Islamic dairy boycott may affect NZ

Controversial cartoons published in the Danish and Norwegian media have triggered consumer boycotts of Danish exports by Islamic consumers.

The boycotts are hurting a major European partner of Fonterra, and at least one Saudi company which buys New Zealand dairy ingredients.

In the Middle East, where Danish dairy company Arla is the second biggest foreign player, gaps on some supermarket shelves, with labels in English and Arabic, indicate that Danish products have been withdrawn.

Copenhagen's Jyllands-Posten daily printed 12 drawings by Danish cartoonists who had been asked to illustrate the prophet.

Islam considers images of prophets disrespectful and caricatures of them blasphemous, and one of the drawings showed Muhammad wearing a turban with a bomb in it.

The centrality that mainstream Sunni Islam gives to the figure of the Prophet is even more marked in Saudi's strict Wahhabi school of Islam.

Popular boycotts spread after a Norwegian newspaper this month re-printed the cartoons, and there has been an avalanche of emails and text messages urging Muslims to boycott Danish products, the Arab News newspaper reported.

They are hurting not only Danish companies such as Arla -- Fonterra's key partner in the UK yellow fats market -- but even companies which appear to be Danish, such as the Saudi Dairy and Foodstuff Company (Sadafco) and the Bahrain Danish Dairy Company.

Sadafco is 100 per cent Saudi-owned, but is still widely associated in the Middle East with Denmark because it began in 1976 as the Danish Saudi Dairy Company.

The company has been trying to persuade consumers that its imported milkpowders and other ingredients for manufacture or sale come from New Zealand rather than Denmark, the Arab News reported from Jeddah yesterday.

"The company's nationality is Saudi 100 per cent" Sadafco said in a statement. "It does not import or sell any products from Denmark or Norway as all its products are produced in its factories in Jeddah and Dammam and the raw material used in its production lines are from local markets or Gulf or New Zealand."

Sources at Sadafco said that its share price had slumped.

In some Saudi and Bahrain supermarkets, gaps with labels in English and Arabic indicate that Danish products have been withdrawn, and some commentators have said that the shortfall may represent an opportunity for other exporters, including Fonterra, Kraft, and Nestle.

Arla -- Fonterra's main partner in selling Anchor butter and other spreads in the UK -- confirmed that the anger sparked by the cartoons had prompted a boycott of its products in Saudi Arabia. Arla Foods is the leading Danish exporter to Saudi Arabia, where it has been selling an estimated 268 million euros ($474 million) worth of products every year. It has dominated the butter market, and with Kraft was a leader of the cheese market.

But the company said major Saudi customers were threatening to stop buying Arla butter and cheeses unless the Danish government officially apologised.

"More and more supermarkets are taking our products off their shelves and don't want fresh supplies because consumers no longer want to buy our brand," Arla Foods spokesman Louis Honore told the AFP news agency. "The situation is very serious."

"We are certainly afraid this will spread across Saudi Arabia and affect our business," Arla director Finn Hansen said.

One Saudi supermarket chain, Panda, issued its sales flyer for this week with a photograph of Danish feta cheese with the words "cancelled" in English and Arabic clearly overprinted, the Arab News reported.

"We have pulled all Danish products from the shelves of our Panda supermarkets and hypermarkets ... and left the shelves empty for the people to notice," said Mohammed Gashgari, retail sector manager at Savola Group, which owns the Panda chain.

"We have stopped promoting Danish products since early last week. This is a very important issue for us out of principle."

Half of Arla Foods' cheese production is sold in two "domestic markets" -- Sweden, and Denmark -- and the UK, where Arla packs and markets Fonterra's butter and spreads under the Anchor brand. In the Middle East, Arla's key brands are Puck (processed cheese) and The Three Cows (feta), Lurpak (spreads) and Power Cow.products for children.

- NZPA