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Saudi Arabia Food and Drink Report Q3 2011
Business Monitor International, June 2011, Pages: 67
The Saudi Arabia 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 Saudi Arabia's food and drink industry.
Fuelled by the prospect of social unrest, the massive government stimulus programme announced by Riyadh has altered our growth outlook for Saudi Arabia. While the hydrocarbons sector in a very healthy position, the majority of the funds will be allocated to the non-energy sector. As this will feed through into most segments of the economy, we have revised up Saudi Arabia's real economic growth forecasts to 5.0% and 5.1% in 2011 and 2012, from 3.9% and 3.7% previously.
Headline Industry Data
- 2011 per capita food consumption growth in local currency = 9.13%; forecast compound annual growth to 2015 = 5.78%.
- 2011 soft drinks value sales = 10.53%; forecast compound annual growth to 2015 = 10.88%.
- 2011 mass grocery retail sales = 8.89%; forecast compound annual growth to 2015 = 9.57%
Key Company Trends
Companies Growing Top Line – Some of Saudi Arabia’s largest food and drink companies continued to report strong top and bottom line growth over the H210 (calendar) period. In January 2011, the Middle East’s largest dairy firm by annual sales Almarai reported FY10 (12 months to December 2010) year-onyear (y-o-y) net income growth of more than 17% to SAR1.28bn. Strongly positioned in the dairy sector across the Gulf, and increasingly looking well placed to catch what we anticipate will be a strong pickup in consumer spending in some of the Middle East and North Africa (MENA) region’s fastest growing economies (most notably Egypt), Almarai is likely to continue posting double-digit growth over H210.
In June 2010, Saudi Arabia’s Aujan, the largest privately owned soft drinks firm in the Gulf – with estimated group sales of US$600mn in 2009 – announced that it was targeting annual sales of US$1bn by 2012. According to Aujan Chairman Adel Aujan, the firm is an anti cyclical ‘one riyal (US$0.27)’ business. He argues that discretion in 2009 extended largely to higher priced goods, with demand for low cost non-essential goods – such as Aujan’s core range of drinks – holding up well, and in some cases outperforming.
Key Risks to Outlook
Decline In Oil Prices – With Saudi Arabia’s economic fortunes closely linked to oil prices, a sustained decline would hit the economy, and subsequently the outlook for domestic demand.
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