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Food & Agribusiness Trade & Investment Opportunities Saudi Arabia & Ireland
© Farrelly & Mitchell 2013
Malachy Mitchell, Managing Director
Riyadh, Saudi Arabia, October 2013
In association with:
www.FARRELLYMITCHELL.ie
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Presentation:
1: Quick Facts & Figures
2: Supply & Demand
3: Retail Landscape
4: Challenges & Opportunities
5: Where’s the Growth?
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
s
1) Quick Facts & Figures
Saudi Market Characteristics Food consumption in the region expected to grow at 4.6% CAGR
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
Source: Farrelly & Mitchell Research Department
Single largest market for F&B in the GCC
(63%)
43% of popula>on under 28 yrs of age
(40m)
Increasing affluence -‐drive demand for packaged foods & healthy op>ons
Dairy, dried foods & bakery products are
favourites
Government encourages private sector investment &
interna>onal collabora>on
Expanding food processing industry reliant on imported
raw material
Growth in licensing agreements between interna>onal and local
manufacturers
Increasing par>cipa>on of women in society -‐ drive demand for convenience / supermarkets
Agriculture contributes 3% to GDP and uses more than 85% of the country’s consumed
water
USA V’s KSA Net food trade in KSA is set to increase more than 3 fold in next 7 years
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
Source: Farrelly & Mitchell Research Department
Metrics
GDP per Capita (USD$)
% of DI on Food
Average Food Spend (USD$)
Food Self Sufficiency
Net Food Trade
USA
49,000
6.6%
3,234
135%
USD $42 Billion
KSA 2012
24,000
23%
5,520
20%
(USD $17 Billion)
KSA 2020
33,770
20%
6,754
10%
(USD $42 Billion)
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
2) Supply & Demand
Agri Production Supply & Demand Saudi Arabian Food Balance
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-‐
5
10
15
20
25
30
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Millions Ton
nes
Imports Produc9on
Saudi domestic supply and import gap is widening In volume – value gap is even wider
Total Agri Production and Imports (Million Tonnes
Source: FAO
Water Consumption (BCM) More efficient utilisation of water for primary agriculture is a strategic imperative
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
1.8
25.5
16.4 18.5 17.5
15 18
0.5
1.7
2.1
2.2 2.7
3.2
3.5
0
5
10
15
20
25
30
1980 1990 1997 1999 2004 2009 2013e
Agriculture
88%
Industrial 9%
Municipal 3%
Water Usage-‐Saudi Arabia
Source: FAO & AQUASTATS
Key Resource Pressures Supply side factors
Food security agenda being developed by:
» Investing in farm land overseas
» Water efficient agriculture
» Promoting the domestic food processing industry
(to reduce imports of processed foods
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
Food Security
Food Self Sufficiency
Water Resources
Agriculture, despite food security aims, only produces 25% of food demand due to:
» Dwindling arable resources (2%) » Water constraints » Inefficiencies in supply and logistics » Rising cost of inputs
Balancing demand generation and ensuring supplies to meet demand is key - Government is a vital link to production capacity with various support schemes
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3) Retail Landscape
Food Retail & Non-Food Retail Sales (US$bn) 2006 - 2005
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
58 %
54%
53%
53%
54%
53%
53%
53%
52%
52% 42%
46%
47%
47%
46%
47% 47%
47%
48%
48%
0
20
40
60
80
100
120
140
160
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USD Bn
Non Food Food
Source: EIU
Multiple Retail Sector Lower Market concentration rates compared to Europe
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Country Mul+ple Retailers
Market Penetra+on
Finland Top 2 65%
Germany Top 5 90%
Holland Top 3 83%
Portugal Top 5 90%
Slovakia Top 3 63%
Ireland Top 3 75%
UK Top 4 65%
*Saudi Arabia Top 3 15%
*Estimated Source: AC Nielson / Farrelly & Mitchell Research Department
Saudi Retail Landscape Fragmented retail landscape
