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Kuwaiti Food Industry and Its Development Report


Executive Summary

The Kuwait food and beverages industry has gained much attention in the recent past. The increasing population, better income, and changing demographics are some of the forces supporting this industry. The industry has been identified as one of the best performing in the country. The report will discuss the historic development, performance, and future performance of the Kuwaiti food industry. This paper offers adequate recommendations that can be used by the Kuwaiti government to support the performance of the food industry. The discussion will also present facts to support the importance of the industry on the country’s economy.

Introduction

The present report investigates the current performance and future prospects of the Kuwaiti food industry. The main aim of the report is to show that the food industry of Kuwait has the potential to drive the country’s economy and become the leading source of income (Oxford Business Group, 2014). Another goal is to analyze the implications of the industry on the country’s economy. In particular, the report attempts to answer the following questions:

  • How has the food industry developed in Kuwait?
  • Can the Kuwaiti government use the food industry as a main income for the country?
  • How has the food industry been affecting the Kuwaiti Economy?

The report is organized as follows. First, the background section discusses the current position of the Kuwaiti food industry and the reasons why it has become one of the promising sources of income. Then, the analysis section presents the data from three sources regarding several aspects of the topic at hand, such as the positive performance of the food industry in Kuwait (Oxford Business Group, 2014). The report ends with conclusions from the analysis and goes further to present meaningful recommendations that can be used to support the industry’s future performance.

Background

Kuwait is one of the fastest growing economies in the region. This kind of growth is attributable to the existing political frameworks, business policies, and presence of powerful industries such as the oil sector. The conducive environment, business opportunities, and leadership experienced in Kuwait have attracted many tourists and foreigners from different parts of the world. Consequently, the hospitality and food industries have developed in such a way that they support this development. Being part of the retail sector in the country, the food industry has been projected to grow by 8 percent within the next few years. Chances are extremely high that the performance of the industry will outperform those of different Western economies (Oxford Business Group, 2014). The changing demographics and growth in income are some of the forces driving this industry. The industry is expected to become an opportunity for many investors in the country. Businesspeople, investors, and policymakers will be interested in the targeted findings in order to make adequate investment decisions.

Historical Context

Throughout the last half of the 20th century, more people migrated from one region to another. These movements catalyzed the wave of globalization. New ideas in business have emerged in different parts of the world. The Middle East has benefited from solid policies and political institutions that have continued to support international business practices. One of the industries that have benefited significantly from these changes is the food sector. Within the past 10 years, Kuwait has recorded a positive economic growth. More people have been getting better salaries than ever before. These developments have supported the food sector.

The Importance of the Kuwaiti Food Industry

The Kuwaiti beverage and food market is set for continuous growth in the next few years. This growth will increase the country’s GDP directly and indirectly. For instance, the industry is expected to contribute a lot to the government’s taxes and incomes (Alpen Capital, 2017). The industry is also expected to attract more tourists thereby expanding the sector. The industry will also push up trade operations and attract a large number of suppliers. These new changes will drive new developments throughout the supply chain process.

Analysis

How the Food Industry Developed in Kuwait

The Kuwaiti food industry is one of fastest growing sectors in the region. The industry started to grow around two decades ago. Towards the end of the 20th century, the number of immigrants began to increase steadily in the country. From 2009 to 2014, the country’s annual production averaged 7.7 percent (Oxford Business Group, 2014). This was equivalent to over 570,000 metric tons. The major sources of food materials included vegetables, cereals, and milk. During the same period, food consumption rose steadily to around 9.4 percent. The increasing number of foreigners has led to increased spending. Currently, over 2 million foreigners and tourists spend around 3.5 billion US dollars at restaurants.

The Kuwaiti food landscape. 
Figure 1: The Kuwaiti food landscape. Source: (Alpen Capital, 2017, p. 18).

The presented figure shows how consumption in the country has surpassed production. The consumption rate has increased steadily from the year 2009 and 2014. It is also notable that the level of food production has been around 0.4 and 0.57 million MT during the same period (Altradius, 2017).

Using the Food Industry as a Main Source of Income in Kuwait

The Kuwaiti food industry has been promising within the past few years. The consumption of food materials has surpassed the rate of production. The country is also one of the leading importers of a wide range of food materials across the region. The government can support domestic production in order to promote performance. The tourism industry has led to increased number of people in the country willing to purchase food materials in the country. The retailing sector (including the food segment) has been growing at an average rate of around 16 percent (Altradius, 2017). The country’s population is also growing fast. More restaurants are expected to emerge within the next five years. The government can identify the right measures to support the industry and eventually make it a major source of income.

Kuwaiti industries performance.
Figure 2: Kuwaiti industries performance.

The above figure indicates clearly that the food industry is one of the best (fair) sectors in the country. This is the case because the industry is characterized by minimum credit risk (Alpen Capital, 2017). The business performance in the sector is average. The government has the potential to support the industry because it is projected to grow positively within the next few years. Consequently, the industry will support the country’s income and eventually drive economic performance.

How the Food Industry is affecting the Kuwaiti Economy

According to the Oxford Business Group (2014), the food industry of Kuwait is supporting economic development. This is the case because the sector has been growing very fast. This development will be fueled by a number of forces such as increasing incomes and the positive performance of the tourism sector. The economic and political attributes in the country are attracting more investors and foreigners. The number of people currently spending on healthy Kuwaiti foods is on the rise. For instance, tourists and foreigners have been observed to contribute over 3.5 billion dollars annually to the industry. Through effective taxation systems, the government has been able to maximize its incomes.

The industry presents numerous opportunities that can sustain economic performance indirectly (“Kuwait the worlds’ food capital by 2030,” 2017). For instance, the industry is attracting more people thereby supporting the tourism, communication, transportation, and oil industries. The industry is associated with the increasing number of malls in the country. More individuals have taken up new roles such as supply chain in order to support the industry. Global trade has emerged due to the nature of the industry.

Change in food consumption vis-à-vis population and GDP. 
Figure 3: Change in food consumption vis-à-vis population and GDP. Source: (Alpen Capital, 2017, p. 69).

This graph shows conclusively that the level of food consumption is on the rise. This development will promote a number of economic drivers such as tourism and supply chain (Oxford Business Group, 2014). More people will be willing to consume a wide range of food materials and eventually support the nation’s economic development.

Conclusion and Recommendations

In conclusion, this analysis shows conclusively that Kuwait stands a chance to benefit from the rapidly growing food industry. With proper policies and incentives, the industry is a driving factor for other sectors such as transport, oil, and tourism (Oxford Business Group, 2014). Such policies will make it easier for the country to expand its GDP and become an economic powerhouse in the region.

The report recommends the following:

  • The government should identify new strategies to strengthen the industry.
  • Kuwait should implement powerful policies to create the best environment for the food sector.
  • Attracting more foreign investors will become a win-win situation for the sector.

REFERENCES

Alpen Capital. (2017). Web.

Altradius. (2017). Web.

(2017). Web.

Oxford Business Group. (2014). Web.

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IvyPanda. (2020, November 9). Kuwaiti Food Industry and Its Development. Retrieved from https://ivypanda.com/essays/kuwaiti-food-industry-and-its-development/

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IvyPanda. 2020. "Kuwaiti Food Industry and Its Development." November 9, 2020. https://ivypanda.com/essays/kuwaiti-food-industry-and-its-development/.

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