries in which SARS is particularly prevalent.
"In Hong Kong it is now forbidden to hold in-store demonstrations and in Singapore all suppliers of our products have their temperature taken before they are allowed to enter supermarkets," he said.
"In general, we're trying to avoid visiting public places and we're on our guard when people return from trips or if they're suffering from SARS-like symptoms."
The SARS situation could not have come at a worse time for Arla Foods, which is already unlikely to meet its growth targets for 2003 as a result of falling exchange rates. Profits for the first six months of the fiscal year were DK346 million (€46.6m) against DK425 million last year.
As well declining exchange rates, Arla Foods has been affected by increasing price pressure in export markets and by the fact that EU subsidies have not increased correspondingly. A further factor is the current trends in the German market where consumers are turning away from higher-priced products in favour of discount stores.