Gulf Dairy Market Targets $3.35 Billion by 2033

The Gulf dairy and beverage industry is witnessing a shift towards functional nutrition, high-protein dairy products, immunity-boosting beverages and locally sourced ingredients, according to Firoz Ahmed, Group Head of Quality and Research & Development at Dhofar Foods and Investment Company, Oman. In an interview with ZestNews published by DairyNews.today on October 15, 2026, Ahmed highlighted that the regional functional dairy market is valued at approximately USD 2.25 billion and is projected to reach USD 3.35 billion by 2033, accounting for around 11–12% of the market, according to the company’s estimates.

Ahmed brings 26 years of food-industry experience, including 21 years in the Middle East across the UAE, Kuwait and Oman. He began his career with Nestlé and Godrej Foods in India, subsequently worked in the UAE and at Arabian Beverage Industries in Kuwait, and has spent the last five years with Dhofar Foods. Founded in 1983, Dhofar Foods and Investment operates a vertically integrated food business spanning feed milling, dairy farming, edible oils, dairy products, beverages and plastics.

The company is scaling up production in line with Oman Vision 2040 and the country’s food-security ambitions. Ahmed said changing consumer preferences are creating opportunities for products that offer benefits beyond basic nutrition, including protein-rich Greek yoghurt, probiotic-fortified dairy, vitamin-enriched beverages, immunity boosters and zero-added-sugar juices.

Government nutrition initiatives and growing interest in preventive healthcare, particularly following the pandemic, are supporting this transition. Younger, fitness-conscious consumers are increasingly seeking functional benefits in everyday food and beverages, making health-oriented products a key growth category over the next three to five years.

However, the industry faces significant pressure from global supply-chain volatility, inflation and rising freight costs. Gulf Cooperation Council (GCC) manufacturers depend heavily on imported packaging materials, agricultural grains and cattle feed, which represent a substantial share of production costs. Ahmed reported that container freight costs had increased three to five times amid regional geopolitical tensions.

Manufacturers must manage these higher expenses without compromising product affordability, quality or shelf stability. Dhofar Foods plans to address these challenges through greater localisation of raw-material sourcing and stronger integration across its supply chain. The company’s agricultural base in Salalah, Oman, provides an advantage through local grass and forage cultivation, while its feed manufacturing operations and plastics business support upstream supply-chain integration.

Ahmed identified access to raw materials at their source as an increasingly important competitive advantage, arguing that local sourcing can reduce costs and improve resilience against international disruptions. Saudi Arabia is another strategic growth market for the Omani company, supported by its young, increasingly urban population, purchasing power and healthy-living initiatives under Saudi Vision 2030. Ahmed expects growth through modern retail, supermarket chains and high-volume business-to-business platforms, alongside traditional retail.

By 2030, he anticipates a broader shift from conventional juices and beverages towards products positioned around specific health benefits. High-protein dairy is currently one of the strongest growth categories in the region, while functional beverages featuring probiotics, vitamins and immunity-supporting formulations are also gaining traction. Lactose-free dairy is another emerging opportunity as awareness of lactose sensitivity increases, enabling consumers to remain within the dairy category.

In contrast, Ahmed described plant-based alternatives as a largely niche segment in Oman and the wider GCC, citing dependence on imported raw materials, low sales volumes and logistics challenges. Product formulation is also being shaped by regulation and consumer expectations. Ahmed identified sugar taxes and clean-label requirements as two major influences on product development, noting that a 50% sugar tax in the region can significantly affect profit margins. Dhofar Foods has developed a range of 100% natural juices with no added sugar and is working towards broader clean-label formulations under its three-year industrial plan.

Removing sugar while maintaining familiar taste requires careful optimisation of Brix levels, mouthfeel, flavour impact and aftertaste. Sustainability remains another priority for dairy producers operating in a water-scarce environment. Ahmed said Salalah benefits from comparatively favourable agricultural conditions, including greenery, fodder availability and water resources, although dairy farming remains challenging across much of Oman and the GCC.

Dhofar Foods uses recycled water for most of its operations and is focusing on agricultural technologies that improve water efficiency, bioengineered raw materials and herd genetics to help cows withstand heat stress. The company also cultivates its own grass and forage in Salalah, reducing some of its dependence on imported feed.

Over the next five years, Dhofar Foods plans to concentrate on three strategic priorities: premium, healthier versions of its core products; expansion of exports; and development of new value-added categories. A broader health-oriented dairy and beverage range is planned for launch from the beginning of 2027, according to Ahmed’s October 2026 interview. The company currently exports to the UAE, Saudi Arabia and Yemen, mainly in one or two categories, and intends to expand its complete product portfolio across regional markets.

Planned product opportunities include premium cheeses, infant nutrition and dairy snacks. Ahmed also emphasised that producers and retailers approach the market differently: retailers focus on daily consumer demand, sales velocity, margins and product turnover, while manufacturers prioritise long-term asset utilisation, production capacity, raw-material availability and plant efficiency. For young professionals entering the regional food industry, he recommended combining scientific expertise with process engineering, advanced technology, regulatory knowledge and practical operational experience.

His advice to industry leaders is to manage operational crises directly from the factory floor rather than relying exclusively on reports and spreadsheets. Overall, Dhofar Foods’ strategy reflects the growing importance of functional dairy innovation, supply-chain localisation, water-efficient production and regional export expansion as Gulf manufacturers respond to changing consumer preferences and economic pressures.

Source: Dairynews7x7 17 Oct, 2026 Read full story here

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