Saudi Arabia’s population is expected to be 33 mn by 2021, making it the only GCC market that can provide investors with long-term volume growth
KSA’s food industry remains one of the most attractive in the region, with strong sales growth expectation over our forecast period. On an average, KSA imports 80% of its food requirement where food accounts for 15% of its total imports. Based on the governments’ initiatives (NPL) to overcome obstacles on foreign investment, Saudi Arabia’s food processing sector is expected to attract strong investment, particularly in the key segments, which are contributing to the growth in local food consumption.
The expansion of the big organized food retailing and producer such as AlMarai and Savola will continue to strengthen internal trade systems and local food production, which is expected to contribute to lower cost, that can be passed on to consumers partially offsetting impact of value added tax (VAT). Although we believe the labour market is under pressure, the food sector will benefit from a sizeable population of around 31.74mn, with an average household of 6.4 persons.
This will boost the demand for consumer goods amid a weak consumer spending environment. Saudi Arabia’s population is expected to reach 33.0mn by 2021, making it the only market in the Gulf region that can realistically provide investors with long-term volume growth potential.
Source: Aljazira Capital