fruit juice market situation in saudi arabia

FRUIT JUICE MARKET SITUATION IN
SAUDI ARABIA
2ND JUICE, NECTARS & SOFT DRINKS SUMMIT
ISTANBUL 7TH – 8TH SEPT. 2011
SOURCE OF DATA: IMES REPORTS, AC NIELSEN, & IN-HOUSE SURVEYS, TP, SYNOVATE
ALL RESEARCH INFORMATION IS FOR SAUDI ARABIA ONLY, UNLESS OTHER-WISE STATED
SAUDI ARABIA
AT THIS POINT “SAUDI” OVERALL ECONOMIC GROWTH IS ROBUST AND
ACCORDING TO LATEST REPORT, REAL GROWTH WILL REACH 6.5% - THE
HIGHEST SINCE 2003, FAVOURABLE AS COMPARED TO THE RATES SEEN IN
MOST DYNAMIC EMERGING MARKETS.
KEY SECTORS:
-
CONSTRUCTION
CONTRACTING FIRMS – FROM PUBLIC
INFRASTRUCTURE INVESTMENT
REFINING / POWER
TRANSPORT & EDUCATION
(IN GENERAL ALL SECTORS SHOULD CONTINUE TO DO WELL)
2
SNAP SHOT SAUDI ARABIA
YEAR
2005
2007
2009
2011
POPULATION
(IN MILLIONS)
26.4
27.6
28.7
29.2
PER CAPITA
INCOME (US $)
11,970
13,303
13,386
14,250
(ESTIMATED)
DAIRY & BEVERAGE PLANTS IN OPERATION: 41
(MOST OF THE DAIRY MANUFACTURERS ALSO PRODUCES JNSD)
3
MACRO ANALYSIS
 SAUDI ARABIA POPULATION STANDS AT 29.2 MILLION CURRENTLY. THE
POPULATION GROWTH AVERAGES AT AROUND 2.2% YEAR ON YEAR. TOTAL
EXPATRIATE MAKES 20.5% OF THE TOTAL POPULATION.
(A) AGE STRUCTURE
0-14 YEARS
15-64 YEARS
65 AND OVER
= 38% (MALE 5.7 M / FEMALE 5.4 M)
= 59.5%
= 2.5%
(B) URBAN POPULATION = 82%
 KINGDOM’S RECOVERABLE WATER RESOURCES ARE DECLINING, THEREFORE
IMPACTING AGRICULTURAL OUTPUT. THIS WILL MAKE SAUDI ARABIA
DEPENDED ON IMPORT OF FOOD, HOWEVER GOVERNMENT HAS DECIDED
TO INVEST IN FOREIGN COUNTRIES IN AGRICULTURAL SECTOR TO ENSURE
FOOD CONTINUITY AT FAVORABLE PRICING.
4
VALUE CHAIN ANALYSIS
KSA UNIVERSE
SAUDI RETAIL UNIVERSE
2010 (CURRENT)
SHARE OF TRADE
OUTLETS
OUTLET
NUMBERS
# OF
OUTLETS
HYPER MARKET
SUPERMARKET
ORGANIZE
D TRADE
SELF SERVICE (MINI
MARKETS)
LARGE GROCERY
SMALL SHOPS
(BAQALLA)
GENERAL
TRADE
14.3% 1.0%
4.4%
69
300
5000
3000
80.3%
25000
WHOLESALE
1500
TOTAL
34869
SELF SERVICE
OT
WS
GT
5
VALUE CHAIN ANALYSIS
CHANNEL : HYPER EXPANSION PLANS (NUMBER OF OUTLETS)
OUTLETS
2000
2008
2010
BY 2015
PANDA
0
0
0
0
0
0
-0
20
11
8
4
3
4
-50
35
11
6
4
8
5
69
61
-33
6 (?)
15
14
15
144
GEANT
CARREFOUR
SADHAN
DANUBE
OTHAIM
LULU
TOTAL
THE NUMBER OF BAQALAS (SMALL GROCERIES) WILL
DECREASE RAPIDLY, AS TO NEW HYPER MARKETS OPENS.
 1/3 OF SMALL GROCERY HAS ALREADY GONE OUT OF
MARKET IN LAST 20 YEARS.
