Egypt Market Research

The most promising market in the North African and Middle Eastern region is Egypt. It is the consumer market which promises the most in the food and beverage sector with a lot of potential for growth. There are a few reasons why ... view more

Egypt Market Research

The most promising market in the North African and Middle Eastern region is Egypt. It is the consumer market which promises the most in the food and beverage sector with a lot of potential for growth. There are a few reasons why Egypt is on the fast track to growth. First and foremost, a young and dynamic population is at the core which is already close to 80mn. Apart from this, the country follows a positive macro-economic outlook which is the reason for the growth potential. But the primary problem is the regulatory environment and the uneven distribution of income which is threatening to disrupt the country’s growth progress. The 2010 per capita food consumption is estimated to grow at a rate of 5.07%, while by the end of the estimate period of 2014; it should grow at a rate of 26.46%. In case of soft drinks volume sales, the 2010 estimate is at a rate of 5.03% which is expected to increase to 28.74% by 2014. The 2010 mass grocery retails is increasing at a rate of 9.47%, while the 2014 estimate says that it is going to grow by 47.19%.

The real GDP growth for Egypt was 4.7% in 2010 and the next year is going to be more or less the same at 4.6%. The consumer price index also increased by 10.6% from last year and the next year is supposed to show an increase of 15.7% in the same. Finally, the real private consumption growth which grew at 4.5% since last year is expected to show a hike of 4% by the end of 2011. Many multinational companies are getting attracted to the Egyptian market due to a plethora of reasons. Prominently, the underdeveloped size of the food and beverages market is one of the huge draws for any company. Apart from this, there is also the huge population which seems to play a big role in attracting multinational companies which are planning to set up base or expanding their business. Some of the primary companies hail from the Gulf as they are interested in setting up base here, with a view to build exposure for frontier markets.

Though most of the food and beverage market is headed by the international companies, the domestic companies are also getting increasingly active. In June 2010, an Egyptian food and beverage company Juhayna confirmed that it had raised US$142.5mn in an overpriced private stock offering. Due to this, there was 80% of Juhayna’s private stock for buying and the remaining 20% was to be kept for public investors. By doing this, Juhayna became the first company to offer shares for public investment since 2008. There are a few kinks in the Egyptian economy which need to be ironed out so that the country is able to perform better. The country’s regulatory practices are a big concern and the food and beverages industry rates it only 5/10. Apart from this, the mismanagement of infrastructure also plays a major role in Egypt being a high-cost market.