Over BMI 's forecast period to 2017 , there is room for strong growth across Egypt's soft drinks sector. Given that about 90% of the population practise s Islam, the alcohol industry is of course very marginal; this is to the benefit of soft drinks.
Gulf-based companies are increasingly active in Egypt, and in some cases are joining forces with Western companies as they look to expand in the Middle East and North Africa region, with Egypt the standout opportunity in North Africa. As one example, Saudi dairy company Almarai and US-based drinks firm PepsiCo formed a joint venture in 2009.
Between 2013 and 2017, we expect per capita consumption of soft drinks in volume terms to increase from abou t 38 litres to about 47 litres , taking into account anticipated population growth. Stripping out population and looking at the industry in pure volume terms, we see total soft drinks volume sales growing at a compoun d annual rate of 7.5% between 2013 and 2017. V alue sales are expected to grow at a brisker 15.2% as premiumisation opportunities continue to kick in.
|Still Room For Growth In Carbonates|
|Egypt - Soft Drinks Volume (mn litres) Sales By Category|
We expect per capita consumption of bottled water to grow from about 10 litres to 13 litres over the forecast period. Similar to carbonated drinks, the bottled water industry is very well placed to grow as incomes rise and demand for potable water grows - driving up productive capacity and competition within the sector in the process. Greater investment interest from Gulf-based producers is likely to form a foundation for greater segmentation within potable water over the next few years, with the indust ry fairly fragmented currently.
Juice sales are growing from a low base. Typically more expensive than mainstream carbonates and bottled water, we expect per capita consumption to grow strongly to 201 7 . Volume and especially value growth over the long term will be fuelled by disposable income growth, which will be necessary to make higher-pric ed drinks more widely consumed.
We highlight that despite the ongoing political uncertainty in Egypt, the core dynamics that attracted many companies to the country prior to the Arab Spring have not changed. It has an enormous population that could surpass 100mn by the early 2020s, according to UN data, and this population base is young and expected to develop greater spending power. Egypt is also arguably the cultural hub of the Arab world and can double up as an excellent gateway to the wider North African and Sub-Saharan African regions. No other country in the Arab world can come close to matching Egypt's potential in the consumer sector , in our view.