 PANDA TOOK OVER “GEANT” HYPER CHAIN IN 2009.


HUGE MARKETING INVESTMENTS, DISPLAY, REBATES
AND EXPOSURE PAYMENTS WILL BE MOST BENEFICIAL
TO THOSE WITH GOOD STRATEGIC PLANS.
THREE BRANDS PER CATEGORY IS THE NORM NOW IN
TOP END OF THE MARKET.
6
SAUDI ARABIA
RETAIL UNIVERSE TRENDS (2010)
RETAIL TYPE
THE UNIVERSE
HYPER MARKET
69
SUPERMARKETS
300
SELF SERVICE
5000
WHOLESALES
1500
LARGE GROCERY
3000
SMALL GROCERY
25000
TOTAL
TRENDS
34869
7
SNAP SHOT SAUDI ARABIA
PER CAPITA
CONSUMPTION
DAIRY
MARKET
BEVERAGE
MARKET
VOLUME
VALUE
55
KG
$
125
127.5
LITRES
$
228
VOLUME
TOTAL
1.622
MILLION
TONS
6.732
MILLION
LITRES
VALUE
TOTAL
(MILLION)
$
3776
$
3760
GROWTH
(ANNUAL)
LARGEST
CONTRIBUTOR
(MILLION $)
8.5%
(a) CHEESE = 1101
(b) LIQUID MILK =
832
(c) LABAN = 470
6.7%
(a) JUICES = 1286
(b) CSD = 1236
(c) WATER
BOTTLED =
425
8
DRINKS
BRANDS IN SAUDI ARABIA
PACKAGE
CANS
BOTTLES
FIBERS
OTHERS
BRANDS
21
60
78
33
ALMOST 100 BRANDS
WITH DIFFERENT PACKAGE VARIANTS
(POUCHES, CUPS
PETS)
•
•
•
•
THE MARKET IS FRAGMENTED – TOO MANY PLAYERS / FOUR BASIC
TYPE OF PACKAGING.
NO BRAND LOYALTY AMONGST LOW PRICE BRANDS – TRADERS
STOCKS MOSTLY THOSE BRANDS WHICH GIVES HIGHER MARGIN.
ALL DRINKS SINGLE SERVE 200-250 ML ARE RETAILED AT SR 1.00
(EURO 0.18) PER PACK.
CSD RAISED PRICES DEC 2009 BY 50% (TO SR 1.50 PER UNIT = ERUO
0.30)
SOURCE: AC NIELSEN
9
MARKET PERSPECTIVE
K.S.A
 JNSD WILL CONTINUE TO GROW.
 MULTINATIONAL PLAYERS COMPETING FOR THE SAME SHARE OF STOMACH
WILL FIND IT DIFFICULT TO COMPETE WITH LOCAL PLAYERS.
 STRONG LOCAL BRANDS WILL SURVIVE WHILE SMALL PLAYERS WILL BE TAKEN
OVER BY THE BIG PLAYERS.
 RETAILERS POWER WILL INCREASE, ADDING PRESSURE ON PRODUCERS,
RESULTING IN LOWER MARGIN, BUT HIGHER RETAILERS PROFIT.
 JOINT VENTURES WITH LOCAL BRANDS BY INTERNATIONAL BRAND ONLY ENTRY
OPTION.
 LARGE LOCAL PRODUCERS WILL EXPAND GEOGRAPHICALLY IN THE REGION BY
BUYING / JOINT VENTURE WITH OTHER LOCAL REGIONAL PRODUCERS.
 FEWER BUT LARGER PRODUCERS UTILIZING THE ECONOMIC OF SCALE FOR
THEIR SURVIVAL.
 TOP BRANDS WILL FOCUS ON RETAIL MARKET – SPACE BUYING / COOLER
INDUCTION.
10
CONSUMER’S PERSPECTIVE
 MOBILE BEVERAGES CONSUMPTION HABIT IS STILL UNKNOWN - (THE CULTURE
ISSUE).
 HEALTH AWARENESS – GRADUALLY INCREASING.
 ORGANIC PRODUCT – UNKNOWN / VERY LIMITED.
 STRONG CONSUMER AWARENESS TOWARD HEALTHY DRINKS.
