Blog: Arla disaster

Catherine Sleep | 16 February 2006

To “hope for the best, plan for the worst” is generally considered a wise business strategy. But sometimes the worst exceeds your fears in such spectacular manner that your plans look hopelessly inadequate. Let us turn to Denmark for an example…

Dairy giant Arla Foods has been rocked by a crisis not of its making. The company has been designated chief scapegoat of protests over political cartoons featuring the Muslim Prophet Muhammad. It has no relationship to the newspapers that printed them other than a common nationality and could have done nothing to prevent their publication. Nevertheless it finds itself in the eye of a hugely damaging storm that has reduced its US$470m annual exports to the Middle East to zero. It will take years for Arla’s sales to the Muslim world to recover, no question about it.

The company has made every reasonable effort to placate protestors, for example paying for a statement, to be placed as an advertisement in leading Saudi newspapers, from Denmark’s ambassador to Saudi Arabia saying that Denmark respects all religions. That said, Arla must walk a tightrope to distance itself from the cartoons without offending those in its native country who would defend their publication as an act of free speech. A survey showed that 79% of Danes think that no apology is necessary for the cartoons, and Danes eat a lot of butter too.

Just to pile on the misery, a Danish court this week found Arla guilty of breaching national competition laws by abusing its dominant position.

One thing’s for certain: Arla’s Dutch counterpart Campina will be counting its blessings right now that its planned merger with Arla last year came to nought.

We’ll be discussing the longer-term impact of the boycott in more depth over the coming days, but in the meantime find out more here:

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