Professional Documents
Culture Documents
Prithviraj YB
12/19/2013
Introduction
The Saudi Arabian food-processing sector has experienced rapid growth in recent years, with a number of local companies reporting strong growth in the recent years. The Saudi government supports the food and drink industry by providing attractive financing and subsidies on selected equipment, and through the imposition of high tariffs on imports that compete with locally-produced equivalents. Important sub-segments in Saudi Arabias food processing industry, including meatprocessing, dairy, juice and confectionery manufacturing, have developed to such an extent in recent years that they are now meeting the majority of domestic demand.
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Total Land Area: 2,250,000 sq km Population (July 08): 28,161,417 (including 18% or 5,576,076 non naturals. Rapidly increasing. By 2025, Population expected to be 105 million. Current population growth rate: 1.945% Age Structure: 0-14 Yrs: 38.1% 15-64 Yrs: 59.5% 65 & above: 2.4%
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Contd.
Median age: Total 21.5 Yrs Male 22.9 Yrs Female 19.7 Yrs Birth Rate: 28.83 births / 1000 popln Fertility Rate: 3.89 children / woman Ethnic group: Arabs : 90% Afro Asians : 10% Literacy rate: 78.8% (can read / write) City / Oasis density: 1000 people / sq km Westerners: 100,000
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GCC Overview
Countries: Saudi Arabia, UAE, Oman, Bahrain, Qatar, Kuwait Population: 36.4 million Largest market: Saudi Arabia Second largest market: UAE 76% of UAE population is expatriates-have wider range of preferences 75% of Saudi population is localshomogeneous consumption Future: Saudi will be the largest market; Qatar & UAE are markets with high potential
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Beverage Type Volume (million Lit) Packed Water : 5321 Hot Tea : 3207 Carbonated soft drinks : 2506 Liquid milk : 1865 Juice Products : 1367 Hot Coffee : 1183 Laban : 538 All other beverages : 620
Source: IMES Research & Estimates
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1. Energy Drinks 2. RTD Tea products 3. Malt Beverages 4. Bottled Water 5. Liquid Milk 6. Juice Products 7. Carbonated soft drinks 8. Laban 9. Dilute Drinks 10. Tea
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8.3 7.2 6.9 6.7 6.2 5.5 5.2 4.1 3.0 1.7
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As per the data, UAE tops in per capita consumption of packed water, while Oman leads in hot tea and Bahrain leads in carbonated soft drinks. Liquid milk, laban and juice products are expected to grow indicating that people prefer to go for naturals more. Other beverages mentioned in the table include dilute drinks, malt beverages, iced tea, energy drinks and sports drinks. Dilute drinks, which contain 3-15% fruit content are the most common but have seen general decline over the years. Energy drinks is small segment but has achieved avg annual growth rate of 52% over 5 years across GCC. Consumption in Kuwait has grown by 84% over the past 5 years. Major players like Red Bull, Power Horse and Bison face competition from new entries.
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Tea is one of the mature products, expected to grow along with population. RTD iced tea is relatively new but one of the stronger growing beverages. All beverage categories expected to grow at a healthy rate over the next five years, while energy drinks are the faster growers. Juice Products are expected to grow at faster rate than carbonated soft drinks. Hot tea and dilute drinks are expected to grow at extremely slow rates.
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SOFT DRINKS IN SAUDI ARABIA Significant growth in the soft drinks market as a whole.
The soft drinks market registered 6% total volume and value growth in 2007. Soft drinks popularity in the kingdom can be attributed to the diversity of products, together with their wide availability throughout the kingdom. Carbonates and bottled water remain the most popular in volume terms, while fruit/vegetable juice ranks second in value terms after carbonates. Functional drinks on the other hand registered the most dynamic growth in 2007, as these products are substitutes for alcohol in the country. Other smaller sectors, including RTD tea and concentrates are gaining further popularity despite seasonal demand, especially in concentrates, where demand almost triples during Ramadan.
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Health concerns boost sales of bottled water, fruit/vegetable juice and low calorie options
Consumers in the kingdom are becoming increasingly healthconscious. This trend is pushed by a couple of elements, firstly the effect of the media and the high number of television programs addressing health problems, and secondly, the impact of foreign expatriates who are more aware of health issues than local consumers. The trend is pushing demand for healthier products, including bottled water and fruit/vegetable juice, in addition to low calorie carbonates. Bottled water and low calorie cola carbonates registered an impressive 8% growth in total volume terms in 2007, while fruit/vegetable juice registered 6% growth.
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Almarai Dairy Company Al Rabie Saudi Foods Company Abuljadayel Beverages National Factory for Foodstuff Production NADEC Al Othman (NADA) Pepsico Arrow Juice Company Aujan Soft Drinks Karim Food Industries Gulf Union Foods Company Najdiyah Marketing Al Safi Dairy Company Al Rai Food Industries
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CONCLUSION:
Majority of the companies located in Saudi Arabia have diversified themselves in terms of product range doing it from juices, nectars, floats, drinks, milk, laban, flavoured milk, fruit+milk, puddings, tomato paste etc thereby minimizing the operating costs. In spite of price raise in commodities in the international trade in the previous year, these companies have survived well and some companies showed good growth in the fiscal ending 2008. In the current year of 2009, the companies have set to take advantage of the price fall in the commodities, minimizing the inventory and thereby trying to become much more competitive. Even though only few companies have dared for new product launch this year, it need to be seen how far they do well in the market and how far do the Saudi customers accept them.
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