Arla i vækst-Afrika

Abstract

The abolition of the European milk quota system in 2015, is expected to increase the milk production within the European Union by 9,6 billion kilograms towards the year 2023, compared to the production level in 2012. Arla which is one of the major producers of milk within the Union, expect that the production from their famers alone will increase by 1 billion kilograms, and as a consequence of this, the company is looking for growth opportunities on new and existing markets, where this additional production can be sold in a profitable way. This report seeks out to analyze the Nigerian market for milk powder, in the attempt of identifying possible strategic and marketing initiatives which can be put in place by Arla, in order to gain competitive advantages in this market, and help the company to achieve part of their goal for the African continent, which is to triple the revenue to at least 2 billion Danish kroner by the end of 2017. The report notes that Arla is a relatively small player in the Nigerian market, which overall is showing oligopolistic tendencies and is dominated by four major players, who are considered to be relatively well-consolidated and well-known by consumers, who are characterized as relatively loyal to their favorite brands, as long as they remain competitive on price. The market itself is characterized by high interaction between companies, mainly among the biggest players in the market. The main external factors affecting the industry, is the economic and socio-cultural factors which provides growth and segmentation possibilities, especially within the child segment in the more prosperous cities, in the southwestern parts of the country. At the same time consumer trend to consume the product on the move without mixing it, shows differentiation possibilities on the packaging. The report concludes that Arla should take advantage of its relatively small market share and pursue a differentiation-focus strategy on brand level, targeting the above segment and at the same time exploiting the differentiation possibilities on the packaging. Finally, it is noted that both the degree of location and internalization advantages are high, why it is concluded that it would be beneficial for Arla to replace their current license-based business model, and instead implement FDI and enter into a joint venture, with a strong and reliable local partner.