GROUP -8 , Section -A , DCP

ALMARAI MARKETING
REPORT


1

TABLE OF CONTENT

S.NO CONTENT
Page
1 Introduction 2
2 Product 4
3 Pricing 8
4 Place 9
5 Promotion 11
6 Conclusion 15
7 Reference 16
8 Appendix-1 17
2

1.ALMARAI : AN ILLUSTRATED HISTORY
Almarai started its journey in the year 1977 when HH Prince Sultan bin Mohammed bin Saudi
Al Kabeer, its founding Chairman, recognized an opportunity to transform Saudi Arabias
traditional dairy farming industry to meet the needs of a rapidly expanding domestic market.
Under his guidance and patronage, numerous agricultural projects were launched to achieve his
vision. Starting with fresh milk and Laban processing, the scale and scope of these initiatives
soon expanded to incorporate modern dairy farms and state-of-the-art processing plants. During
the early 1990s, Almarai entered a period of restructuring and reinvestment that took it from a
decentralized structure to a centralized structure. The aim: to establish itself as a low-cost
producer so that its consumers can enjoy high-quality products at an affordable price. In line with
this model, it replaced five decentralized processing plants with its first central processing plant.
It also replaced ten small decentralized dairy farms with four large dairy farms in Al Kharj in the
central region. In late 2005, it commissioned a second, larger central processing plant,
incorporating a new cheese plant. It also commissioned two new super-farms. In the same year, it
also moved from being a privately owned company to a publicly listed company and now has
around 70,000 shareholders. At the end of 2011, its market capitalization exceeded SAR23
billion. Its growth strategy encompasses diversification through innovation, geographical
expansion and organic growth. Apart from its co-founded strength of dairy and agriculture
products, it also ventured into several other market verticals, thereby consolidating several
product markets under one roof. Significant of these are:
Bakery
In 2007, Almarai entered the bakery products market by acquiring Jeddah-based Western
Bakeries. Two years later, it started the construction of a new bakery facility in Al Kharj. It
continue to develop its bakery portfolio with innovative products and new distribution channels.
Poultry
In 2009,it added poultry products to its portfolio through the acquisition of Hail Agricultural
Development Company (HADCO). After investing in a world-class production facility, it
launched the new premium poultry brand Alyoum. Its brand presence is significant in critical
markets.
Geographical expansion
Paving the way for geographical expansion beyond GCC, Almarai pooled its respective expertise
in dairy and juice with PepsiCo. In 2009, it launched a joint venture together the International
Dairy and Juice (IDJ) Company.
Today, Almarai is a brand behemoth, having established market supremacy and has lead the
market with its capablity of delivering high quality products to more than 70,000 customers
within the Gulf Cooperation Council (GCC) daily.

3

Infant nutrition
In 2010, Almarai entered the infant nutrition market with the construction of the regions first
infant nutrition plant at Al Kharj, to be commissioned in 2012. Recognizing that the best way
forward involves working with acknowledged experts in this field, it formed the International
Pediatric Nutrition Company (IPNC), a 50-50 joint venture with Mead Johnson Nutrition. Its
infant nutrition products have been co-branded under Almarai and Mead Johnsons flagship
range, Enfa.
Outlook of dairy industry in gulf
Limited arable land and acute water shortage restrict agricultural production in GCC. Amid
rising population and insufficient domestic food production, GCC countries rely heavily on
Imports; in 2010, food imports in the GCC region accounted for more than 70% of its total
food requirement. This over dependence on imports, together with rising global food prices, has
alleviated the food security issue in the region. In the past, disruptions in food imports, either due
to policy restrictions by exporting countries or natural calamities, have affected the region
significantly. Consequently, GCC governments have taken several initiatives to enhance food
security in the region. With limited food production capabilities, GCC governments are
increasingly focusing on developing long-term relations with food producing nations globally. In
addition, governments are investing significantly on developing the food processing sector in the
region. GCC is gradually emerging as a major food processing and re-export destination. Among
GCC countries, the UAE leads the food processing sector due to its strategic location and strong
logistics.



















