From CSDs to water, beverage companies of all types continue to saturate the GCC market.
The UAE moved to the top of BMI's regional Food & Drink Business Environment Ratings table in Q3 '09.
The BMI report attributes this to the country's overall standing as an attractive market for investors in search of near-term returns.
One of the world's highest per capita GDPs and a lack of market saturation are among a number of main attractions pulling food and beverage investors to the Emirates.
Earlier in the Q3, Emirates Foodstuff and Mineral Water Company (Agthia) reported a turnover of $232.5 million and net income of $19.6 million for the 2008 financial year, largely through its subsidiary Al Ain Mineral Water, which grew 40 per cent to $37.7 million.
Demand for soft drinks is also healthy. BMI forecast soft drinks' value to grow by 52.77 per cent through 2013 while per capita soft drinks consumption is set to grow by 26.75 per cent in the same period. This reflects opportunities that remain despite the UAE's small population.
Saudi Arabia fell to the fourth position in the BMI ratings table. A decline in crude oil prices and private investment forced BMI to revise down the Kingdom's GDP growth forecast to 2.1 per cent this year.
Saudi Arabia's large, youthful population allows it to register as the region's largest market.
Despite a weaker near-term economic outlook, a number of drink companies have continued to do well.
Ad spend
According to PARC research for 2008, the UAE's F&B sector ranked fourth in ad spend in the GCC.
It was preceded by Lebanon, Saudi Arabia and Egypt, in that order. Saudi Arabia's ad spend was concentrated in print and outdoor, while the UAE's concentration was on outdoor, radio and newspapers.
Tropicana ranked seventh in the GCC and Levant, with an ad spend of $3.97 million, while Sun Top ranked 11th, with $2.1 million.
However, it was Sun Top that outranked Tropicana in the GCC, with $2.1 million, while Tropicana spent $1.84 million.
In the GCC, Tropicana ranked seventh in terms of TV ad spend and sixth in outdoor, with $3.57 million and $375,000, respectively.
Masafi ranked ninth in terms of newspapers ad spend and fifth in magazines, with $106,000 and $67,000, respectively. Sun Top ranked second in terms of magazines ad spend, with $161,000.
Facets of coverage
We looked at the media coverage in October of two soft drink brands (Pepsi and Coca-Cola), two juice brands (Sun Top and Tropicana) and six water brands (Al Ain Mineral Water, Masafi, Evian, Perrier, San Pellegrino and Ice Crystal), representing three segments of the cold drinks sector.
Relative to the water brands, Masafi takes the lead position in terms of share of voice, newspaper OTS and coverage size. As a result, it achieved the highest number of PRDs (Positive Reputation Drivers) and highest amount of PR influence. All 15 clippings of Masafi during October were press releases and, as a result, did not incur any NRDs (Negative Reputation Drivers). This reflects a very active PR programme on behalf of Masafi relative to the other water brands.
Al Ain Mineral Water ranked second in those categories, but ranked first in terms of magazines OTS as well as in prominence value, which is a qualitative value given after assessment of the level of prominence the mention of the brand had in the article. San Pellegrino and Ice Crystal did not achieve any coverage at all, while Evian and Perrier's PR voice was a whisper.
As for the CSD, Coca-Cola had substantially higher coverage, and thus higher OTS and coverage size. It also achieved a higher prominence value, 0.41, against Pepsi's 0.38. Coca-Cola also received a large number of NRDs; Pepsi received no none.
The juice segment however seemed to depend less on PR. Both Sun Top and Tropicana, achieved a single non-PR clipping each.
Messages
Al Ain Mineral Water had messages on its sponsorship of the Rugby Festival and a Force India 1 event, as well as posting sales profits and promoting drinking water for health purposes. The messages focused on its involvement with health issues.
Masafi had more messages, which reflected community involvement, concern for health and environmental issues with their sponsorship of Breast Cancer Walkathon and Al Khan Beach Cleanup Campaign, and their launch of Oxo-Biodegradable caps.
They reflected their CSR with its donations to the UN.
Pepsi focused on its strengths, with messages on its launch of products in the UAE market, Q3 profits, deals and participation in events. It outranks Coca-Cola in sales in the ME and India markets.
Coca-Cola focused on community involvement, with sponsorship of the "Open House" campaign and participation in events, while it reflected strength with messages on its Q3 profits, deals and its shares upgrade by Deutsche Bank.
Analysis
The UAE's beverages sector is likely to continue to grow, while Saudi Arabia's seems a bit shaky. However, they have something in common, and that is opportunities, according to consumption growth estimates in the BMI report.
The F&B sector spends a lot on advertising, ranking fourth in GCC ad spend. The biggest advertisers were the juice brands: Sun Top and Tropicana. Sun Top's focus was on magazines, while Tropicana focused on TV and outdoor. Masafi was the only water brand to be on PARC's top 10 list, with a focus on newspaper and magazine advertising.
As for the soft drinks, Pepsi enjoys higher sales in the region, and while Coca-Cola penetrated a larger volume of coverage in the Web and print media, it did not penetrate powerful messages. Pepsi seemed to lie low, with a substantially lower volume of coverage.
The juice brands did not have any PR existence in October; their focus seems to be primarily on advertising.
© Gulf Marketing Review 2009
