ARLA Foods, Europe’s second-largest dairy company, has scrapped plans for a US$50 million extension to its operations in Saudi Arabia. The Danish company had been finalising a deal to double the number of employees at its dairy in Riyadh, until last week’s furore over a Danish newspaper’s publication of offensive caricatures of the Prophet Muhammad.
The company — which manufactures Lurpak butter, Puck cheddar, and Three Cows fetta cheese, and has been losing over US$2.4 million a day in sales in the region — has called a halt to operations and closed the dairy. It is unclear whether any of the 800 employees will lose their jobs. “We are hardly selling any products at all in the Middle East region,” Louis Honore, a spokesman for Arla told Arabian Business. “It has affected our range of products enormously. We have seen our biggest losses in Saudi Arabia — where our turnover is largest — and we are being forced to stockpile our products.”
Honore admitted that the company’s Middle Eastern operations would take considerable time to recover, even after the controversy has subsided.
“It will take a long time before we can re-establish sales as they were before this boycott,” he admitted. “We’re very frustrated as we’re caught in between the Danish newspaper and the Danish government on the one hand, and the consumers and the religious leaders of the Middle East on the other. It’s very difficult to act because people have nothing against our products — they’re quite fond of our products.
They aim to hurt Denmark as such, not us as a company.”
Despite an apology by Jyllands-Posten, the newspaper concerned, Muslim anger shows no signs of abating. In response, supermarket chains including Carrefour, Consumers Cooperative Union, and Spinneys, have removed all Danish products from their shelves.
“We have received some very strong complaints from customers,” said a spokesman for Emke Group, which runs the LuLu supermarket chain across the GCC. “We are very close to the local populations of the countries we operate in, so when we started getting criticism at a number of different outlets, we decided to act and remove the products.”
In addition, last week saw masked gunmen storm EU offices in Gaza, an unidentified terrorist group in Iraq call for a fatwa against Danish troops in the region, and the Jyllands-Posten offices evacuated after bomb threats.
Saudi Arabia has recalled its ambassador to Denmark, while Libya said it was closing its embassy in Copenhagen. Ministers from 17 Arab countries also issued a statement condemning the publication of the cartoons, some of which depicted Muhammad as a terrorist. “The council of Arab interior ministers strongly denounce the offence to Islam and the prophet published in the Danish press and ask the Danish government to firmly punish the authors of these offences,” read the statement.
While Denmark moved to lodge an official complaint with the World Trade Organisation (WTO) over suspicions that the boycotts were state-supported, government sources in Saudi Arabia and other Muslim nations contended that the protests had been “launched by the people”.
The Danish government has been criticised for its sluggish response to big business’ demands for a swift resolution to the dispute. However, Denmark’s prime minister Anders Fogh Rasmussen last week admitted that a debate over free speech had escalated into something potentially far more damaging.
Arla is among a number of Danish firms that have put pressure on their government to secure an end to the crisis. “We and many other industries have urged our government to step forward and enter into a dialogue with those who are feeling insulted in the Middle East,” said Honore. “However, the government has still not done enough. We need a swift resolution, and we will not be satisfied until this problem is solved.”
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