4


2.PRODUCT

Almarai has various products in its product assortment. The various product which forms the
product mix of the Almarai are:
Dairy
Liquids
(1977)
Yoghurts
and
Deserts
(1977)
Foods
(2005)
Juices
(1999)
Bakery
(2007)
Poultry
(2009)
Infant
Formula
(2010)
Fresh Laban Zabadi Cream Cheese
Spread
Pomegranate

7Days Alyoum Trays

Almarai
Enfamil A+
Stage 1
Fresh Milk Gishta Cheese Slicess Orange with
Pulp

Lusine Crispy
Sticks
Alyoum Whole
Chicken

Almarai Enfamil
A+ Stage 2
Fresh Flav. Milk Labneh Butter Alphonso Mango

Lusine Sliced
Breads
Almarai Enfamil
A+ Stage 3
Milk Shake Sterilized Cream Ghee Strawberry

Lusine Burger
Bun

Long Life Milk Vetal Zabedi Whipping Cream Mixed Fruit

Luisine Puffs
Evaporated Milk Layered Fruit Cooking Cream Mango

Luisine
Croissants

Vetal Laban Custord Mozzarella Orange

Luisine
Sandwich
Biscuits

Lacto Free Crme Caramel Tinned Cheddar
Cheese
Apple

Luisine Wafers
Fresh Flav.
Laban
Soured Cream Haloumi Mango Mixed
Fruit

Luisine Mamoul
Flav. Long life
Milk
Flav. Yoghurt Block Cheddar Mixed Berry

Luisine Waffle
Almarai Up Triangle Cheese Guava with Pulp

Luisine Cup
Cakes

Cheese Square
Portion
Orange and
Carrot


Feta Lemon with
Mint


Kiwi-Lime


5

5078.3
1601.8
1243.2
1290.6
504.4
Sales (in millions of SAR)
Dairy Products Food Juices Bakery Poultry
Product line Analysis
Width of the product line 7
Length of the product Mix 65
Average product line length approx. 9
Sales by Product line for the year 2012









Thus dairy business is its core business accounting for almost 51% of its sales. While as per rate
of growth Poultry product line had the growth of 58% when compared with the previous year.
Thus it has a high potential and a segment in which company is investing heavily. Dairy Product
sector is another sector in which company is investing as it is its core sector.
Sales Comparison between the year 2011 and 2012



Dairy Products Food Products Poultry Juice Bakery
2011 4236.8 1446.6 319.2 888.1 966.1
2012 5078.3 1601.8 504.4 1243.2 1290.6
Column1
0
1000
2000
3000
4000
5000
6000
S
a
l
e
s

Comparison between the sales in 2011 and 2012
2011 2012
6

Product Strategies
Earlier when Almarai was established, it had its presence only in Dairy Products. But they have
decided to expand their business after 1990s. As a part of their strategy to expand, they started
acquiring other businesses. They began venturing into new segments in addition to launching
their existing products in new markets. In 1997, Almarai introduced fresh juice products to
complement the range of dairy products that they already have. In 2007, they went for further
expansion by venturing into bakery business with the acquisition of Western Bakeries.
In 2009, poultry was added to their business by acquiring a company called Hail Agricultural
Development Company (HADCO). Again in 2009, they acquired Mead Johnson Nutrition
Company to form a 50-50 joint venture known as the International Pediatric Nutrition Company
(IPNC). In the same year, Almarai formed a joint venture with PepsiCo & launched a company
called International Dairy and Juice (IDJ) Company to jointly utilize their expertise in Dairy and
Juice industries respectively.
Product Design and New Product Development
They design and develop new products based on various target groups. They segment the market
into various groups and design the products based on the needs of those groups. For example,
they launched Flavored Milk product with different flavors which are targeted at kids. They
entered into the baby food market which also provided the company the opportunities to expand
into new categories. They position the brand in the market as premium quality food and
beverages that are fresh, nutritious, healthy and irresistible. They also position themselves as
innovative which creates new treats and delicacies for consumers. They try to imbibe this image
in the minds of the consumers through their advertisements.
Success Factors
There are many reasons for the continued success of the brand Almarai. They invest a lot on
the state-of-the-art infrastructure and best quality production facilities which will give them a
competitive edge over the other brands. They believe that employees are one of the most
important factors for the success of the organization and true to that, they recruit people with the
high skills and quality experience and take proper care of their employees. Their slogan is
Quality You Can Trust. Even though they venture into new businesses and markets, they
ensure that Quality is not compromised and that their customers are satisfied. The company has
an excellent distribution system. They have the go-to-market systems that are unmatched. The
company distributes its products annually to all the six GCC states and also recently ventured in
North African countries like Egypt etc. Almarai has a very comprehensive marketing campaigns
and innovation programs. They change the packaging graphics of their products regularly to give
them a fresh look which will strengthen the consumer appeal. They also sponsors various events
like International Hail Rally, Dates Festival, weddings and disabled children which will develop
Loyalty and Brand image for Almarai. If we have to quote an example of the result obtained by
quantifying all these strategies and success factors, we can say that the combination of product
7

