Abstract
Egypt places fifth in BMI’s regional Food & Drink Business Environment
Ratings table for Q309.
Although a decline in private investment will
dampen Egypt’s outlook, its economy is expected to
outperform the
wider regions in 2009 with GDP growth coming in at 3.7%. Despite the global
meltdown
affecting expansions, Egypt’s food and drink industries
have continued to attract investment from Saudi
Arabia in particular as
discussed in BMI’s recently published Egypt Food & Drink Report for
Q309.
At the time of writing, International Dairy and Juice Limited
– a promising joint venture between
Almarai and PepsiCo – was
on the verge of finalising the acquisition of leading Egyptian dairy
company
International Company for Agro-Industrial Projects (Beyti). Should
the deal be finalised, it will be
worth around EGP650mn, which would make
it the biggest food and drink M&A deal in Egypt in 2009
so far. It is
believed that Almarai will be responsible for managing Beyti’s
production, while PepsiCo will
spearhead its marketing operation. Both
companies stand to gain from BMI’s forecast that through to
2013,
food consumption will increase by 16.6% to EGP234bn (US$42bn).
In June
2009, Saudi food and drink company Halwani Brothers announced plans to double
its annual
sales growth to 10% by 2011 by investing SAR250mn (US$66.7mn)
in expansions. The project will be
set in motion by the launch of a new
biscuit plant and packaging facility by 2010. Although it is based in
Saudi Arabia, Halwani earns around 60% of its income in Egypt and is similarly
well placed to benefit
from BMI’s upbeat aforementioned food
consumption forecast.
Also in June, Saudi Arabia-based mass grocery
retailer (MGR) Al-Othaim announced plans to enter
Egypt’s emerging
retail market. Joining the likes of Carrefour MAF and UAE-based Spinneys,
Al-
Othaim will be encouraged by BMI’s forecast that MGR sales are
expected to rise by 32.9% between
2009 and 2013 to reach EGP32.5bn.
Despite its undoubted promise, the country’s MGR industry has
proven
a poisoned chalice for a number of distinguished retailers, most notably
UK-based Sainsbury’s
and South Africa’s Shoprite. Both have
subsequently exited having failed to adapt to consumer
preferences. As a
regional retailer, Al-Othaim is less likely to encounter such
difficulties.
Egypt is shaping up to be a key frontier market for food and
drink companies. Through to 2013, its GDP
per capita is forecast to rocket
up by almost 150% to reach US$5,200 while its population is expected to
grow to within touching distance of 90mn. What is more, the country appeal
extends well beyond its own
border. Export opportunities are aplenty
through the country’s free trade access to the Gulf Co-operation
Council (GCC) and Common Market for Eastern and Southern Africa (COMESA)
regions.
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