Qatar Food and Drink Report Q1 2012
Includes 3 FREE quarterly updates
We continue to retain our bullish outlook for Qatar owing to its enviable hydrocarbon-based economy. We are pencilling in a 28.0% year-on-year (y-o-y) increase in hydrocarbon revenues through FY2011/12 and, while we acknowledge that oil and gas prices are likely to moderate, we nevertheless expect an expansion of production capacity to translate into continued growth in the value of the country’s exports over the coming years. This surge in hydrocarbon income has been accompanied by an aggressive ramping up of current expenditure. In early September 2011, the government announced a 60% hike in the wages and social benefits it pays to public-sector employees, as well as an increase in state pensions for civilian and military retirees by the same proportion. Qatar’s biggest weakness continues to be the size of its population – an expected 1.9mn in 2011. Nevertheless, given that this population is high-spending, there are still opportunities for highmargin, ultra-luxury investors. Developing tastes and preferences, combined with high incomes, will continue to provide an ideal platform for food retailing growth. In addition, the country is expecting continued spending as it prepares to host the FIFA World Cup in 2022.
Headline Industry Data
Key Industry Trends And Developments
Coca-Cola Makes Major Investment: In December 2011 it was reported Coca-Cola has acquired a 50% stake in Saudi Arabian beverage manufacturer Aujan Industries. The deal is worth US$980mn and will allow Aujan to pursue its international expansion plans for brands including Barbican and Rani, as well as building upon the regional success of its Vimto brand. The deal is expected to be completed during H112, and will help Coca-Cola make headway in one of the few markets in which its rival PepsiCo leads. The deal represents the largest-ever investment by a multinational firm in the Middle’s East’s fast-moving consumer goods sector.
Casino Pens Franchise Deal: French retailer Casino in December 2011 signed a franchise arrangement with the domestic company Al Meera. Al Meera will open and operate three hypermarkets in Qatar under the Géant and Géant Easy brands, with the first store opening in Oman in the next 12-18 months. Al Meera is already a major player in the domestic market and currently operates 23 supermarkets in Qatar.
Risks To Outlook Oil Price Stability: Despite the political upheaval throughout the region, the main threat for Qatar remains the fluctuations in global oil prices. Despite the government’s efforts to diversify its economy away from the energy sector, non-hydrocarbon sector growth will still not be sufficient to sustain the economy should oil prices collapse. Another major risk comes from the social and political upheaval in the region. Should this turmoil be prolonged, it would likely pose downside risks to our growth outlook and could weigh on consumer spending.
We continue to retain our bullish outlook for Qatar owing to its enviable hydrocarbon-based economy. We are pencilling in a 28.0% year-on-year (y-o-y) increase in hydrocarbon revenues through FY2011/12 and, while we acknowledge that oil and gas prices are likely to moderate, we nevertheless expect an expansion of production capacity to translate into continued growth in the value of the country’s exports over the coming years. This surge in hydrocarbon income has been accompanied by an aggressive ramping up of current expenditure. In early September 2011, the government announced a 60% hike in the wages and social benefits it pays to public-sector employees, as well as an increase in state pensions for civilian and military retirees by the same proportion. Qatar’s biggest weakness continues to be the size of its population – an expected 1.9mn in 2011. Nevertheless, given that this population is high-spending, there are still opportunities for highmargin, ultra-luxury investors. Developing tastes and preferences, combined with high incomes, will continue to provide an ideal platform for food retailing growth. In addition, the country is expecting continued spending as it prepares to host the FIFA World Cup in 2022.
Headline Industry Data
- 2011 food consumption growth = +11.2%; forecast to 2016 = +28.7%.
- 2011 soft drinks value sales = +14.3%; forecast to 2016 = +33.7%.
- 2011 mass grocery retail sales = +7.6%; forecast to 2016 = +31.4%.
- 2011 supermarket sales = +4.2%; forecast to 2016 = +15.7%.