improvement, new packaging graphics, marketing techniques and focused distribution strategies
resulted in overall sales increase by 33.5% from 2011 to 2012.

Packaging and Labeling
The company has a consistent look on its all the Dairy product. It has the nutrition information
per 100 ml of serving and it is available in a packing of 180ml,200ml,360ml,500ml,1lt,2lt. The
products have different colour labels for different products . It uses Green colour labels for Full
Fat products , Red for Low fat and Pink for Skimmed in both Laban and Milk category.
Company is also bringing innovation in its packaging to boost sales For Eg In the year 2012 it
has started selling its spreadable cheese in innovative Jars. In the year 2012, the company did a
major investment in Poultry product line in the project for producing hygenically proofed shrink
packaging for whole birds. The focus on consistently delivering better product quality and
attractive packaging along with unmatched distribution and sales reach, have combined to see
revenues grow 58.0% to SAR 504.4 million for the poultry product line.

















8

3.PRICING STRATEGY
Prices of milk and other dairy products such as cheese and laban were not regulated in the
middle early until early 2000s. A price war started in the middle east over prices of dairy
products at that time. Big players such as Al marai decreased their product prices substantially.
As a result the local dairy companies and other small firms had to follow the suit in order to
maintain their customers. But the relative profit for the smaller companies was relatively low and
they started to get pushed out of the market. To counter the low price the small companies started
to merge with the agenda that if merged, they can take on the bigger players in the dairy market.
Despite of this bold move they could not withstand the financial losses they were making since
the market of share of such companies was very small as compared to bigger players such as Al-
marai who had bout 60% share in the market.
At this point the Saudi government decided to intervene. After a lot of discussion and meeting
over the ongoing situation, the government fixed the prices for milk and other dairy products so
that all firms could harness the same benefit only depending on their market size. Further,
another agreement was signed which put a limit on the marketing time of any new product.
According to that agreement, no company can start promotion of a new product more than 2
months prior to the launch of the product in the market.
In lieu of these conditions all dairy companies including Al marai have to maintain maintain the
upper limit of their prices. They cant obviously increase their prices because their market share
will start to decline and also they cant decrease their prices because of the limitation by the
government. So the prices of milk and dairy products throughout the middle east is uniform and
hence there is no prevailing pricing strategy.
In year 2001, Almarai decreased its prices a little because they were able to get raw milk at
cheaper prices directly from local farms and hence decreased their cost of production. Again
local players started to raise concern and accused Almarai of breaking the agreement and trying
to induce another price war. So, once again Almarai had to increase its prices back to the usual
market trend.
Here is one look at prices of major milk products of Almarai and its UAE competitor Al-ain:
Product Al-Ain Price (AED) Almarai Price (AED)
1 ltr bottle
6 6
2 ltr bottle
10.5 10
1 gallon bottle
15 14
Yogurt cup
3 3
Laban bottle
7 7




9

4. PLACE : CHANNELS OF DISTRIBUTION

Channel of distribution is a pipeline of a product or a service from a producer to consumers. It
tells consumers where customers will obtain a product or service. The type of distribution
Almarai uses is indirect distribution. It means that there are several intermediaries between
points of production and points of sale. The more diverse distribution channels become the less
bargaining power a single distributor will have.
It was found that Almarai primarily applies three types of distribution channels:
(1.) Stores, retail outlets, one-shop stops : Almarai has strategic alliances with the
distribution channels such as Carrefour, HyperPanda, Al Othaim etc. where it distributes
its products. The channels provide for critical and preferred shelf space over Almarais
competitors.

