Arab owned and affiliated grocery stores in the Middle East are boycotting products from Denmark in response to Danish newspapers' publishing of controversial cartoons depicting the Muslim prophet Mohammed.

That's bad news for Swiss-Danish Arla Foods, one of Europe's largest dairy importers, but its might be good news for rivals such as Fonterra, of New Zealand, and for France's Groupe Lactalis.

Fonterra had to distance itself from European dairy companies after some emails and fliers promoting the boycott were thought to have wrongly listed Fonterra products as coming from Denmark. Companies such as Fonterra are expected to be the biggest beneficiaries of the boycott due to their capacity to produce large volumes of dairy supplies quickly.

After the boycott began, Lactalis said its President butter was second to Arla's Lurpak in the Middle Eastern market until the boycott began, adding that it would take some time before the impact on market shares becomes clear.

The rejection of Danish products in the region is believed to be costing Arla over $2.4 million per day in lost sales.