Running head: ALMARAI’S SWOT ANALYSIS 1

Almarai’s SWOT Analysis

Name
Institution
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Company’s Overview

Almarai was established in 1977 in Riyadh Saudi Arabia and has developed to become a leading

manufacturer of food and beverages as well as a leading distributor of these products in the

Middle East. The company is active in the MENA (Middle East and North Africa) regions in five

categorical products namely infant nutrition, juice, dairy, poultry, and bakery. Every product is

marketed under different brand (Almarai, n.d.). For instance, Almarai brand name is used to

market dairy and juice products, L’usine brand name for bakery which was made possible

through the acquisition of Western Bakeries Company in Jeddah. The company has also acquired

the Hail Agricultural Development Company which facilitated the poultry investment and

aligned with Pepsi Company for juice products (Byrne, 2015). So, acquisition is part of its

expansion strategy.

With a mission “to provide quality and nutritious food and beverages that enrich

consumers’ lives every day” and a vision “to be the consumers’ preferred choice by leading in

chosen markets with superior food and beverage products”, the company has pursued aggressive

growth strategy since 2005 through continuous distribution of new products and expanding other

sectors of it business (Byrne, 2015). As a result, the company has remained adaptive and flexible

in fulfilling its roles to its consumers. Through collaboration and knowledge sharing the

company has continued to strive for satisfying results while being concerned with corporate

social responsibility (Maerkle & Abbasi, 2017). Out of this consistency and working hard to

deliver high quality products to the market, this paper provides the SWOT (Strengths,

Weaknesses, Opportunities, Threats) analysis of Almarai’ businesses and operations.

Almarai’s SWOT Analysis

Strengths:
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1. Well established brands

Almarai is a leading company in GCC and the only dealer in dairy products in the Gulf region.

Being that it is the only one dealing in fresh dairy products, several customers across Gulf region

purchase the products of this company particularly from one or more of the categorical products

the company produces. The customers have learned to trust the brand image of the company as it

is operating in monopoly. As a result, Mahajan (2012) notes that the company has been able to

enjoy a larger market share due to more sales arising from well established brands.

2. Mergers and acquisitions

Almarai has been involved in various mergers and acquisitions which has led to different brands

in the various categories of products it produces. The company acquired Western Bakeries

Company, aligned with Pepsi company, acquired Teeba (producer of fruits and dairy located in

Jordan), bought the Egypt dairy company (Beyti), and acquired Hail Agricultural Development

Company (HADCO) (Maerkle & Abbasi, 2017). This has helped the company to expand the

boundaries of its operations and acquiring additional markets for increased profits.

3. Quality system

Almarai has an efficient system that focuses on quality using well trained experts who are

proficient in sales and marketing. The company also has and effective supply chain management

techniques that well integrated into its channels of distribution network. This helps the company

to successfully add value to their products and be a step ahead of its competitors. And efficient

quality system also leads to production of unique products that might be hard to imitate.

4. Innovation

The company has a high level of technology integrated in its farms and processing units. Also,

there is an improved technology in the packaging of products alongside advanced manufacturing

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techniques and complex infrastructure for distribution, all focusing on increasing the level of

coverage. Also, the company as a well-established information system which uses the SAP

system used by large companies such as Apple, Intel, Chevron etc (SAP News, 2010). With the

SAP system, the company can manage different business functions such as human resources,

production and pant management using modules that facilitate sharing of data. Besides, the

company has perfected its sales using handheld computers which in one way or the other have

also helped to reduce the amount of time taken to complete transactions and processing

important documents.

5. Product diversity

Almarai produces a wide range of products with a specific aim to satisfy the needs of their

customers. Their products appear in 5 categories which seem unavoidable to daily human life.

They include infant nutrition, juice, dairy, poultry, and bakery which generally fall in the broad

category of food and beverages. These products are entitled to different brands. The strategic

move can help the company’s product manager to evaluate the products and see which one is

more profitable and which one is less profitable and therefore, strategize another way of

balancing the products popularity for uniform profits.

6. Professional management team

Almarai has a team of managers who are professional at their work. They are experienced and

skilled senior team with in-depth knowledge of the organization. Also, the company obtains its

senior personnel from different backgrounds and nationalities leading to a combined expertise

that is based on the local knowledge. Such expertise includes skilful planning, management of

the field sales, management of the chilled chain, accurate sales forecasting, and effective
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management of the control systems (Almarai, n.d.). This has helped the company to run things

smoothly with minimized losses.