(2.) Web : Almarai has a limited online presence but it does reach out to customers through
various websites such as : earlybird, trolley, alosraselect.com, laabai.lk etc.

(3.) Mobile : Almarai has quite recently launched an app - Almarai Hoops, on iTunes where
users can play the game and win award points depending on what item they succeed to
hoop around. The users can claim cash back worth the award points.

Supply-Chain
Almarai has the strongest distribution network in GCC. Below is the overview of the various
stages in the production and the product distribution channel, which forms the backbone of
Almarais core strength :

(1.) Manufacturing facilities : Almarai has two large manufacturing central processing
plants : CPP1 and CPP2 located at about 130 Km away from Riyadh. These facilities
are the hub of Almarais extensive distribution channel. These plants are fully
automated and equipped with technologically advanced, state of the art machineries.
The raw milk produced at the dairy farms is transported to these plants in insulated road
tankers. Almarai has been constantly expanding its manufacturing facilities to produce
more than 60% of bottle production in-house.


(2.) Packaging and distribution : The more than 240 products are packaged at the
manufacturing facilities and delivered to around 100 sale depots. Then 2000 delivery
vans transport the products to more than 40,000 end retail outlets. Almarai caters to
more than 42,000 customers throughout the GCC on a daily basis. Around 30% of sales
come from small grocery stores and about another 30% from supermarkets. This trend is
expected to shift further towards the larger retail units. This is because of increasing
incomes and demands on time which will lead to higher demand for supermarkets or
10

one shop stop where a weeks requirements can be purchased in a single visit. Even
though these larger retail units such as Carrefour, Panda, and Al Othaim entail lower
margins it is a good sign for Almarai because these units will extend Almarais
customer base.
Vertical Integration
One of the Almarais core strength is its high vertical integration. Almarai enjoys a considerable
presence across the value chain in the key stages of :
(i) Production (from raw material to processing) : Almarai owns almost but not all of
the dairy farms from where it collects raw milk. It processes the milk at its own
plants.

(ii) Distribution (from transportation to point of sale) : Almarai owns all of its 54 tankers
and 450 trailers that carry raw milk or finished products. It owns all of its more than
100 sale depots and has strategic partnership with big retail chains such as Carrefour,
Panda, Al Othaim etc. Savola, the owner of Panda has nearly 30% of stakes in
Almarai and its CEO is on Almarai board.
Almarais involvement in these crucial stages enables it to following advantages :
(a) Cost control : Since Almarai owns most of its supply and distribution so it can adjust its
production and transportation to exert control over its costs.

(b) Quality : The majority ownership of its supply-chain ensures Almarai of a standard
quality of its products throughout.

(c) Delivery : The sole ownership of Almarai over its transportation facilities makes the
delivery of its product timely and efficient.

(d) Reduced reliance on external suppliers : Vertical integration mitigates Almarais
reliance on external suppliers. It has higher bargaining power over suppliers and there is a
constant threat to supplier to lose business because in case of a default or lack in quality
Almarai can always either switch to other suppliers or self sustain the supply.

(e) Growing Customer base : Almarai can dictate terms on potential points of conflict over
prices and quality of products. This helps Almarai gain and retain customers.
Organic Expansion
On February 13 - 2008, Almarai and PepsiCo entered into a joint venture called - International
Dairy & Juice Limited to explore new business opportunities. The stakes are divided as 52% for
PepsiCo and 48% for Almarai. The joint venture, as a part of its expansion strategy, focused
initially in Southeast Asia, Africa and the Middle East.
11

Almarai has leveraged PepsiCos distribution network and capabilities, market knowledge and
insight to strengthen its position outside GCC.

