Assessing a dairy opportunity in Egypt and Saudi Arabia

The situation

A consortium consisting of a leading food and beverage distributor in the Middle East and a global dairy manufacturer in the Netherlands was exploring whether to penetrate the highly competitive dairy markets in Saudi Arabia or Egypt through an industrial setup. The client asked Strategy& for help in identifying attractive plays in both Egypt and Saudi Arabia, and in particular, determining whether a joint venture in a greenfield dairy opportunity was a worthwhile investment.

How we helped

The Strategy& team assessed the dairy market dynamics and expected evolution of the competitive landscapes in Egypt and Saudi Arabia, considering consumption trends, volume and revenue potential, gross margin and profit pool, innovation trends and positioning in the market, market share of key players, and the category participation landscape. We defined a framework to prioritize attractive dairy categories and looked at different strategic scenarios, including mass play, liquid milk play, natural cheese play, and snacking play. We conducted workshops for key stakeholders at different intervals, first to introduce the dairy categories and strategic plays in Egypt and Saudi Arabia, then to present the recommended proposition for the chosen joint venture. Our presentation included an articulation of the financial implications and the required investments.

Results

We recommended an industrial setup in Saudi Arabia for one of the plays, given the attractiveness of the category, the consortium’s capabilities in Saudi Arabia, and that country’s favorable market conditions.