Key Industry Trends And Developments
Coca-Cola Makes Major Investment: In December 2011 it was reported Coca-Cola has acquired a 50% stake in Saudi Arabian beverage manufacturer Aujan Industries. The deal is worth US$980mn and will allow Aujan to pursue its international expansion plans for brands including Barbican and Rani, as well as building upon the regional success of its Vimto brand. The deal is expected to be completed during H112, and will help Coca-Cola make headway in one of the few markets in which its rival PepsiCo leads. The deal represents the largest-ever investment by a multinational firm in the Middle’s East’s fast-moving consumer goods sector.
Casino Pens Franchise Deal: French retailer Casino in December 2011 signed a franchise arrangement with the domestic company Al Meera. Al Meera will open and operate three hypermarkets in Qatar under the Géant and Géant Easy brands, with the first store opening in Oman in the next 12-18 months. Al Meera is already a major player in the domestic market and currently operates 23 supermarkets in Qatar.
Risks To Outlook Oil Price Stability: Despite the political upheaval throughout the region, the main threat for Qatar remains the fluctuations in global oil prices. Despite the government’s efforts to diversify its economy away from the energy sector, non-hydrocarbon sector growth will still not be sufficient to sustain the economy should oil prices collapse. Another major risk comes from the social and political upheaval in the region. Should this turmoil be prolonged, it would likely pose downside risks to our growth outlook and could weigh on consumer spending.
Contents
SWOT AnalysisQatar Food Industry SWOT
Qatar Drink Industry SWOT
Qatar Mass Grocery Retail Industry SWOT
Business Environment
BMI’s Core Global Industry Views
Table: Agricultural Commodity Prices
Table: Core Views Q112
Middle East Food & Drink Risk/Reward Ratings
Table: Saudi Arabia Food & Drink Risk/Reward Ratings – Q112
Table: Middle East & North Africa Food & Drink Risk/Reward Ratings – Q112
Qatar Food & Drink Risk/Reward Ratings
Macroeconomic Outlook
Table: Economic Activity
Industry Forecast Scenario
Consumer Outlook
Food
Consumption
Table: Food Consumption Indicators – Historical Data & Forecasts
Drink
Soft Drinks
Table: Soft Drinks Value Sales – Historical Data & Forecasts
Hot Drinks
Mass Grocery Retail
Table: Mass Grocery Retail Sales – Historical Data & Forecasts
Table: Grocery Retail Sales By Format, 2010 And 2020
Trade
Table: Food & Drink Trade Indicators – Historical Data & Forecasts
Food
Key Gulf Region Industry Trends
Premiumisation Key To Growth
Shift In Food Security Strategy
Potential Cooperation With Belarus?
Growing Popularity Of Eating Out And Snack Foods
Diversification Into New Products And Frontier Markets
Growing Investment Interest From Non-Regional MNCs
Market Overview
Food Production
Halal Food
Table: Muslim Populations In Selected Countries
Drink
Key Gulf Region Industry Trends
Coca-Cola Makes An Aggressive Investment
Frontier Market Investment Strengthening
Carbonate Prices Moving Up
Diversifying Away From Carbonates
Tang Proving Very Popular
Market Overview
Hot Drinks
Soft Drinks
Mass Grocery Retail
Key Gulf Region Industry Trends
Géant Pursuing Region Wide Expansion
Frontier Market Investment
Consolidation
Growing Investment Into Modern Convenience Retailing
Multinational Presence Growing?
Market Overview
Table: Structure Of Qatar’s Mass Grocery Retail Market – Sales Value By Format (US$bn)
Competitive Landscape
Table: Key Players In Qatar’s Food & Drink Sector
Table: Key Players in Qatar’s Mass Grocery Retail Sector
Company Monitor
Drink
Masafi
Mass Grocery Retail
Carrefour MAF
EMKE Group (Lulu )
BMI Methodology
Food & Drink Business Environment Ratings
Ratings Methodology
Ratings System
Indicators
Table: Limits Of Potential Returns
Table: Risks To Realisation Of Potential Returns
Weighting
Table: Weighting
BMI Food & Drink Industry Glossary
Food & Drink
Mass Grocery Retail
BMI Food & Drink Forecasting And Sources
How We Generate Our Industry Forecasts
Sources Skip to top