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Annual Report 2021

At a glance
Operating Review
People & Culture
Financial Statements
Almarai

Operating
Review

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Dairy

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Dairy

Total Dairy revenue for 2021 was

SAR 9,631 million

as compared with

SAR 9,476 million

in 2020.

Value Share of Saudi Market (Dec 21 MAT)

Market Share
Market Position
Laban: 64.6%
1
Fresh milk: 64.9%
1
Zabadi:61.2%
1
UHT milk: 21.4%
2

Total Dairy Revenue (SAR million)

Since Almarai’s establishment in 1977, our dairy products have remained at the heart of our business. Backed by an enduring commitment to quality, our extensive range of fresh dairy, long life dairy and dairy foods are known and loved across the region.


As the regional leader in the Dair segment, Almarai continued to strengthen its leadership market position through 2021 despite the adverse effects of COVID-19 with year-on-year value share growth of 1.4% in dairy in the KSA. Core categories of laban, fresh milk and UHT milk also registered volume share growth during the year. Labneh was a standout segment in terms of performance with Almarai securing clear leadership in the KSA market.

Resilience in Action

Overall whilst the volume was softer in several segments in 2021 year over year due to significant base year impact, externally we were and are faced with a huge cost push which led Almarai to initiate mitigation measures to offset the significant increases in the material and freight costs including administration of strategic pricing adjustments in multiple markets.

Core dairy experienced softer demand owing to COVID-19 restrictions, slower re-opening of schools, subdued tourism and reduction in expat population. Despite this negative environment, Almarai continued to improve its value share position throughout the year versus the prior year.

A Robust Strategic Foundation

We maintained our unwavering commitment to quality and in further improving our core dairy offerings by delivering superior consumer ratings on milk, laban, zabadi and spreadable cheese segments versus the competitive set. Additional growth measures resulted in the acceleration of our volume market share in under-indexed categories including labneh (+23%), milk powder (+4 %), plain UHT milk (+1.4%) and cheese square portions (+3.1%) in 2021. This growth was complemented by robust expansion in new segments such as hummus and honey, as well as significant recovery in year-on-year growth for value added dairy products such as fresh flavored milk (+34%), fresh flavored laban (+25%) and Greek yoghurt (+17%).

Almarai Dairy in 2022

We will continue to strengthen our resolve to protect and grow core dairy segments in 2022 by sustained investments in product upgrades and broad availability whilst also accelerating our performance in select under indexed segments within Long Life and dairy foods. We will focus on building a robust innovation pipeline to deliver our ambition in the value added dairy portfolio and support further expansion of recently entered segments of hummus and honey.

Juice

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Juice

Total juice revenue for 2021 was

SAR 1,510 million

as compared with

SAR 1,448 million

in 2020

Key Performance Indicators

Juice Volume Shares
45.2%
Juice Value Share
45.4%
Household Penetration
79.2%
Household Frequency
13.7%

Total Juice Revenue (SAR million)

Almarai’s extensive range of fresh and concentrate-based juices and nectars are a staple of retail shelves across the GCC, Egypt and Jordan. With more than 30 flavor varieties, including special varieties for children, we are a regional leader in terms of product range and quality.


Almarai has remained steadfast in the face of growing price competition in 2021, maintaining our strong and stable market share of 41%, whilst also leading sector-wide expansion in the premium segment through our Farm Select range, achieving a 30% growth in market share over the course of the year. Meanwhile, we doubled our market share in the Long Life segment to 4% to become the only brand to achieve volume growth in a declining category.

We continue to perform in line with the objectives of our strategy by gaining market share, driving household penetration above the competition, and securing growth across all targeted health brand indicators. However, we have also faced budget headwinds in 2021, including the rising cost of goods sold (COGS) and the sluggishness of the projected rebound in sales following the worst of the COVID-19 pandemic, as well as delays in the registration of new products for exemption from sugar taxes from the authorities in Oman.

Building on our Market Leadership

Notwithstanding negative market headwinds in 2021, Almarai remained focused on driving brand equity through perceptive media planning and an ROI-based promotion strategy. We continued to fine tune our portfolio through ew innovations to capture additional market share, whilst driving down costs through recipe optimization and increased packaging efficiencies to enable growing reinvestment in the business.

Meanwhile, our route to market (RTM) capabilities supported considerable improvements in extra shelf display and positioning, ensuring the growing prominence of our products.

Almarai Juice in 2022

Almarai will continue to protect and grow our core fresh juice market share in 2022 to maintain our leadership position in this category going forward. With a focus on expanding our presence in the premium segment, and greater engagement in new product categories, to offer customers more choice and boost performance in this category.

Poultry

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Poultry

Total Poultry revenue for 2021 was

SAR 2,301 million

as compared with

SAR 2,293 million

in 2020.

Poultry Market Share by Volume

Total Poultry Revenue (SAR million)

Almarai’s poultry range, which offers fresh whole chickens and a variety of related value-added products, continues to dominate the Saudi market. This year, we continued to invest for the future and develop our brands, which are among the best known and most trusted in the Kingdom.


Almarai’s strong poultry presence and brand equity were critical in providing resilience throughout the COVID-19 pandemic, acting as a springboard to growth as the market stabilized during 2021.

As of year end 2021, we maintained our leadership position in the Kingdom’s fresh poultry segment across all retail channels, with a market share value of 32% double that of the second largest player in the segment while our ALYOUM brand continued to be the strongest in the market with a consumer awareness score of 81%.

