Kuwait Food and Drink Report Q3 2009

Kuwait has fallen back into sixth place in BMI’s regional Food & Drink Business Environment Ratingstable for Q309. Although a decline in crude oil prices and private investment forced through by the globalfinancial meltdown will press down on Kuwait’s economic outlook, extensive government infrastructurespending will provide a degree of cushion. BMI has forecast GDP to contract by 1% in 2009, which isbetter than our global average (we are currently forecasting global output to slide by 2.3% in 2009) inthese turbulent times. Despite a weakened near term economic outlook, the country remains one of theGulf region’s wealthiest and is home to a fairly dynamic food processing industry as discussed in BMI’srecently published Kuwait Food & Drink Report for Q309.

Kuwait Food Company (Americana) is the country’s leading food company with assets across the foodservices industry as well as food and drink production. The company boasts an extensive productionportfolio that includes popular food brands such as Heinz and California Garden. Therefore, it isparticularly well placed to capitalise on rising demand for convenience and packaged foods.

Like most countries in the Gulf region, Kuwait possesses a reasonably well developed dairy sector.Spearheaded by Kuwait Danish Dairy and closely followed by Kuwait Dairy Corporation, the industryis one of the country’s most well invested. Both companies have vertically integrated product portfolio’s(including fresh milk, yoghurt and ice creams) yet their ability to grow into dominant regional players ishamstrung by the competitiveness of the Gulf region’s dairy industry.

BMI analyses that the halal food industry may not only attract further regional investment (UAE-basedAl Islami Foods entered Kuwait in April 2009 after securing a distributional tie ups with Gulf Tradingand Refrigeration Company (GTRC) and International Agencies Company (IAC)), but also provide growth opportunities for Kuwaiti companies. The World Halal Forum expects the value of the halal foodindustry to grow to US$650mn in 2010 and Gulf-based companies are scrambling to jump on to thebandwagon of an industry that has thus far been dominated by non-regional food processors.

Through to 2013, BMI has forecast food consumption to increase by 4.8% and reach US$1.32bn whileper capita consumption is expected to crawl up to US$390. Although the forecasted growth figures are byno means dynamic, regional investors in particular are likely to remain interested in the high-incomeKuwaiti consumer base as they diversify their businesses in search of greater volume.