A restructuring process has helped Saudi dairy and food giant Sadafco come on track within a year of making losses.

Sadafco recovered from a net loss of SR25 million ($6.6 million) in the financial year ending March 31 2006 to announce a net profit of SR33.1 million in the following year thanks to strong steps including layoffs and stopping production of items that did not move.
Sadafco had explained its loss-making year as fallout from the boycott of Danish goods in the wake of controversial cartoons that appeared in a Danish magazine as well as from higher prices of raw ingredients including milk powder and tomato paste. It said that although Danish Turnkey Dairies Danish firm’s small stake in Sadafco was withdrawn in 1987, Arab consumers still associated the European firm with the company. As 2006-2007 progressed, the company was able to convince consumers through the mass media that it had relinquished all links with Denmark.
Sadafco was established in 1976 as a join venture between Saudi businessmen (48 per cent) and Kuwaiti businessmen (48 per cent) with the remainder shareholding held by the Danish company.  The shareholding structure changed over the years. In 1987 the company acquired the Saudi Danish Dairy Company of Riyadh and in 1991 merged with Gulf Danish Dairy Company and Medina Danish Dairy Company. The company also had a tie-up with Milk Products Holding, a subsidiary of the New Zealand Dairy Board, and acquired Sara Snack Foods Company.
Sadafco factories produce milk, flavoured milk, juices, ice cream, water and snacks. As well as supplying the Saudi and markets, Sadafco products are exported to GCC markets, the wider Arab region and Pakistan.
Sadafco has a distribution fleet of 85 vehicles and trailer combinations that enable it to fulfill 85 per cent of the needs of all sales depots within Saudi Arabia and the GCC states. According to the company, these vehicles travel some 10 million km per year.
The company claims that five of every seven UHT (ultra-high temperature) milk packs sold in Saudi Arabia constitute its Saudia milk brand. It also claims that Saudia milk contains more milk solids and more nutrients than what its competitors offer. Free of preservatives, it is available in a range of pack sizes and fat contents.
Another of its popular products is the Saudia milk shake Shaka, which it markets as premium quality. “Shaka before consumption improves the taste experience thus highlighting the premium image. Its unique prism shape provides real teen appeal,” the company says.
Sadafco also produces feta cheese in 10 kg and 16 kg packs and cheese spread packed in glass which it says makes it convenient to use. Among food products, it claims it enjoys the highest market share in tomato paste. The company explains that its traditional Arabic dish mutabal is free of preservatives, uses only natural ingredients and passes through stringent quality control processes including tests on colour, taste and freshness. Another Middle Eastern delicacy called hommos is packed in Tetra Pak packaging and like the other regional favourite is “100 per cent natural, made in Saudi Arabia and contains no bleaching agents that artificially lighten the appearance of the product.”