Food & Beverage Market in Egypt - Current Scenario

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Excerpts from the Internationally Renowned Magazine - 
(Food & Beverage News) - A Saffron Media Publication.






This article is just an overview on Food & Beverage Market in Egypt: Current Scenario and it is published in India's best and first newspaper for the Food & Beverage Industry - Food & Beverage News magazine on 1st November, 2018.
Enjoy reading and feel free to pour genuine comments!!

Link of the article is given below as well.

http://www.saffronmedia.in/eMagazines/fnb/2018/FNBNov01152018/index.html

Egypt, a Mediterranean country (Capital – Cairo), located in North Africa; actually acts as a crucial link between Northeast Asia and Middle East. It is bordered by countries such as Israel, Sudan and Libya; and certain land boundaries by Gaza strip, Gulf of Aqaba and Red Sea. It is an emerging and developing economy with GDP growth of about 5% at present financial year 2018. After experiencing a mammoth success in eradicating poverty; it has stepped forward to be a noticeable economy, depending on enhanced private consumption and huge investments; and also transcending in the arena of tourism and gas exports.

The culinary culture of any country is solely based on the agriculture, eating habits, traditional values existing as legacy, the land produce and current trends been supported by existing government to facilitate and promote its market growth. Egypt is no such exception to this philosophy.
One of the largest economies in Africa; Egypt is experiencing tremendous shift in agricultural business due to increasing population. With simultaneous concurrent growth in population (at the rate of 2.2% as per Egyptian Central Agency for Public Mobilization and Statistics - CAPMAS), Egyptian market is on the flourishing onset and threshold of incessant growth in Food and Beverage Market too. Reason behind this statement is obviously demand generated due to large market cap and supply will suffice only when the market is ready to deliver its product and services.

Food and Beverage processing industry is very promising in its growth and its growth in Food has been increasing at an average of 11% whereas beverages boomed at an average of 16% on an annual basis. This growth is an apparent indication of the significant opportunities it holds within its domain and thus the annual growth of Food and Beverage sector is no less than 25% annually and still has the clear expectation of growing even more in upcoming years.

Egypt lacks heavily in agricultural produce in overall scenario due to its unsuitability and incapability of infertile land to produce excellent food products and hence is forced to rely on import business of food and beverage sector to satiate the existing demands. It opens a platform for big players to display their potentiality and sweep away the market needs by its supply in present scenario and in future as well.

The factual condition needs to be studied here to demystify certain aspects of Egyptian market. The existing government needs to focus heavily on certain local issues prevailing in the field of agriculture and market expansion in food and beverage sector. Primarily, government needs to make provision for irrigation facilities for all agricultural land, which still is a critical challenge. Gradual reforms measures are improving the economy, but this country is still the large importer of commodities like wheat, sugars and oils. Nevertheless, it needs to have proper strategies to allow all investors to have convenience and ease to execute their business plans in Egypt. The devaluation of currency came into picture in year 2016 and this resulted in inflation rising from 12.9% to 30% from year 2016 -2017 respectively. This speaks volume about the genuine market scenario of Egypt.

There is an enormous rise of Western brands entering in market here; increase in big outlets or supermarkets selling products and women entering in pursuit of jobs to meet their income needs have been observed in last few years. The population of this country is Muslim dominated and hence is 90% population demands “Halal traditions” of food and drink. They usually demand for processed food, snacks foods providing condition to let convenience food to flourish. This all conditions have made conducive environment for convenience-based food to be a super success and eventually it has mushroomed in all periphery of the country. This condition acted as an open invitation for countries like America, China, France, Thailand, Italy and Switzerland to enter in this segment and instead grab the opportunities.
In year 2014, two big supermarket chains Turkish BIM and Kazyon entered Egyptian land; which subsequently led to opening of hundreds of outlets. This had a huge impact on economy by just doubling the food sales from year 2011 to year 2017. This incredible growth is still expected to rise in next few years. In fact, the phenomenal sales which increased due to entry of supermarkets in Egypt are only in just 3 years. The sale in convenience stores experienced a remarkable increase of around 22% in year 2016 and will keep growing is an assumption.

