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Memo on the Structure of Dairy Products Market in Egypt

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The market structure of dairy products in Egypt must be considered well to develop right strategies for Content Cow Dairy’s trade operations. It is based on the understanding of the market trends for dairy products that a new operator can launch its products in a foreign or local market.

The Structure of Dairy Product Market

The total milk production in the Egyptian market is approximately 3.8 tons. The milk supply is exclusively from cattle. The productivity of milk in the local market ranges from 500kg per cow annually. This is low compared to the demand levels of cattle products in Egypt. These conditions imply that Egypt is generally a net importer of cheese products. Philips cited that the dairy products market is generally dominated by unpackaged milk. This represents approximately 85% of the total milk consumption in the market.

The Juhayna Company is the dominant distributor of packaged milk in Egypt.  The company has the largest and the most extensive dairy product distribution channel. It operates 20 distribution centers that monopolize the distribution channels in the market. The remote markets are served by its four sub-distributors. Through these channels of distribution, there is generally an even distribution of dairy products in the market.

The competition levels among operators and distributors in the Egyptian market are still low. Juhayna is the single dominant operator in packaged dairy products. The company has developed an unparalleled image of its products that has gained recognition in the local market. It shares 68% of market share in plain packaged milk, 55% of drinkable yogurt, and 30% of spoonable yogurt. The local market is cushioned by the government against competition from foreign operators in milk and other dairy products. As a result of this market protection and low competition levels, the prices of dairy products have remained high relative to the world prices.

The yogurt market is segmented into loose and packaged products. However, this sector is highly penetrated by multinational firms. As a result, competition in the local yogurt product market is generally stiff. The multinational companies introduced various dairy products that cater for local consumers of different income levels and age brackets. This has raised competition between the local companies and the multinational corporations. Juhayna, a local operator and distributor thus experiences competition in its operations in the local market.

Socio-cultural Environment of the Dairy Product Market

Dairy products such as yogurt, butter, cheese form part of the diet of the local consumers in the Egyptian market. These products are also used as ingredients in the Egyptian dishes. There are no much dietary and religious restrictions in the consumption of dairy products. The tastes for these products still remain high. However, the consumption levels and patterns are gradually changing with preference for packaged dairy products. Historically, the local consumers had preference for loose unpackaged milk. This has changed especially with campaigns that have marketed the consumption of packaged milk and dairy products. This is because of the health implications of the consumption of the un-hygienic loose dairy products.

Preferences for consumption of dairy products that are processed within a supply chain that is formal with locally popular names remain high. This works against dairy products of unknown origin. Fresh fluid milk is used occasionally in cooking. However yogurt, especially mish, is the staple for the rural households. Soured milk in a blend with flour and seasonings form part of the evening meals and preferred diet for the rural tables. 

In conclusion, the Egyptian market has great potential for dairy products. Competition in these products is still relatively low. The consumers are yet to totally embrace use of packaged dairy products. The channels of distribution are still monopolized by one dominant operator although multinational corporations are slowly penetrating the market with yogurt products.

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