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Saudi Arabia Food and Drink Report Q3 2011

Saudi Arabia Food and Drink Report Q3 2011

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Price $530.00
Meta Description Fuelled by the prospect of social unrest, the massive government stimulus programme announced by Riyadh has altered our growth
Publisher Business Monitor International
Date of Report Jun 17, 2011
Quick Overview
Fuelled by the prospect of social unrest, the massive government stimulus programme announced by Riyadh has altered our growth outlook for Saudi Arabia. While the hydrocarbons sector in a very healthy position, the majority of the funds will be allocated to the non-energy sector. As this will feed through into most segments of the economy, we have revised up Saudi Arabia's real economic growth forecasts to 5.0% and 5.1% in 2011 and 2012, from 3.9% and 3.7% previously.
Headline Industry Data
?? 2011 per capita food consumption growth in local currency = 9.13%; forecast compound annual growth to 2015 = 5.78%.
?? 2011 soft drinks value sales = 10.53%; forecast compound annual growth to 2015 = 10.88%.
?? 2011 mass grocery retail sales = 8.89%; forecast compound annual growth to 2015 = 9.57%
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 January 2011, the Middle East’s largest dairy firm by annual sales Almarai reported FY10 (12 months to December 2010) year-onyear (y-o-y) net income growth of more than 17% to SAR1.28bn. 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.
In June 2010, Saudi Arabia’s Aujan, the largest privately owned soft drinks firm in the Gulf – with estimated group sales of US$600mn in 2009 – announced that it was targeting annual sales of US$1bn by 2012. According to Aujan Chairman 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 – such as 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 closely linked to oil prices, a sustained decline would hit the economy, and subsequently the outlook for domestic demand.
Table of Contents
BMI Industry View ........................................................................................................................................... 5
SWOT Analysis ................................................................................................................................................ 6
Saudi Arabia Food Industry SWOT ...................................................................................................................................................................... 6
Saudi Arabia Drink Industry SWOT...................................................................................................................................................................... 7
Saudi Arabia Mass Grocery Retail Industry SWOT .............................................................................................................................................. 8
Business Environment ................................................................................................................................... 9
BMI’s Core Global Industry Views ............................................................................................................................................................................ 9
Table: BMI Food & Drink Core Views ............................................................................................................................................................... 14
Middle East Food & Drink Business Environment Ratings ..................................................................................................................................... 15
Table: Middle East & North Africa Food & Drink Risk/Reward Ratings Q311 .................................................................................................. 17
Saudi Arabia’s Food & Drink Business Environment Rating .................................................................................................................................. 18
Macroeconomic Outlook ............................................................................................................................... 19
Table: Measures with impact on private consumption ........................................................................................................................................ 22
Table: Saudi Arabia - Economic Activity ............................................................................................................................................................ 23
Industry Forecast Scenario ........................................................................................................................... 24
Consumer Outlook ................................................................................................................................................................................................... 24
Food......................................................................................................................................................................................................................... 26
Table: Food Consumption Indicators – 2006-2015 ............................................................................................................................................ 27
Confectionery...................................................................................................................................................................................................... 28
Table: Confectionery Sales – Historical Data & Forecasts, 2006-2015 .............................................................................................................. 28
Drinks ...................................................................................................................................................................................................................... 29
Soft Drinks .......................................................................................................................................................................................................... 29
Table: Soft Drinks Sales – Historical Sales & Forecasts, 2006-2015 .................................................................................................................. 30
Alcoholic Drinks ................................................................................................................................................................................................. 31
Hot Drinks .......................................................................................................................................................................................................... 31
Table: Hot Drink Sales – Historical Data & Forecasts, 2006-2015 .................................................................................................................... 32
Mass Grocery Retail ................................................................................................................................................................................................ 33
Table: MGR Sales Indicators – Historical Sales & Forecasts, 2006-2015 .......................................................................................................... 34
Table: Grocery Retail Sales By Format (%) – Historical Data And Forecasts, 2009-2019 ................................................................................. 35
Trade .................................................................................................................................................................................................................. 36
Table: Food, Drink & Tobacco Trade Indicators (US$mn) – Historical Data & Forecasts, 2006-2015 ............................................................. 36
Food ................................................................................................................................................................ 37
Key Gulf Region Industry Trends And Developments .............................................................................................................................................. 37
Companies Growing Top Line ............................................................................................................................................................................ 37
Diversification Into New Products And Frontier Markets .................................................................................................................................. 37
Growing Investment Interest From Non-Regional MNCs ................................................................................................................................... 38
Market Overview ..................................................................................................................................................................................................... 39
Food Processing ................................................................................................................................................................................................. 39
Dairy Processing ................................................................................................................................................................................................ 39
Agriculture .......................................................................................................................................................................................................... 40
