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Kuwait Food and Drink Report Q2 2009
Business Monitor International, April 2009, Pages: 41
The Kuwait Food and Drink Report provides independent forecasts and competitive intelligence on Kuwait's food and drink industry.
In light of the global economic crisis, falling oil prices, and the impact this will have on consumer confidence, the Kuwaiti food and drink industry is currently undergoing a difficult period, as discussed in our recently published Kuwait Food & Drink Report for Q209. On the economic front, things are looking substantially more challenging, but not disastrous, in 2009. We see a real GDP contraction of 1.0%, with extensive government infrastructure spending mitigating declines in consumer spending (exacerbated by the loss of significant numbers of recently unemployed expatriate workers), private investment and exports. In conjunction with substantially lower oil prices, this will send the budget into deficit. Nevertheless, we are forecasting a reasonable real GDP growth rate of 3.7% from 2013-2017. This is predicated on a number of conditions, including oil and gas output continuing to rise right up to 2018, and the government’s vast amount of accumulated wealth.
Given this more positive longer-term outlook, it should come as no surprise that we are still forecasting considerable growth in food consumption, of 12.5% between 2008 and 2013 in dollar terms when it will reach US$1.4bn. Kuwaitis tend to have reasonably high disposable incomes, due to good employment levels and the fiscal prudence of their government. The population has become accustomed to a high standard of living – with GDP per capita having risen to an estimated US$44,624 in 2008, and are therefore, despite the current economic downturn and drop in oil prices, we do not expect a pronounced shift in consumer spending habits within the food sector, as we expect local consumers to remain fairly resilient.
In light of this continued growth, a number of regional producers are still continuing to move forward with investments. For example, in December 2008 Al Islami Foods, a leading halal food producer in the Gulf Region, entered the Saudi Arabian market after reaching a strategic distribution agreement with Arabian Trading Supplies, which will distribute a range of Al Islami's halal products under the brand name 'Co-op Islami’. The firm said it is also intent on growing its presence in other Gulf Co-operation Council (GCC) countries including Kuwait, Bahrain, Qatar, and Oman in 2009. The market for halal foods is large and growing rapidly, we estimated that the global market for halal food products is currently worth US$580bn. Therefore firms like Al Islami have been investing in expansions in order to meet this growing demand.
This surge in demand has also led to some problems in the industry. According to a recent report in the Kuwaiti Times, the Kuwaiti market is full of imported meat with forged certificates that falsely identify the meat as halal. With too many official bodies attempting to supervise halal standards, many were questioning the others’ validity. Along with the rise in demand for halal products, there has been in a surge in ‘fake’ halal foods. This has development urged the international Muslim community to establish the International Halal Integrity Alliance, the purpose of which is to counter phony halal products and standardise regulations.
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