GCC food industry on a sustainable, balanced growth path

RetailME Bureau

Food consumption in the GCC is expected to expand at a CAGR of 4.2% from an estimated 48.1 million metric tonnes (MT) in 2016 to 59.2 million MT in 2021, indicates investment banking advisory firm Alpen Capital. This growth is primarily attributable to increase in the consumer base, coupled with a higher per capita income, as the GCC economies stage a sustained economic recovery from the recent downturn.

“We expect the GCC food industry to grow at a sustainable pace. This growth is primarily attributable to factors such as growing population, higher per capita income, a vibrant tourism market, changing dietary habits and preferences and increasing penetration of organised retail. Government as well as private sector investments are being channelled towards augmenting the domestic food production capacity and supply, even as securing food sources in other resource-rich countries remains a key priority,” says Sameena Ahmad, managing director, Alpen Capital (ME) Limited.

Overall consumption in most food categories is expected to remain broadly unchanged through 2021 with cereals as the most consumed food category in the region.

The country-wise share in total GCC food consumption is also anticipated to remain largely unchanged until 2021 with Saudi Arabia and the UAE likely to remain the major food consumption centres. During the forecast period, food consumption in Saudi Arabia and the UAE is expected to grow at an annualised average rate of 4.2% to 37.7 million MT and 4.4% to 10.1 million MT, respectively.

“Despite significant headwinds due to fall in oil prices, drop in infrastructure projects, job losses and attendant retail spend, the GCC food industry is forecasted to grow in the coming years. Food security remains a key priority for the GCC countries as the reliance on heavy imports continue owing to limited arable land, hot and arid climate and fresh water shortage,” adds says Mahboob Murshed, managing director, Alpen Capital (ME) Limited.

“We see several government initiatives aimed not only at enhancing domestic productivity, but also at investing in farmlands overseas to mitigate the risk. Despite this key challenge, the sector remains on the radar of investors who are looking at opportunities to enter the region or a specific country in the GCC to take advantage of what the sector has to offer. This has not only attracted new players to the market but also led to significant consolidation in the segment and we expect this trend to continue,” he observes.

Get more details from the report in the March 2017 edition of RetailME