Qatar Food and Drink Report Q1 2012

We continue to retain our bullish outlook for Qatar owing to its enviable hydrocarbon-based economy. We are pencilling in a 28.0% year-on-year (y-o-y) increase in hydrocarbon revenues through FY2011/12 and, while we acknowledge that oil and gas prices are likely to moderate, we nevertheless expect an expansion of production capacity to translate into continued growth in the value of the country’s exports over the coming years. This surge in hydrocarbon income has been accompanied by an aggressive ramping up of current expenditure. In early September 2011, the government announced a 60% hike in the wages and social benefits it pays to public-sector employees, as well as an increase in state pensions for civilian and military retirees by the same proportion. Qatar’s biggest weakness continues to be the size of its population – an expected 1.9mn in 2011. Nevertheless, given that this population is high-spending, there are still opportunities for highmargin, ultra-luxury investors. Developing tastes and preferences, combined with high incomes, will continue to provide an ideal platform for food retailing growth. In addition, the country is expecting continued spending as it prepares to host the FIFA World Cup in 2022.
Headline Industry Data
?? 2011 food consumption growth = +11.2%; forecast to 2016 = +28.7%.
?? 2011 soft drinks value sales = +14.3%; forecast to 2016 = +33.7%.
?? 2011 mass grocery retail sales = +7.6%; forecast to 2016 = +31.4%.
?? 2011 supermarket sales = +4.2%; forecast to 2016 = +15.7%.
Key Industry Trends And Developments
Coca-Cola Makes Major Investment: In December 2011 it was reported Coca-Cola has acquired a 50% stake in Saudi Arabian beverage manufacturer Aujan Industries. The deal is worth US$980mn and will allow Aujan to pursue its international expansion plans for brands including Barbican and Rani, as well as building upon the regional success of its Vimto brand. The deal is expected to be completed during H112, and will help Coca-Cola make headway in one of the few markets in which its rival PepsiCo leads. The deal represents the largest-ever investment by a multinational firm in the Middle’s East’s fast-moving consumer goods sector.
Casino Pens Franchise Deal: French retailer Casino in December 2011 signed a franchise arrangement with the domestic company Al Meera. Al Meera will open and operate three hypermarkets in Qatar under the Géant and Géant Easy brands, with the first store opening in Oman in the next 12-18 months. Al Meera is already a major player in the domestic market and currently operates 23 supermarkets in Qatar.
Risks To Outlook Oil Price Stability: Despite the political upheaval throughout the region, the main threat for Qatar remains the fluctuations in global oil prices. Despite the government’s efforts to diversify its economy away from the energy sector, non-hydrocarbon sector growth will still not be sufficient to sustain the economy should oil prices collapse. Another major risk comes from the social and political upheaval in the region. Should this turmoil be prolonged, it would likely pose downside risks to our growth outlook and could weigh on consumer spending.

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SWOT Analysis 7
Qatar Food Industry SWOT 7
Qatar Drink Industry SWOT 8
Qatar Mass Grocery Retail Industry SWOT 9
Business Environment 10
BMI’s Core Global Industry Views 10
Table: Agricultural Commodity Prices 12
Table: Core Views Q112 21
Middle East Food & Drink Risk/Reward Ratings 22
Table: Saudi Arabia Food & Drink Risk/Reward Ratings – Q112 23
Table: Middle East & North Africa Food & Drink Risk/Reward Ratings – Q112 25
Qatar Food & Drink Risk/Reward Ratings 26
Macroeconomic Outlook 27
Table: Economic Activity 29
Industry Forecast Scenario 30
Consumer Outlook 30
Food 33
Consumption 33
Table: Food Consumption Indicators – Historical Data & Forecasts 34
Drink 35
Soft Drinks 35
Table: Soft Drinks Value Sales – Historical Data & Forecasts 36
Hot Drinks 36
Mass Grocery Retail 37
Table: Mass Grocery Retail Sales – Historical Data & Forecasts 38
Table: Grocery Retail Sales By Format, 2010 And 2020 38
Trade 39
Table: Food & Drink Trade Indicators – Historical Data & Forecasts 39
Food 40
Key Gulf Region Industry Trends 40
Premiumisation Key To Growth 40
Shift In Food Security Strategy 40
Potential Cooperation With Belarus? 41
Growing Popularity Of Eating Out And Snack Foods 42
Diversification Into New Products And Frontier Markets 42
Growing Investment Interest From Non-Regional MNCs 43
Market Overview 44
Food Production 44
Halal Food 44
Table: Muslim Populations In Selected Countries 45
Drink 46
Key Gulf Region Industry Trends 46
Coca-Cola Makes An Aggressive Investment 46
Frontier Market Investment Strengthening 46
Carbonate Prices Moving Up 46
Diversifying Away From Carbonates 47
Tang Proving Very Popular 48
Market Overview 48
Hot Drinks 48
Soft Drinks 48
Mass Grocery Retail 50
Key Gulf Region Industry Trends 50
Géant Pursuing Region Wide Expansion 50
Frontier Market Investment 50
Consolidation 51
Growing Investment Into Modern Convenience Retailing 51
Multinational Presence Growing? 51
Market Overview 52
Table: Structure Of Qatar’s Mass Grocery Retail Market – Sales Value By Format (US$bn) 53
Competitive Landscape 54
Table: Key Players In Qatar’s Food & Drink Sector 54
Table: Key Players in Qatar’s Mass Grocery Retail Sector 55
Company Monitor 56
Drink 56
Masafi 56
Mass Grocery Retail 58
Carrefour MAF 58
EMKE Group (Lulu ) 60
BMI Methodology 62
Food & Drink Business Environment Ratings 62
Ratings Methodology 62
Ratings System 62
Indicators 62
Table: Limits Of Potential Returns 63
Table: Risks To Realisation Of Potential Returns 64
Weighting 65
Table: Weighting 65
BMI Food & Drink Industry Glossary 66
Food & Drink 66
Mass Grocery Retail 66
BMI Food & Drink Forecasting And Sources 68
How We Generate Our Industry Forecasts 68
Sources 69
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