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Bahrain Food and Drink Report Q3 2008
Business Monitor International, July 2008, Pages: 46
This Food and Drink Report provides independent forecasts and competitive intelligence on Bahrain's food and drink industry.
After beginning construction in early 2007, Kraft Foods MEA finally opened its first Middle Eastern production plant in Bahrain in April. As discussed in this new Bahrain Food & Drink Report for Q308, Kraft’s decision to build the plant in Bahrain represented somewhat of a coup for the local food and drink industry. The Bahraini government has worked hard to create an attractive business environment in order to attract greater investments and diversify its economy away from the hydrocarbons industry in anticipation of future price falls. The need is particularly pressing in Bahrain in light of its relatively small oil reserves, but its diversification efforts are also more advanced as the nonoil sectors already account for more than 85% of real GDP.
Kraft’s 60,000m² plant is located in Bahrain's International Investment Park and represents an investment of US$40mn. Kraft has said that this new production plant is expected to contribute US$120mn annually in wages, raw and packaging materials and operations. This investment represents the first direct investment by Kraft Foods in the Gulf region and is one of the largest food and beverage manufacturing plants owned by a multinational company in the GCC. Patrick Satamian, the vice-president and area director of the Middle East and Africa said, 'The Bahrain plant opening gives us a competitive edge in growing our market share in this region as it will enable us to meet consumer demand more efficiently and quickly.' The new Kraft plant should also allow for greater production efficiencies and ability to respond to local preferences and customer demands and will allow the company to introduce products that have not yet been available in the region because they were unsuitable for import from overseas plants.
Despite the fact that Bahrain is a politically stable country that is generally seen as pro-Western, companies can still experience difficulties as illustrated by Danish dairy company Arla Foods. In March Arla was once again entangled in a Middle Eastern controversy as it faced a renewed consumer backlash against its products. Arla has said that its butter and cheese sales have been affected by a fresh boycott, as the company cut production in Denmark by 150 tonnes per week due to falling Middle Eastern orders. The 2006 boycott of Danish goods followed the controversy surrounding the publication of cartoons depicting the Prophet Muhammed by a Danish newspaper, which were extremely offensive to many Muslims. Following the recent re-publication of these cartoons in several Danish newspapers, some Muslim leaders in the Middle East have called for a new boycott. Yet there are conflicting reports regarding the extent to which the new boycott is being followed. According to local press reports, shoppers in Bahrain are continuing to buy Danish products, with stores continuing to stock these in response to this demand, which indicates that the boycott may not be as damaging as it was in 2006 and also reflects the tolerance Bahrain is known for.
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