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United Arab Emirates Food & Drink Report Q1 2012
Business Monitor International, Nov 2011, Pages: 69
Business Monitor International's United Arab 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 United Arab's food and drink industry.
BMI's outlook on the UAE’s food and drink sector remains very positive in light of recent developments. It recently revised up its forecast for 2011 real GDP growth to 3.3% from the previous 3.0%, which was a result of its view that the country would be among the few to actually benefit from the widespread social unrest unfolding throughout the Middle East and North Africa (MENA) region at this juncture. As one of only a few states that have so far avoided large-scale demonstrations, the UAE has actually seen its risk profile improve since the start of the year. The outlook for Dubai in particular has been given a boost as a result of the 'Arab Spring', as violent unrest on the streets in Bahrain solidifies the former's reputation as a relative safe haven in a volatile region. With investors increasingly on the lookout for such safe havens, BMI is optimistic with its outlook for the UAE’s food and drink sector.
Headline Industry Data
- 2011 per capita food consumption growth in local currency = 4.2%; forecast to 2016 = 30.1%
- 2011 soft drinks value sales growth = 0.1%; forecast to 2016 = 24.1%
- 2011 mass grocery retail sales = 6.8%; forecast compound annual growth to 2015 = 38.2%
Key Company Trends
Casino Goes For Convenience
In September France-based retailer Casino's Middle East business announced plans for a pan-Gulf region expansion that will include 30 stores, with the majority being smaller convenience-type stores. Casino is looking to take advantage of the bursting of the enormous property bubble that had developed in the UAE in the years leading up to the global financial crisis. Casino's Middle East business pursued a conservative expansion policy during this time. However, with real estate prices having come down significantly, the retailer is now ready to start investing in the high-potential convenience store concept.
Coffee Retail Heating Up
The UEA’s coffee retail sector is hot, with a number of recent investments. In September Canadian coffee shop Tim Hortons opened its first 'export' outlet in Dubai, its first attempt to break into a radically different market. UAE-based franchise consultant MEFranchising entered into an agreement with C House, an Italian coffee company, to commence operations in the UAE, with Gulf-wide expansions on the cards.
Risks To Outlook
A key risk to BMI's outlook is the price of oil. It is currently basing its economic forecasts on the assumption that oil reaches equilibrium around the US$90/bbl area, based on long-term supply and demand forecasts. An average price above or below this level would have positive or negative implications for growth respectively.
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