GFM FOOD TECH SUMMIT Saudi F&B Market · Global Specialist in Food & Agribusiness 200+ Sector...
Transcript of GFM FOOD TECH SUMMIT Saudi F&B Market · Global Specialist in Food & Agribusiness 200+ Sector...
GFM FOOD TECH SUMMIT
Saudi F&B MarketAddressing Health and Wellness
as the New Growth Wave
07 November 2018
FARRELLY & MITCHELLChaitanya GRK, Senior Manager Middle East & Africa
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Farrelly & Mitchell
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
Global Specialist in Food & Agribusiness
200+Sector Specialists
Global
Reach & Experience
EstablishedOver 15 years
ClientsCorporate & Government
StrengthOperational & Strategic
Value ChainFarm to Fork
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Agenda
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SECTION
SECTION
SECTION
SECTION
What do demographics and economic aspects of Saudi indicate
Where does Saudi stand on ‘Health’
What are the bankable opportunities in Saudi
What should companiess address to capitalise the opportunity
Disclaimer: The information in this presentation is intended to give information in general nature, great efforts has been exerted to ensure the accuracy of this data at the time the presentation was drafted. Farrelly & Mitchell Business Consultants Ltd. and its Branch offices or affiliates does not provide any implicit or explicit guarantees on the validity, timing or completeness of any data or information in this presentation. Also we assume no responsibility on the appropriateness of the data and information for suiting any particular purpose or reliability in trading or investing. Please note: Unless provided otherwise and in writing from us, all information contained in this presentation, including logo, pictures and drawings, are considered property of Farrelly & Mitchell Business Consultants Ltd.
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1.5%
Favourable demographics to drive Saudi F&B demand
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
Fast growing with median age <10 years than developed countries’ average
32 82
128
320
39 82
122
355
Saudi Germany Japan USA
2015 2030
CAGR 2015-2030Population in Mn
29.8
45.9 46.337.634.7
47.6 51.5
39.8
Saudi Germany Japan USA
2015 2030
Median age, years
Almost 10 years less than average of all developed countries
Saudi population is growing at a faster pace than some of the developed economies …• More mouths feed in future
…with larger base of youthful population• Contributing to strong economic growth• Increased economic freedom
0%-0.3%
0.7%
XX%
Source: World bank
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Strong consumer spending potential indicates wider opportunities in F&B
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
Per capita GDP comparable to developed countries
+ USD 7,500 (~14%) Growth from 2017 to 2023
Saudi per capita GDP (PPP) is comparable to developed countries…• Higher consumer spending potential
…which is set to increase further• Wider avenues to spend• Only 18% of household expenditure is
on F&B (2013)
54,532 50,804 42,942
59,792 62,122 62,705 51,423
72,861
Saudi Germany Japan USA
2017 2030
54,53255,926
57,35858,399
59,55160,780
62,122
2017 2018 2019 2020 2021 2022 2023
Competing against developed countries
Per capita GDP (PPP), Units in USD
Source: World bank and Saudi General Authority of Statistics
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59%68%
34%
14%23%
60%
23%
7%
39%27%
4%10%
35%
70%
35%
9%
Physically inactive Overweight Obese Diabetic
Saudi Germany Japan USA
However, health challenges set to change consumer approach to F&B
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
Limited physical activity increasing NCDs, which contributes to 73% of adult mortality
• Obesity is key reason for Noncommunicable Diseases (NCD).
• Around 73% of the adult mortality is due to NCDs in 2016
Young population base but inactive lifestyle creating larger health challenges• Consumers are increasingly getting health conscious • Social media penetration playing a major role • Marginal awareness push from F&B companies % of adults
Source: World Health Organization
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Economic situations displacing base population in Saudi on long term
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
Eventually impacting F&B industry
27,963
34,568 33,385 31,150 28,102
2013 2014 2015 2016 2017
(33,143)(61,483)
(94,389)
(277,025)
(234,191)
(290,381)
2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2
11.7
6.7
(5.0)
Expats 2016 Anticipated expatsleaving by 2025
Expats by 2025
Around 1 Mn Expat workers left from 2017 till 2018 Q2
Increased employment to Saudis – More spending
Decreased by 19% from 2014
Consumer spending sentiment negatively impacted due to economic situations
Expat employees leaving the country resulted in change in base population
Around 5 Mn expats estimated to leave by 2025. Resulting in 3 Mn jobs for Saudis
Expat employees leaving the country Total expats (employees and dependents) in MnConsumer expenditure per capita, SAR
Source: Saudi General Authority of Statistics and Farrelly and Mitchell Research
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But higher employment rates for Saudis to sustain the industry as affordability increase…
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
Around 3 Mn Saudis to replace expats as part of Saudization
On average 3 times higher than an expat
Around 27% higher than expat household
INCREASED EMPLOYMENT TO SAUDIS
HIGHER SALARY TO SAUDIS
HIGHER HOUSEHOLD SPENDING OF SAUDIS
HIGHER AFFORDABILITY
Increase in per capita spending
Increased preference for premium products
CONSUMER TURNS
HEDONISTIC
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Source: Saudi General Authority of Statistics and Farrelly and Mitchell Research
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…with prevailing health challenges, consumers seeking ‘Healthy Food’ to substantially increase
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
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HealthChallenges
