Boston, MA -- (SBWIRE) -- 03/28/2014 -- We maintain a positive outlook for the Kuwaiti food and drink industry, as rapid wage growth, easy access to consumer credit and supportive fiscal policies are expected to spur household spending over 2014. That said, we note that limited market size and already high per capita consumer spending for food and drinks will limit sales growth to relatively moderate figures.
Headline Industry Data (local currency)
- Total food consumption (local currency) growth (y-o-y) in 2014: +2.3%; compound annual growth rate (CAGR) to 2018: +3.1%
- Per capita food consumption (local currency) growth (y-o-y) in 2014:-0.9%; CAGR to 2018:+0.2%
- Bottled water volume (litres) sales growth (y-o-y) in 2014: +4.2%; CAGR to 2018:
- Total mass grocery retail (MGR) sales (local currency) growth (y-o-y) in 2014: +3.1%; compound annual growth rate (CAGR) to 2018:
Key Industry Developments
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Mezzan To Acauire Unitra Mets Group: In late 2013, Kuwait-based conglomerate Mezzan Holding Company said it was planning to acquire the distributor of Red Bull energy drink in the UAE Unitra Mets Group from Invest AD and its other shareholders. The move underlines Mezzan's interest in consumerrelated investments in the Gulf Arab region. NBK Capital and Gibson, Dunn & Crutcher advised Mezzan on the transaction, while deNovo Corporate Advisors and Clifford Chance advised Invest AD. However, the financial details of the transaction have not been revealed.
Kout Acquires Little Chef In The UK: In summer 2013, Kuwait-based Kout Food Group acquired the UKbased Little Chef chain of roadside eateries from private equity firm RCapital in a deal estimated to be worth about GBP15mn. Kout already runs more than 40 Burger King and KFC outlets in the UK, as well as the Maison Blanc patisserie chain.
Carrefour Sells Stake In JV To Majid Al-Futtaim: In a surprise move in May 2013, Carrefour sold its 25% stake in its Middle East and North Africa (MENA) joint venture to its partner Majid Al-Futtaim (MAF) for AED2.5bn (EUR530mn). Under the agreement, MAF will retain a franchise agreement with Carrefour until 2025, which means the stores will retain the popular Carrefour banner until then.
Key Risks To Outlook
Given the structural weaknesses in the country's political structure, our core view is that the pace of economic reform is likely to remain halting despite the election of a nominally pro-government parliament in July (see 'Court Ruling Will Not End Prevailing Uncertainty', June 17 2013). In light of that, any breakdown in the relations between the parliament and the executive over the coming quarters, or a development that would force the emir to call for new elections, would put a brake on non-oil economic activity.
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