Weighed down by the global financial crisis with 2009 GDP growth estimated at 0.15%, Saudi Arabia is expected to register modest GDP growth of 2.01% in 2010. While a number of global food and drink companies continue to struggle for earnings and sales growth momentum, Saudi industry leaders such as Almarai and Savola Group announced strong year-end headline earnings over the quarter as discussed in BMI's recently published Saudi Arabia Food & Drink Report for Q210. Despite under par fourth quarter earnings of SAR248.8mn, below the bottom of the range SAR264.9mn forecast by analysts polled by Reuters, Almarai recorded strong year-end earnings of SAR1.1bn (US$290mn) for the 12 months to December 31 2009. As well as posting year-on-year (y-o-y) annual earnings and turnover growth of 20.5% and 16.7% (to SAR5.9bn), Almarai pursued a raft of significant organic and non-organic growth initiatives. The establishment of a groundbreaking joint venture with PepsiCo was arguably the most significant event of Almarai's financial year and in BMI's opinion will significantly open up access to some of the Middle East's most promising underdeveloped consumer goods markets such as Egypt and Jordan. Not focusing on quick-fire non-organic growth alone, Almarai also strengthened organically by entering into the infant formula segment. With new business units coming online and ongoing expansion into core dairy units anticipated in 2010, Almarai is increasingly well positioned to capitalise on a forecast 16.07% increase in headline food consumption to SAR72.72bn to 2014. Unperturbed by the downturn, Savola reported particularly significant FY09 earnings growth in Q110; headline earnings increased 371.3% year-on-year (y-o-y) to SAR952mn (US$253.9mn). Per share earnings strengthened to SAR1.9 from SAR0.4 a year earlier. The Gulf region's leading sugar refiner and a leading global producer of branded edible oil, Savola is also Saudi Arabia's largest mass grocery retailer (MGR) by sales. We anticipate its Panda unit taking on even greater strategic significance in 2010. Bolstered by the acquisition of assets from the Geant supermarket banner owned by Saudi-based Farad Alhokair Group, Savola plans to grow its store count to 120 by 2010 (from about 60 in 2008). Laid out across the hypermarket and supermarket segments, Savola's retail unit is well positioned to take advantage of BMI's forecast 27.18% increase in headline Saudi MGR sales to SAR83.89bn in 2014. Also this quarter, New Zealand's dairy giant Fonterra underlined its commitment to the Gulf region (specifically Saudi Arabia) after reaching a final agreement to acquire the outstanding 51% stake in its Saudi joint venture partner Saudi New Zealand Dairy Products Company from Saudi Dairy and Foodstuff Company (Sadafco). The Gulf region already contributes significantly to Fonterra's foreign market business. In the financial year ending July 31 2009, sales revenues in the Middle East, Asia and Africa were up by 22% y-o-y to US$1.7bn (total group sales were US$12.6bn). Anticipated strengthening in dairy consumption and further industry segmentation should continue to support group Fonterra's ability to grow its Gulf business.

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Saudi Arabia Food and Drink Report Q2 2010
Published on March 2010
Report Summary
Weighed down by the global financial crisis with 2009 GDP growth estimated at 0.15%, Saudi Arabia is expected to register modest
GDP growth of 2.01% in 2010. While a number of global food and drink companies continue to struggle for earnings and sales growth
momentum, Saudi industry leaders such as Almarai and Savola Group announced strong year-end headline earnings over the quarter
as discussed in BMI's recently published Saudi Arabia Food & Drink Report for Q210.
Despite under par fourth quarter earnings of SAR248.8mn, below the bottom of the range SAR264.9mn forecast by analysts polled by
Reuters, Almarai recorded strong year-end earnings of SAR1.1bn (US$290mn) for the 12 months to December 31 2009. As well as
posting year-on-year (y-o-y) annual earnings and turnover growth of 20.5% and 16.7% (to SAR5.9bn), Almarai pursued a raft of
significant organic and non-organic growth initiatives.
The establishment of a groundbreaking joint venture with PepsiCo was arguably the most significant event of Almarai's financial year
and in BMI's opinion will significantly open up access to some of the Middle East's most promising underdeveloped consumer goods
markets such as Egypt and Jordan. Not focusing on quick-fire non-organic growth alone, Almarai also strengthened organically by
entering into the infant formula segment. With new business units coming online and ongoing expansion into core dairy units
anticipated in 2010, Almarai is increasingly well positioned to capitalise on a forecast 16.07% increase in headline food consumption
to SAR72.72bn to 2014.
Unperturbed by the downturn, Savola reported particularly significant FY09 earnings growth in Q110; headline earnings increased
371.3% year-on-year (y-o-y) to SAR952mn (US$253.9mn). Per share earnings strengthened to SAR1.9 from SAR0.4 a year earlier.