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
SR Billion 2009 2010 2011 2012 2013e 2014e Market Share 2014
CAGR
Small Grocery /others 46.2 47.2 48.3 49.6 51.1 52.6 55% 3.3%
Hypermarkets 13.2 14.2 15.3 16.4 17.6 18.7 20% 9.1%
Supermarkets 19.5 20.3 21.1 22.1 23.1 24.2 25% 5.5%
Total Market Size 78.9 81.7 84.7 88.1 91.8 95.5 4.9%
Source: Euromonitor / Farrelly & Mitchell Research Department
Food Retail Market Value (USD$m) of selected historic/forecast 2007 - 2014
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
5260.6
4862
3597
1088.3
719.2
571
465.5
1259.7
0 1000 2000 3000 4000 5000 6000
Bakery
Dairy
Dried Processed Food
Baby Food
Sweet and Savoury snacks
Canned/preserved Food
Frozen Processed Food
Oil and Fats
Source: Euromonitor / Farrelly & Mitchell Research Department
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
4) Challenges & Opportunities
Local Challenges Strategic & operational challenges
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Food imports projected to increase to 83% of total food requirement driven by:
» Changes to Agricultural policy (KSA) » Diminishing water resources » Growing population
Rising food prices globally leaves the region vulnerable to food price shocks & Inflation. The region is more vulnerable to price increases due to:
» Food stocks » Trade lags » High percentage of imports » Under developed & fragmented supply chain
High unemployment rates within young rapidly growing domestic population
Macro DriversOpportunities & barriers
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Market Drivers -‐ Macro Popula'on demographic Incomes Changing taste
Food security Ra'onaliza'on
Economies of scale
Barriers Route to market Exper'se
Access to mature
businesses
Opportuni4es
Innova'on Collabora'on Exper'se & Skills
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5) Where’s the Growth?
Retail Packaged processed Food Key market and growth sectors
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
Source: Farrelly & Mitchell Research Department
0%
10%
20%
30%
40%
50%
60%
70%
80%
-‐
5,000
10,000
15,000
20,000
25,000
Bakery
Dairy Products
Dried Processed Food
ConfecAonery
Oils & Fat
Baby Food
Snack Food
Sauces, dressings and Condiments
Canned/Preserved food
Ice Cream
Frozen Proceseed food
Spreads
Chilled Processed food
Others
2010 SR
2014 SR
Growth
Key High Growth Sectors Forecasted growth rates over the next 5 years (CAGR)
www. FarrellyMitchell.com Farrelly & Mitchell: Food Sector Trends and Opportunities
Frozen Processed Meats, Poultry
and Seafood 8%
Processed Baby Food 9.8%
Bakery & Confec:onery
Retail 7.2%
Cheese Manufacturing
7.9%
Dried Processed Foods Trading
8.3%
Source: Farrelly & Mitchell Research Department
Thank YouQ&A
Head Office:
Malachy MitchellManaging Director
Unit 5A Fingal Bay Business ParkBalbrigganCo. DublinIreland
Tel: 00 353 1 690 6550Fax: 00 353 1 883 4910Mobile: 00 353 86 806 0843Email: mmitchell@farrellymitchell.com Web: www.farrellymitchell.com
Middle East Office:
Mohammed HajjarRegional Director
Al-Rusais BuildingSuite 510Olaya Main RoadP.O. Box 616, Riyadh 11421Kingdom of Saudi Arabia
Tel: 00 966 11 4634406Fax: 00 966 11 4648952 Mobile: 00 966 54 338 7199Email: mhajjar@farrellymitchell.com Web: www.farrellymitchell.com
Please Note:The information in this presentation is intended to give information in general nature, great efforts has been exerted to ensure the accuracy of this data at the time the initial presentation was made. Farrelly & Mitchell Business Consultants Ltd. and its Branch offices or affiliates does not provide any implicit or explicit guarantees on the validity, timing or completeness of any data or information in this presentation. Also we assume no responsibility on the appropriateness of the data and information for suiting any particular purpose or reliability in trading or investing. Unless provided otherwise and in writing from us, all information contained in this presentation, including logo, pictures and drawings, are considered property of Farrelly & Mitchell Business Consultants Ltd.
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