 CONSUMER’S HAVE FAITH IN LOCAL PRODUCTS, DUE STRINGENT PRODUCTION
REGULATION (GLOBAL HEALTH AND STANDARD IS ENFORCED VIGOROUSLY).
11
MAIN CHALLENGES
K.S.A.
 MARKETING TO CONSUMERS IS GETTING HARDER AND IT WILL CONTINUE TO
BE SO.
 INCREASE IN RAW MATERIAL PRICES WILL ERODE THE MARGINS OF THE
CATEGORY.
 PRICE INCREASE “CAP” BY THE MINISTRY – (EXAMPLE RECENT CSD / DAIRY)
 INCREASING COST OF NEW PRODUCT LISTING / REGISTRATION / RENT FEE.
 DECREASE IN PURCHASING POWER WILL DRIVE THE CONSUMER TO CHOOSE
LOWER QUALITY PRODUCTS RESULTING IN SHIFT TOWARD BUDGET BRANDS /
PRIVATE LABELS / SEARCH FOR BEST OFFERS.
 RETAILERS UTILIZING THE SITUATION FOR THEIR BENEFITS AND PUSHING THE
PRODUCERS FOR LOWER COST AND HIGHER INVESTMENT IN THEIR WEEKLY /
MONTHLY PROMOTION.
 THE RETAIL SPACE “WAR” RESULTING IN HIGHER COST – SHELF BASED SPACE
REQUIRES HEAVY MARKETING SPENT.
 BE THE TOP THREE BRAND – OR THE FEAR OF GETTING DE-LISTED.
 LOGISTIC IS A CHALLENGE – ABOUT 35,000 RETAIL OUTLETS.
 COMPETITION INTENSIFY AS INNOVATION IS IN DEMAND MORE THAN EVER AS
MANUFACTURER SEEKS WAYS TO DIFFERENTIATE.
12
EXPORT FROM SAUDI ARABIA
 CERTIFICATE OF CONFORMITY (TAKES MONTHS):
 PROTECTING CONSUMERS, PRODUCER,
ENVIRONMENT, PUBLIC SAFETY, NATIONAL
ECONOMY FROM SUB-STANDARD PRODUCTS AS
WELL AS RESTRUCTURING THE IMPORTATION OF
INFERIOR, DEBASED AND FAKE PRODUCTS.
 VERIFICATION PROCESS
 DOCUMENTATION
 CERTIFICATE
 BOARDER VERIFICATION
 PROTECTIONIST APPROACH
 THOUGH “SAUDI GOVERNMENT” HAS MEMORANDUM
OF UNDERSTANDING WITH MANY ARAB / ASIAN
COUNTRIES – CUSTOMS DUTIES / TAXES WAVER
AGREEMENT, YET VALUE ADDED TAX AND SALES TAX
IMPOSED ON SAUDI PRODUCTS.
 PRINTING OF LOCAL DISTRIBUTOR’S NAME /
ADDRESS – NOT PRACTICAL.
 SPECIFICATION / LABEL UNIFORMITY VARYING
AMONGST THE ARAB COUNTRIES – THERE IS NO
UNIFIED POLICY.
13
CONSUMER BEHAVIOUR
 INCREASE IN PRODUCT PRICES HAS RESULTED IN CONSUMERS BEING
CAUTIONS AND EVEN MORE PRICE SENSITIVE THAN THEY USED TO BE,
WHERE IN THE PAST WE HAVE SEEN A TENDENCY TO OVERINDULGE, SAUDI
CONSUMERS ARE NOW TAKING MEASURES TO ENSURE THEIR FINANCIAL
STABILITY. CONSUMERS ARE CUTTING THEIR SPENDING IN DIFFERENT
ASPECTS OF THEIR LIVES.
