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Satyendra Pathak
Doha
Baladna, a key pillar of the Qatari National Food Security programme, has emerged as one of Qatar’s greatest commercial success stories in the post-blockade period.
Established in 2014, Baladna Food Industries (BFI) has grown to become Qatar’s largest locally-owned fresh dairy and beverage supplier and has helped the country achieve almost 100 percent self-sufficiency in fresh milk.
The company has spent QR2.7 billion ($740 million) over the last three years to expand its capacity and production capabilities.
The company has ample capacity for growth through upcoming new and value-added products as well as exports. Baladna recorded a 115.4 percent top-line growth in 2019, which should be followed by an expected 95.2 percent in 2020 and 16.8 percent in 2021 as the company plans to increase the number of stock-keeping units (SKUs) substantially by the end of 2020.
According to a report published recently by QNB Financial Services (QNBFS), exports and overseas expansion opportunities will be a major component of Baladna’s growth strategy.
“Exports accounted for a mere 0.53 percent of Baladna’s revenue in 2019. On the other hand, expanding into new markets is a major component of Baladna’s growth strategy. Thus, its anticipated herd expansion and long-life product range should support the company’s growth objectives. Apart from dairy and non-dairy products, Baladna is considering exporting its excess packaging material,” the report said.
“New products are expected to boost 2020-2022 revenue and bottom-line as the company plans to increase the variety of juices and cheeses. We expect Baladna’s net income to grow by 207.5 percent in 2020 and 12 percent in 2021,” the report said.
Baladna has ample capacity to sustain future growth as the company has managed to build its current capacity in Qatar.
In early 2019, Baladna’s newly built facility Plant 3 that processes raw milk from Baladna’s herd and converts it into dairy products became operational. Plant 3 has a maximum daily capacity of 500k-600k liters per day. Recently, a new production line was shifted from Plant 2 to Plant 3, which increased the Plant 3 capacity by approximately 150k liters per day.
Furthermore, a new UHT line is expected to be added in Plant 3, which will increase its capacity by nearly 170k liters per day. Baladna can also utilise Plant 3 to produce juice products.
With Plant 3 up and running, Baladna currently has a maximum beverage processing capacity of 700k-900k liters per day, which is enough to cover the entire dairy products demand of Qatar. Currently, Baladna utilises 45 percent to 55 percent of its overall capacity.
Baladna’s infrastructure has the flexibility of processing multiple products like fresh milk, juice and UHT long-life milk at the same time, which creates an edge for the company in responding to the rapid changes in demand dynamics.
At the end of 2019, the report said, Baladna entered into the long-life juice products and it continues to expand its cheese range in particular.
“Baladna only has an 11.9 percent local market share in cheese, which increases to 36 percent in the natural cheese segment. Baladna also has a relatively lower market share in the juice segment of about 13.5 percent as the company has recently entered that segment as well. Baladna sees significant growth opportunities in long-life juice, creams, processed cheese, and flavoured yogurt,” the report said.
It is noteworthy that the Qatari cheese and juice markets have higher annual growth rates of 4.1 per cent and 11.9 percent respectively against the core fresh dairy sector’s 2.4 percent.
Baladna has also launched a new brand called Awafi, which is more of a value brand targeting a different segment of consumers from the Baladna brand.
According to the report, Baladna targets expanding its herd 30 percent to 24,000 by end of 2020. After Baladna imported 8,000 cows in 2018, its herd reached 20,846 cows as of March this year. Currently, the cows onsite give birth to approximately 30-35 baby calves per day, which should result in 11,000-13,000 new cows per annum equaling 50-60 percent of the existing herd.
By the end of 2020, the total herd is expected to reach 24,000 cows, with the contribution of the natural herd growth cycle. On average, each cow will produce milk for 3-4 years before being replaced with a younger and more productive cow. In order to speed up its herd growth, Baladna is also considering importing 2,200 cows from the US by June’20, of which 807 have reached the farm in May 2020.
