Background

The UAE has moved to the top of BMI’s regional Food & Drink Business Environment Ratings table for Q309. According to the BMI report, the country’s standing as an attractive market for investors in search for near-term returns. One of the world’s highest per capita GDP’s and a lack of market saturation are among the main attractions pulling food and drink investors in the UAE.

Earlier in the 3rd quarter, Mineral Water Company (Agthia) reported turnover of AED854M and net income of AED72.2M for FY08. Largely through its subsidiary Al Ain Mineral Water, which grew 40% to AED 138.6M.

Demand for soft drinks is unlikely to fall either. BMI has forecast soft drinks’ value to grow by 52.77% through 2013 which per capita soft drinks consumption is set to grow by 26.75% in the same period, reflecting opportunities that remain despite the UAE’s small population.

Saudi Arabia fell to the 4th position in BMI’s regional Food & Drink Business Environment Ratings table for Q3209. A decline in crude-oil prices and private investment has forced BMI to revise down the Kingdom’s GDP growth forecast to 2.1% in 2009.

Saudi Arabia boasts a large and youthful population that 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 Food & Beverages sector ranks 4th in terms of Ad Spend in the GCC. It was preceded by Lebanon, KSA and Egypt, respectively. KSA’s Ad Spend was concentrated on newspapers, magazines and outdoor, while UAE’s concentration was on outdoor, radio and newspapers.

Topricana Juice ranked 7th in the GCC & Levant market with $3.97M, while Sun Top ranked 11th with $2.1M. However, it was Sun Top that out-ranked Tropicana Juice in the GCC market with $2.1M, while Tropicana spent $1.84M.

In the GCC market, Tropicana ranked 7th in terms of TV Ad Spend and 6th in Outdoor with $3.57M and $375,000, respectively. Masafi ranked 9th in terms of newspapers Ad Spend and 5th in magazines’, with $106,000 and $67,000, respectively. Sun Top ranked 2nd in terms of magazines Ad Spend with $161,000.

Facets Of Coverage

We looked at the media coverage in Oct. 09 of two soft drink brands (Pepsi & Coca Cola), two juice brands (Sun Top & Tropicana Juice) and six water brands (Al Ain Mineral Water, Masafi, Evian, Perrier, San Pallagrino and Ice Crystal), representing 3 segments of the cold drinks sector.

Relative to the water brands, Masafi takes the lead position in terms of share of voice, newspaper OTS (Opportunities To See) and coverage size. As a result, it achieved the highest amount of PRD’s (Positive Reputation Drivers) and highest amount of PR Influence. All 15 clippings of Masafi during Oct. 09 were press releases and as a result did not achieve any NRD’s (Negative Reputation Drivers). This reflects a very active PR program on behalf of Masafi relative to the other water brands.

Al Ain Mineral Water ranked 2nd in those categories, but ranked 1st 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 Pallagrino and Ice Crystal did not achieve any coverage at all, while Evian and Perrier’s PR voice seemed whisper-ish.

As for the soft drinks segment, Coca Cola had substantially higher coverage and thus, higher OTS and coverage size. It also achieved a higher prominence value of 0.41, relative to Pepsi’s 0.38. Coca Cola also received a good amount of NRD’s, relative to Pepsi’s 0 NRD.

The juice segment proved to not believe much in PR. Both brands; Sun Top and Tropicana Juice 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 focus on reflecting its involvement, strength and concern with health issues.

Masafi had more messages, and they reflected community involvement, concern for health and environmental issues with their sponsorship of Breast Cancer Walkathon and Al Khan Beach Cleanup Campaign as well as their launch of Oxo-Biodegradable caps. They reflected their CSR (Community Social Responsibility) with their donations to the UN.

Pepsi focused on messages of strength and perseverance with messages on its launch of products in UE market, 3rd quarter profits, deals and participation in events. It also outranks Coca Cola in sales in the ME and India markets.

Coca Cola had messages on its community involvement with sponsorship of the “Open House’ campaign and participation in events, while it reflected strength with messages on its 3rd quarter profits, deals and its shades upgrade by Deutsche Bank.

Analysis

The UAE’s Beverages sector is likely to continue to grow, while KSA’s seems a bit shaky. However, they both have one thing in common and that is opportunities, according to consumption growth estimates by BMI report for the UAE.

The Food & Beverages sector provides big advertisers, ranking 4th in GCC Ad Spend. The biggest advertisers were the juice brands; Sun Top and Tropicana Juice. Sun Top’s focus was on magazines, while Tropicana Juice focused on TV and outdoor advertising. Masafi was the only water brand to be on PARC’s top 10 list, with a focus on newspapers and magazines 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 lay low with a substantially lower volume of coverage.

The juice brands did not have any PR existence in Oct. 09 and the media does not voluntarily talk about them either. Their focus seems to be primarily on advertising. With a tight competition between Sun Top and Tropicana, it may benefit one to enter the PR arena.