KSA and UAE drive food growth

News that Carrefour and its competitors are planning big expansion drives in Saudi Arabia is perhaps no great surprise. With one of the world’s fastest growing populations and an economy buoyed on high oil prices, many Saudi Arabians have plenty of disposable income. And food, drink and other FMCG goods appear to be one area where this cash is being spent.

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By  Roger Field Published  February 7, 2006

|~||~||~|News that Carrefour and its competitors are planning big expansion drives in Saudi Arabia is perhaps no great surprise. With one of the world’s fastest growing populations and an economy buoyed on high oil prices, many Saudi Arabians have plenty of disposable income. And food, drink and other FMCG goods appear to be one area where this cash is being spent. Furthermore, Saudi Arabia has suffered from a dearth of supermarkets and hypermarkets in recent years, and demand for an alternative to wholesalers is high. And as the more pleasant atmosphere of modern supermarkets starts to replace wholesalers as the retail outlet of choice, Saudi Arabian consumers appear to be spending more time and money on food and drink. Consumers also appear to shop more frequently when they use supermarkets as oppose to wholesalers, and this also increases the number of spontaneous purchases made. Indeed, overall food sales in Saudi Arabia between January and October 2005 increased by 9.3%, from about US $2.6 billion to US $2.8 billion, according to marketing information company, ACNielsen. Furthermore, these trends are likely to continue, and supermarkets and hypermarkets look set to be the main beneficiaries. Indeed, the total top-end contribution of supermarkets and hypermarkets to the Saudi Arabian grocery trade is likely to increase to 47% from its current level of 32% by the year 2010, according to retail analysts at ACNielsen. But it is not just Saudi Arabia where changes in the Middle East’s FMCG sector are manifesting themselves. While the region’s most populous country is emerging as the front-line for hypermarket expansion, with the big players slugging it out in a drive to gain the most stores in the best positions, the UAE is also a prime focus for the FMCG sector. Food imports to the UAE alone exceeded US $12 billion in 2004, with more than 90% of the region’s food and drink products imported, according to figures from the World Bank. This is perhaps one reason for the increasing popularity of Dubai’s Gulfood exhibition, which brings together food producers, retailers and foodservice specialist from around the world. This year, Gulfood is taking place at Dubai’s International Convention and Exhibition Centre, from February 19-22, and is expected to attract more than 30,000 trade visitors from about 120 countries. RNME will be present at the event and ready to discuss the latest developments in the FMCG sector with visitors and exhibitors. Roger Field, Editor. E-mail: roger.field@itp.com||**||

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