Bahrain’s leading dairy and beverage company, whose sales for the first time touched BD1 million ($2.65 million) per month, announced it is examining the possibility of opening a new factory to supplement its existing one.

Awal Dairy Company acting general manager Samad Alkhaja said the new plant for which a blueprint is under study would produce items similar to ones now being produced plus new food-related ones.
To cope with growth and increasing requirements for packaging material, work has begun on a 2,000 sq m warehouse within the factory premises with capacity for 2,000 pallets. A new frezer storage facility is under construction and will be ready by March 2009.
A new line for UHT (ultra high temperature) milk was commissioned last July.
The company, owned by Bahraini firms General Trading & Food Processing Co (Trafco) (51 per cent) and Yousuf Abdul Rahman Engineer (Holding) Co (49 per cent), is optimistic it can sell substantially more in the home market and in some markets in the Gulf and its vicinity with demand for dairy and juice products set to grow with expanding populations.
Bahrain contributed 60 per cent of Awal’s revenues of BD12.5 million in the financial year which ended in September 2008. The company reported total sales of BD10.5 million in 2006-2007 and BD8.1 million in 2005-2006.
Alkhaja said the company hoped to grow its home market sales by 20 per cent at the end of September 2011.
Most of Awal’s overseas sales are generated in Kuwait and Iraq, both of whom account for around 55 per cent of export revenues.  The Kuwait-Iraq segment is more or less shared equally by the two countries. Jordan accounts for 30 per cent and Saudi Arabia makes up the remainder.
Exports to Iraq are routed through Kuwait where the company has a subsidiary. For other overseas markets the company has appointed dealers.
The company aims to increase exports to Kuwait by 20 per cent by the end of September 2010 and introduce more products into the Iraqi market. The company recently signed up two firms to distribute and penetrate the Iraqi market.
“Bahrain being a relatively small market, the Awal management will focus on Kuwait and Iraq which are the two most important players for our future growth,” Alkhaja said.
Awal hopes to export to Iraq one of its newest products, ‘Gaimer,’ a thick breakfast cream, which it expects will be popular there.  It hopes to generate sales of BD5 million from Iraq by September 2010.
Another major focus would be to explore Saudi Arabia, the largest market for food and beverages in the Gulf.
The company’s long life UHT milk, which uses Tetra Pak technology, accounted for 49 per cent of sales followed by long life juices and drinks 37 per cent, ice creams 10 per cent and other items 4 per cent.
Annual production capacity for UHT milk is 50,000 tonnes.  The company can produce 75,000 tonnes of pasteurised milk products and 25,000 tonnes of juices and drinks. Other capacities: ice cream 10,000 tonnes, fresh milk 12,000 tonnes and tomato paste 6,000 tonnes.
The company is contracted to make and pack long life drinks for a major dairy and juice firm in Saudi Arabia, tomato paste for another major Saudi dairy and food products firm and thick Rawabi cream for Satco, Kuwait.  
As well as Gaimer, new products introduced by Awal in 2008 included four juice flavours from red and white grapes and yellow and ruby grapefruit.  It also launched an ice lolly made from natural fruit juices and added eight ice cream products to its Fabion range including a Choco Choco bar and a Choco Vanilla bar.
Al Khaja said Choco Choco and Choco Vanilla were launched in winter but the response was “amazing.” 
“Choco Choco is a delicious chocolate ice cream with a touch of hazelnut flavour and a coating of Swiss rich chocolate with roasted California almond, a real treat,” said Alkhaja, adding that both the chocolate and vanilla ice creams were actually premium products offered at the price of standard ice cream.
The company announced it would soon offer juice and flavoured products in PET bottles. 
Alkhaja said one of the most serious challenges was bottlenecks on the King Fahad Causeway linking Bahrain and Saudi Arabia. The causeway is also the route taken to go to Kuwait.
A year ago a cargo truck leaving Bahrain could make a return journey to Kuwait within two days and a maximum of three while currently it takes six, he said. “The causeway delays are costing exporters such as Awal additional shipping costs and giving us daily logistical nightmares.”
Another challenge was to maintain market share in the region’s highly competitive environment where some of the biggest production companies are based, particularly Saudi establishments.
Alkhaja voiced concern over oversupply. “The number of dairy manufacturers when one considers the total population is far too high. This is a very unhealthy situation which has encouraged some of the dairies to dump their products, especially during the off-season and winter months.”
The official commented that future mergers were the only way to create healthy and profitable businesses in the region. “In return,” he observed, “a healthy dairy firm will invest in technology to produce higher quality products with more choices for consumers.”
He also drew attention to “skyrocketing” prices and the direct or indirect impact the world’s current financial crisis might have on the GCC economy.