Productivity per cow at Baladna has surpassed the US average of 33 liters per day, reaching 37.2 litres in the first quarter of 2020. The metric improved by approximately 12 percent in 2019, with the average milking cow producing approximately 32 liters per day in December last year.
Beef and compost sales should support bottom-line growth of Baladna as it produces typical by-products of the dairy industry, namely beef and compost.
The report said that the government’s support of a total of QR1.27 billion over 10 years out of which eight years are remaining will enhance Baladna’s bottom-line and valuation.
“In order to sustain this support, Baladna has to fulfill certain criteria such as utilising its IPO proceeds to reduce its debt as well as meeting certain periodic volume targets,” the report said.
Baladna has begun exporting to Oman, Afghanistan and Yemen as its first external markets. This is a part of the company’s long-term strategy of extending its footprint beyond Qatar in a range of long-life products. In the first half of 2019, Baladna Oman, a limited liability company was set up to execute distribution services with the aim of supporting the company’s marketing efforts in Oman.
Highlighting the government’s protection of Qatari dairy industry and producers, the report said, “The Government of Qatar is implementing certain measures intended for public safety, which could also provide some edge to local dairy producers in comparison to imports.
Compared to the rest of the region, the report said, Qatar had a higher per capita drinkable dairy consumption of approximately 50.3 liters per annum in 2017.
Having said that, the average-percapita-milk-consumption in the Western countries is higher at approximately 75 liters per annum, indicating a potential opportunity for milk consumption.
“Qatar’s highest GDP per capita in the world coupled with a growing economy should provide sufficient consumption power to residents. The FIFA World Cup Qatar 2022 is likely to be a major driver for Baladna. Qatar is expected to welcome 1.7 million visitors during this event as per the Qatar Civil Aviation Authority,” the report said.
Baladna has made a strong start to 2020, strengthening our expectations for 95.2 percent and 207.5 percent growth in revenue and earnings in 2020.
Considering its already launched and upcoming offerings, the report said, “We believe Baladna’s revenue and earnings performance is likely to speed up in the remaining part of the year. For 2021, we expect the company to record growth rates of 16.8 percent in revenue and 12 percent in earnings.”
Doha
Baladna, a key pillar of the Qatari National Food Security programme, has emerged as one of Qatar’s greatest commercial success stories in the post-blockade period.
Established in 2014, Baladna Food Industries (BFI) has grown to become Qatar’s largest locally-owned fresh dairy and beverage supplier and has helped the country achieve almost 100 percent self-sufficiency in fresh milk.
The company has spent QR2.7 billion ($740 million) over the last three years to expand its capacity and production capabilities.
The company has ample capacity for growth through upcoming new and value-added products as well as exports. Baladna recorded a 115.4 percent top-line growth in 2019, which should be followed by an expected 95.2 percent in 2020 and 16.8 percent in 2021 as the company plans to increase the number of stock-keeping units (SKUs) substantially by the end of 2020.
According to a report published recently by QNB Financial Services (QNBFS), exports and overseas expansion opportunities will be a major component of Baladna’s growth strategy.
“Exports accounted for a mere 0.53 percent of Baladna’s revenue in 2019. On the other hand, expanding into new markets is a major component of Baladna’s growth strategy. Thus, its anticipated herd expansion and long-life product range should support the company’s growth objectives. Apart from dairy and non-dairy products, Baladna is considering exporting its excess packaging material,” the report said.
“New products are expected to boost 2020-2022 revenue and bottom-line as the company plans to increase the variety of juices and cheeses. We expect Baladna’s net income to grow by 207.5 percent in 2020 and 12 percent in 2021,” the report said.
Baladna has ample capacity to sustain future growth as the company has managed to build its current capacity in Qatar.
In early 2019, Baladna’s newly built facility Plant 3 that processes raw milk from Baladna’s herd and converts it into dairy products became operational. Plant 3 has a maximum daily capacity of 500k-600k liters per day. Recently, a new production line was shifted from Plant 2 to Plant 3, which increased the Plant 3 capacity by approximately 150k liters per day.
Furthermore, a new UHT line is expected to be added in Plant 3, which will increase its capacity by nearly 170k liters per day. Baladna can also utilise Plant 3 to produce juice products.
