Arla braces for second wave of consumer boycott

It might easily turn out to be a really bad case of deja-vu but Danish dairy producer, Arla Foods, are hoping that the latest uproar involving reprinted cartoons of the Prophet Muhammad and an anti-Islam movie would not affect their bottom line as big as it did in 2006.

As The Netherlands raised its national risk level of a terrorist attack to "substantial" before the launch of a film said to be critical of the Qur’an, and with the recent republishing of cartoons insulting Islam by Danish newspapers, representatives of Arla Foods hopes that they would not be victimised again over something that they do not have control over.

Speaking on the sidelines of the recent Gulfood 2008 in Dubai, Lars Eggars, director of Consumer International, Arla Foods amba, said that they have been extremely saddened by this whole episode, as it interrupted not only some very good business in the Middle East, but also plenty of personal relationships built over the past 40 years.

“The whole situation has upset us of course, but we are not in the business of politics or religion for that matter. We are in the business of producing and selling dairy products,” said Eggars. “And as such, we felt that we have been drawn into something that we have no inputs on, and basically, we cannot do much about it.”

“The only thing is that we have to accept the situation as it is and try to work our way around it. That was what we did in 2006, and it seems this is what we are going to do this year,” he added.

Danish exports to Muslim countries fell by more than 11 per cent in 2006 during the boycott, according to Denmark’s national statistics agency. Recalling the tumultuous 2006 when Arla was estimated to lose as much as £1 million a day at the height of Middle East’s Danish products boycott in March 2006, Eggars pointed out that the ones truly affected are actually the simple farmers who were merely trying to earn enough for their families.

“You know that we are not a capitalist structured company; we are a co-operative owned by dairy producers. Therefore, we have farmers who milk their cows every morning to produce either fresh milk for Denmark, or cheese for the Middle East. These people are just like you and me, and they have families to support,” he said.

Admitting that they did lose a significant market share and had to close down several non-core businesses as a result of the consumer boycott, Eggars hoped that this time the authorities and the consumers would exercise a little due consideration.

“Let me give you an example. Many Danes have been going on vacation in Spain for years, and they have been behaving in a certain manner. Therefore, when I go there, I would not like to be judged by how my compatriots have been acting; I want to be judged based on what I have been doing, and not by how somebody else has been behaving,” he reasoned.

Although many would think that it should be easy for the respective governments to impose sanctions on its citizens for national interest, Eggars says this is almost impossible in many European countries as freedom of speech is deeply rooted within their culture and constitution.

For the record, Arla’s chief executive officer, Peder Tuborgh, did urge the Danish government to take action. In a statement, he said, “I urgently beg the government to enter a positive dialogue with the many millions of Muslims who feel they have been offended by Denmark. Freedom of expression is an internal Danish issue but this has a very different dimension. This is about Denmark having offended millions of Muslims.”

Consequently, Arla took out a full-page advertising in Saudi Arabia apologising for the cartoons and indicating Arla’s great respect for Islam in the country. This however raised controversy back in Denmark, where women’s organisations and some Danish politicians criticised Arla, and called on Danish women to boycott Arla’s products in Denmark.

This year, although there were similar calls for Muslims to repeat the boycott, most notably from Dr Yusuf Al Qaradawi, an Egyptian cleric based in Qatar late February, supermarkets and hypermarkets across the UAE are still waiting for an official call for boycott.

“We do not have all the information to take a decision on pulling Danish products from our shelves,” said Bejoy Mathew, Marketing Manager, Abu Dhabi Co-operative Society. “Last time, we respected public sentiment and participated in the boycott of Danish products and brands. If there is an official call, we will participate and arrange alternative products for our customers.”

A spokesman for the Abu Dhabi-based Emke Group, which runs Lulu hypermarkets, said, “We have not received an official communiqué. Last time we followed public sentiment and removed Danish goods – including dairy products, confectioneries and chickens.”

For Arla Foods however, signs of the boycott are already being felt, with the company forced to cut production at its Bislev Dairy in Denmark by 150 tons per week because of decreasing demand from the Middle East. However, unlike 2006, Eggars reckon that the decision this year would be a lot simpler.

“Yes, it has been hard and I imagine it will be a lot harder still,” says Eggars. “But then again, our farmers still have families to support, and at the end of the day, if we cannot do our business here, we have to take it somewhere else. Of course we think it is a shame and unfortunate, but if this is what we have to do, then this is what we will do.”