The Gulf region's leading sugar refiner and a leading global producer of branded edible oil, Savola is also Saudi Arabia's largest mass
grocery retailer (MGR) by sales. We anticipate its Panda unit taking on even greater strategic significance in 2010. Bolstered by the
acquisition of assets from the Geant supermarket banner owned by Saudi-based Farad Alhokair Group, Savola plans to grow its store
count to 120 by 2010 (from about 60 in 2008). Laid out across the hypermarket and supermarket segments, Savola's retail unit is well
positioned to take advantage of BMI's forecast 27.18% increase in headline Saudi MGR sales to SAR83.89bn in 2014. Also this
quarter, New Zealand's dairy giant Fonterra underlined its commitment to the Gulf region (specifically Saudi Arabia) after reaching a
final agreement to acquire the outstanding 51% stake in its Saudi joint venture partner Saudi New Zealand Dairy Products Company
from Saudi Dairy and Foodstuff Company (Sadafco). The Gulf region already contributes significantly to Fonterra's foreign market
business. In the financial year ending July 31 2009, sales revenues in the Middle East, Asia and Africa were up by 22% y-o-y to
US$1.7bn (total group sales were US$12.6bn). Anticipated strengthening in dairy consumption and further industry segmentation
should continue to support group Fonterra's ability to grow its Gulf business.
Table of Content
Executive Summary .....................5
SWOT Analysis......7
Saudi Arabia Food Industry SWOT ..... 7
Saudi Arabia Drink Industry SWOT..... 8
Saudi Arabia Mass Grocery Retail Industry SWOT.... 9
Business Environment ..............10
BMI's Core Global Industry Views......... 10
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Table: BMI's Core Views For The Food & Drink Industry ............. 10
Regional Food & Drink Business Environment Ratings 11
Middle East Food & Drink Business Environment Ratings ' Q2 2010.................... 12
Saudi Arabia's Food & Drink Business Environment Rating ............... 13
Macroeconomic Outlook.. 14
Saudi Arabia ' Economic Activity ..... 16
Food......................17
Industry Forecast Scenario..................... 17
Food Consumption...... 17
Food Consumption Indicators ' Historical Data & Forecasts ......... 18
Trade ... 18
Table: Food, Drink & Tobacco Trade Indicators (US$mn), 2005-2014 .................. 19
Confectionery.............. 19
Table: Confectionary indicators, 2005-2014 ............ 20
Industry Developments..... 21
Market Overview ............. 23
Food Processing ......... 23
Dairy Processing ........ 23
Agriculture.................. 24
Halal Food.................. 25
Table: Muslim Populations In Select Countries........ 26
Drink .....................27
Industry Forecast Scenario..................... 27
Soft Drinks.................. 27
Table: Soft Drinks Indicators, 2005 ' 2014 .............. 27
Hot Drinks .................. 29
Table: Hot Drinks Indicators, 2005-2014................. 29
Alcoholic Drinks ......... 29
Industry Developments..... 30
Market Overview ............. 31
Soft Drinks.................. 31
Hot Drinks .................. 32
Alcoholic Drinks ......... 32
Mass Grocery Retail...................33
Industry Forecast Scenario..................... 33
Tale: Retail Indicators, 2005-2014 .... 34
Table: Grocery Retail Sales By Format (%) ' Historical Data And Forecasts........ 34
Industry Developments..... 35
Market Overview ............. 36
Saudi Arabian Estimated MGR Market Share (%) ' 2010............... 36
Table: Structure of Saudi Arabia's Mass Grocery Retail Sector by Estimated Number of Outlets.. 37
Table: Structure of Saudi Arabia's Mass Grocery Retail Sector ' Estimated Sales Value by Format (US$bn) ..... 37
Table: Structure of Saudi Arabia's Mass Grocery Retail Sector ' Estimated Sales Value by Format (SARbn) ..... 37
Table: Structure of Saudi Arabia's Mass Grocery Retail Sector ' Estimated Sales Value by Format (US$bn) ..... 38
Table: Structure of Saudi Arabia's Mass Grocery Retail Sector ' Average Sales Value per Retail Outlet, 2008... 38
Competitive Landscape.............39
Table: Key Players in Saudi Arabia's Food & Drink Sector............ 39
Table: Key Players in Saudi Arabia's Mass Grocery Retail Sector... 40
Company Analysis............ 41
Food .... 41
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Al Safi-Danone ........... 41
SADAFCO ' Saudi Dairy & Foodstuff Company ..... 42
Almarai Dairy............. 43
Al Rabie Saudi Foods . 44
Drink.... 45
Aujan ... 45
Mass Grocery Retail ... 46
Savola Group ' Al Azizia Panda........ 46
Carrefour MAF ' Saudi Arabia ......... 47
Appendix ..............48
Country Snapshot: Saudi Arabia Demographic Data .... 48
Section 1: Population.. 48
Table: Demographic Indicators, 2005-2030............. 48
Table: Rural/Urban Breakdown, 2005-2030 ............ 49
Section 2: Education and Healthcare 49
Table: Education, 2003-2005 ............ 49
Table: Vital Statistics, 2005-2030...... 49
Section 3: Labour Market and Spending Power........ 50
Table: Employment Indicators, 1999-2006............... 50
Table: Consumer Expenditure, 2000-2012 (US$) ..... 50
BMI Food & Drink Methodology.51
Food & Drink Business Environment Ratings ............... 51
Ratings Methodology ....... 51
Ratings Overview............. 51
Ratings System............ 51
Indicators.................... 51
Limits Of Potential Returns................ 52
Risks To Realisation Of Potential Returns ................ 52
Weighting.................... 53
Weighting.................... 53
BMI Food & Drink Industry Glossary .... 54
Food & Drink ............. 54
Mass Grocery Retail ... 54
BMI Food & Drink Forecasting & Sourcing ................. 56
How We Generate Our Industry Forecasts ............... 56
Sourcing...................... 57
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