Almarai SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Growth of milk market in GCC: The milk market in GCC has witnessed a steady growth in recent years. GCC fresh milk market grew at CAGR of 7% during 2009-2016 reaching production volumes of more than 700 million litres in 2016. Saudi Arabia represents the largest market for the segment, accounting for majority of the share. The country is expected to become the only market in the Gulf region that can help Almarai realize long-term volume growth potential owing to the potential population growth to 33.0 million by 2021. The milk market is expected to reach a volume of 1100 million litres by 2022. All this present a very good opportunity for Almarai which is a market leader in the segment with a market share of 28.7%.

2. Product diversification with major opportunity in infant nutrition: Along with the core segment of Dairy and Juices, they have diversified into other segments like Poultry, Bakery; and Infant Nutrition. The Bakery and Poultry segments are growing strongly year on year with a CAGR of 14.6% and 48.3% respectively between the periods of 2010-2015.The Infant Nutrition segment can be a driver of growth in the future. As of 2018, 96% of demand in the infant nutrition segment is fulfilled by imported products from outside the GCC region. Almarai has launched 15 new products in the segment in 2015 with the help of their strong product pipeline which can be a strong driver of growth. Almarai since 2017 has also produced innovative ready to-drink formula products in infant and children supplement segment which is preservative free.

3. Increasing number of pilgrims visiting Saudi for Hajj and Umrah to propel demand: With each year, there is an increasing number of pilgrims coming for Hajj and Umrah. According to the Arabian Travel Market (ATM), religious tourism has the potential of attracting 30 million pilgrims by 2030, making it the biggest source of tourism for the Kingdom. This will be almost 11 million pilgrims more than the 2017 figures of 19 million Hajj and Umrah pilgrims. This will lead to an increase in demand for consumer products in the dairy segment, benefitting Almarai.

Threat

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Political

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Economic

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Social

1. Health conscious consumers: Consumers are increasingly steering towards products that are rich in nutrition and health quotient. This has been one of the major reason towards the growth of the dairy and fresh milk market in the gulf region. Almarai is already a market leader in the segment with a market share of 57% in fresh dairy in GCC and also has a strong distribution network .This provides a great opportunity for Almarai in future growth.

2. Increase in demand during festive seasons: Festive seasons like Ramadan lead to very high demand of products and Almarai, with the help of its extensive distribution network, has been able to meet the increasing demand consistently. Ramadan month is a top season for companies and they come up with innovative campaigns to increase brand awareness. Almarai comes up with unique campaigns during the month that embody the holy spirit of Ramadan in its advertisements. Its 2017 ad campaign received 1.5 million views within 5 hours of its launch on the Facebook page of Almarai and touched almost 3 million within first 24 hours.

3. Workforce localization initiatives to strengthen domestic brand value: As the number of college graduates across the Middle East and North Africa are expected to reach 30 million by 2020, there will be a greater demand for skilled jobs, making MENA’s demographics remain weighted towards a young population. Following Vision 2030, which is part of the Saudi national agenda, Almarai has set up its growth strategy to better the quality of its workforce while simultaneously playing a role in the Kingdom’s socioeconomic development. This will be achieved by retain talented employees and giving professional Saudi nationals greater opportunity. These moves are expected to improve not only Almarai’s brand image but also give it significant advantage over its competitors.

Technological

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Legal

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Environmental

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