5. PROMOTION : MARKETING COMMUNICATION
Marketing Communications refers to the different strategies used by companies to reach and
attract their target market through different channels of communication. It is a term
encompassing all those messages, using media and any other platform, that companies want
to communicate to their audience in order to expand their customer base and hence build
customer loyalty. Among the 4 Ps of marketing, Marketing Communications corresponds to the
Promotion part. It is a pretty exciting phase of a product life cycle for all marketers wherein
advertising, promotional offers, taglines etc are thought of to attract customers or make the
product saleable. Marketing communicators are those who practice branding, direct marketing,
sales, sales promotion, promotion, packaging, public relations and online marketing.
There are, fundamentally, three basic objectives of promotion:
1) To communicate information about products to present and potential customers
2) To differentiate a product from other products by increasing Points of Difference (POD)
3) To increase demand for products
In the case of Almarai, various channels or communications media that are used to propagate
messages to customers are:
Advertising
Almarai has constantly focused on products modification over the years and it comes as no
surprise that with each passing Television commercial, Almarai showcases different strategies to
outsmart competitors. Strategies, in this case, range from appealing to customers taste buds to
emotionally connecting with them or to signal the presence of Almarai products to new markets.
At Alamarai, focus has shifted from product-oriented television commercials to emotion-
oriented television commercials. This stems from the fact that this is the age of Perception
Selling Point (PSP) which combines all the advantages of having a Unique Selling Point (USP)
with the advantages of connecting with the target market through emotional appeals or connect.
Through many of its commercials, Almarai has specifically targeted children by making use of
animations or by personifying the various products it endorses. Many of Almarais dairy
products have been showcased on television citing a mother-child relationship to connect with
customers. This age of PSP focuses not on the product, rather the perception and value that the
product can evoke and provide to its users.Certain television commercials of Almarai have
primarily focussed on its product composition by focussing on its purity and other such
attributes, thus elucidating a crystal clear difference in its products with those of its
competitors.Almarais Finally in Egypt commercial focussed on the expansion of the brand
Almarai to different parts of the world and emotionally connected to all its customers by making
12

them feel that their brand is going places. Such is the power of advertisements. Almarai has
constantly kept itself in the spotlight through sponsorship of various reputed events such as:
1) International Hail Rally
2) Dates festival
3) Annual Equestrian Race
The sponsoring of such events has kept Almarai always in the minds of many and has
successfully targeted new customers through such event sponsoring initiatives.Another factor
which has been instrumental in Almarai creating a perception selling point is their association
with the underprivileged, especially children with disability and this has instantly struck
chords with many customers who believe their brand is socially responsible.
Social Media
The advent of social media has revolutionised marketing communications for many companies
and Almarai is no exception. It has a dedicated official Facebook page with members in large
numbers and is full of constant updates on everything happening at Almarai to keep its
customers in touch with their brand on a more personal level.A very interesting differentiation
that Almarai has done with respect to other companies is that they constantly update happenings
at a daily level including their interactions with distributors and suppliers for e.g.
procurement of feed farms from various countries. This is a marked change from other
companies pages wherein the focus is only on the front-end product and not into what goes on
into making a product. Almarai has also come up with an online gaming initiative called
Almarai Hoops which is a gaming application found on Facebook, Google or the Apple app
store. The interesting thing about this application is the way Almarai uses it to promote its
products. Under rules and conditions, someone who registers has to provide his basic details
including emails etc. and through a mandatory regulation that all registered users of this
application will get promotional offers and updates of various products, Almarai does the
promotion part. This game again showcases the PSP wherein it is trying to connect to the young
age group segment of its target market.
Integrated Brand Promotion
Almarai has established itself as a leader in dairy products and other non durables in the Gulf
region and is the market leader in several segments like Fresh dairy, Fruit juices and poultry. It
has achieved this by co branding itself with several companies that it has acquired. Some of the
influential ones are:
1. Western Bakery Company Limited.
13


This is an advertisement showing western bakery cookies being served with Almarai milk. The
idea is that cookies taste better with Almarai milk. The acquisition of this company gave Almarai
the opportunity to expand its product line and to have an integrated brand promotion opportunity.
Western bakery products are now marketed as Almarais which a better known brand than
Western Bakery is.
2. International Dairy and Juice Co.

Here Almarai products from dairy to juices are advertised together as a promotion of the Almarai
extended product line. The primary product of the Almarai company is its dairy products, by
acquiring International Dairy & Juice it now has the rights to promote the juices at par with its
dairy products
3. Hail Agriculture Development Co.
14


By acquiring Hail Agriculture Almarai expands its product line to poultry products in a region
which imports most of its poultry needs. As the dairy products and poultry products are
complementary to each other Almarai now promote the products as a single product which is a
healthy breakfast of milk and eggs.

