Discuss about the Al Ain Dairy in United Arab Emirates.
Al Ain Dairy is the largest dairy in United Arab Emirates (UAE). It was established in 1981. The dairy is the first to launch camel milk ice cream. Milk powder products are also available by the diary in market. The camelait premium ice cream and camelait milk powder were launched in 2015 and are available in stores across UAE. Fresh, flavoured camel milk and camel milk laban are already sold by Al Ain under a brand named Camelait in UAE. The main market for dairy is White Gulf Cooperation Council (WGCC) for marketing camel milk products. The demand for camel milk is increasing due to low in fat, high in calcium and rich source of protein. It is the mission of company to make available local products to customers around the globe. The dairy uses spray drying technology and it is the only company in UAE to use this technology in manufacturing (Wilson, 2017). Spray drying used to produce dry powder from liquid. In this technology liquid is dried with hot gas. In this report porter’s five forces is prepared and applied in Al Ain.
Porter’s five forces
The dairy industry in UAE is unique and profitable. The industry is continuously expected to grow and experience growth in future. With the increasing health awareness and standard of living, the demand for healthy food is continuously rising. The dairy products have been segmented into milk, laban, yogurt, curd and ice cream. Porter’s five force analysis is an important tool for marketing. It helps to identify and measure Al Ain’s strength and position in the particular business atmosphere (Taleb, 2015). Such framework provides better understanding of Al Ain to it’s management. The Porter’s five force analysis is mainly concerned with five important components and face issues and impending changes in environment.
Power of buyers
The buyers like to collect information before delivery of products. There is a communication network in Al Ain which helps to communicate with customers. The dairy prefers fixed pricing method to avoid any chance of bargaining from customers. The bargaining power of customers is low in case of Al Ain dairy farm. The customers do not have many choices due to the monopoly in market. The demand of products is increasing frequently. The purchases also cannot be postponed.
The bargaining power of customers has always been important factor in the performance of company. There is less chance of switching due to high brand image through differentiation and uniqueness of products. The buyers do not have bargaining power. The power of buyers is high when they buy large volume of products and are sensitive to lower prices. It is important for the company understand power of customer and their needs so that company can make efforts to satisfy them (Berry, 2016).
Power of suppliers
Al Ain is known for strong relations with suppliers. The supplier power of Al Ain is high because Al Ain uses same products from same suppliers. For instance, the dairy provides the same camelait ice cream everywhere. The service provided by suppliers is quite satisfactory. The dairy do not import milk or substitutes from foreign countries. It gives benefit as discount can be given by domestic suppliers. Good quality of milk and ice cream and delivery on time helps dairy in winning trust of customers (Hill, Jones & Schilling, 2014).
The suppliers do not do business with just one company; they supply products to other firms too. There can be some important customer to suppliers in comparison to less important companies. The suppliers always have less bargaining power to them. Al Ain focuses on strong relations with suppliers to make quality stronger. It also provides guidance to suppliers to work more competently to decrease terminated expenses.
Threat of substitute products
The threat of substitute products is medium because products of most diaries are unique and there is not much competition. There is threat of substitute products because a person can get what is wanted by them in an easier way. If Al Ain produces fresh milk and it does not last long and costs more and the other company producing milk which is cheaper and can be consumed for more days, then people will like to buy milk of other company. It is because Al Ain’s milk would not last long. If Al Ain produces powder milk at lower prices than customers would go for powder milk. Substitute of products can change opinion of customers and it can be threat for the market share of firm (Nagy, 2016).
Al Ain is the first dairy to produce camel milk ice cream and the company is continued to bring innovative products to the market. The camel milk is pasteurized to produce ice cream and makes available in six generous flavors such as saffron, cardamom, date, chocolate, lite raspberry vanilla and chocolate. The uniqueness of Al Ain’s ice cream is that it uses 100% fresh camel milk (Abusheliabi, et. al. 2017). It does not add neutralizers, preservatives and other substances. This uniqueness of dairy has less risk of substitute products.
Threat of new entrants
The threat of new entrants for Al Ain dairy is low as it is already established. There are various kinds of dairies already in the industry of UAE. There is threat to enter at this point because it can cause conflict for the new entrants because the customers are loyal for Al Ain dairy and there will be no economy of scale for new entrants. There will be low distribution channels and high existing power and government regulations. Al Ain is an established and strong brand and it is difficult to enter in market because the new entrants face price competition and takes enough time to establish in the dairy industry (Frésard & Valta, 2016).
It is always threat for the company when there are limited resources in industry. It results in monopolies and becomes difficult for new entrants to enter into industry. Although Al Ain has established a strong brand image in the market but there are lot of companies who are already in the industry and achieved a place even though they could not cross Al Ain in terms of market share. There are number of companies attempt to enter market and endeavour for market share but very few can survive (Greenspan, 2015).
Intensity of rivalry
There is competitive market structure of dairies so there are high rivalry and many competitors like Marmum Dairy Farm, Gulf and Safa Dairies and more. Al Ain is pioneer in the dairy industry of UAE and has made substantial development in dairy production technology. It includes high speed packing machines and bacteria testing equipment. The dairy is beyond competition in the market, it exports to international market. It also aims to make country self-sufficient regarding dairy products.
Al Ain has competitive advantage that the company is in the dairy industry for longer time then it’s competitors. The market of UAE is very competitive but still there is room for growth. The diary can dominate market by introducing it’s brand in other GCC countries in near future (Raziq, 2015). It was the first diary which was established in UAE and currently it comprises 36% market share. It’s specification of providing 40 high quality milk, juices and milk products keeps the company away from it’s competitors. It assures the quality and safety standards. The company has competitive advantage as the demand for nutritious products is continuously rising in European and North America markets (Dobbs, 2014).
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