CONSUMERS WILL EVENTUALLY GET
MORE HEALTH CONSCIOUS
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NEED FOR FOOD ADDRESSING
‘HEALTHY’ FACTOR
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Less artificial, sugar free, low salt, fat free, natural colours, no preservatives etc…
Offering specific benefit like D Vitamin, bone health, gut health, immunity, heart health, brain health etc…
Clean Food
Functional Food
Source: Farrelly and Mitchell Research
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Dairy, Poultry, Bakery and Beverages to attract higher consumer attentionFunctional benefits to gain the most
Existing market maturity for health food Low – Med Low Low-Med Low - Med
Future scope High High High High
Type of benefits to address Functional Clean Clean and functional Functional
Product benefits to address• Protein• Probiotics• Bone health
• Hormone free• Natural feed• Omega 3
• Ancient grains• Organic• High fiber• Protein• Diabetic
• Vitamins• Antioxidants • Gut health
Key target consumers Kids and women All Adults Kids and Adults
DAIRY BAKERY BEVERAGESPOULTRY
Source: Farrelly and Mitchell Research
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Prevalence
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
Consumer negligence on some of the basic health issues…
…>50% of mortality due to cardiovascular, cancer and musculoskeletal diseases
Vitamin D
Leadingto bigger health
challenges
>60% of population are deficient
Overweight Hypertension Diabetes
68% population
26% of adults
14% of adults
Cardiovascular Cancer Musculoskeletal
Hyper-cholesterolemia8.5% of adults20% in border
Colorectal cancer 15% men
10% women on overall cancer
instances
Osteoporosis34% female
31% male over 50 years
Precaution Low carbs Low sodium Low sugar Supplementation Low saturated fat High fibre and
Antioxidants High calcium
Next growth wave of opportunities in the Saudi F&B space
Source: World Health Organization and Farrelly and Mitchell Research
Hypertension, Vitamin D deficiency, Musculoskeletal and Colorectal cancer challenges could be addressed through nutrition; untapped by F&B companies
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Immense scope to launch low sodium commodity portfolio. Substantial opportunity for high fibre, fortified calcium and functional beverages
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
• Potentially attractive but consumer awareness is low; requires substantial outreach • Low volume variants but becomes an essential differentiator to win ‘Heart Space’ of the consumer;
addresses most commonly faced challenge by large companies in the region
Poultry –
–
Functional drinks
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Dairy Low sodium cheese, laban
Low sodium processed meat - Cold cuts, franks etc
Low sodium bread/bakery
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Low sodium - Snacks, condiments, processed food, canned food etc
Bakery
Hormone free/clean products
High fibre/Whole grains
Clean - Free from Additives, colorants, preservatives Functional drinks - Immunity, anti oxidants
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Beverages
Fortified dairy
–
–
Hypertension Vitamin D Cancer Musculoskeletal
Others
Source: Farrelly and Mitchell Research
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Product relevance overpowers consumer preferenceBrand loyalty, price and packaging which are key attributes of mass products are underweighted
HEALTHY FOOD PRODUCTS
RelevanceBenefits that the product offers to the consumer
BrandSmall to medium sized companies gaining when they differentiate
PriceConsumer is ready to pay reasonable delta if the product is relevant
PackagingNot critical as long as the labelling is clear
R
B P PBrand Price Packaging
Relevance
Source: Farrelly and Mitchell Research
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What should companies address to capitalise on the opportunity?Letting know the product benefit and digital marketing are crucial aspects
Companies marketing/venturing to market healthy products need to prioritize four key aspects
Product labels• Product benefit• Ingredients
Digital marketing• Social media
playing crucial role• Paid promotions through
ambassadors
Product distribution• Distributor• Product reach
Product visibility• Retail shelf space• Merchandise
Source: Farrelly and Mitchell Research
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Questions? Shukran!
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave
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Malachy MitchellManaging Director
Unit 5A Fingal Business ParkBalbrigganCo. DublinIreland K32 EH70
Tel: +353 1 690 6550Fax: +353 1 883 4910Mobile: +353 86 806 0843Email: [email protected]
Saudi Arabia
Najeeb AlhumaidRegional Manager
Al-Rusais BuildingSuite 510Olaya Main Road6468 Al Ulaya - Al UlayaRiyadh 12211 - 3857Kingdom of Saudi Arabia
Tel: +966 11 4634406Mobile: +966 54 338 7199Email: [email protected]
www.farrellymitchell.com
Europe
Farrelly & Mitchell is a leading international agribusiness and food management consulting firm with offices in Europe and the Middle East.
We help our clients to build and implement sustainable restructuring, transformation or growth strategies across each link of the agribusiness and food value chain - from large scale farmland crop and livestock investments and agribusinesses to consumer food or beverage manufacturing, distribution, retail and hospitality.
Headquartered in Ireland with an office in the Middle East, the firm works with corporate, investment bank, private equity, family office and government clients throughout Europe, Middle East, Africa and globally.
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About Farrelly & Mitchell
© Farrelly & Mitchell 2018
Middle East and Africa
Chaitanya GRKSenior Manager
Al-Rusais BuildingSuite 510Olaya Main Road6468 Al Ulaya - Al UlayaRiyadh 12211 - 3857Kingdom of Saudi Arabia
Tel: +966 11 4634406Mobile: +971 551991356Email: [email protected]
GFM Food & Tech Summit: Saudi F&B Market Addressing Health and Wellness as the New Growth Wave