Almarai Market Survey
Objective This survey was conducted to find out the brand recognition and the consumer
preference of Almarai products.
Scope The questionnaire contained 10 questions (Appendix-1) related to Alamrai juice and
other Almarai products. The survey was done on a total of 93 respondents who had purchased
Almarai products from the Bravo retail store.
Findings

Out of 93 respondents 67 said that they drink Almarai juice, while 26 said they dont. When
asked about which flavor do they like the results were 17 for Orange, 14 each for Mango and
Apple, 9 for Lemon, 6 for Strawberry, 3 each for Cocktail and Mixed berry, and 1 for Guava.
When asked about the reason they preferred Almarai over other brands, the biggest factor was
the taste followed by price and availability. Also people who had brought Almarai juices were
also likely to buy other Almarai products like dairy and poultry products. There was a correlation
between the purchase of dairy products and the infant nutrition products. When asked if
attractive discounts are offered by Almarai most respondents agreed. Overall the survey found
out that there is a good level of preference of Almarai products over other brands with 47 out of
93 respondents preferring Almarai, 33 for Al Rawabi and 13 for Lacnor. The main reason for this
dominance of Almarai in the minds of consumers is its quality and competitive pricing.
Distribution also played a major part in Almarais preference as it is the most available brand in
any superstore and occupies the most advantageous position in the aisle. Discounts and
promotions also play an important role but are less significant factors.


15











6. CONCLUSION
In conclusion,













16














7.REFERENCE
[1] Mrpurejuice. Almarai-Orange & Carrot Juice AD-English. YouTube, Jan 21, 2012.

[2] matrixb7 Almarai Feta TV Ad (Rocket Salad & Pizza) in English. YouTube, Jul, 25, 2009.

[3] Almarai AlMarai Documetry 2010 - English. YouTube, Oct, 25, 2011.

[4] Tharic NJ National Geographics Megafactories - Almarai. YouTube, Jul, 31, 2013

[5] Welcome to Almarai - Quality You Can Trust , from http://almarai.com/en/


.




17













Appendix-1
Questionnaire

1. Do you drink Almarai juices?

a. Yes b. No
2. Which flavor you like most?
a. Orange b. Mango c. Strawberry d. Lemon
e. Guava f. Cocktail g. Mixed Berry h. Apple

3. Which brand of juices you like the most?

a. Almarai b. Al Rawabi c. Rani
d. Caesar e. Masafi f. Lacno

4. What is the reason behind choosing your brand?

a) Tasty b) Price c)Availability
d) Like e) Advertisement f) Quality

5. How much Quantity you purchase the most?

a) 200ml b) 300ml
18

c) 1.75L d) 1L

6. Have you tried any other Almarai products other than juices?

a) Culinary Products (Tinned Cheese, Butter, Ghee, Feta Cheese, Whipping Cream)

b) Dairy Liquids (Fresh Laban, Fresh Milk, Flavored Fresh Milk, UHT Milk, Evaporated
Milk, Advanced Nutrition)

c) Home Snacks (Cream Jar Cheese, Cheddar Jar Cheese, Sliced Cheese, Square Cheese
Portions, Block Cheddar, Halloumi Cheese)

d) Yoghurts and Desserts (Yoghurt, Fresh Cream, Labneh, Layered Fruit Yoghurt, Stirred
Fruit Yoghurt, Sterilized Cream, Desserts)

e) Kids Products (Triangled Cheese, UHT Flavored Milk, Zady Drinking Yoghurt, Zady
Flavored Yoghurt, Zady Jelly Custard, Zady Fruit Dairy Snack)

7. Attractive discounts are offered?

a) Agree b) Disagree c) Neutral



8. Are you satisfied with the Quality?

a) Agree b) Disagree c) Neutral

9. Would you recommend Almarai products to your friends?

a) Agree b) Disagree c) Neutral

10. What is your overall opinion about Almarai?

a) Very Good b) Good c) Bad d) Very Bad e) Neutral