BASE: RESPONDENTS 816
14
“OUTLOOK”
MOST POPULAR
FLAVOURS
THESE ARE THE ACTUAL CONSUMPTION IN K.S.A
(a) JUICES NECTARS
(b) DRINKS (10%)
15
TOTAL MARKET “VOLUME” TREND
JUICES / NECTARS SEGMENT
ALL PACKAGES TYPE
GROWTH
7.7 %
GROWTH
+5.2 %
430
463
487
MILLION
LITRES
MILLION
LITRES
MILLION
LITRES
MAT 09
(MAY 08 / APR 09)
MAT 2010
(MAY 09 / APR 10)
MAT 2011
(MAY 10 / APR 11)
PER CAPITA CONSUMPTION 16.5 LITRE
16
TOP TEN FLAVOUR RANKING
(JUICE / NECTAR SEGMENTS)
SAUDI MARKET CONSUMPTION
CURRENT (MAT 2011)
PREVIOUS (MAT 09)
GROWTH
RANKING
VOLUME
(MILLION
LITRES)
106
1
95.6
+10.9%
2
91.5
2
80.7
+13.4%
ORANGE
3
83
3
64.5
+22.3%
APPLE
4
53.5
4
40.5
+32.1%
GUAVA
5
35
6
25.9
+35.1%
STRAWBERR
Y
6
30.8
5
26.9
+14.5%
BERRY MIX
7
23.8
7
21.0
+13.3%
PINEAPPLE
8
12.9
8
8.1
+59.3%
LEMON
9
12.5
9
6.3
+98.4%
10
11.4
10
5.9
+93.2%
RANKING
VOLUME
(MILLION
LITRES)
MANGO
1
MIXED FRUIT
KIWI
PS:- “PEACH” HAS GROWN 114% IN 2 YEARS (FROM 2.8 TO 6 MILLION LITRES)
17
EMERGING FLAVOURS (JN)
SAUDI ARABIA
CURRENT
MAT 2011
(MILLION
LITRES)
PREVIOUS
MAT 2009
(MILLION
LITRES)
6.0
2.8
1
PEACH
2
POMEGRANATE
1.500
0.250
3
PINK GUAVA
0.495
0
4
MULTI VITAMIN
(ADDED)
0.382
0.152
5
BLACK
CURRENT
0.323
0
6
MINI LEMON
0.164
0
TRIED BUT NOT SUCCESSFUL:BLACKBERRY – CHERRY – CRANBERRY LYCHEE - MANDARIN –
MELON – PASSION FRUIT – PEARS – RASPBERRY – RED
ORANGE RED GRAPE FRUIT
18
TOTAL MARKET VOLUME TREND
DRINKS 10% TO 30%
ALL PACKAGES TYPE
SAUDI ARABIA
MAJOR UPSURGE SINCE
DEC 2009, WHEN CSD
RAISED PRICES BY 50%
+15.5%
481.6
MILLION
LITRES
MAT 09
(MAY 08 / APR 09)
4.2%
556.4
MILLION
LITRES
MAT 2010
(MAY 09 / APR 10)
579.6
MILLION
LITRES
MAT 2011
(MAY 10 / APR 11)
PER CAPITA CONSUMPTION 19.6 LITRE
19
TOP TEN FLAVOUR RANKING
(DRINKS 10%)
SAUDIA ARABIA
CURRENT (MAT 2009)
PREVIOUS (MAT 11)
GROWTH
RANKING
VOLUME
(MILLION
LITRES)
225.1
1
275.4
+22.3%
2
77.0
2
81.6
+6.0%
FRUIT
(MIX)
3
52.1
3
65.7
+26.1%
APPLE
4
42.4
4
45.8
+8%
LEMON
5
15.3
9
12.9
<15.7%>
GUAVA
6
14.9
6
18.3
+22.8%
COLA
7
13.3
5
24.5
+84%
PEACH
8
12.3
7
16.0
+30%
PINEAPP
LE
9
9.4
8
15.4
+63.8%
10
2.8
10
2.2
<21.4%>
RANKING
VOLUME
(MILLION
LITRES)
ORANGE
1
MANGO
GRAPE
20
MANGO PULP / IMPORT IN K.S.A
(TOTAL MANUFACTURED – NOT TOTAL CONSUMED
MOSTLY 35%
JUICE
CONTENT
ESTIMATED 4900 CONTAINERS OF 40’ A YEAR (EACH 18 TONS)
21
TO SUCCEED IN SAUDI
MARKET
(a)
DO YOUR HOME WORK WELL
BACKWARD / FORWARD
(b) TAKE CALCULATED RISK AND INVEST
RECENTLY “AL-RABIE” TOOK A BOLD STEP
AND INTRODUCED A PRODUCT WHEN
THERE IS NO CONSUMER
THERE IS NO MARKET
(A CLASSICAL “BLUE OCEAN STRATEGY”)
22
SOYA
•
•
•
TILL END DEC 2010, SOYA DRINKS PRESENCE LIMITED TO 10 OR 12 HIGH
END RETAIL OUTLET ONLY. (LIMITED IMPORT FROM EUROPE / USA).
