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Bahrain Food and Drink Report Q2 2011
Business Monitor International, Feb 2011, Pages: 62
The Bahrain 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 Bahrain's food and drink industry.
The growth forecasts for Bahrain remain well below previous trend levels, although there are some better prospects on the horizon. The consumer picture is mixed, but heavy government investment looks set to drive up output in the oil and gas sector through the end of our five-year forecast period.
The publisher has previously expressed scepticism that consumer spending could return to previous levels, even if employment was to continue growing. The reports view was based on the sluggish performance of the financial sector, as evidenced by low rates of credit growth. This view remains in play: in Q210, the total value of credit extended by Bahraini banks fell to 78.3% of GDP, down from 79.3% in the previous quarter. In absolute terms, the total value of domestic credit fell by 1.1% q-o-q and by 2.7% on a y-o-y basis.
In addition, the aforementioned growth in employment appears to have stalled somewhat. In its Q2 bulletin, the central bank reveals a zero increase in employment rates during the quarter, with a slight increase in private sector jobs offset by a reduction in public sector employment (possibly indicating a desire by the state to reduce the public sector wage bill at a time when its debt load is rising and it needs to allocate money to large-scale investment projects such as the aforementioned oil sector expansion).
Headline Industry Data:
- 2010 per capita food consumption = +6.72%; forecast to 2015 = +40.07%
- 2010 soft drink value sales = +5.17%; forecast to 2015 = +31.20%
- 2010 mass grocery retail sales = +15.98%; forecast to 2015 = +95.35%
Key Company Trends:
Alcohol Piggybacking Off Aviation Boom
Opportunities for growth in alcohol, specifically spirits, in the Gulf region are perhaps greater than widely perceived given the barriers to trade that exist. While legal consumption is still largely restricted to hotels and airports, these channels have been providing pretty strong growth, albeit off a low base, particularly for Diageo, it expects to double its sales in the Middle East over the next five years, with Dubai a big driver.
Given the restrictions on alcohol inherent throughout the Gulf, the structural makeup of the spirits industry and in particular sales channels differs considerably from most regions. Duty free is big business for spirits companies and Diageo has also been pioneering its Emporium premium retail airport outlet designed to target high spenders.
The spirits growth story extends beyond Dubai, with Abu Dhabi having shown form too with Diageo clocking in annual growth close to 30%. Duty free is again the big driver here. Outside the UAE, Qatar should take on more importance over the next few years as it builds plenty of new hotels in preparation for the 2022 World Cup. Bahrain holds promise too and alcohol is more readily available than in most of the Gulf region.
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