Abstract
Bahrain has moved into second position in BMI’s regional Food & Drink
Business Environment Ratings
table for Q309. A decline in crude oil prices
coupled with a marked decline in private investment has
forced BMI to
revise down the kingdom’s GDP forecast to reflect a 0.55% contraction in
2009. Although
Bahrain does not provide investors with the premiumisation
potential of the UAE or the large markets of
Egypt or Saudi Arabia
(Bahrain has a GDP per capita of US$25,628 and a population of 1.1mn), its
main
attraction is its excellent regulatory environment, which is among
the Middle East’s most liberal. The
kingdom’s openness to
foreign investment has attracted big name mass grocery retailers (MGRs) such
as
Carrefour and Waitrose despite the small size of the market as
discussed in BMI’s recently published
Bahrain Food & Drink Report
for Q309.
In Q209, UK-based premium-end retailer Waitrose announced its
intention to launch its first supermarket
in Bahrain by 2010 at the
state-of-the-art US$800mn Villamar development. It will mark
Waitrose’s
second foray into the Middle East following its entry
into the UAE. The retailer will target pockets of
extreme wealth across
the kingdom.
Waitrose’s imminent entry adds to an impressive array
of retailers that include Carrefour (in a jointventure
with its Middle
East partner Majid Al Futtaim), UAE-based EMKE and France-based Casino
(in
partnership with Fu-Com International).
BMI has forecast MGR value sales
to grow by 31.8% through to 2013. The expansion will be
spearheaded by the
supermarket and hypermarket segments. Declining real estate prices could speed
up
the pace by which the country’s retailers launch stand-alone
outlets. Presently, a number of supermarkets
and hypermarkets are located
adjacent to shopping malls, a common feature of the Middle East’s
MGR
landscape. Region-wide apathy towards discounted goods, which are
perceived to be of inferior quality,
means the discount segment is
unlikely to make any headway for the foreseeable future.
The entry of
international and regional MGR companies is likely to hasten the pace at which
Bahrain’s
grocery retail sector formalises. By 2017, BMI forecasts
that the organised MGR sector will account for
57% of total grocery sales
(up from an estimated 46% in 2007). Retailers seeking entry are likely to
invest
sooner rather than later as the kingdom’s small population
means its MGR market is likely mature over
the next five to ten years.
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