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Bahrain Food and Drink Report Q4 2011
Business Monitor International, Aug 2011, Pages: 70
Business Monitor International's 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 recent political tensions in Bahrain will weigh on consumer confidence, especially as there is no resolution in sight. Lacking a lasting political resolution to the current crisis, the threat of large-scale unrest will remain present, and the country’s political climate is expected to remain tense through the remainder of 2011. This will have an impact on economic growth, and the report forecasts Bahrain’s economy contracting 1.6% in 2011 as the ongoing political crisis results in weaker consumption and investment patterns, and harms the country’s all-important tourism and financial services industries. For the most part, higher oil prices and an increase in government spending (which will be supported by the US$10bn in foreign aid pledged by other Gulf states in February) will be crucial to preventing a more pronounced decline in headline growth.
Beyond 2011, BMI has lowered the five-year growth forecasts and now see real GDP expanding by an average 4.1% through 2015, compared to previous forecast of 5.4%. The longer-term outlook is broadly positive beyond 2011, assuming oil prices do not collapse and political stability is eventually restored. That said, the onset of violent unrest at the start of 2011 has raised a host of questions surrounding Bahrain’s long-term outlook, with concerns growing that the country’s financial services and tourism sectors will suffer heavily.
Headline Industry Data
- 2010 per capita food consumption = +10.9%; forecast to 2015 = +47.6%
- 2010 soft drink value sales = +22.9%; forecast to 2015 = +29.8%
- 2010 mass grocery retail sales = +20%; forecast to 2015 = +74.8%
Key Company Trends
Tang Passes US$1bn In World Sales:
In July, American food and drink giant Kraft Foods announced that its powdered fruit drink Tang passed the US$1bn worldwide sales mark in 2010, joining 11 other billion-dollar Kraft Foods brands. Bahrain has played a major role in this achievement, with the Gulf Cooperation Council being the third largest Tang market globally and all production carried out at the Kraft Foods plant in Bahrain. The company believes the great performance of Tang is down to its growth in developing markets, indicating that the company will continue to pay particular attention to Bahrain and the greater Gulf region, with plans to expand the Bahrain production facility.
Investing In Fisheries:
In July 2011 it was reported that Diyar Al Muharraq, the biggest private urban development project in Bahrain, has increased initiatives to enrich the bodies of water surrounding its development by replenishing the area with a large stock of viable fish species. Working in collaboration with the General Authority for the Protection of Marine Resources, Environment and Wildlife, Diyar Al Muharraq released 8,000 baby sobaity bream into these waters. This initiative is a part of the Marine Resources Directorate’s release program, which is looking to increase the local fish stocks and promote the creation of marine protected areas.
Key Risks to Outlook
Long-term Impact of Current Crisis:
Should the government fail to address some of the protestors’ main grievances, Bahrain’s political crisis could rumble on for longer than expected, with risks of the opposition becoming radicalised increasing by the day. It also remains unclear what impact this current political crisis will have on Bahrain’s long-term economic outlook. Should investors begin to reassess the costs of doing business in the country and begin relocating to Dubai or Doha, Bahrain’s growth outlook would suffer accordingly.
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