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Middle east boycott of danish goods hits hard { February 3 2006 } Original Source Link: (May no longer be active)
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Middle East boycott of Danish goods hits hard
By Adam Jones in Paris
Published: February 3 2006 19:01 | Last updated: February 3 2006 19:01
Boycotts of Danish goods are under way in several Muslim countries following the furore over the publication of cartoons depicting the Prophet Mohammed in a Danish newspaper.
Many supermarkets in Cairo, for instance, the Arab world’s biggest city with a population of 17m, have cleared their shelves of Danish products, advertising the fact on signs displayed outside.
On Friday Nestlé, the Swiss food multinational, admitted that it had taken the unusual step of printing an advertisement in a Saudi Arabian newspaper telling consumers that two of the products it sold in the region were not of Danish origin.
A Nestlé spokesman said the advertisement was a response to a rumour suggesting – incorrectly – that the two brands of milk powder, Nido and Klim, were made in Denmark.
The Swiss group said it had noticed a decline in sales in Saudi Arabia and, to a lesser extent, the United Arab Emirates, as a consequence of the rumour.
“On one day there was a reaction on the part of consumers and also by some stores who took the products off the shelves. We took the trouble to rectify the situation – to give the correct information to consumers.”
The advertisement seemed to work. “We noticed that after a day or so the situation normalised and we don’t expect this to have an impact on our business.” Nestlé, whose brands include KitKat chocolate bars and Nescafé instant coffee, stressed that the move was not an “anti-Danish” measure.
There has been no such escape for Arla Foods, the dairy co-operative owned by 11,000 Danish and Swedish farmers. The Middle East is a key £300m-a-year market for Arla, one it had been nurturing for 40 years. Only recently, the board had decided to invest £40m in the region. The plan was to double the local workforce from 1,000 to 2,000 while expanding production at its cheese spread plant in Riyadh, Saudi Arabia.
The investment may now never be made. All of its products have been removed from store shelves in the region and production in Riyadh has been halted. Arla said it was still paying the factory’s 800 workers but the future of the plant is uncertain. “We hope in a week or two weeks we will have a feeling as to whether there is a hope for us to restart production,” said a spokeswoman. There is also a question mark over jobs in Denmark.
Arla exports cheese and Lurpak butter to the Middle East. On Friday it had to send home 150 Danish workers after orders fell. If things do not return to normal within 10 weeks, Arla will have to begin negotiations with unions about the future of these jobs.
The best-case scenario is still pretty grim. “We will have to re-establish the entire business [in the Middle East]. There is no way we are going to regain what we had built.”
The safety of staff remains a concern. Last month, there were two attacks against Arla employees in Saudi Arabia, although no one was seriously hurt.
Carrefour, the French retailer that has franchises in the Middle East, said on Friday there was not yet any evidence of the boycott being extended to goods from European countries in which the controversial cartoons had been reprinted.
The decision to remove Danish products from Carrefour stores in the Middle East was taken solely by its local partner, Majid Al Futtaim, it added. “They are free to do whatever they want in their shops.”
Additional reporting, William Wallis in Cairo
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