Alpen Capital says increase in population, growing tourism, high per capita income are likely to drive the growth of the food sector in the region
Food consumption in the GCC is expected to grow at a compound annual growth rate (CAGR) of 3.3 percent to 60.7 million metric tonnes (MT) in 2023, according to new research.
Increase in population, growing tourism, high per capita income and a sustained economic recovery are likely to drive the growth of the food sector in the region, said Alpen Capital in a report.
As the staple food of the region, cereals are expected to remain the most consumed food category with a share of 48.2 percent by 2023.
The report said increasing demand for milk products will drive the growth of the dairy sector while consumption of egg, fish, potatoes and fats & oil will also increase.
Alpen added that consumption of healthy and organic food is likely to increase with growing awareness. However, the respective share of most food categories in the overall consumption is anticipated to remain broadly unchanged.
The country-wise food consumption share in the GCC is also projected to largely remain unchanged through 2023 with Saudi Arabia and the UAE expected to remain the largest food consuming nations with their combined share of around 81 percent. Oman is expected to experience the fastest annualised growth at a CAGR of 4.6 percent.
The report said an expanding consumer base will drive the growth in food consumption in the region. Increasing urbanisation and a growing affluence of expatriates continue to drive the demand of packaged and international food.
It added that due to high prevalence of lifestyle diseases in the region, there is a growing awareness of healthy eating habits, which has boosted the demand for organic food and food items that are sugar and fat free, low in salt, and with no preservatives.
Due to the region's unfavourable climate, limited water resources and arable land in the region, the GCC countries import around 85 percent of the total food consumed.
This has exposed the region to food price fluctuations and any adverse changes in the socio-political environment in the source countries and vital trade routes could pose a threat to GCC food imports, Alpen said.
“We anticipate the GCC food sector will continue to grow at a steady pace owing to factors such as growing population, higher per capita income, a vibrant tourism market and changing dietary habits and preferences. Upcoming mega events like Expo 2020 and the FIFA World Cup 2022 are expected to further aid the growth of food consumption in the region,” said Sameena Ahmad, managing director, Alpen Capital.
Krishna Dhanak, executive director at Alpen Capital, added: “Rising incidences of lifestyle related diseases would continue to drive the demand for organic and healthy food items. Despite regional and economic challenges, we saw significant M&A activity take place in the sector during the past two years. Inherent demand for self-sustenance coupled with government initiatives and investments aimed at augmenting domestic productivity and food security, makes the region attractive for investors.”