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Bahrain Food and Drink Report Q4 2008
Business Monitor International, Oct 2008, Pages: 56
The Bahrain Food Drink Report provides independent forecasts and competitive intelligence on Bahrain's food and drink industry.
Following a period of relative quiet, Bahrain’s mass grocery retail (MGR) sector is set to experience a wave of activity, with two major retailers announcing expansion plans, as discussed in BMI’s recently published Bahrain Food & Drink Report for Q4. The first is international major Auchan, which announced in July that it has signed a joint venture agreement with Dubai real estate developer Nakheel to develop a retail chain in the Gulf region. The new company, called HyperCorp, will establish a chain of 15 hypermarkets and 40 supermarkets across the GCC over the next 10 years, with the first round of openings consisting of five hypermarkets in Nakheel's Dubai developments. The other is Abu-Dhabi based food and retail group Emke, which announced in July plans to invest BHD50mn (US$132mn) on two local projects in Bahrain, creating more than 2,000 jobs in the country. The group opened its first hypermarket in Bahrain in September 2007 in the Dana Mall in Manama. The company has now said that it will open another Lulu outlet in August of this year, and also plans to open a shopping mall in A'ali by the end of 2010.
Unlike other Gulf states, until 2005 Bahrain had only one hypermarket, jointly run by local company Fu- Com International and Casino Groupe of France. Fu-Com is itself a joint venture between Bahrainbased Retail Arabia and the Dubai-based Al Ghurair Group. However, in 2005 a group of Saudi Arabian investors, A K Al Muhaidib and Sons Group, introduced their giant hypermarket concept to the country, with the opening of a new store. French retail giant Carrefour has also decided to enter the country and has set the second half of 2008 as its target market entry date.
Such investments are the main driver behind the growth rate of 42.3% we are currently forecasting in Bahrain's hypermarket sector between 2007 and 2012. The hypermarket format will contribute most in sales terms to the sector's overall growth, due to the vast selling power of just one store. Overall MGR sales are set to increase by almost 53% over the forecast period to 2012.
Economic expansion will be the other main driver, as we are forecasting real GDP growth of 5.2% in 2008 and averaging 4.3% over the remainder of the forecast period. With oil output expected to remain constant until 2010 before declining slightly, real economic expansion will be driven entirely by the nonoil sector (although oil revenues will feed through in terms of higher liquidity and increased government spending). We highlight the financial services sector as a key driver of non-oil growth, as Bahrain takes advantage of the growing demand for Islamic banking products. However, food price inflation does remain a significant concern. While the consumer price index (CPI) reached 6.2% year on year (y-o-y) in April, we suspect that price rises in the food and housing sectors were far higher than this headline figure.
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