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Qatar Food and Drink Report Q4 2010
Business Monitor International, Oct 2010, Pages: 51
Business Monitor International's Qatar 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 Qatar's food and drink industry.
With a 2009 per capita GDP estimated at nearly US$70,000, Qatar is one of the world's wealthiest markets by disposable income. Therefore, not surprisingly, Qatar’s consumer outlook remains positive over our forecast period, as we believe the country could potentially challenge the UAE (specifically Dubai) as the Gulf region's most premiumised and segmented consumer market over the next few years. Premiumisation will be the key driver of growth moving forward due to the very small size of the population at just around 1.7mn. With no other real competitor to the position of the fastest growing economy in the world in 2010, we have no reasons not to be impressed by Qatar's immense potential, openness drive and rapidly developing infrastructure. The Qatari economy is among the privileged hydrocarbon rich states in the Gulf region, sheltered by the relatively constant demand for energy (compared to other commodities), and less dependent on the general outlook of the global economy. Nevertheless, we see private consumption remaining fairly restrained over the near term with the demand for premiumised consumer goods remaining quite sluggish.
Headline Industry Data
- 2010 per capita food consumption = +4.73%; forecast to 2014 = +24.97%
- 2010 soft drinks value sales = +21.14%; forecast to 2014 = +62.87%
- 2010 mass grocery retail sales = +16.01%; forecast to 2014 = +54.69%
- 2010 hypermarket sales = +16.21; forecast to 2014 = +60.77
Key Company Trends
Continuing to look abroad for growth – In August 2010 it was reported that Hassad Food, an arm of the country’s sovereign wealth fund, plans to acquire a sugar project in Brazil with a capacity to produce 25mn tonnes of sugar annually. Once the acquisition is completed, around 70% of the sugar production will be shipped to Qatar for domestic use, while the remaining 30% will go towards the production of biofuels. While largely not following many of its Gulf peers in acquiring farmland abroad, Qatar has been devising its own international food security strategy. Led by Hassad Food, Qatar is increasingly favouring investing in existing agricultural companies abroad as opposed to buying up farmlands.
Zad Benefits From Diversification – In April 2010 leading Qatari flour mill company Zad Holding (formerly Qatar Flour Mills) reported a more than doubling in first quarter (three months to March 31 2010) net income to QAR33.6mn (US$9.23mn). The company has clearly benefitted from its growth strategy, which has involved moves into new business areas. In August 2009 the company announced plans to launch a range of European-style bakery products under the 'Qbake' brand, which was followed in November with the announcement that it will launch a milestone poultry production facility. Building on the momentum established in Q110, Zad is likely to use strong growth momentum to gradually step up efforts to diversify its business by pursuing regional and frontier market investment, as well as also diversifying by targeting new business units.
Key Risks to Outlook
Slowdown in Demand – In the shorter term, given Qatar's position as a major hydrocarbon exporter and the effect oil and gas inflows have on the performance of its economy, a slowdown in global demand inflicted by growing concerns over the state of the world economy (primarily Chinese and eurozone downside risks) could weigh on energy inflows – subsequently affecting consumer spending.
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