New Market Report: Egypt Food & Drink Report Q3 2013

From: Fast Market Research, Inc.
Published: Wed Sep 04 2013

Despite a short-term weakness, we continue to view Egypt as one of our favourite Middle East and Africa (MEA) markets from the point of view of longer-term opportunities in the food and drink industries, as well as with regard to mass grocery retail. Its large and expanding population will provide a suitable aspirational consumer base for both volume increases and value-based premiumisation. However, we do reiterate that the gloomy shorter-term economic outlook poses downside risks to our forecasts.

Headline Industry Forecasts (local currency)

* 2013 per capita food consumption growth = +10.43% year-on-year (y-o-y); forecast compound annual growth rate (CAGR) to 2017 = +11.52%.
* 2013 alcoholic drinks value sales growth = +18.12% y-o-y; forecast CAGR to 2017 = +17.22%.
* 2013 soft drinks value sales growth = +15.11% y-o-y; forecast CAGR to 2017 = +15.20%.
* 2013 mass grocery retail sales growth = +14.53% y-o-y; forecast CAGR to 2017 = +15.15%.

Full Report Details at

Key Industry Trends

Kraft Foods Looking to Expand in Egypt Through Acquisition: In June 2013, Al Mal newspaper, citing unnamed sources, reported that US food company Kraft Foods had submitted a non-binding tender offer to buy Egypt's Bisco Misr, making it the third company to bid for the Cairo-based food manufacturer. Kraft's move is in line with our with that multinationals will continue to expand in emerging markets, targeting their longer-term demographic and economic potential.

Egypt's Metro Attracts Take-Over Bid: In May 2013, Dubai (UAE)-based retail firm Majid Al Futtaim (MAF) reportedly moved closer to buying the Egyptian Metro supermarket chain from family-owned Mansour Group, which owns and operates Metro supermarkets and discount stores under the trade name Kheir Zaman. In the same month, in a move that came as a bit of a surprise, Carrefour sold its 25% stake in its Middle East and North Africa (MENA) joint venture to MAF - its joint venture (JV).

Key Risks To Outlook

Inflationary Risks Remain in Play: Our forecast for higher inflation over the course of the year is based on our expectation for further currency depreciation and a reduction in subsidies, but the exact figures will depend on the rate of this reduction and related factors. The outlook for the currency is bleak as foreign investors have left Egypt and there has been a notable decline in the country's dollar-earning sectors. In addition, the depletion of foreign reserves has reduced the government's ability to prop up the Egyptian pound. While subsidies will not be completely withdrawn by the end of year, particularly for fuel and food, we will likely see reductions which will push prices for goods higher.

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Contact Name: Bill Thompson
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