Food opportunities abound in the Gulf: Kuwait, Bahrain, Qatar and Oman are emerging as key food markets, a new report says - Food

Business Asia, Oct, 2002

Australian's foodservice industry will find plenty of opportunities in the Gulf States, as rapid growth and high incomes create a boom market for suppliers, a new report has found.

The Gulf States--Kuwait, Bahrain, Qatar and Oman--are emerging as one of the fastest growing markets for international suppliers to the foodservice industry, with growth forecast at more than five per cent over the next two years.

The latest report from BIS Shrapnel--Foodservice in the Middle East 2002-2004: The Gulf States--identifies a market comprised of 13,300 outlets serving meals valued at US$4.1 billion ($7.5 billion) retail annually.

The report also found that the Gulf States are heavily reliant on imports as their major sources of food, importing foodstuffs valued at US$2.7 billion annually. This dollar value is a total for the figures for Kuwait and Oman in 1999, Qatar in 2000 and Bahrain in 2001.

The largest items by value are fruit and vegetables, dairy products and eggs, and cereals and cereal preparations.

Premium foods

Yet another attraction is that the biggest demand will be from the moist lucrative segment of the market--hotels, premium price restaurants, and fast food/casual dining outlets.

The study warns, however, that these positive projections are based upon the retention of a fairly stable oil price.

A complication is that anti-US sentiment is increasing, even among the wealthy--a factor which will work in the interests of non-US foodservice industry suppliers.

The Gulf States are unusual in that the institutional sector of the foodservice industry (including schools, hospitals, defence and similar establishments) comprise more than one-third of the market.

Local food companies are strongly protected, and suppliers need to strictly observe cultural and religious sensitivities when seeking business.

Another key factor is the high number of foreign workers--46 per cent in total across the four nations.

This market segment is serviced by cheap local eateries and is expected to decline in value in line with a decline in the number of foreign workers.

In demographic terms, the Gulf States differ markedly from developed Western economies in that population growth is high at between two per cent (Qatar) and nearly four per cent (Oman). Some 44 per cent of the Omani population is below the age of 15, and the market for prepared foods and snacks targeted at a younger audience is strong in each of the four states.

Outlook

Qatar will record the fastest growth over the next two years of 8.5 per cent, which is one of the fastest in the world. The nation is small, with a population of only 600,000, but is one of the wealthiest in the world with a per capita GDP of US$28,000. The country has achieved very high levels of growth (12 per cent in 2000) on the back of expansion of its oil industry. The foodservice industry is maturing rapidly with per capita annual foodservice expenditure of nearly US$1300, or more than three times the equivalent figure in Oman. New hotels and restaurants are emerging as the country rapidly develops.

Kuwait, with a population of 2.3 million, has the strictest regime in terms of food and liquor consumption. Both pork and alcohol are forbidden.

The foodservice market is mature, and comprises a large number of western fast food outlets. The foodservice industry will continue to grow vigorously at nearly five per cent, or approximately in line with GDP growth.

Bahrain has few oil reserves, but remains relatively wealthy with an annual per capita GDP of US$11,000. The number of foreign workers is low by comparison with the other Gulf States. Hotels and fast food chains will be the fastest growing segments.

Oman has the lowest annual average per capita GDP of US$8000. The country has the highest number of food outlets at more than 13,000, and Omanis consume nearly 1.3 billion meals from nearly 13,000 foodservice outlets. Oman is the least commercialised of the Gulf States, and its population of 2.4 million is widely dispersed across the country. Foodservice industry growth will be the weakest of the four states at a little less than three per cent.

AUSTRALIA'S PROLONGED DROUGHT COULD AFFECT GLOBAL TRADE

Severe drought in Australia, one of the worst on record, is cutting so deeply into farm export production that it looks like shaking global markets, possibly into next year.

It is now almost six months since much of eastern Australia has had good rain. Tracts of bone dry land in the northwest of New South Wales (NSW), the worst-hit state, have not received rain for two years.

Most of NSW has had some of its lowest rainfall on record, while a vast northwestern chunk had its lowest rainfall ever in the past three months.

As a dry winter slips into spring, worst case scenarios occur--what if it does not rain until autumn, in April?

Australia's official government forecaster abandoned last month its normally cautious approach to slash the expected size of Australia's winter crops by 40 per cent, or by something like $7 billion, because of the drought.