BMI View: Despite some downside risks, we maintain our positive outlook on food consumption growth in Bahrain throughout our forecast period to 2019 . We forecast food consumption growth in local currency terms of 5.7%, down from 6. 6 % in 2014, supported by strong growth in the mass grocery retail (MGR) sector. Real GDP growth is forecast to reach 3. 4 % in 2 015 and 3.3% in 2016 . However, employment and wage growth have slowed in recent months and are yet to show signs of improvement.
Headline Industry Data (local currency)
Food consumption growth for 2015: +5.7%; compound annual growth rate (CAGR) 2014 to 2019: +5.8%.
Per capita food consumption growth for 2015: +4.5%; CAGR 2014 to 2019: +4.2%.
Soft drinks value sales growth for 2015: +4.4%; CAGR 2014 to 2019: +4.6%.
MGR sales growth for 2015: +7.1%; CAGR 2014 to 2019: +7.4%.
Key Trends And Developments
Al Rawabi Eyes Further Regional Growth
Al Rawabi Dairy celebrated its 25th anniversary in March 2015, with the announcement that its Q115 sales had risen 15% year-on-year (y-o-y) and that it plans to expand its operations in Kuwait and Bahrain by the year's end. According to a report in Gulf News, the company produces a 275,000 litres of fresh milk and 150,000 litres of fresh fruit/vegetable juice a day. Al Rawabi's dairy herd has grown from 500 head of cattle in 1989 to 12,500 animals, of which approximately 8,000 are milking cows.
Strong Performance From BMMI In 2014
Alsora Supermarket owner BMMI Group reported that its annual sales grew 7.8% y-o-y from BHD98.3mn in 2013 to BHD106mn in 2014. It achieved a net profit of BHD11.3mn, up 13% from BHD10mn in 2013. The company puts this strong performance down to its investments in infrastructure, assets, quality and operational systems, including the expansion of its Alosra Supermarkets in Bahrain.
Pressure On Delmon Poultry To Move
Following complaints from residents in Hamala, Delmon Poultry Company is under pressure to relocate, reported Trade Arabia in April 2015. Hamala has expanded, and Delmon now finds itself surrounded by residential properties whose owners are annoyed by the smells from the plant. Now a developer wants to build hundreds of new homes on an adjacent plot of land.
Nesto Group Opens New Store In Manama
UAE-based Nesto Group said in January 2015 that it was about to open its sixth supermarket in Bahrain. Located in Manama, the 3,000 square feet store will house a supermarket and department store.
EMKE Group To Expand Bahraini Operations
Following the opening of a major logistics centre in Manama in December 2014, Lulu hypermarkets operator EMKE Group announced further planned investments across the country. EMKE plans to open a further three new hypermarkets in Bahrain by the end of 2016, creating 600 new jobs.
Mondelez International To Create 300 Jobs With New Bahrain Biscuit Plant
US-based Mondelez International announced in October 2014 that its USD90mn new biscuit manufacturing plant in Bahrain would create around 300 direct jobs by the end of its initial operating phase. Te plant's scalability means that there is the potential to generate a further 700 direct jobs and sustain thousands of indirect jobs. The plant will initially produce Oreo, Ritz and TUC biscuits to cater for increasing Middle Eastern and African demand for the brands.
Mega Mart To Introduce A Further 2,000 Tesco Brand Products
Bahraini retailer Mega Mart announced in October 2014 that it would introduce a further 2,000 Tesco brand goods to the shelves of its Mega Mart and Macro Mart stores. This is the result of an agreement signed with Tesco's Middle East and North Africa distributor MENA Holdings Group. Mega Mart already sells more than 1,500 Tesco private-label goods in its stores.
Key Risks To Outlook
The persistent uncertainty in Bahrain's political landscape remains a barrier to a full recovery in investor confidence. While security incidents have become less frequent in the past few months, the stalemate between the government and the opposition remains unresolved. The ongoing declines in oil prices add another cause for concern, given Bahrain's precarious fiscal outlook. A sharper-than-expected drop in oil prices could force the government to cut back on public expenditure.