Hot Drinks

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Hot Drinks in Egypt

Euromonitor International's Hot Drinks in Egypt market report offers a comprehensive guide to the size and shape of the market at a national level. It provides the latest retail sales data, allowing you to identify the sectors driving growth. It identifies the leading companies, the leading brands and offers strategic analysis of key factors influencing the market - be they new product developments, packaging innovations, economic/lifestyle influences, distribution or pricing issues. Forecasts illustrate how the market is set to change.

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EXECUTIVE SUMMARY

TABLE OF CONTENTS

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Tables: 48 | Publication date: Jun 2006

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Executive summary

Government promises an improvement in living standards

Unemployment continues to represent a major challenge for the Egyptian government. Although the government claims that the rate of unemployment is 9%, independent figures place it closer to 20%.

The national Democratic Party programme, which began at the end of 2005, aims to tackle this chronic problem by creating 4.5 million jobs over the next six years. This equates to 750,000 new jobs per year. This plan will consist of five programmes in finance, medium-sized enterprise support, medium and small-sized industries, agriculture and tourism. These programmes are expected to affect the hot drinks market both directly and indirectly.

Encouraging new investment may attract foreign companies to the hot drinks industry; Egypt has the highest population in the region, with an average growth rate of 2%, which makes it a large market.

On the other hand, maintaining an expansionary fiscal policy, with the aim of stimulating high rates of economic growth and investment in order to raise living standards, will increase the demand for hot drinks, as drinking a cup of tea with several spoons of sugar is a luxury that many Egyptians cannot afford. Around 20% of the population live below the poverty line.

Uncertain future for tourism in light of terrorist attacks

Tourism is essential to the economy and its revenue accounts for around 25% of Egypt’s foreign currency income. In 2004, Egypt welcomed six million tourists, bringing in revenue of US$43.0 billion. Tourism brings foreign currency into the country and creates new employment opportunities.

Government programmes aim to promote the tourist industry by attracting local and foreign investment. An initial budget of E£48.0 billion will be allocated to build 750 hotels and increase the number of hotel rooms in Egypt to 240,000; this will coincide with an anticipated increase in tourist numbers. Currently, Egypt has around 1,200 hotels and tourist villages and 150,000 hotel rooms. The government expects the number of tourists visiting Egypt to reach 14 million by 2011, up from eight million in 2004.

However, terrorist attacks may well deter tourists from coming to Egypt in the future, and this would have a negative impact on both the foodservice and retail channels.

High per capita consumption of tea

Egypt is the largest market for tea in the Middle East, not only because of its 70 million population, but also due to the penetration of black tea as the main drink both indoors and outdoors. Tea is the cheapest drink. In Upper Egypt, the average consumption of tea per day is five to seven cups, whilst in Cairo and the north, it is only two to three cups a day. In Upper Egypt, dark boiled tea with lots of sugar is preferred, whilst in rural northern areas, "Koshary" tea is more popular with two spoons of sugar.

In offices and even on the streets, there are men and women selling tea to office workers, builders and drivers, as almost all lower-income workers like to drink several cups of tea during their breaks.

Tea is the hospitality drink in Egypt. It is affordable and cheaper than soft drinks or coffee, as 50g of dust tea (loose tea, not in tea bags) costs E£1.25 and can make 15-20 cups of tea, compared to E£1.50 for a 250ml bottle of juice or E£1.00 for a carbonated drink. Per capita consumption in 2005 was around 1.26 kg.

Turkish coffee drives growth of the coffee sector

Turkish coffee accounts for around 95% of fresh coffee value sales. It is consumed mainly by adult men, such as retired state employees, more than women or young people. Drinking coffee in the morning, traditionally Turkish coffee, is a very common occurrence. However, a great number of elderly people in Egypt suffer from high blood pressure due to stress-related health issues. Subsequently, they are usually advised not to drink coffee or at least reduce their consumption of it. However, there are few signs that health issues are leading to a decline in consumption, which has remained stable.

Traditionalists prefer to make coffee the traditional way in a “kanaka”, which is perfectly suited for any finely ground coffee, preferably flavoured with cardamom, putting the coffee and sugar in first, then the water, then bringing the whole thing to a quick boil over the fire, reducing the heat at a crucial moment but letting the coffee boil to a foamy top briefly before serving.

Sales of chocolate-based flavoured powder drinks driven by children

Children account for a high percentage of the Egyptian population, and parents encourage their children to consume products containing milk. Mothers like to make chocolate drinks by adding powder to hot or cold milk. Chocolate-based flavoured powder hot drinks are more popular with children, who often drink them prior to going to school. Sales therefore tend to peak during the school year.

Chocolate-based hot drinks are not very popular with adults. However, industry sources report that a substantial proportion of retail sales of these products tend to be used when baking cakes at home. Therefore, even households that do not have children sometimes buy chocolate-based hot drinks. Chocolate cakes are very popular in Egypt and housewives like to make them, as ready-made chocolate cakes are very hard to find and, of course, are more expensive than home-made ones.

Café Najjar to sign a deal with the Egyptian Post Office

The Egyptian Post Office has implemented a serious restructuring policy in order to offer a better service to customers. Recently, it was announced that post offices in 3,750 locations throughout Egypt have made an agreement with Café Najjar to carry its Multi Rama hot drinks machine, which offers seven different drinks. Post Offices will pay Café Najjar a monthly rent.

HOT DRINKS IN EGYPT : MARKET INSIGHT

EXECUTIVE SUMMARY

HOT DRINKS SALES

Market Performance

Table 1 Retail Sales of Hot Drinks by Sector: Volume 2000-2005

Table 2 Retail Sales of Hot Drinks by Sector: Value 2000-2005

Table 3 Retail Sales of Hot Drinks by Sector: % Volume Growth 2000-2005

Table 4 Retail Sales of Hot Drinks by Sector: % Value Growth 2000-2005

Competitive Environment

Table 5 Hot Drinks Company Shares by Retail Value 2001-2005

Table 6 Hot Drinks Brand Shares by Retail Value 2002-2005

Retail Distribution