With Plant 3 up and running, Baladna currently has a maximum beverage processing capacity of 700k-900k liters per day, which is enough to cover the entire dairy products demand of Qatar. Currently, Baladna utilises 45 percent to 55 percent of its overall capacity.
Baladna’s infrastructure has the flexibility of processing multiple products like fresh milk, juice and UHT long-life milk at the same time, which creates an edge for the company in responding to the rapid changes in demand dynamics.
At the end of 2019, the report said, Baladna entered into the long-life juice products and it continues to expand its cheese range in particular.
“Baladna only has an 11.9 percent local market share in cheese, which increases to 36 percent in the natural cheese segment. Baladna also has a relatively lower market share in the juice segment of about 13.5 percent as the company has recently entered that segment as well. Baladna sees significant growth opportunities in long-life juice, creams, processed cheese, and flavoured yogurt,” the report said.
It is noteworthy that the Qatari cheese and juice markets have higher annual growth rates of 4.1 per cent and 11.9 percent respectively against the core fresh dairy sector’s 2.4 percent.
Baladna has also launched a new brand called Awafi, which is more of a value brand targeting a different segment of consumers from the Baladna brand.
According to the report, Baladna targets expanding its herd 30 percent to 24,000 by end of 2020. After Baladna imported 8,000 cows in 2018, its herd reached 20,846 cows as of March this year. Currently, the cows onsite give birth to approximately 30-35 baby calves per day, which should result in 11,000-13,000 new cows per annum equaling 50-60 percent of the existing herd.
By the end of 2020, the total herd is expected to reach 24,000 cows, with the contribution of the natural herd growth cycle. On average, each cow will produce milk for 3-4 years before being replaced with a younger and more productive cow. In order to speed up its herd growth, Baladna is also considering importing 2,200 cows from the US by June’20, of which 807 have reached the farm in May 2020.
Productivity per cow at Baladna has surpassed the US average of 33 liters per day, reaching 37.2 litres in the first quarter of 2020. The metric improved by approximately 12 percent in 2019, with the average milking cow producing approximately 32 liters per day in December last year.
Beef and compost sales should support bottom-line growth of Baladna as it produces typical by-products of the dairy industry, namely beef and compost.
The report said that the government’s support of a total of QR1.27 billion over 10 years out of which eight years are remaining will enhance Baladna’s bottom-line and valuation.
“In order to sustain this support, Baladna has to fulfill certain criteria such as utilising its IPO proceeds to reduce its debt as well as meeting certain periodic volume targets,” the report said.
Baladna has begun exporting to Oman, Afghanistan and Yemen as its first external markets. This is a part of the company’s long-term strategy of extending its footprint beyond Qatar in a range of long-life products. In the first half of 2019, Baladna Oman, a limited liability company was set up to execute distribution services with the aim of supporting the company’s marketing efforts in Oman.
Highlighting the government’s protection of Qatari dairy industry and producers, the report said, “The Government of Qatar is implementing certain measures intended for public safety, which could also provide some edge to local dairy producers in comparison to imports.
Compared to the rest of the region, the report said, Qatar had a higher per capita drinkable dairy consumption of approximately 50.3 liters per annum in 2017.
Having said that, the average-percapita-milk-consumption in the Western countries is higher at approximately 75 liters per annum, indicating a potential opportunity for milk consumption.
“Qatar’s highest GDP per capita in the world coupled with a growing economy should provide sufficient consumption power to residents. The FIFA World Cup Qatar 2022 is likely to be a major driver for Baladna. Qatar is expected to welcome 1.7 million visitors during this event as per the Qatar Civil Aviation Authority,” the report said.
Baladna has made a strong start to 2020, strengthening our expectations for 95.2 percent and 207.5 percent growth in revenue and earnings in 2020.
Considering its already launched and upcoming offerings, the report said, “We believe Baladna’s revenue and earnings performance is likely to speed up in the remaining part of the year. For 2021, we expect the company to record growth rates of 16.8 percent in revenue and 12 percent in earnings.”
