Savola Deal Targets Further MGR Growth

Savola Group - a leading Saudi Arabia-based company with assets across the food and mass grocery retail (MGR) segments - has reportedly spent SAR500mn (US$133.3mn) increasing its equity stake in one of the kingdom's leading dairy companies, Al Marai, to 29%. One of the largest integrated dairy producers in the world, Al Marai has not been noticeably affected by the global financial meltdown so far, recently reporting a 22% y-o-y increase in Q109 net income to SAR197.4mn (US$52.64mn). Indeed, BMI's food and drink team are currently forecasting that Saudi Arabia's food consumption will grow by an encouraging 19.8% through to 2013, which should ensure that Al Marai continues to post solid domestic turnover growth, particularly as consumers trade up to higher margin products (per capita food consumption is set to rise by over 10%). CFW is particularly upbeat about the dairy giant's increasingly bold international expansion strategy, which has already seen it develop a manufacturing presence in Egypt and which sees it set to target a number of non- Gulf Co-operation Council (GCC) Middle East markets as well as the North Africa region.

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