Table: Egypt – Major Imports and Competing Suppliers (2016)
Product Category
Major Supply
Sources Strengths of Key Supply Countries
Advantages and Disadvantages of Local Suppliers
Snack Foods Imports:
23,899 MT $33.5 million 

1.UAE – 26.6%
2. Turkey – 15.8%
3. Italy – 9.14
7. USA – 5.5% (82.54% increase from 2015)
Duty-free access Proximity 
Lower quality
More price competitive 

Breakfast Cereals Imports: 2,275 MT $3.7 million 

1. Poland – 20.43%
 2. Turkey – 16.4%
3. France – 12.5%
4. USA – 11.9% (45% increase from 2015)
EU duty-free access
Imports perceived to be better quality
Beef and Offal Imports:
129,716 MT $1,459.0 million 

1. Brazil – 50.36%
2. India – 32.22% 3. USA – 13.42%
Low cost of production (India/Brazil)
Limited domestic stock
Dairy (excl. cheese) Imports: 211,870 MT $513.7 million 
1. New Zealand – 51.22%
2. France – 7.22%
3. Germany – 7%
4. USA – 4.38%
Low cost of production (NZ) EU duty-free access
Limited domestic production
Cheese Imports:
30,678 MT $124 million 
1. Netherlands – 33.32%
2. New Zealand – 17.21%
3. Poland – 14.73%
11. USA – 0.77%
Low cost of production (NZ) EU duty-free access
Domestic production does not meet demand
Fresh Apples Imports:
10,320 MT $350.3 million 
1. Italy – 36.82%
2. Greece – 19.53%
3. Poland – 13.03%
18. USA 0.02%
EU duty-free access Proximity
No domestic production
Fish & Seafood Products Imports: 359,503 MT $648.8 million 
1. Thailand – 27.13%
2. Netherlands – 13.2%
3. Vietnam – 6.6%
23. USA – 0.42%
Duty-free access
Large domestic tilapia production Limited production of marine varieties
Beverages (non-alcoholic) Imports: Quantity N/A $141.4 million 
1. UAE – 40.96%
2. Spain – 11.93%
3. Saudi Arabia – 6.46%
20. USA – 0.47%
Duty-free access (Arab Union)
Limited domestic production
Source: CAPMAS, FAS Cairo office research.  

Notwithstanding such remarkable growth, the conditions in Egypt are not that favourable for all countries as Egypt has signed trade agreements with European Union, the Arab League and Turkey provisioning them with preferential treatment in Egypt market. This actually act as deterrent for the remaining countries to enter in business in Egypt.

As per the last report of BMI US publisher; the business of processed vegetables in Egypt ranks 17th in the world and the estimated growth is of 20% per year. The business segment of fruits and dairy milk is also blooming by and large with utmost potential.

The processing industry as per the market survey has been segregated under following segments and they are as such:
·         Milk and fruit juices 
·         Soft drinks 
·         Ice cream 
·         Cheese (White and cheddar versions) 
·         Sweet and salty snacks, processed food, oil and migraine 
·         Drinking water 
·         Processed meat, chickens and vegetables. 

The Sugar, confectionery & chocolates segment has the 32% contribution in market share, whereas fruits & vegetables has 28%; and meats, poultries &  fish has 11%; Oil and Vegetable fats has 9%; juices, drinks and water has around 7%; milk & dairy products has around 5% contribution in entire Food and Beverage market share of Egypt. This segregation depicts all about the market segmentation of Egypt.
Among the key importers of Egyptian food and beverage products are United States, Brazil and Argentina whereas the chief exporters have Saudi Arabia, Sudan and Libya in the list.

Seeing huge opportunities of growth, big brands in corporate sector have been investing tremendously in Egypt. For illustrations, the biggest global cereal manufacturer, Kellogg Company acquired stake in Egypt’s largest biscuit producer, Bisco Misr in 2013. Nestlé, the giant in chocolate and confectionary business is spreading its business in this country and this depicts the faith which Egypt has sustained in last decades.

In Egypt, Gulfood manufacturing event to be held this year would be biggest food and beverage processing industry event with participation of 60 countries, each showcasing and boasting of its technological development in food and Beverage sector. This event will be a gathering of more than 1600 global suppliers coming from every nook and corners of the world with their latest ingredients, processing, and packaging stuff of food and beverage sector. This event will act as a platform to discuss various issues with food safety concerns and operational hurdles.

So, undoubtedly Egypt has huge potential in Food and Beverage Sector in coming years and it just needs to be explored in right manner.


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