Dairy giant Arla Foods has warned that it may be forced to reassess its strategy for the Middle East if the boycott of Danish goods continues.
Arla has been caught up in a revival of a boycott first seen two years ago when Muslim countries protested against the Danish publication of a cartoon depicting the prophet Mohammed.
The row flared up again in February after several Danish newspapers reprinted the cartoon in a show of solidarity with the cartoonist, who had been the victim of a failed murder attempt.
Arla said that the latest boycott had lasted longer than expected. “Turnover in the region is at 50% of the level we would have expected at this point in the year,” a spokesperson said. “If it lasts the full year we will lose DKK1.3bn (US$274m).”
The spokesperson added: “It is still a very strategically important market for us because of the growth and opportunities it presents. But the last couple of years have presented new challenges. If they continue we will have to reassess our strategy for the region. As yet we have made no formal changes.”
Arla has already cut production at its Bislev Dairy in Denmark by 150 tons per week because of falling Middle East orders.
The spokesperson added that there is little the company can do to bring an end to the boycott.
“We are laying low and keeping a low profile,” the spokesperson said. “We are working to maintain good relationships with our customers so that retailers continue to stock our products. We believe it has hit rock bottom and it will get better.”
