1. INDUSTRY/MARKET/ COMPETITORS INFORMATION:
Supporting Factors in upbringing Almarai:
1.
Government Support in upbringing Almarai
GCC consumer demand is supported by a young and fast growing population which is benefiting from
macro economic growth and the regional Governments’ focus on improving living standards,
particularly following the Arab Spring in 2011.Throughout the global financial crisis, growth in some of
the oil-rich GCC economies has been supported by Government spending. This spending increase
rich
increased
further in the form of fiscal stimulus packages and direct increases in wages following the regional
political instability in 2011.
2.
Favourable demographics
A number of demographic trends underpin the growing regional market for consumer products in the
GCC. A growing proportion of young adults, shifting consumer habits, a fast expanding middle class
with higher disposable incomes, high rate of urbanization and lifestyle changes collectively make the
GCC region a fairly decent sized consumer economy with a combined GDP of US$1.4tr and a total
ed
population
of 41mn. Over the last 12years, the GCC region’s GDP has grown ~4x from US$341bn to $1.4tr
(2012E), while the region’s population has risen by nearly 38% to 41mn (2012E), up from 30
30mn back
in 2000.

2. 3.
Focus of Government on employment:
The Saudi Arabian demographics are comparable more to Egypt’s than to its GCC peers, with Saudi
nationals accounting for over 75% of the country’s total population. The country’s population has
risen by nearly 7mn in the last 12 yrs from 20.5mn in 2000 to 27mn in 2012, which implies ~570k
more mouths to feed every year. Despite being the largest petroleum exporter globally, and sitting on
the world’s largest share of oil reserves (20%), KSA has the lowest GDP per capita among its GCC
lowest
peers. Hence, the benefits of the country’s substantial energy resources haven’t yet fully trickled
down to the general population.
Average Monthly Household Incomes
4.
Consumer demand:
Food consumption in Saudi Arabia in general has increased at a rapid pace over the years with the
strong growth in the population. Rapid urbanization and improvement in living standar
standards is also
fuelling food consumption in the country. The consumer preferences are also shifting, increasingly
towards prepared and packaged food given the changing and busy lifestyles. With more than 40% of
the population in their teens, international fast food chains are also quite popular and continue to
eens,
expand their footprint in Saudi to meet growing demand.
According to the Saudi Ministry of Economy and Planning statistics, expenditure on food and
beverages accounts for >20% of a household’s average monthly salary while meat and poultry within
monthly
the food consumption accounts for the largest share at 29%.

3. Segmental GCC/KSA Market Share:
Dairy Market:
GCC region’s dairy market is close to US$4bn in size with Saudi Arabia leading in market share at
60% of the total volumes. The product mix includes fresh milk, long life milk, milk powder, laban and
zabadi (yoghurt). Compared to the developed world per capita dairy consumption of 90
90-100kgs, the
dairy consumption per capita is among the lowest globally in Saudi Arabia and the GCC region at
49kgs.
Excluding the consumption of Laban and Zabadi, the milk usage per capita drops further to 30kgs;
highlighting significant room for continued double digit growth, in the medium term.
The dairy market is quite fragmented across the GCC region where key players include Almarai,
ented
Nestle, Al Safi (Danone) and SADAFCO. With a healthy mix of local and foreign players, the top dairy
producers account for 65% of the total market volumes.
GCC Milk Consumption per Capita

4. GCC dairy market to reach US $5.8 Billion by 2015
ry
Cheese and Butter Segment:
The GCC region is big on cheese and butter usage, with per capita consumption at ~2.4kg and total
market value at >US$1.3bn. Closely following the population share in the GCC, Saudi Arabia is the
largest market for cheese and butter products, accounting for 69% of the total volumes.
total
GCC Cheese & Butter Market By Value

5. Juice Segment:
The GCC region’s >US$2bn Juice segment is highly fragmented given low entry barriers. There are
more than 16 active players where the top three control only 32% of the market unlike Dairy, Cheese
and Butter where the top three producers on average control more than a 50% market share.
Juice Market By Value
KSA Bakery Segment:
Volume growth in bakery products has been driven primarily by bread over the last couple of years
where Saudis are ranked among the top 5 consumers in the world in terms of per
per-capita bread
consumption. According to company data, bread sales in KSA account for ~66% of total bakery
volumes followed by Pastries and Cake sales at 16% and 12% respectively. The bakery segment is
also highly fragmented where the top 14 players account for ~54% market share and a number of
local and unbranded players dominate regional sales. Almarai's Western Bakeries is the leading
regional
manufacturer in KSA’s bakery market, while it’s other brand 7-days has also managed to gain market
7 days
share since its launch 3 years ago. The company’s two brands currently control 27% of the bakery
volumes in KSA. Growing at a 4-year average growth of 16%, we expect bakery volumes in Saudi
year
Arabia to reach 463mn kgs by 2015 with the segment valued at US$6.7bn.

6. KSA Poultry Segment:
Saudi Arabia’s poultry consumption has been steadily growing at an average rate of 5% per annum
average
over the last 5 years. KSA’s poultry consumption was estimated at 1Bn kgs in 2011 valuing at
US$4.6bn and implying a per capita consumption of 42kgs. Assuming a conservative 2.8% growth,
the poultry consumption should grow to 1.2bn kgs with total value at US$5.2bn by 2015 based on our
1.2bn
estimates. Like other perishable items, the Saudi poultry market is quite cyclical in nature where
consumption rises significantly during Ramadan and the Hajj season due to an increased number of
visitors in the country – monthly visitors’ average jumped to ~2.6mn during the 2011 Hajj season up
from an average of 1.8mn visitors during other Islamic months. Chicken is consumed on a regular
basis and generally constitutes the main ingredient of traditional Saudi dishes. The market is
traditional
dominated by imported frozen chicken meat which represents ~57% of the total volumes. Locally
produced fresh chicken accounts for 28% market share in total poultry volumes, while local frozen
product accounts for 15% share. Based on Almarai’s annual poultry sales of ~22mn kgs in 2011, we
estimate the company’s share in total market volumes at ~2%. However, considering only the fresh
retail segment, Almarai’s share in total volumes comes to ~7% while in value it equals ~31%.

7. Food & Beverages Segment:
While there are more than 55 listed companies in food and beverages sector across the GCC region
with a combined market cap of US$21bn, only 12 are more than US$300mn in market cap. Almarai is
the largest listed food manufacturing company with a market cap of US$7bn followed by Savola
Group with a market cap of US$5.3bn. Kuwait Foods (Americana) is the third largest listed by market
cap and these three account for >70% of the total GCC Food & beverages sector market cap.
GCC Food and Beverage Top Four
Companies by Market Cap
8
7
6
5
4
3
2
1
0
7
5.3
2.5
USD Billion
0.6
Almarai Savola Kuwait Sadafco
Foods
GCC Food and Beverage Top Four
Companies by Market Cap
8
7
6
5
4
3
2
1
0
6.7
2.6
2.1
USD Million
0.4
Savola Kuwait Almarai Nadec
Foods