Morocco Food and Drink Report Q3 2012

Includes 3 FREE quarterly updates

Private consumption patterns continue to look promising, bolstered in particular by a good harvest.

Agriculture accounts for around 40% of Morocco’s total workforce, leaving the broader economy highly dependent on grain yields. Private consumption has been further boosted by a sharp increase in government subsidies of food and fuel. We expect public spending on subsidies to come to MAD54.9bn (US$7.0bn) by the end of 2012, up from MAD27.2bn in 2010. Public sector wages rose by 11.0% in May, which should further increase household consumption. Our generally positive outlook is backed up by government surveys that show consumer confidence is around its highest level since early 2008.

Headline Industry Data

• Per capita food consumption is forecast to increase by 1.60% in 2012. Through to 2016, compound annual growth of 1.80% is forecast
• Mass grocery retail (MGR) sales are forecast to increase by 8.90% in 2012. To 2016, compound annual growth of 10.30% is forecast

Key Regional Company Trends Casino and Al-Meera Investing In Retail: In February 2012, French retailer Casino signed a joint venture (JV) agreement with Qatari retail group al-Meera Holding, with plans to open outlets in North Africa and Jordan. The JV, called ALGE Retail, is looking at expansion in Tunisia, Libya and Egypt. It will be headquartered in Geneva, with Casino owning 49% and al-Meera owning 51%. Dabur India To Establish New Manufacturing Plants: In February 2012, fast-moving consumer goods major Dabur India announced it will invest INR1bn (US$20.1mn) establishing new manufacturing plants in Africa over the next two years to expand its global footprint. According to a company official, the funds will be used primarily to construct plants in places such as Morocco and Southern and Eastern Africa. The official said the new plants will support its existing factories in Nigeria and Egypt.

Key Risks to Outlook Government Expenditure Levels Under Scrutiny: We are pessimistic about the government’s ability to maintain the current level of spending because of the weakness of its fiscal position. Although we continue to expect the short-term political situation to remain relatively stable, the worsening outlook for inflation – and its budgetary consequences – will restrict the government’s ability to respond to any deterioration in domestic stability if it occurs.