7. Distribution channels

The success of Almarai is to a great extent related to the well-established distribution network it

has in the Gulf countries. The mergers and acquisitions have improved the distribution channels

of the company with gross annual distribution of its products across 6 states in the GCC. This is

made possible by the long-haul fleet responsible for transporting raw milk to the processing

plants and then transporting the finished products to the consumers in specific locations. The

transports have been designed to ensure that the product reaches the consumer while it is still

fresh. In fact, the company manages to reach about 42,000 of its shops in GCC every day. This

way, the company has been able to increase the demand for its products from the various places

it distributes.

8. Promotion

Almarai conducts promotion on different products using different medium to enable their

products to reach customers. The company conducts campaigns using newspapers and radio.

Also, the company offers discounts to earn the goodwill of their customers. Along with this the

company has TV commercials and billboard/holdings where it promotes its products. Lately, due

to the advancements in technology, the company has also adopted the use of social media to

promote its products and launching other campaigns like the breast-feeding campaign (Mahmud,

2016) that increase its popularity among social media users.

Weaknesses:

1. Dependency
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Th company solely relies on the Almarai Brand name. This decreases its ability to fall back to an

alternative brand and continue with its operations in case of unexpected events (Byrne, 2015).

Another dependency affecting the company involved the importation of feed stocks and raw

materials. These can in one way or the other increase the operational costs.

2. Lack of expansion

The business operations of Almarai tend to concentrate highly in Riyadh and most of them

located in areas where resources have been noted to be depleting gradually particularly the water

resources. As a result, there is need for the company to expand its territories of operations to

avoid losses that come with resource depletion.

3. Limited market share

The company has limited market share in the Gulf region (Byrne, 2015). This is likely to affect

its stock performance and lead to a low growth. The limited market share could be due to the

competitors of the company such as Baladna, NADEC and Rawabi (Owler, n.d.).

Opportunities:

1. Introduction of GCC currency in future

In future, there is a likelihood that Almarai will enjoy some benefits attached to the elimination

of the costs in currency exchange after the introduction of the GCC currency. The company will

benefit from reduced duties in both exports and imports (Maerkle & Abbasi, 2017). This will

lead to a positive effect on the revenues of the company.

2. Product diversification

The company has diversified into various products apart from dairy and juices. There other

products in the categories of bakery, poultry and infant nutrition. The company has been

experiencing a strong growth in the bakery and poultry segment. However, a big opportunity
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seems to knock the door of the company in the category of infant nutrition. The demand for

infant nutrition in the GCC region has been for long time fulfilled using imported products. With

the help of a firm product pipeline, Almarai has launched 15 new products in the category of

infant nutrition (Almarai, 2018). Also, the company has produced products of ready to drink

formula to infants and children and they are free of preservatives meant to supplement the diet of

young children. This can be a strong driver of growth in the company and a major contributor of

the company’s revenues.

3. Muslim tourists

Every year, increased number of tourists visit GCC regions for Hajj and Umrah. This is a form of

religious tourism which is projected to increase every year. In fact, it is projected that it might

increase in up to 23m by 2023 from 19millionn in 2017 (Arabian Business, 2019). Thus, there is

a likelihood that this can lead to an increased demand of the dairy consumer products thereby

benefitting Almarai in terms of revenue.

4. Health campaigns

The recent campaigns targeting the need to live a healthy life is likely to lead to increased

consumption of milk and fruit juices. Almarai itself runs the campaigns to provide them with an

opportunity to increase revenue from sales in the Gulf regions.

5. Low interest rates on loans

The company has an opportunity to enjoy more investments due to the low interest rates on loans

for business (Byrne, 2015).

6. Population rise

As the company seeks to extend its services to MENA regions, there is need to note that

according to IMF (International Monetary Fund), the MENA countries are experiencing high
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population growth rates due to increased fertility rates (International Monetary Fund, n.d.). this is

a good indicator for Almarai as high population is likely to provide a wider market for its

products and make the company rip more in terms of sales.

