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Kuwait Food and Drink Report Q1 2010
Business Monitor International, Nov 2009, Pages: 54
The Kuwait Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kuwait's food and drink industry.
Kuwait comes in fifth place in BMI’s regional Food & Drink Business Environment Ratings table for Q110. Although by no means a long-term play, GDP per capita above US$30,000 and a reasonably large population by Gulf regional standards (excluding Saudi Arabia) of 3.2mn makes Kuwait’s mass grocery retail (MGR) industry a fairly attractive investment proposition, as discussed in BMI’s Kuwait Food & Drink Report for Q110.
Bearing in mind that organised grocery retail sales contribute to less than 50% to overall grocery sales, Kuwait’s underdeveloped MGR industry will provide opportunities within the high-value hypermarket and supermarket segments in particular over our forecast period through to 2014. We expect MGR sales to strengthen by 22.25% to KWD0.64bn (US$2.36bn). While the downturn has cooled demand for premium products, we do not expect it to have a long-term structural bearing on the industry’s trajectory, with trade-up trends gradually returning in line with ongoing improvements in Kuwait’s economy.
The strength of the co-operative category distinguishes Kuwait’s MGR industry from the wider Gulf region, where hypermarkets and supermarkets call the shots. Led by the government-backed Union of Consumer Cooperative Societies (UCCS), co-operative sales are expected to make up over 60% of MGR sales in 2009. UCCS benefits from favourable legislation that prohibits private retailers from operating in potentially lucrative residential neighbourhoods. Despite strengthening demand for hypermarket and supermarkets, a forecast 17.27% increase in co-operative sales to KWD0.37bn through to 2014 suggests that the category has legs.
Investment in the hypermarket category by prominent regional retailers like Carrefour MAF has increased expectations among Kuwaiti consumers. Operating just one store in the country, Carrefour MAF pursues with caution in Kuwait. Taking into account the hypermarket category’s expected outperformance, with sales increasing by 35.3% to KWD0.17bn in 2014, Carrefour MAF is likely to strengthen its presence over our forecast period. So is the Abu Dhabi-based retailer EMKE Group. In 2009, it announced plans to establish a regional presence.
In the event that the government relaxes its stance on the movement of private retailers, Kuwait’s largest private retailer, Sultan Group, could increase focus on the emerging convenience store category. Sultan operates 12 convenience stores under the TSC X-Press banner and will look to capitalise on consumers’ growing desire for convenient residential retailing.
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