Strategy and Performance

The competitive GCC dairy market continued to grow steadily during the year in review, backed by a number of key growth drivers including increasing health consciousness among consumers, and a growing demand for convenience and versatility in products.

Key Market Trends and Challenges

The market continues to be driven by shifting consumer preferences, with demand increasing for a wider variety of innovative, healthy, and nutritious dairy products beyond traditional fresh milk. In terms of sales channels, there has been an aggressive increase of discounters entering the Saudi Arabia and wider GCC market to meet consumer demand for value-driven product options. This trend is backed by the rise of the e-commerce channel, especially in terms of online discount retail options. This discounter model, focused on offering prices that are generally 15-35% lower than traditional retailers to the large price-sensitive demographic, continues to add immense margin pressure on dairy producers.

Costs of production inputs, feedstock and shipping continued to increase, with the impact compounded by the removal of certain government subsidies, particularly those on fuel prices. The dairy industry also continues to be significantly impacted by the cost of compliance, driven by the Kingdom’s evolving regulatory landscape, especially new environmental, food safety, and sustainability mandates.

In line with Almarai’s X 18 billion investment plan, the Dairy division continued to carry out a number of significant investments to the value of X 1.8 billion in 2025, covering different focus areas including "Renew and Replace" initiatives, capacity expansions, product diversification, and technology adoption.

A Further Breakdown of Our Investments

A critical area of investment in 2025 was the continuation of the "Renew and Replace" initiative falling under our proactive Asset Lifecycle Management (ALM) strategy, which ensures the extensive asset base across Almarai’s dairy supply chain does not decline in performance and upholds desired service levels, maintaining our benchmark quality and food safety standards. Investments were made across several dairy production lines such as our traditional fermented milk drink Laban, and our fresh cream product Gishta, to meet growing consumer demand and accommodate product diversification.

During the reporting period, the Dairy division also invested in enhancing our dairy supply chain through both infrastructure and technology investments. We built new dairy depots, increased our fleet and added new routes to further expand our distribution network reach, while adopting emerging technologies to automate various aspects of our supply chain. We also remained unwavering in our commitment to the highest regulatory, legislative, and quality standards through ongoing investments in compliance.

Capacity expansion investments carried out in 2024 in the long-life dairy lines enabled us to repatriate 22% of production volumes from external suppliers this year. One of our substantial investments in 2024 was an aseptic milk filling line, a sophisticated technology that would further enhance the production of Almarai’s protein and long-life dairy bottles, and extend their shelf life. During the year in review, this newly installed line reached maximum output capacity of 40 million liters, demonstrating the growing demand for long-life dairy as well as the success achieved through the high return of our investment. Other recent investments include a slices line for our growing cheese business, and a new production belt to extend our evaporated milk line, yet another product that shows steady growth trends with positive forecasts.

During the year in review, we continued to successfully grow our ice cream market share in Saudi Arabia, backed by an innovative product pipeline and an aggressively expanding cold chain, recording X 70 million in revenue at the close of the year, surpassing revenue projections.

Penetrating Saudi Arabia’s Promising Ice Cream Market

We made our foray into ice cream in mid 2024 through an import model, where we qualified, onboarded, and managed co-manufacturing sites outside the Kingdom to successfully deliver innovative ice cream made from the highest quality milk, cream, and natural ingredients. The early success of our ice cream venture is anchored to Almarai’s highly reputable position as a leader in the dairy industry, backed by a strong supply model that continuously premarket tests new products to gauge consumer acceptance. During the year in review, we continued to expand our cold chain to support demand by investing X 500 million in freezers, chillers, and refrigerated trucks to increase reach and availability in a market that is projected to surpass X 2.6 billion by 2030. The response and reception from consumers continued to be extremely positive in 2025, with strong plans for further expansion in 2026.

Product innovation remained one of Dairy’s key focus areas during the year in review, as we continued to enhance our existing portfolios of core categories, while also pursuing opportunities in adjacent categories. Backed by heavy investments in R&D, Almarai has also ventured into food products such as hummus and tahini that are alternatives for traditional dairy-based proteins to meet emerging demands in an evolving market.

New Products Introduced in 2025

• Lacto Free Plain Milk (50% more protein, low fat, source of calcium)
• Mini vanilla cones
• Mini Bites Caramel
• Mango Flavored Milk
• Yaqoot Evaporated Milk
• Trofo’s Authentic Greek Feta
• Tahini
• Marvello Natural Cheese Slices

The Dairy division continued to align with Almarai’s overarching sustainability pillars, following stringent guidelines on health and nutrition standards for all raw materials and products moving across our vertically integrated dairy supply chain. Our farms follow sustainable agriculture practices across our arable lands across USA and Argentina, where we cultivate the highest quality feed for our growing dairy herds. We hold ourselves to the highest standards of water management and conservation, and other climate change initiatives aimed at reducing energy consumption and our environmental footprint. Our animal welfare practices and biosecurity procedures are held to global benchmarks.