Canned food holds its ground in Middle East

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As one of the best-established categories in the Middle East, canned food continues to surprise producers and retailers with solid sales.

One player that has reported robust growth from some of its canned foods in the region is Gulf Food Industries, which produces the California Garden brand.

Tarek El Dakhakhny, the company's marketing manager said that growth in some bean categories such as foul medammes, or fava beans, has been strong during the past year, with growth of about 11%.

"If you look at the volume growth over the past two years for foul medammes, we're talking about 11% growth, which is significant growth in volume," he says.

"In the fava bean sector, we are the market leader by far. We have around a 65% market share of the overall market share of fava beans in the region, in Egypt, Libya, the GCC and Lebanon," he adds.

Baked beans are a more mature category than foul medammes, but still achieved significant growth, mainly in Saudi Arabia and Bahrain. "Some markets have a very big demand for baked beans such as Bahrain and Saudi Arabia. In the UAE, they are consumed mainly by Europeans," Dakhakhny says.

But to keep these growth levels in proportion, Dakhakhny adds that a category can only really be considered to be growing in the Gulf when the growth rate is above 5%. "Above 5% you can start saying that you have growth. Growth needs to be more than 5% in my opinion to be more than nominal," he says.

"In terms of value, you have to filter in the price inflation because there has been a lot of inflation, particularly in the GCC although not in Saudi Arabia as far as I know. On the GCC level, most of the growth happened in 2005 versus 2004 in the foul medammes sector," he adds. "The price inflations is mainly a result of rapid growth in the regional economies and population."

When this is taken into account, Dakhakhny concedes that on average, growth in the canned food category across the Middle East is quite low. "We are not talking about fast growing categories as far as canned foods are concerned in the GCC. Mature categories do grow. We are not talking about decline," he says. Saudi Arabia and Qatar experienced above average growth in 2005 compared with 2004, he adds.

But while canned foods are generally recognised as mature categories with nominal growth, this also brings some advantages, to established players at least. "It is not all bad," Dakhakhny says.

"Mature categories are low growth categories, but they are also fairly low risk. If you are big in that category it is harder for a competitor to move you."

Part of the reason for the continued growth of canned food, apart from a growing population and economy, is that people are increasingly demanding convenient foods owing to a changing lifestyle.

"People don't have time and are relying more on ready-to-eat products or easy-to-prepare products. There are also more working females and this is all generally helping drive the canned food industry," Dakhakhny says.

But one country that stands out in the MENA region is Egypt. Gulf Food Industries has been promoting some of its products heavily in the country, such as fava beans, which are a staple part of the Egyptian diet. "Egypt is usually a different picture from the rest of the region," Dakhakhny says. "We are the market leader in Egypt with about a 70% share of the market. In this category we are helping to drive the growth."

He added that Egyptians are important customers for Gulf Food Industries because they consume the highest frequency of fava beans in the region. "It is a typical part of the Egyptian cuisine, and is like baked beans for Europeans or for British," he said.

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