AL-RABIE: TOOK A BOLD DECISION TO INTRODUCE IT IN K.S.A.
NUTRITIONIST / HEALTH CARE UNIT / DIETICIANS / PEDIATRICIANS / CHILD
CARE UNITS – BENEFIT OF SOYA – A PROJECT THAT TOOK TWO YEARS IN
MAKING.
TWO YEARS DOWN THE ROAD, THE
INTRODUCTION WAS SUCCESS ON THE
SHELF
•
•
•
POSITIONED IN CHILLED SECTION –
NEXT TO PASTEURIZED MILK.
PRICED ALMOST AT 50% LESS THAN
IMPORTED PRODUCTS BY TOP
RETAILERS.
DEMAND & DISTRIBUTION CONTINUE
TO EXPAND.
23
• BRANDS CONSOLIDATIONS
• DEVELOPMENT OF FOOD CHAIN
• SUCCESSFUL INTERNATIONAL BRANDS
– SUCCESS
– FAILURES
24
How far local & international
companies and brands will consolidate
A BRIEF SYNOPSIS
With international companies & Brands, there
has been successes, as well as failures.
Success:
- Al-Safi / Danon joint venture (Al-Safi
being the world largest integrated Dairy
Industry)
- Co-packing local Brands, mostly EU –
Beverages & Food products.
- “Retail” chain Carrefour – an emerging
retailer.
- Red Bull a success, despite being 2.5
times more expensive than its closest
rival.
- Baskin Robbins & Haggen Daz enjoys
Top of mind amongst middle / high
income group.
- TEXCO planning entry
25
How Fast Food Shaping the culture
Some of the faster growing fast food
chains in ME
(a) An American creation.
(b) Appeals to youth & consumers.
(c) Less time preparing foods at
home.
(d) Brand association and
identification.
(e) McDonaldisation of ME society.
(f) Main attributes – Taste,
Cleanliness, Convenience, Speed,
Healthiness and Friendly staff are
some of the consumer’s
perception.
(g) These have over the past 20 years
opened an “era” of local chain
taking a share of the growing
demand.
26
Coffee Chain
Big Successful Brands
THERE ARE MORE THAN 1000 OF COFFEE SHOPS OR KIOS ON
HIGHWAYS / MAIN CITIES
27
Failures:
- “WALLS” ice cream factory closure – a
multimillion $ investment.
- Gatorade / Snapple failed to establish.
- Tropicana started successfully, but in
recent past is being diminishing.
- Mr. Juicy – Juice Beverage came with big
bang, but was eventually withdrawn.
- Movenpick ice cream at one point had
large clientele, but since more than two
years has gone out of the market.
- Candia and Yoplait Dairy range failed to
establish.
- South African brand – Ceres limited to
selective top market.
28
TOTAL JUICE / NECTARS / DRINKS
OUTLOOK
• PRESENTLY
• 4 YEARS DOWN THE ROAD
29
KEY SEGMENTATIONS
BY PACK TYPE (2011)
TOTAL MARKET 1066.6 MILLION LITRES
SINGLE SERVE
TAKE HOME
PERCENTAGE
73%
•
•
•
•
•
ASEPTIC
BOTTLES
PET / HDPE
CANS
OTHERS
62%
12.5%
14.0%
8%
3.5%
-----100%
PERCENTAGE
27%
•
•
•
•
PET/HDPE
ASEPTIC
BOTTLES
OTHERS
82%
9.5%
7%
1.5%
-----100%
IMPORTED PRODUCTS CONSTITUTE LESS THAN 2% OF THE
TOTAL MARKET – THESE ARE MAINLY FROM TRANSBOARDER
IMPORTS WITHIN GCC
30
OVERVIEW TOTAL MARKET
(JNSD)
JNSD
2009
(MILLION
LITRES)
2010
(MILLION
LITRES)
2011
(MILLION
LITRES)
JUICE /
NECTARS
(JN)
430
463
487
DRINKS
(CSD)
481.6
556.4
579.6
TOTAL
911.6
1019.4
1066.6
MARKET
VALUE
CAGR
CONSUMPTION
(PER CAPITA)
CONSUMPTION
(PER CAPITA)
$ 1.325
BILLIONS
8.2%
36.5
LITRE
SR 170.4
$ 45.4
31
MARKET BY PRODUCT
(LONG LIFE / PASTEURIZED)
(MILLION LITRES)
TYPE
2009
(MILLION
LITRES)
2010
(MILLION
LITRES)
