The GCC food industry is poised for sustained growth, according to Dubai-headquartered investment banking advisory firm Alpen Capital (ME) Limited. The just-released GCC Food Industry report 2019 provides an overview of the food sector and outlines the recent trends, growth drivers and challenges in the industry.
The food consumption in the GCC, according to Alpen Capital, is expected to grow at a CAGR of 3.3% from an estimated 51.5 million MT from 2018 to 60.7 million MT in 2023. Increase in population, growing tourism, high per capita income and a sustained economic recovery are likely to drive the growth of the food sector in the region.
Cereals, the staple food of the region, are expected to remain the most consumed food category with a share of 48.2% by 2023. Increasing demand for milk products will drive the growth of the Dairy sector, and consumption of egg, fish, potatoes and fats & oil will contribute to the growth of the “others” category. Use of healthy and organic food is likely to increase with growing awareness. However, the respective share of most food categories in the overall consumption is anticipated to remain broadly unchanged.
The country-wise food consumption share in the GCC is projected to remain unchanged through 2023. Saudi Arabia and the UAE are expected to remain the largest food consuming nations with their combined share of around 81% by 2023. Oman is expected to experience the fastest annualised growth at a CAGR of 4.6%.
“We anticipate the GCC food sector will continue to grow at a steady pace owing to factors. These include growing population, higher per capita income, a vibrant tourism market and changing dietary habits and preferences,” says Sameena Ahmad, managing director, Alpen Capital (ME) Limited.
“Upcoming MEGA events like EXPO 2020 and the FIFA World Cup 2022 are expected to aid the growth of food consumption in the region further. The food services industry continues to evolve with increasing penetration of food delivery channels and rising number of tech-savvy millennials in the region,” she adds.
“Over the next five years, we expect to witness steady growth in the GCC food sector. Growth drivers include strong macro-economic variables, changing demographics and an increasing number of working couples. The growing influence of global culture is also supplementing the growth of the food sector,” says Krishna Dhanak, executive director at Alpen Capital.
“Rising incidences of lifestyle-related diseases would continue to drive the demand for organic and healthy food items. Despite regional and economic challenges, we saw significant M&A activity take place in the sector during the past two years. Latent demand for self-sustenance coupled with government initiatives and investments aimed at augmenting domestic productivity and food security makes the region attractive for investors,” Dhanak elaborates.