Kuwait’s food industry is set for further growth, as domestic demand fuelled by rising incomes, which will maintain positive spending power despite economic pressures. Lower food inflation will further boost consumer spending, increasing the demand for high-value goods. According to a recent report by BMI, Kuwait’s food industry will remain strong over five-year forecast period (2015-2020), despite the current economic growth slowdown. Spending will support premiumisation, and the demand for confectionery products will remain high. Furthermore, BMI’s report expects pasta consumption to rise with the growing demand for convenience foods across the region. Food sales growth in Kuwait in 2016 to reach 6.2 percent; compound annual growth rate, 2015 to 2020: 5.8 percent. Demand for staple foods will remain resilient in Kuwait, with rice and meat sales driving growth.
Kuwait’s food industry will experience stable growth over the five-year forecast period to 2020 as household consumption growth remains strong. Analysts at BMI expect economic growth to slow over 2016 and 2017, given the country’s heavily reliance on the oil sector. Analysts forecast real GDP growth of 1.2 percent and 1.9 percent in 2016 and 2017 respectively, from an estimated 1.5 percent in 2015. Though BMI forecasts a gradual decline in GDP per capita, Kuwait will still benefit from a higher spending power than the regional average.
Therefore, the analysts expect positive consumer spending to drive food consumption growth. The report food sales forecasts will grow by a CAGR of 5.8 percent to 2020, led by meat and rice sales. Meat and rice sales in Kuwait will remain strong over the forecast period, owing to high consumption levels across the country, as rice forms part of the country’s staple diet. The Middle East region is one of the biggest markets for halal foods, with Kuwait among the wealthiest, with fellow GCC countries. BMI forecasts are for meat and poultry sales to reach a CAGR of 6.9 percent over the forecast period. As consumer habits undergo rapid changes, the report is forecasting sustained growth in Kuwait’s snack food and confectionery segments over the coming years. While traditional eating habits still dominate, local consumers are increasingly adopting more Western consumption habits, with snack foods and processed foods becoming increasingly popular. This is reflected in the alarming rates of obesity and diabetes in the country.
“Meat and rice sales in Kuwait will remain strong over the forecast period, owing to high consumption levels across the country”
The major drivers behind the growth of sugar and sugar products sales will be investment from food producers (both in novel products and in advertising), the growth of the mass grocery retail (MGR) sector and rising youth population. Rising consumption of dairy products will continue to attract investment from regional players as growth in the dairy industry is sustained, with a CAGR of 5.0 percent over the forecast period. Due to sticky price growth in the pasta industry, the report sales growth figures understate the consumption growth of pasta in Kuwait. Pasta consumption across the region is relatively high owing to the growing need for convenience in the rest of the GCC. The vast majority of pasta products sold in the country are produced locally. Considering rapid expansion of domestic production capacities and relatively stagnant demand, the report expect Kuwait to be able to export increasingly larger amounts of uncooked pasta products.