2012-04-30 16:05:01 - Recently published research from Business Monitor International, "Saudi Arabia Food & Drink Report Q2 2012", is now available at Fast Market Research

Saudi Arabia's positive growth outlook and its favourable demographics support our outlook for a strong consumer sector. Throughout 2011, robust growth was spurred by loose fiscal and monetary policy, and we expect these conditions to continue in 2012. We also expect household consumption to hold up well in 2012 and are forecasting real growth of 5.0%. The main driver of this expansion will continue to be government spending. Public sector wages, social benefits and food and fuel subsidies were all substantially increased in 2011; with the Arab Spring still on the minds of policymakers, spending is unlikely to be reined in. Moreover, still-elevated global oil prices will leave Riyadh with plenty of room to manoeuvre on the fiscal front. This

loose fiscal policy has spurred consumer spending, which has been reflected in a host of leading indicator data.


Full Report Details at
- www.fastmr.com/prod/359606_saudi_arabia_food_drink_report_q2_201 ..


Headline Industry Data

* 2012 per capita food consumption growth in local currency = 11.6%; forecast growth 2011-2016 = 48.3%.
* 2012 confectionary value sales growth = 15.2%; forecast growth to 2016 = 56.3%.
* 2012 mass grocery retail sales growth = 14.2%; forecast growth to 2016 = 75.3%

Key Company Trends

Investing In Food Security: With Saudi Arabia looking to address food security issues, leading dairy producer Almarai has announced that it will buy Argentine farm operator Fondomonte for US$83mn. The deal is expected to strengthen Almarai's supply chain, and we believe similar deals could be forthcoming as the company looks to cater to rising demand at home. Fondomonte operates three farms in Argentina which produce a range of commodities including maize and wheat.

Mars Makes Major Investment: In February 2012 it was announced that confectionery producer Mars has started construction of a new chocolate facility in Saudi Arabia. The plant is scheduled to begin production in 2014, with the full development of the project set to take 10 years and cost US$210mn. The plant will employ 400 people when it begins operations and initially will produce the firm's Galaxy and Galaxy Jewel brands. The move reflects growing demand for confectionery products in the Middle East, where Mars already operates a facility in Dubai producing its Mars, Galaxy and Snickers brands. Saudi Arabia's confectionary sector is forecast to experience strong growth owing in part to its very large youth population.

Key Risks To Outlook

Given the extent to which our forecasts rely on heavy government spending, and by extension elevated oil prices, any sharp downtick in global energy demand would present a substantial risk to the country's growth outlook. However, with Brent crude trading at over US$110/bbl throughout January, concerns over supply in Iran and elsewhere persisting, and positive economic data coming out of the United States, for the time being this risk looks remote.

A more pressing concern is the potential for a sharp acceleration of inflation. With the economy experiencing a prolonged period of robust growth amid loose monetary and fiscal policy, there is a significant risk that upside price pressures could pick up rapidly in the medium term, putting pressure on consumer spending. While we expect consumer price inflation to remain relatively subdued in 2012 as global commodity prices moderate and spending on subsidies stays high, over the medium term inflation is a problem that is likely to come increasingly into focus.

Partial Table of Contents:

SWOT Analysis
- Saudi Arabia Food Industry SWOT
- Saudi Arabia Drink Industry SWOT
- Saudi Arabia Mass Grocery Retail Industry SWOT
Business Environment
- BMI's Core Global Industry Views
- Table: Agricultural Commodity Prices
- Table: Core Views Q212
- Middle East Food & Drink Risk/Reward Ratings
- Table: Middle East Food & Drink Risk/Reward Ratings Q212
- Saudi Arabia Food & Drink Business Environment Rating
- Macroeconomic Outlook
- Table: Economic Activity
Industry Forecast Scenario
- Consumer Outlook
- Food
- Food Consumption
- Table: Food Consumption Indicators - Historical Data & Forecasts
- Confectionery
- Table: Confectionery Value Sales - Historical Data & Forecasts
- Drinks
- Soft Drinks
- Table: Soft Drinks Value Sales - Historical Data & Forecasts
- Alcoholic Drinks
- Hot Drinks
- Table: Hot Drinks Value Sales - Historical Data & Forecasts
- Mass Grocery Retail
- Table: Mass Grocery Retail Sales - Historical Data & Forecasts
- Table: Mass Grocery Retail Sales By Format
- Trade
- Table: Trade Indicators - Historical Data & Forecasts
Food
- Key Gulf Region Industry Trends And Developments
- Almarai Investing In Diversification
- New Products And Frontier Markets
- Growing Investment Interest From Multinational Corporations
- Growing Popularity Of Eating Out
- Snack Chains Growing in Popularity
- Market Overview
- Food Processing
- Dairy Processing
- Agriculture
- Halal
Drink
- Key Gulf Region Industry Trends And Developments
- Bottled Water Sector Growing in Importance
- Frontier Market Investment Strengthening
- Carbonates Shake-Up
- Diversifying Away From Carbonates
- Market Overview
- Soft Drinks
- Hot Drinks
- Alcoholic Drinks
Mass Grocery Retail
- Key Gulf Region Industry Trends And Developments
- Foreign Retailers Looking At Saudi Arabia
- Frontier Market Investment
- Growing Investment Into Modern Convenience Retailing
- Market Overview
- Table: Mass Grocery Retail Sector Structure - Estimated Sales Value By Format (US$bn)
- Table: Mass Grocery Retail Sector Structure - Estimated Sales Value By Format (SARbn)
Competitive Landscape
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Full Table of Contents is available at:
-- www.fastmr.com/catalog/product.aspx?productid=359606&dt=t

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Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010

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