Boston, MA -- (SBWIRE) -- 05/26/2014 -- Despite the relative near-term weakness of its food and drink market on account of the wider political and economic situation, Egypt's core demographics continue to offer encouraging prospects for the world's major fast-moving consumer goods companies. Egypt is also arguably the cultural hub of the Arab world and doubles as an excellent gateway to the wider North African and Sub-Saharan African regions. We believe that no other country in the Arab world can match Egypt's long-term potential, which is why many of the world's largest consumer companies will very likely be increasing, rather than cutting back, their investment in the country.
Our country risk team holds a moderately bullish view on the Egyptian economy and its consumer, mainly predicated on the expectation for continued improvements in political stability as well as the impact of low base effects. Our baseline scenario sees the economy expanding 2.7% in FY2014 and 4.2% in FY2015 (fiscal year running from July-June), up from 1.9% in FY2013.
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Though we hold such a view, we stress that heightened political tensions could quickly erode any gains seen in economic growth. The resignation of former Prime Minister Hazem el-Beblawi's interim government on February 24 highlights the ongoing challenges which face the country.
Headline Industry Forecasts (local currency)
- 2014 total food consumption growth (local currency): +12.8%; compound annual growth rate (CAGR) 2013-2018: +13.2%.
- 2014 per capita food consumption growth (local currency): +11.0%; CAGR 2013-2018: +11.4%.
- 2014 alcoholic drinks volume sales growth: +7.6%; compound annual growth rate (CAGR) 2013-2018: +7.7%.
- 2014 total soft drinks volume sales growth: +4.4%; CAGR 2013-2018: +6.6%.
- 2014 mass grocery retail sales (local currency) growth: +14.8%; compound annual growth rate 2013-2018: +14.7%.
Key Industry Trends
Coca-Cola To Invest US$500mn: US soft drinks giant The Coca-Cola Company is planning to invest US $500mn to set up a plant in Egypt, reflecting the company's confidence in the country's investment climate, according to President of Coca-Cola International Ahmet C. Bozer. The announcement came during a meeting between Bozer and Prime Minister Ibrahim Mehleb in March, which was attended by the Minister of Investment, Industry and Foreign Trade Mounir Fakhry Abdel Nour and a delegation from The Coca- Cola Company.
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