Browse the complete Report on - Saudi Arabia Food and Drink Report Q4 2010
With a population nearing 25mn, and making up nearly two thirds of the Gulf consumer market, Saudi Arabia is the only Gulf state with genuine long-term growth appeal. Indeed, important to this, we see the population – and thus potential consumers - increasing by 11% between 2009 and 2014 alone, and almost doubling by 2050.
After narrowly avoiding an economic contraction in 2009, with real GDP coming in at 0.18%, Saudi Arabia’s economy is expected to perform solidly in 2010 with 2.20% growth forecast. Having fallen sharply in H109 (calendar) as the global economic riptide kicked in, consumer confidence picked up in H209 and the momentum carried over into 2010. We see this recovery in confidence continuing to play out over the rest of 2010 with upside to our core food and drink indicators beginning to really come to the fore in 2011.
Headline Industry Data
- 2010 per capita food consumption = +4.59%; forecast to 2014 = +31.24%
- 2010 soft drink value sales = +5.06%; forecast to 2014 = +27.78%
- 2010 mass grocery retail sales = +9.23%; forecast to 2014 = +48.69%
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 June 2010, Almarai reported above consensus Q210 (three months to June 30 2010) net income growth of 19.5% year-on-year (y-o-y). 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.
Also in June 2010, Saudi Arabia's Aujan, the largest privately owned soft drinks firm in the Gulf - with group sales expected at US$600mn in 2009 – announced that it was targeting annual sales of US$1bn by 2012. According to Aujan Chairmen 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 like 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 tied linked to oil prices, a sustained decline would hit the economy, and subsequently the outlook for domestic demand.
Decline In Oil Prices – With Saudi Arabia’s economic fortunes tied linked to oil prices, a sustained decline would hit the economy, and subsequently the outlook for domestic demand.
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