2011 EST.
(MILLION
LITRES)
CAGR
LONG LIFE
(AMBIENT)
702
785
821.3
8.2%
SHORT LIFE
(PASTEURIZED)
209.6
234.4
245
8.2%
TOTAL
911.6
1019.4
1066.6
PASTEURIZED GROWTH FACTOR:
(a) PERCEIVED AS FRESH
(b) DEVELOPMENT OF RETAIL “CHILLED FACILITY”
(c) DAIRY INDUSTRY (MAIN PLAYER) CHILLED LOGISTIC USED
AS FILLER.
32
MARKET BY PRODUCT TYPE
JUICE – NECTARS - DRINKS
(MILLION LITRES)
TYPE
2009
2010
2011
SHARE
BY TYPE
CAGR
JUICES
184.9
193.0
201
18.9%
4.2%
NECTARS
245.1
270.0
286
26.8%
8%
DRINKS
(JUICES OR
FLAVOURED)
481.6
556.4
579.6
54.3%
9.8%
TOTAL
911.6
1019.4
1066.6
100%
33
Outlook (Future)
The Saudi Consumers
•
•
•
•
•
•
Focus on “Value” for money.
Focus on Food Safety
Focus on Health, but at right price.
Focus on accessing Information.
Focus on better work / life balance.
Focus on growing consumer’s awareness for
clean / healthy products.
Next 4 years looks healthy / progressive
34
WHAT THE FUTURE
HOLDS
640
665
385
420 NECTARS
256
260 JUICES
2014
2015
CAGR
700
556.4
MILLION LITRE
600
500
579.6
270
245.1
286
200
100
605
DRINKS
481.6
400
300
589
320
350
184.9
193
201
225
239
2009
2010
2011
2012
2013
0
TOTAL
(MILLION
LITRES)
1066.6
(EST.)
1134
1194
1281
1345
DRINKS
5.5%
NECTARS
9.5%
JUICES
6.0%
35
SUMMARY
•
SAUDI POPULATION IS YOUNG AND LIKE TO EXPERIMENT WITH NEW FLAVOURS /
PRODUCTS.
•
PACKAGING WILL CONTINUE TO INNOVATE.
•
ACCELERATION IN GOVT. SCHOOL DEMAND FOR HIGH JUICE CONTENT CURRENTLY
LESS THAN 35% SCHOOLS ENFORCING 30% JUICE CONTENT.
THERE ARE INDICATION, THAT IN NEAR FUTURE ALL GOVT.
SCHOOLS BY LAW
MIGHT GO FOR 100% JUICE CONTENT.
•
MANUFACTURER WILL COMPEL GOVERNMENT TO ALLOW THEM TO RAISE PRICES
(CURRENT PRICE PER UNIT)
– PORTION PACK 250 ML
0.2 EURO
– PORTION PACK + 250 ML 0.2 EURO
THIS IS AN EXTREME BOARDER LINE
– ONE LITRE
0.8 TO 0.9 EURO
•
EXOTIC FRUIT COMBINATION (NECTARS) WILL CONTINUE TO GROW FASTER THAN
OTHERS.
•
ON THE GO “CONSUMERS WILL NEED / DEMAND “CHILLED” PRODUCTS – THE COLD
SHELF FOR PORTION PACKS JNSD NEED TO MATCH CSD
•
DEVELOPING PRODUCTS TO “SPECIFIC” AND TASTE NEED OF THE LOCAL CONSUMERS.
•
PRIVATE LABEL CURRENTLY LESS THAN 5% - ALL CATEGORIES) WILL GAIN MOMENTUM
– INCLUDING JNSD.
•
AGE 0-14 YEAR WITH 38% OF THE POPULATION ARE TO BE THE PRIME TARGET GROUP
36
THANK YOU
37