GCC food consumption to grow by 3.5% annually by 2019
Region’s food market is worth at least $35 billion, says Alpen Capital
Dubai: Food consumption in the Gulf Cooperation Council (GCC) countries is expected to grow at a compounded annual growth rate (CAGR) of 3.5 per cent between 2014 and 2019 as the region’s population expands.
According to investment bank Alpen Capital’s GCC Food Industry Report 2015 released on Tuesday, food consumed in the region is likely to reach 51.9 million metric tonnes by 2019.
“The drivers for this growth are a bigger population, high income and tourism,” Mahboob Murshed, managing director at investment bank Alpen Capital, told reporters in Dubai on Tuesday.
The GCC’s population is expected to grow by 2.4 per cent, from 50 million today to 57.6 million by 2019, Alpen Capital said in its report, citing data from the International Monetary Fund.
Tourist numbers in the GCC are expected to rise, creating more demand for food. International tourist arrivals are forecast to grow by 7.8 per cent annually by 2024.
Saudi Arabia is by far the largest food consuming country in the region, accounting for 60 per cent of consumption, primarily due to a growing population, as per the report. However, the rate of consumption is only expected to grow by 3 per cent annually by 2019.
Qatar is forecast to have the highest food consumption growth rate in the region — at 5.5 per cent annually over the next four years, followed by the UAE at 4.8 per cent.
When asked about how the volatility in oil prices, which have dropped by more than 50 per cent sine June 2014, has been affecting the GCC’s food sector, Murshed said: “Look at how Emirates, Etihad and Qatar Airways have been growing, and how many people are coming here for tourism. The hospitality and services industries are growing by leaps and bounds.”
As the GCC’s population grows, so will per capita income, as per the report. That is likely to increase by 2.5 per cent annually by 2019.
“Rising income levels have led to strong preference for discretionary and high-priced food products such as organic, cut-vegetables, ready-to-cook, marinated meat, and flavoured milk. This has, in turn, drawn international as well as local food retailers and manufacturers to establish and expand their presence in the region,” according to the report.
Cereals are the most consumed food category in the region. It is expected to account for 46.5 per cent of total food consumption in 2019.
The GCC is highly dependent on food imports as result of water shortage and a lack of arable land. Up to 75 per cent of food consumed is imported, Murshed said, adding that the UAE imports 78 per cent of its food. Food re-exports from the UAE touched $2.5 billion in 2014. The GCC’s food market is worth at least $35 billion, with the UAE representing 18-19 per cent of that, according to Murshed.