Halal Food .......................................................................................................................................................................................................... 41
Table: Muslim Populations In Select Countries .................................................................................................................................................. 42
Drink ............................................................................................................................................................... 43
Key Gulf Region Industry Trends And Developments .............................................................................................................................................. 43
Key Players Growing Strongly............................................................................................................................................................................ 43
Frontier Market Investment Strengthening ......................................................................................................................................................... 43
Market Overview ..................................................................................................................................................................................................... 45
Soft Drinks .......................................................................................................................................................................................................... 45
Hot Drinks .......................................................................................................................................................................................................... 46
Alcoholic Drinks ................................................................................................................................................................................................. 46
Mass Grocery Retail ...................................................................................................................................... 47
Key Gulf Region Industry Trends And Developments .............................................................................................................................................. 47
Frontier Market Investment ................................................................................................................................................................................ 47
Consolidation...................................................................................................................................................................................................... 47
Growing Investment Into Modern Convenience Retailing ................................................................................................................................... 48
Market Overview ..................................................................................................................................................................................................... 49
Table: Structure Of Saudi Arabia’s Mass Grocery Retail Sector – Estimated Sales Value By Format (US$bn), 2004-2009 ............................... 50
Table: Structure Of Saudi Arabia’s Mass Grocery Retail Sector – Estimated Sales Value By Format (SARbn), 2004-2009 ............................... 50
Competitive Landscape ................................................................................................................................ 51
Table: Key Players In Saudi Arabia’s Food & Drink Sector ............................................................................................................................... 51
Table: Key Players In Saudi Arabia’s Mass Grocery Retail Sector ..................................................................................................................... 52
Company Analysis.................................................................................................................................................................................................... 53
Food ................................................................................................................................................................................................................... 53
Al Safi-Danone ................................................................................................................................................................................................... 53
SADAFCO – Saudi Dairy & Foodstuff Company ............................................................................................................................................... 54
Almarai ............................................................................................................................................................................................................... 55
Al Rabie Saudi Foods ......................................................................................................................................................................................... 56
Drink ................................................................................................................................................................................................................... 57
Aujan .................................................................................................................................................................................................................. 57
Mass Grocery Retail ........................................................................................................................................................................................... 58
Savola Group – Al Azizia Panda ......................................................................................................................................................................... 58
Carrefour MAF – Saudi Arabia .......................................................................................................................................................................... 59
BMI Food & Drink Methodology .................................................................................................................... 60
Food & Drink Business Environment Ratings ......................................................................................................................................................... 60
Ratings Methodology ............................................................................................................................................................................................... 60
Ratings Overview ..................................................................................................................................................................................................... 60
Ratings System .................................................................................................................................................................................................... 60
Indicators ............................................................................................................................................................................................................ 60
Table: Limits Of Potential Returns ..................................................................................................................................................................... 61
Table: Risks To Realisation Of Potential Returns ............................................................................................................................................... 62
Weighting ............................................................................................................................................................................................................ 63
Table: Weighting ................................................................................................................................................................................................ 63
BMI Food & Drink Industry Glossary ..................................................................................................................................................................... 64
Food & Drink ..................................................................................................................................................................................................... 64
Mass Grocery Retail ........................................................................................................................................................................................... 64
BMI Food & Drink Forecasting & Sourcing ........................................................................................................................................................... 66
How We Generate Our Industry Forecasts ......................................................................................................................................................... 66
Sourcing .............................................................................................................................................................................................................. 67




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