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Gulf food consumption to grow 4.2% annually to 2021 – Alpen

Gulf food consumption to grow 4.2% annually to 2021 – Alpen

Alpen said Saudi and the UAE would continue to lead regional consumption

Food consumption in the Gulf Cooperation Council is expected to expand 4.2 per cent annually over the next few years in line with population and per capita income growth, according to investment bank Alpen Capital.

In its GCC Food Industry report, the company said consumption would grow from 48.1 million metric tonnes in 2016 to 59.2 million MT in 2021, with cereal remaining the most broadly consumed category.

“This growth is primarily attributable to factors such as growing population, higher per capita income, and a vibrant tourism market, changing dietary habits and preferences, and increasing penetration of organised retail,” said Sameena Ahmad, managing director, Alpen Capital (ME) Limited.

“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.”

During the period Saudi and the UAE will remain the major food consumption centres with market shares across the region likely to remain unchanged, according to the firm. Growth of 4.2 per cent to 37.7 million MT and 4.4 per cent to 10.1 million MT is expected in each country inline with population and GDP projections.

Alpen said key growth drivers for food consumption in the Gulf would include the addition of 6.5 million individuals to the population between 2016 and 2021 and demand in categories including packaged foods and ready meals, organic food, halal food and online ordering.

A projected 3.7 per cent annual increase in GDP per capita to 2020 as regional economies recover from low oil prices, the growing penetration of hypermarkets and supermarkets, seasonal consumption during Ramadan and shopping festivals and Gulf governments’ investments in sustainable supply are also expected to boost consumption.

Alpen said the region’s main challenge was limited arable land and inadequate water, leading to dependence on imports and vulnerability to geopolitical tensions.

Cuts to subsidies and wages and the subdued job market are also likely to affect consumer spending and the profitability of domestic producers. While an inadequate number of warehouses and cold storage locations and lack of transport infrastructure are resulting in food waste.

However, there was no mention of the introduction of a selective tax in the region that will make some goods more expensive, along with the impact of the implementation of value added tax in 2018.

Read: Saudi authorises finance minister to set soft drinks tax date

The bank forecast the regional consolidations and mergers of food groups would continue, with the combined revenue of 22 listed food firms operating in the region growing 3.1 per cent over the last two years.

Read: GCC firm Adeptio completes $2.4bn Americana stake buy

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