Saudi Arabia Food and Drink Report Q1 2013
Report description
Despite the ongoing turbulence in the world economy, we continue to maintain a very positive outlook for Saudi Arabia's consumer sector. The Saudi economy is still growing at a rapid pace, powered by high government spending and a steady expansion of the private sector, and we forecast GDP to expand by 5.2% and 4.5% in 2012 and 2013 respectively. Domestic consumption remains buoyant, under the lingering effects of a boost in public sector wages and social benefits introduced in early 2011, which also included increased spending on infrastructure and social benefits. Household expenditure in Saudi Arabia has expanded markedly since these subsidy packages worth US$130bn (comprising wage hikes for civil servants as well as housing and unemployment benefits), and the latest results show this trend is continuing. Nearly all leading indicators point to higher spending throughout 2012. We retain our positive outlook on private consumption in the near term, forecasting an expansion of 6.0% in 2012 and 5.0% in 2013. Meanwhile, we expect government consumption to remain expansionary, and forecast growth of 6.0% and 5.0% in 2012 and 2013 respectively.
Headline Industry Data
? 2013 food consumption growth in local currency = +9.75%; forecast growth to 2017 = +53.3
%? 2013 confectionery value sales growth = +8.6%; forecast growth to 2017 = +43.3
%? 2013 mass grocery retail sales growth = +11.7%; forecast growth to 2017 = +64.8
%Key Company Trends
Almarai in the News: Dairy and drinks company Almarai has had to lower its 2012 profit growth forecasts to 7% after third quarter profits missed estimates due to higher commodity prices and expansion costs. The Savola Group in October 2012 raised its stake in Almarai from 29.95% to 36.52% by purchasing shares worth SAR2bn (US$533mn) as a part of Savola's strategy of growing its exposure in its core sectors.
Government Focuses on Fast Food: According to an October 2012 report from Bloomberg Businessweek, the Saudi Arabian government is seeking to boost job creation by promoting the fast-food sector. The government has made job creation a priority, with the retail sector in particular targeted. Owing to the country's relatively restrictive social and cultural climate, which effectively bans bars and limits movie theatres, restaurants have assumed a central role as effective entertainment facilities, with American-style outlets proving particularly popular.
Key Risks To Outlook: We expect inflation to remain broadly subdued in 2012, on the back of moderating global energy prices and government subsidisation of food and fuel. However, we highlight that a prolonged period of robust growth, coupled with loose fiscal and monetary policy, poses a medium-term inflation risk, and could begin to spur more rapid price rises this year, putting a damper on consumer spending.
A sharper-than-expected downturn in the global economy, if it was to translate into a substantial decline in oil prices, would pose significant downside risks to our forecasts for Saudi Arabia's fiscal and current account position, though it remains highly unlikely that either account will fall into the red in the near term.
Table of contents
Chapter - BMI Industry View
Chapter - SWOT Analysis
Saudi Arabia Food Industry SWOT
Saudi Arabia Drink Industry SWOT
Saudi Arabia Mass Grocery Retail Industry SWOT
Chapter - Business Environment
BMI's Core Global Industry Views
Table: Core Views
Middle East Food & Drink Risk/Reward Ratings
Table: Middle East And North Africa Q113 Risk/Reward Ratings
Table: Middle East & North Africa Q113 Food & Drink Risk/Reward Sub-Factor Ratings (scores out of 10)
Saudi Arabia Food & Drink Risk/Reward Ratings
Macroeconomic Outlook
Table: Economic Activity
Chapter - Industry Forecast Scenario
Consumer Outlook
Food
Food Consumption
Table: Food Consumption Indicators – Historical Data & Forecasts, 2010-2017
Confectionery
Table: Confectionery Value Sales – Historical Data & Forecasts, 2010-2017
Drinks
Soft Drinks
Table: Soft Drinks Value Sales – Historical Data & Forecasts, 2010-2017
Alcoholic Drinks
Hot Drinks
Table: Hot Drinks Value Sales – Historical Data & Forecasts, 2010-2017
Mass Grocery Retail
Table: Mass Grocery Retail Sales – Historical Data & Forecasts, 2010-2017
Table: Retail Sales By Format
Trade
Table: Trade Indicators – Historical Data & Forecasts, 2010-2017
Chapter - Food
Key Gulf Region Industry Trends And Developments
Almarai Investing In Diversification
New Products And Frontier Markets
Growing Investment Interest From Multinational Corporations
Growing Popularity Of Eating Out
Snack Chains Growing in Popularity
Market Overview
Food Processing
Dairy Processing
Agriculture
Halal
Chapter - Drink
Key Gulf Region Industry Trends And Developments
Bottled Water Sector Growing In Importance
Frontier Market Investment Strengthening
Carbonates Shake-Up
Diversifying Away From Carbonates
Market Overview
Soft Drinks
Hot Drinks
Alcoholic Drinks
Chapter - Mass Grocery Retail
Key Gulf Region Industry Trends And Developments
Foreign Retailers Looking At Saudi Arabia
Frontier Market Investment
Growing Investment Into Modern Convenience Retailing
Market Overview
Chapter - Competitive Landscape
Table: Key Players In Saudi Arabia's Food & Drink Sector
Table: Key Players In Saudi Arabia's Mass Grocery Retail Sector
Chapter - Company Monitor
Food
Al Safi-Danone
Saudi Dairy & Foodstuff Company (SADAFCO)
Almarai
Al Rabie Saudi Foods
Drink
Aujan
Mass Grocery Retail
Savola Group – Al Azizia Panda
EMKE Group (LuLu)
Carrefour MAF – Saudi Arabia
Chapter - Demographic Outlook
Table: Saudi Arabia's Population By Age Group, 1990-2020 ('000)
Table: Saudi Arabia's Population By Age Group, 1990-2020 (% of total)
Table: Saudi Arabia's Key Population Ratios, 1990-2020
Table: Saudi Arabia's Rural And Urban Population, 1990-2020
Chapter - Risk/Reward Ratings Methodology
Table: Rewards
Table: Risks
Weighting
Table: Weighting
Chapter - BMI Food & Drink Industry Glossary
Food & Drink
Mass Grocery Retail
Chapter - BMI Food & Drink Forecasting & Sourcing
How We Generate Our Industry Forecasts
Sourcing
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