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Egypt Food and Drink Report Q3 2008


Description: The Egypt Food and Drink Report provides independent forecasts and competitive intelligence on Egypt's food and drink industry.

Food price inflation is continuing to plague Egypt, with concern over these issues growing on a daily basis, as discussed in this recently published Egypt Food & Drink Report for Q308. With the government facing protests from thousands of its citizens, there has been strong pressure to take action against soaring food costs. In fact, the sharp rise in economic unrest will be uncomfortably reminiscent of the 1977 bread riots, in which at least 70 people died, after the government tried to reduce subsidies.

In March the government made the decision to suspend rice exports for six months in an attempt to prevent the price of yet another basic food staple from rising further. Egypt produces around 4.5mn tonnes of rice annually, of which 3.5mn are allocated to the domestic market. It was due to have exported between 300,000 and 400,000 tonnes over the six-month period, which will instead be kept in the domestic market. President Mubarak then ordered the army to help produce more subsidised bread, with the army and government together opening 10 new bakeries in Cairo to produce cheap bread, along with 500 kiosks to distribute this bread and cut queues. The government has also been ordered by Mubarak to use foreign currency reserves to purchase addition wheat on the international market. In addition, the government will add 15mn new citizens to the list of those eligible to receive subsidised cooking oil, sugar and rice, which, along with other new policies, will raise the annual bill for food subsidies by US$3.1bn to a total of US$13.7bn for this year.

Then in April the government decided to remove tariffs on certain basic food products in the face of the mounting protests. While virtually all Middle Eastern governments have been dealing with inflation, many of the smaller, richer Gulf States have attempted to offset this by raising government salaries, a policy which could have the effect of further fuelling inflation. However, in countries such as Egypt, which are far bigger and where a large percentage of the population lives in poverty, this is not a viable option. 'We cannot afford to increase the salaries for our people like the rich countries are doing in the Gulf and we cannot deal with it like in the west' said trade and industry minister Rachid Mohamed Rachid in an interview with the Financial Times.

This social and political unrest has led to us dropping the country’s political risk rating. Since the government will likely be forced to change economic and fiscal policies in response to public pressure, it has lost points in the policy formation category, while the rise in inflation to 14.4% year-on-year (y-o-y, March) has triggered an automatic downward revision in the social stability category. Clearly, despite the strong desire to cut back on food subsidies, given the current rate of food price inflation, it is impossible for the government to do so without suffering a major political backlash, something that it is unlikely to risk given the current climate.


Contents: Executive Summary 5
Business Environment 6
Regional Food & Drink Business Environment Ratings 6
Table: MEA Food & Drink Business Environment Ratings – Q308 9
Egypt’s Food & Drink Business Environment Rating 10
Table: Global Food & Drink Business Environment Rankings – Egypt’s Global Peer Group 11

SWOT Analysis 12
Food And Drink 12
Egypt Food And Drink Industry SWOT 12
Mass Grocery Retail 13
Egypt Mass Grocery Retail Industry SWOT 13

Macroeconomic Outlook 14
Table: Egypt – Economic Activity 16
Food 17
Industry Forecast Scenario 17
Consumption 17
Table: Egypt Food Consumption Indicators 17
Canned Food 17
Table: Egypt Food Sub-sector Indicators 18
Confectionery 18
Table: Confectionary Indicators 19
Industry Developments 19
Market Overview 20
Processed Food 20
Agriculture 22
Drink 23
Industry Forecast Scenario 23
Alcoholic Drinks 23
Table: Egypt Alcoholic Drink Industry Data 23
Soft Drinks 23
Table: Soft drinks sales 24
Industry Developments 24
Drink 24
Market Overview 24
Alcoholic Drinks 24
Soft Drinks 25
Agriculture At A Glance 26
Table: Egyptian Organic Agricultural Data 26
Table: Egypt Rural/Urban Population Breakdown 26
Agricultural Commodity Price 27

Retail 28
Industry Forecast Scenario 28
Table: MGR Retail Indicators – Historical Data & Forecasts (US$bn) 29
Table: Grocery Retail Sales By Format – Historical Data And Forecasts 29
Industry Developments 30
Market Overview 31
Table: Structure Of Egypt's Mass Grocery Retail Market By Estimated Number Of Outlets 33
Table: Structure Of Egypt's Mass Grocery Retail Market (US$bn) – Sales Value By Format 33
Table: Value Of Sales Per Outlet, 2007 33

Competitive Landscape 34
Key Players 34
Food And Drink 34
Table: Key Players In Egypt's Food And Drink Sector, 2006 34
Mass Grocery Retail 35
Table: Key Players In Egypt's Mass Grocery Retail Sector, 2006 35
Company Analysis 36
Food 36
Cairo Poultry Company (CPC) 36
Faragalla 37
Drink 38
Al-Ahram Beverages Co (ABC) 38
Mass Grocery Retail 39
Metro (Mansour Group) 39
Carrefour MAF – Egypt 40
Tobacco 41
Eastern Tobacco Company (ETC) 41

Appendix 42
Food & Drink Business Environment Ratings 42
Ratings Methodology 42
Ratings Overview 42
Ratings System 42
Indicators 42
Limits Of Potential Returns 43
Risks To Realisation Of Potential Returns 44
Weighting 45
Weighting 45
BMI Food & Drink Industry Glossary 46
Food & Drink 46
Mass Grocery Retail 46
BMI Food & Drink Forecasting & Sourcing 48
How We Generate Our Industry Forecasts 48
Sourcing 49


Companies Mentioned - Cairo Poultry Company (CPC) - Faragalla - Al-Ahram Beverages Co (ABC) - Metro (Mansour Group) - Carrefour MAF – Egypt - Eastern Tobacco Company (ETC)


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