Overview of the Middle East Market

Food and Drinks Industry Day

November 27th 2008

CONTENTS

ü Middle East in Figures

ü Market overview of Saudi Arabia

ü Irish food & drink exports to Saudi Arabia

ü Market overview of UAE

ü Bord Bia Middle East Services in 2009

The Middle East

• Population of 305 m (est)

• Comprising 16+ countries

• Saudi Arabia, UAE, Iran & Turkey are the four largest

economies in the ME

• Saudi / UAE / Kuwait key oil exporting countries

• Key issues for the future

– Rapid population growth

– Unemployment is a major issue

– Concerns over security of food supply in the region

Saudi Arabia in Figures

ü 2007 GDP: $546 billion− One of the largest economies in the Middle East − 2007 GDP growth: 3.4%− Expected 2008 growth: 7.2%− Per capita income of $20,700− Oil based economy / worlds largest producer & exporter of oil

ü Inflation: 4.1% in 2007 / 4.7% in 2008 est

ü Unemployment: 13%

ü Population: 27 million– 5m are expatriates – Population expected to reach 40m by 2020– Life expectancy: male 74 yrs, female 78 yrs– Young Population: 43% < 15 yrs old

Saudi Arabia – A major food importer

• Saudi Arabia is a major food importing nation - only 4% of Saudi’s land is arable

• Food imports were valued at €8bn in 2007

• The rapidly growing food processing sector relies on imported ingredients

• The majority of consumer ready foods sold at retail level are imported

• Rapid population growth, increased spending power and rising living standards will increase demand for imported products

• Growing desire to purchase western goods

• Brand conscious consumers

Retail Overview

• The sector is highly fragmented, largely dominated by single-outlet operations

• 70% of the grocery sales are accounted for by the modern retail sector

• Retail is dominated by domestic players - Top ten players are:– Azizia Panda; Al Othaim Commercial Group; Axiom Telecom; Fawaz Al Hokair

Group; Al Sawani Group; M H Alshaya; and Al Bandar Trading

• Hypermarket formats are rapidly expanding

• Retail grocery sales in 2005 were estimated at €25bn

• International retail is dominated by the French groups, Carrefour and Casino (Geant); they have long term plans to expand rapidly.

• Buying and eating habits have changed significantly since the introduction of Western-style supermarkets and restaurants in the late 1970s.

Food Service Overview

• Most of the major international players are present

– McDonalds, Pizza Hut, KFC, TGI Friday ‘s

• They compete with the well established domestic players

• They import the bulk of their ingredient components

• The foodservice sector is growing - a major family form of entertainment outside the home, as there are limited alternatives.

IRISH EXPORT PERFORMANCE

ü 2007 F&D exports to Saudi Arabia: €167 m (- 2% v 2006 due

to a decrease in food preparation exports)

ü Largest Middle East market for Irish food & drink

ü Key exports are dairy & ingredients and food preparations

ü Infant formula exports valued at 61m

ü Market is now open for Irish beef - all meat imported must be

produced in accordance with Muslim tradition (Halal)

Source: CSO

UAE Market Overview

• Population is 2.6m – 75% are expatriates

• It has one of the most diverse populations in the Middle East

• UAE is heavily dependent on food imports - estimated to account for over 75 per cent of the food supply

• The country has become highly prosperous due to FDI

• Tourism and oil are the major contributors to the economy

• 5th highest GDP rate in the world

UAE in Figures

ü 2007 GDP: $170 bn / $187.7bn in 2008

- One of the most developed economies in the world

- Huge construction boom taking place

ü Inflation: 10% in 2007 / 12% in 2008 est

ü Unemployment: 2.6% est

ü Population: 2.6 million

– 75% are expatriates

– Predicted to increase by 18% in 2010

– Main population centres are Abu Dhabi (the capital) and Dubai

Retail Sector UAE

• Retail market is estimated to be worth €8.5bn - growing at 15% per annum

• Increasing household consumption, affluent population, and booming service industry are propelling growth

• Shopping events in Dubai (like DSS and DSF) and Dubai Duty Free (DDF) are the major contributor in the UAE’s retail industry

• Over 600 supermarkets with the majority of them run by independents or small co-ops

• Strong growth in shopping malls and hypermarkets

• Main players, Carrefour, Casino, Spinneys, Emke, Al Safeer, Panda

• Private label growth is increasing

Foodservice in UAE

• Important market sector given the rate of tourism development

• Large number of five star hotels and restaurants

• Most of the major fast food chains are present

• Dubai airport is now a major airline hub giving rise to demand for food to service a wide range of international airlines using the airport.

• Dubai Duty Free (DDF), the regions largest duty free player had sales in 2007 in excess of $800 million (expected to reach $1 billion mark in 2009); Irish brands accounted for sales of $12.3 million, about 1.5% of total.

• DDF Irish sales in 2007 were made up of 90% alcoholic beverages

Irish Food & Drink Exports to UAE

• Exports amounted to €37 million up 15% on 2006 levels

• Main categories are dairy & ingredients, food preparations & alcoholic beverages

• Market Access discussions are taking place to re-open the market for Irish beef

Bord Bia Services in Middle East for 2009

ü Work with a service provider – based in Dubai

ü Participation at Gulf Food in February in Dubai

ü Customised individual client services - providing information and support to Irish companies seeking to develop the market

ü Market Access negotiations for Irish beef