Soft drinks sales in Saudi Arabia are forecast to grow 26.1 percent through to 2013, the “Food and Drink Report” for the third quarter of 2009 said. It said that despite a weakened near-term macroeconomic outlook, a number of food and drink companies have continued to fare well, not least within the competitive dairy sector. The report has forecast food consumption to push up by 10.9 percent through to 2013, which, banded together with their regional sales, should allow Saudi Arabia's dairy majors to register steady turnover uptick. Although Saudi Arabia has fallen back into fourth place in the regional Food & Drink Business Environment Ratings table for Q309, the Kingdom's soft drinks industry remains a valid target for investors seeking regional entry, the report further said, forecasting a soft drinks sales growth of 26.1 percent through to 2013. The report revised downward the Kingdom's GDP growth forecast to 2.1 percent in 2009 as a result of a decline in crude-oil prices and private investment. Although it does not possess the lofty per capita GDP of some of its regional peers, Saudi Arabia boasts a large and youthful population that allows it to register as the region's largest market. Despite a weakened near-term macroeconomic outlook, a number of food and drink companies have continued to fare well, not least within the competitive dairy sector, the recently published Saudi Arabia Food & Drink Report for Q309 said. In the past quarter, Saudi-based dairy major Almarai reported Q109 net income of SR197.4 million ($52.64 million) - a 22 percent year-on-year (y-o-y) uptick. The posting fell in line with expectations and added authority to claims that the company should continue to post solid financials in FY09 despite the Gulf Cooperation Council (GCC) region's vulnerability to the global financial meltdown. In a further development, leading domestic company Savola Group increased its equity position in Almarai to 29 percent. The additional investment is reputed to have been worth SR500 million ($133.3 million). The Kingdom's dairy sector has emerged as the region's standard bearer. In line with an uptick in food consumption, demand for white goods picked up considerably on the back of the oil-led boom up to Q308. Almarai's Q09 results attest to the sector's likely resilience in 2009. The dairy major tussles with Saudi Dairy & Foodstuffs Co, Al Safi Danone and Al Rabie Saudi Foods for market share in what is arguably the Kingdom's most competitive food sector. While the fresh dairy segment remains Almarai's chief source of revenue, the company has made moves to increase sales within its fruit juice segment (fruit juice sales contributed 10 percent to total turnover in FY08). Earlier this year, Almarai signaled its intent by entering into partnership with PepsiCo to form International Dairy and Juice and is set to target a number of non-GCC Middle Eastern markets as well as the North African region. Domestically, competition is provided by local rival Aujan, and UAE-based Masafi, which has a large regional export business.