7. Increased market growth for milk

The GCC is experiencing a fast growth in its fresh milk sector. It has been established that fresh

milk/raw milk is nutritious and helps in maintaining the hydration levels of the body while

strengthening bones. Thus, there is a significant demand for fresh milk in the GCC region. In

fact, the volume of fresh milk sold in 2018 was 786.5 Million Litres and this is expected to rise

to 1,115.7 Million litres by 2024 (IMARC Group, n.d.). In fact, Saudi Arabia is expected to be

the leading market in the GCC region where Almarai can achieve some growth owing to the

notion that the population of the country is increasing fast. Thus, there is a good opportunity for

Almarai to improve its market share since it is the leading brand in the dairy segment.

Threats:

1. Threat from oil subsidies

The market Almarai enjoys at the moment might be impacted by the subsidies in the oil sector in

the sense that the government might halt the revenues it provides to the company due to

dependence on the unpredictable revenues of oil (Maerkle & Abbasi, 2017).

2. Appreciation of currency

The Euro and other major currencies tend to appreciate more compared to US dollar. This could

increase the costs of the feed stocks thereby leading to low margins since Saudi has pegged its

currency to dollar.

3. Recent slow growth rate

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The recent negative consumer trends have impacted negatively the market growth rate of

Almarai recently in the GCC region. The first 6 months of 2018 saw the company post a flat rate

net profit while realizing a decelerated growth in the segments of juice, dairy and bakery. As a

result, the company has experienced a negative top line growth in the backdrop of the general

market. Also, there have been changes in the landscape of retailing which has made the company

to close down over 3,000 of its shop due to the general slowdown in GCC region (Argaam,

2018).

Recommendations

Based on this SWOT analysis, it is evident that there are particular areas that Almarai needs to

improve and adopt other strategies for better business outcomes. As a result, the current analysis

recommends that:

 Almarai should strengthen all the other brand names it uses to have other alternatives in

case the main brand name fails.

 The company should produce its own feeds find other alternatives to acquiring raw

materials in a way that help it to minimise operational costs.

 The company should globalize its operations to facilitate access to more market areas and

even improve its resource-base.

 The company should continue diversifying its products and balance the revenues

obtained from all of them to have uniform cashflow.

Conclusion

Almarai has various strengths and opportunities that can facilitate its growth and revenue

collection. Being the leading producer of dairy products, it is evident that the company enjoys
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monopoly as its competitors never seem to pose a serious threat to its success. Nonetheless, the

company is still weak in some areas that it needs to improves. Also, it has been established that

there are some threats that can impact the revenue realisation of the company as well as its

growth. Thus, it would be important for the company to evaluate itself frequently to see the areas

worth improving through finding alternatives.

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References

Almarai. (2018). Better Everyday: Sustainability Report 2018. Saudi Arabia: Almarai. Retrieved

from https://www.almarai.com/wp-

content/uploads/2019/04/Almarai_Sustainability_Report_2018_Web_EN-1.pdf.

Almarai. Almarai Company. Saudi Arabia. Retrieved from

https://cma.org.sa/en/Market/Prospectuses/Documents/Marai_eng.pdf

Almarai. Profile. Retrieved 15 October 2019, from

https://www.almarai.com/en/corporate/almarai/profile/

Arabian Business. (2019). Saudi tourist numbers forecast to top 23m in 2023. Retrieved 15

October 2019, from https://www.arabianbusiness.com/travel-hospitality/417805-saudi-

tourist-numbers-set-to-exceed-23m-in-2023

Argaam. (2018). Almarai says market challenges, negative consumer trends to continue.

Retrieved 15 October 2019, from

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https://www.feednavigator.com/Article/2014/04/15/Saudi-dairy-and-poultry-producer-

Almarai-accelerates-feed-import-policy

IMARC Group. GCC Fresh Milk Market Accelerated by Increasing Demand for Premium

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market-in-gcc
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International Monetary Fund. Growth and Stability in the Middle East and North Africa --

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Maerkle, R., & Abbasi, A. (2017). Assessing the market for motion graphics in Jeddah, Saudi

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Mahmud, Z. (2016). Almarai Sets Social Media On Fire In KSA With Film On Breastfeeding.

Retrieved 15 October 2019, from https://arabianmarketer.ae/almarai-sets-social-media-

on-fire-in-ksa-with-film-on-breastfeeding/

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SAP News. (2010). Almarai Implements SAP HR Solution to Increase Workforce Productivity -

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