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ALMARAI
Almarai, by far, has a leading market
share in the bakery segment
March 05, 2012
INITIATION OF COVERAGE EQUITY RESEARCH
Almarai bakery products are manufactured and traded by Western Bakeries Company Limited
and Modern Food Industries Limited under the brand names L’usine and 7 Days respectively.
International Baking Services Company Limited, 100% owned by Almarai, trades bakery products.
The company bakery sales grew at a faster rate than the industry during the last years.
Chart 11: Almarai vs. Industry Sale Growth
Source: Euromonitor, Almarai Financials
Apart from L’usine which has a leading market share of 21%, the bakery industry in KSA is highly
fragmented. Pain Dor ranks second followed by Almarai 7 Days with market share of 6.2% and 6.1%,
respectively. L’usine dominates all segments it has presence except maamoul, in which it ranked
second (22.9%) after HB (24.6%), and croissant in which it ranks second also (26.9%) after its sister
company 7 Days (57.7%). In addition, Almarai is faced by a strong competition in the waffles market
from Ghandour, and both of them have a combined market share of 99.5%, as of November 2011,
according to Nielsen.
During 2011, the company introduced new products such as mini croissant from 7 Days. Both
L’usine and 7 Days products are now distributed throughout the entire GCC. Impacted by higher
depreciation and distribution expenses, in addition to the inflation of food prices globally, the return
on sale for this sector decreased from 14.2% in 2010 to 12.2% in 2011. During 2012, the company
plans to improve efficiency of this sector and also increase the capacity of some business lines in
order to be able to export 10% of total production. Alkharj plant will be expanded in 2012 and 2013
and distribution channels will be opened to other GCC markets. Almarai plans to invest SAR 300-500
million in this business during 2012.
POULTRY MARKET
KSA poultry consumption increased by more than 75% during the last decade to reach 1.4 million
tons in 2011, valued at USD 3.6 billion. The increasing demand for poultry is part of the changes in
the consumption patterns in KSA and other GCC markets, as people are changing their diet from a
carbohydrate based to a protein based diet. Having 59% of its needs imported, KSA is the 3 rd largest
chicken importer after Russia and Japan. Frozen products account for 72% of total consumption,
while the fresh products account for the rest.
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