FrieslandCampina and Arabian Food Industries (Domty) join forces to export cheese to Africa and the Middle East

An update on the Cheese market

Davide Milano, Oaklins' Cheese specialist comments on the recent operation between two dairy giants, FrieslandCampina and Arabian Food Industries, that agreed to establish a joint venture to export affordable cheese to Africa and the Middle East from Egypt.

This operation is solid proof of how proximity to the client and the ability to offer a broad product portfolio are becoming crucial. Companies can achieve such targets either through own investments and by setting up branches in various countries – which takes a longer period of time to reach maturity - or by acquiring stakes in companies already operating in geographies or market niches of interest. Being able to identify and pursue such opportunities is vital for Dairy groups who are willing to excel in this highly competitive market. DAVIDE MILANO, CHEESE SPECIALIST, OAKLINS

The operation at a glance

Arabian Food Industries (with its renown brand “Domty”) is a listed and leading cheese manufacturer in Africa. Established in Egypt in 1990 and with nearly 200 SKU (stock-keeping units), it offers cheese – feta, mozzarella, cream cheese –bakery products and fruit juices to Egypt and the Middle East, recording ca. €150m in revenues in 2020 and a sound profitability, ca. 12% EBITDA. Most recent implied valuation of Domty show ca. x6 EBITDA and x0.6 turnover.

Dutch dairy cooperative FrieslandCampina is one of the largest dairy companies in the world with branches in 38 countries and exports across the entire globe. Providing consumers with dairy products, such as milk, yoghurt, condensed milk, dairy-based beverages, cheese, butter and cream. It employs around 24,000 workers around the world and recorded €11b in revenues in 2020 with an EBITDA close to €700m.

The two companies – as a result of negotiations rumored to have started in September 2020 - agreed to establish a joint venture, where FrieslandCampina will hold a 51 % and Domty a 49%, to export affordable cheese products to Africa and the Middle East.

Rationale of the operation

Friesland is already generating €1.1bn sales in Africa. Despite already distributing to North African countries and the Middle East, with the cooperation with Domty, FrieslandCampina will be granted with a faster and easier route into the growing market of the affordable cheese products in the region and an improved customer proximity. Demography and basic nutrition needs makes Africa one of the most dynamic markets in terms of volumes for affordable cheese propositions. This cooperation with a local partner gives Friesland a competitive advantage by putting a flag in one of the most interesting geographical areas. Simultaneously, by partnering with one of the top five biggest Dairy groups in the world, Domty is securing a relationship with a strong partner and also the sourcing of new and innovative products.

We are close to many Dutch and international dairy groups that are seeking to consolidate the market in order to gain positions against competitors. We are equipped to advise dairy corporations in their growth strategies. MARC VAN DE PUT, PARTNER, OAKLINS NETHERLANDS

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Davide eugenio milano 0
Davide Eugenio Milano Turin, Italy
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Marc van de put 0
Marc van de Put Amsterdam, Netherlands
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