Company Overview

Almarai commenced operations in 1396H (corresponding to 1977G) when His Highness Prince
Sultan bin Mohammed bin Saud Al Kabeer developed a number of agricultural projects drawing
on the tremendous potential of developing the traditional dairy industry to meet the fast
growing demand of the local market.
Following years of visionary expansion and diligent product development, Almarai has evolved
as the largest vertically integrated dairy company in the world. Almarai is also the largest
manufacturer and distributor of food and beverages products in the region. Ranked as the
MENA region number one brand in consumer products, Almarai is now the undisputed market
leader across its product categories in the Middle East, North Africa, and all Gulf Cooperation
Council (GCC) countries.
It took two decades to achieve annual revenue of SAR 1.0 billion but only one decade to double
that amount. In the eight years to the end of December 2013, total annual sales soared to reach
SAR 11.2 billion with a compounded annual growth rate of 23.2 % since 2006.
Almarais success can be attributed to a number of factors, including a state-of-the-art
infrastructure which includes farms, production operations and go-to market systems with a
commitment to quality at every stage. Almarais infrastructure, systems and dedication to
quality enables Almarais Saudi Holstein cows to each produce an average of more than 13,375
litres of milk every year almost double the European figure and close to 3,000 litres more than
their nearest international competitors.
Almarai is the first dairy farm in the world to have been awarded the ISO 9001 accreditation,
awarded in 1997, and is the first vertically integrated dairy business to have achieved the ISO
9001-2000 certificate across all of its operating divisions and sectors, including farms,
procurement, processing, technical research and development, distribution and sales.
Today Almarai has a milking herd of over 78,000 cows out of 142,000. With the herd
accommodated on seven farms covering 9,574 hectares.
In 1996 Almarai commissioned its first central processing plant (CPP1) and centralised its dairy
manufacturing facilities on one site. Major diversification was undertaken by Almarai in 1999
with the introduction of fresh fruit juices to complement the existing range of dairy products. In
2005, Almarai commissioned its second central processing plant (CPP2) which produces milk,
juice and cheese products.
Almarais fleet of over 71 tankers and 1,220 trailers undertakes approximately 221,000 trips
annually covering 209 million kilometres to deliver dairy, juice, bakery and poultry products to

127 depots. From the depots, a fleet of 4,655 vans deliver to more than 108,000 stores and
retail outlets. The activities are facilitated through a work force of over 34,000 staff as of the
end of December 2013.
The Company markets a range of food and beverage products under the Almarai brand,
principally through retail outlets. The product range includes fresh and long-life dairy products,
which are made primarily from fresh milk, as well as fruit juices, cheese, butter and some nondairy products. Almarai is an integrated organisation spanning the food supply chain from dairy
farms through to retail stores.
The Companys head office is in Riyadh, Saudi Arabia, and its production facilities, consisting of
the Central Processing Plant (CPP), cheese processing plant, dairy farms and other facilities
are located within 150 kilometres of Riyadh. CPP is the hub of its extensive distribution
network. From there, Almarai products are despatched on a daily basis to distribution centres
in all parts of Saudi Arabia and in the other GCC countries. Almarai regards the GCC countries as
its core market as it is a market leader in the fresh dairy sector in the region10.
As the economies of the GCC countries continue to expand, and their populations grow at
exceptionally fast rates, demand for consumer food products should remain buoyant and
Almarai is positioned to meet this growing demand. The Company has embarked on an
investment programme to ensure that the production and distribution facilities are in place to
meet anticipated continuing increase in demand for its products.
Currently the Company does not have any plans to undertake any material change to the
nature of its business.

