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. 2 % 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: +4.3%.
Soft drinks value sales growth for 2015: +4.6%; CAGR 2014 to 2019: +4.7%.
MGR sales growth for 2015: +7.1%; CAGR 2014 to 2019: +7.4%.
Key Trends And Developments
SPAR International Opens New Stores In The Gulf Region
SPAR International announced in July 2015 that it had opened two new SPAR stores in the United Arab Emirates (UAE), bringing its total presence there to three stores. The retailer is partnering Abu Dhabi Cooperative Society, a local retailer, for its Middle East expansion, with the latter opening SPAR stores in the UAE under licence. SPAR International views the Middle East as a region with considerable development potential for its brand and it is aiming to have 20 stores across the region by the end of 2017.
Concern Grows Over Nestl e' s Maggi Brand Noodles
Following the recall in India in May 2015 of Nestl e's 'Maggi' brand two-minute noodles containing unsafe levels of lead, the Bahraini Health Ministry carried out tests on the product being sold by local retailers. As a result of those tests, the Health Ministry has seized hundreds of packets of the noodles and has introduced a temporary ban on their import. Whilst Nestle insists that Maggi two-minute noodles are safe, it has taken the dramatic step of destroying USD50mn worth of the product. The company's actions have yet to reassure national health authorities, however, with it also being reported that the Canadian Food Inspection Authority is testing samples being marketed on its territory.
Masafi Launches Into Thriving Carbonates Sector
One of the Gulf region's leading bottled water producers, UAE-based Masafi, launched its first range of sparkling fruit juice drinks in May 2015. At the time of its launch, the 'Fruitsss' range was available in 250ml cans and in three flavours. The company already has a strong presence in the region with its bottled water and fresh juice drinks.
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% 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.
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.