Danish firms face boycott in regional markets

Published January 30th, 2006 - 08:07 GMT

In recent weeks there are growing calls in Saudi Arabia and other Arab and Islamic countries for the immediate boycott of Danish imports. The calls are being conveyed through leaflets, e-mails and text messages for mobile phone subscribers. The reason for this request comes after a Danish newspaper published a series of cartoons mocking Prophet Mohammad.


However, reaction by supermarket managers in Saudi Arabia for this call is "patchy," Arab New reported. In some supermarkets, labels in English and Arabic, indicate that Danish products have been removed while in others shelves were fully stocked with familiar Danish products.


In the Qatari capital, major hypermarkets and other foodstuff outlets pulled out Danish products from their shelves responding to the boycott call. According to the Peninsula, there are 80 to 100 Danish items on sale in Qatar and they include some popular brands, fresh items like butter (Lurpak), cheese (Buck), frozen vegetables (Embourg), milk powder (Dano) and liquid milk (also Dano), among others. Equally popular Danish items are cookies, samosas, chicken and beef burgers.


In any case, Danish food producers Arla Foods confirmed a drop in sales to the Saudi market. “We are certainly afraid this will spread across Saudi Arabia and affect our business,” Director Finn Hansen told Reuters. Arla Foods, one of the largest dairy producers in Europe, is the leading Danish exporter to Saudi Arabia, where it has been selling close to 270 million euros worth of products per year. It has mainly controlled the butter market, with Kraft as the leader of the cheese segment.


Arla has placed advertisements in Arabic newspapers to try to stop the boycott.


Another company in problem is Saudi Dairy and Foodstuff Companies. For the past few days the stock price of SADAFCO has been declining. SADAFCO was established in 1976 with the formation of Danish Saudi Dairy Company. Although the company acquired the Saudi Danish Dairy Company of Riyadh in 1987 and in the early 1990s merged with Gulf Danish Dairy Company and Madinah Danish Dairy Company, thereby forming SADAFCO and becoming a 100-percent Saudi company, people still associate it with Danish companies. To minimize losses, SADAFCO has been trying to persuade consumers that its imported milkpowders and other ingredients for manufacture or sale come from New Zealand rather than Denmark.


In this relation, business quarters in Saudi Arabia claim that economic boycott on Danish goods would be economically futile because the majority of the products that mentioned in the leaflets are part of Saudi-owned franchises. This means that those who will suffer the most are the Saudi owners.


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