Company Evolution
The development of Almarai may be viewed in three distinct phases: Initial growth (1977-1990)
Restructuring and reinvestment (1991-1997) Growth and utilising competitive advantages
(1998-2005)
Initial Growth (1977-1990)
The origins of the Company date back to 1977 when HH Prince Sultan bin Mohammed bin Saud
Al Kabeer, recognising the potential to transform traditional dairy farming in Saudi Arabia to
meet the needs of a rapidly growing country, developed a number of agricultural projects
which began with the processing of fresh milk and laban and soon thereafter expanded into
dairy farms, fresh processing plants and cheese processing plants.
The investment in brand development was supported by the reputation rapidly gained by
consistently providing consumers with quality products in a timely manner. By the end of this

period the Almarai brand had become a key asset and a cornerstone on which to build further
growth and development.
By 1990, products were being distributed through 26 distribution depots throughout all regions
of the GCC. In addition to milk and laban, the range of fresh products had expanded to include
zabadi, gishtah and labneh, as well as low fat products and Almarai branded butter and cheese,
imported from Europe.

Restructuring and Reinvestment (1991-1997)

In 1991, the Restructuring and Reinvestment phase started with the establishment of Almarai
Company Trading Limited at which point the Almarai brand had already achieved market
leadership. Almarai was well positioned to benefit from the economic upturn in the region
during that period.
Almarai initiated a comprehensive efficiency and cost reduction programme. Its food supply
chain was developed to anticipate and react to consumer demands in an efficient and cost
effective manner, maximising sales and minimising product returns. prospects, and particularly
its young, growing population, offer Almarai excellent growth potential.
In preparation for anticipated volume growth, Almarai has embarked on a further investment
programme. The principal component of this programme is a major expansion of processing
facilities at its Central Processing Plant. The expansion (CPP2) will provide sufficient
processing capacity for the immediate future and easy access to further capacity for growth.
This will be supported by expansion of the distribution network as required.

Mission
To provide quality and nutritious food and beverages that enrich our consumers lives every
day.
Vision
To be the consumers preferred choice by leading in chosen markets with superior food and
beverage products.
Values
Adaptable: We are agile and flexible in our work, confidently taking bold decisions that benefit
our stakeholders.

Sharing: We work together as one, openly collaborating and sharing skills & knowledge to
enable our people to be the best.
Passionate: We are proud of the work we do, and strive for exceptional results.
Innovation: We are driven to improve our business everyday and to maximize the creative
potential of our people.
Respect: We earn respect by embracing fairness, trust, and integrity in all our relationships.
Excellence: We are diligent in our work and consistency to deliver the best quality in everything
we do.

Organizational Structure
Almarai has developed a functional organisation structure consisting of three operational and
four support divisions. The operational divisions are directly responsible for the various stages
of production and distribution and consist of the following: Sales Operations Farming
They are supported at corporate level by the following central support divisions:
Marketing
Finance,
Information and Support
Human Resources
Administration
Almarais integrated approach to food production and distribution is one of its strengths. Its
component business units are clearly interdependent. Consistency of approach and
harmonization of decision-making are critical to the achievement of overall corporate goals.
Central support functions are focused on providing pro-active assistance to operating units and
on ensuring harmonization of operational targets with overall goals.
The senior management of each division consists of a team of experienced, capable
professionals, led by a Divisional General Manager. The Divisional General Managers report to
the Chief Executive Officer and together form the Management Executive Committee.

Almarai has standardised many policies and procedures and has tended towards a centrally
controlled structure. Almarais managers are clearly focused on agreed financial and nonfinancial targets at business unit level and are free to manage within those constraints. Annual
budgets are presented for approval along with capital expenditure programmes and other
significant developments. Actual performance is reported regularly in detail.
The Almarai approach may therefore be regarded as a subtle combination of centralised and
decentralised with a strong emphasis on interdependence.

Business Model
A fully integrated model is being followed by Almarai for its dairy products (both fresh and long
life), butter and chesse products which composes 70% of its revenue in 2011 where the
company control the value chain from the production of the milk in its farms to the
manufacturing of the product in its own facilities and plants and finally distribute it to the
consumers by its own distribution system using its own fleet (Quantum Investment Bank Ltd,
2014). Almarai has been attempting to implement the same business model with the recent
expansions in other segments through the construction of new production facilities such as a
new plant for infant milks and the poultry processing capacity investments and by gaining
profits in its current network and fleet distribution (Quantum Investment Bank Ltd, 2014).