As well as maintaining our prime position in our home market, we have successfully leveraged our strategic position in the region by consolidating our leadership in the main GCC markets, such as the UAE and Kuwait. At the end of 2021, we occupied the top positions in the Kingdom, the UAE and Kuwait in terms of market share volume at 30%, 21% and 63%, respectively.

Demonstrating our commitment to accelerating growth, and to supporting the food security and local content of the Kingdom, we announced our intention to double our capacity through SAR 6.6 billion in targeted investments over five years. The expansion will be implemented in several phases, which will include the development of production facilities to enable full vertical integration of our poultry supply. Our capacity will be expanded across different geographical regions of the Kingdom, in order to further enhance the biosecurity and resilience of our Poultry business.

The implementation of further supply and production efficiencies, backed by our robust distribution channels, has also positioned us well to capitalize on increased stability in the food service channel. This approach has contributed to the consistent performance of Almarai Poultry in 2021, achieving 17% volume growth in Foodservice compared to 2020.

Delivering Growth as a Market Leader

Almarai’s core strategy to grow our fresh poultry across the GCC’s retail space by maximizing volumes and margins has paid healthy dividends in the segment, despite the negative market headwinds in 2021.

This approach has been complemented by further optimization and efficiency gains throughout our production and distribution chains. This included process automation to maximize returns on every bird sold, whilst ramping up our volumes supplied to the food service channel through an increasingly diversified portfolio.

Hence, despite cost increases, reductions in subsidies and intense competition in retail channels putting added pressure on our bottom line, fresh poultry volumes have grown consistently throughout the year, resulting in growth compared to our pre-COVID-19 performance in 2019.

Driving Recovery in the Foodservice Segment

Foodservice has become a strong growth engine for Almarai’s Poultry unit and a key pillar of the Company’s xpansion plans. Today, Almarai is recognized by our Customers and partners as “Best reliable supplier” for its exceptional service and expansive portfolio.

After a difficult 2020 for the food service industry – characterized by movement restrictions that limited growth and consistency in the development of our Foodservice business – we succeeded in successfully reactivating this strategic channel to deliver 22% growth in value.

Almarai Poultry in 2022

Almarai will continue to target retail growth in the Poultry segment in 2022, leveraging our ability to deliver a consistent supply to our customers and consumers, whilst also driving forward our optimization and efficiency programmes to streamline production. We remain firmly on track to meet our expansion targets to secure stronger growth across all channels, as well as continuing to enhance and streamlining our operations to meet the evolving market requirements.

Bakery

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Bakery

Total Dairy revenue for 2021 was

SAR 9,631 million

as compared with

SAR 9,476 million

in 2020.

Total Bakery Revenue (SAR million)

Almarai’s popular Bakery Brand L’usine, features a range of savory and sweet baked goods, while our 7DAYS brand – in which we have increased our investment this year, offers a wide variety of croissants, cakes, strudel and bake rolls. Both brands are easily available for consumers to enjoy across the GCC markets


Almarai remains the top manufacturer of bakery products for the Saudi market, with a value share of 53% (MAT ’21), outperforming our closest bakery competitor by 10 times. Similarly, our brand health indicators are well above other bakery players.

Our out-of-home consumption categories continued to face challenges in early 2021 due to school closures and other constraints. However, in the second half of 2021, as the COVID-19 restrictions started to ease and consumers began to venture out, we saw a rebound in performance of our out-of- home categories. This was further supported by the return of large events like different Saudi Seasons festivals. We started investing heavily in advertising to ensure we remained at the top of consumer’s mind.

We continued to invest in our bakery business and increased our stake in 7DAYS parent company MFI, by an additional 15% through an investment of SAR 150 million. We also completed the acquisition of Bakemart in 2022, in the UAE and Bahrain, as part of a Foodservice growth drive and to expand our bakery product offering.

Enhancing our Product Range in 2021

Almarai also embarked on a journey to harmonize the complete L’usine range packaging in 2021, to give it consistency and distinct differentiation on-shelf from its competitors. We also enhanced the eating experience of several of our current products like premium puffs and butter croissants which grew by 33% in volume in 2021.

Other initiatives included the re-introduction of the half loaf for our value-added breads range, and the expansion of our butter croissant range with 2 exciting options – zaatar and biscuit cream filling, potato rolls, brioche bread and burger buns and blueberry muffins. We also introduced extended shelf-life breads to drive volume in export markets. New products in the 7DAYS range included double layered mini croissants, a bigger pouch pack of mini croissants for sharing, double vanilla Swiss rolls and bake rolls in cheese flavor.

Our broad strategy in 2021 remained the same, that is to drive penetration to grow our user base by converting people from unpackaged to packaged bakery across categories.

Performance of our single serve offerings from both brands improved significantly in 2021 whilst our core products, such as sliced bread and burger buns, which delivered unprecedented volume growth in 2020 on account of national lockdowns, began to normalize in 2021.

Almarai Bakery in 2022

Being the market leader in the KSA, we will continue to grow the different categories we operate in by driving penetration, ensuring we continue to improve our mind measures through effective communication, continue to launch relevant products for our consumers, capitalize on the ease of restrictions and build on-the-go consumption for our snacking categories and grow our business in the Gulf markets.