Outlook 2014: New growth prospects for the GCC

ON PER CAPITA basis, GCC countries are amongst the wealthiest in the world. Alpen Capital reports that the region’s per capita income rose to a compound annual growth rate (CAGR) of 10.2% to $27,304.4 during 2002-2010. The region continues to enjoy strong economies driven by the increase in crude oil prices. This trend attracts a steady growth in population which is expanded at an annual rate of 3.6% year-on-year in 2000-2010. The Economist Intelligence Unit (EIU) projected that the GCC population will exceed 50 million by 2020. Qatar witnessed the highest growth rate at 12.1%. As populations grow, the food and beverage industry is also experiencing changes in demand. With a 2.7% CAGR, consumption increased from an average 28 million metric tonnes in 1999 to 38.8 MMT in 2010. By 2017, it is expected to reach 49.1 MMT.

The Kingdom of Saudi Arabia is an equally lucrative market with growing population, significant investment in the public sector and increased consumer spending. Food sales in the country account for 50% of the domestic retail market and are expected to be worth almost $70 billion by 2016. The country imports more than $14.2 billion worth of food and beverage products each year to meet its consumption demands. According to BMI’s recent Q1 2013 report, this will rise to $35.2 billion by 2020.

“The prospects look very bright for the F&B industry in Abu Dhabi, the UAE and the GCC at large. The growth in tourism is one major factor behind this,” said Mohamed Jalal Al Rayssi, director of Communication and Community Service at Abu Dhabi Food Control Authority (ADFCA). Internationally important events of the food industry such as SIAL Middle East being held in Abu Dhabi every year continue to draw attention to the country and the capital as a major center for food businesses, attracting new businesses and investments.”

Going with trends

Manufacturers are offering more varieties based on developing trends amongst their consumers.

Local companies are feeling the positive results. Almarai, a leading manufacturer in the KSA whose products include infant formula Enfagrow, Almarai dairy products, and Alyoum fresh chicken, reported a nine-month net profit of SAR 1,071.6 by October 2012. This figure climbed by 5.3%, to SAR 1,128.9 million for the same period in 2013. Almarai attributed the higher sales and net profit during the third quarter of 2013 as well as the year to date performance compared to the same periods last year to the strong performance of their core dairy and juice categories as well as strong revenue growth from the poultry segment.

The Savola Group, also from KSA and another major player in the food and beverage industry, achieved a net income of SAR 683 million for the first six months of 2013, a notable 17% increase from the same period last year at SAR 584 million. Dr Abdulraouf Mannaa, Group CEO and managing director, highlighted that the increase in Savola’s net prPuma Rihanna Creeper