FRESH FRUITS AND VEGETABLE CUTS

INVESTMENT OPPORTUNITY SCORECARD

FOOD PROCESSING

APRIL 2021
 High Potential Moderate Potential Low Potential
FOOD PROCESSING
FRESH FRUITS AND VEGETABLE CUTS
OPPORTUNITY’S DESCRIPTION: Opportunity to supply fresh fruits and vegetables to various consumer segments including food processors, retail outlets and
supermarkets in KSA
DEMAND INVESTMENT OVERVIEW
KSA MARKET SIZE, USD BN INVESTMENT HIGHLIGHTS VALUE PROPOSITION
 Current investment opportunity to supply fresh  High dependency upon imports raises prospect of significant import-substitution
USD Bn
fruits and vegetables in KSA is ~USD 40 Mn opportunities within KSA food industry
5 CAGR +3.5%
4.0  Expected IRR: 19%  KSA’s strategic location and favorable trade agreements (eg: GAFTA) offers
4 3.7 3.8
3.5 3.6 potential for local manufacturers to serve emerging markets like Africa and
3.3
 Expected payback period: 9.1 years
3 South Asia as well as matured markets like Europe
 Investment model: 100% private investment
2  Opportunity to leverage recent FDI measures to motivate private sector
participation in KSA food industry
1

0
2020 2021 2022 2023 2024 2025

KEY DEMAND DRIVERS MARKET OVERVIEW

 One of the major demand drivers is the Kingdom’s strategic
move towards innovative farming techniques such as MARKET READINESS AND COMPETITOR ANALYSIS GLOBAL TRENDS
hydroponics1 and aquaponics2 in order to cope with the  Fresh fruits and vegetable is highly fragmented market with many  Global fresh fruits and vegetable market was valued at
water scarcity of arable land and reuse of wastewater local, small-scale players. Select large players dominate the USD 1.2 Tn (vegetables – USD 631 Bn, fruits – USD 562
 High consumption of fruits and vegetable is also, driven by import market Bn) in 2021 and expected to grow at 3.4% p.a. until 2025
preference for healthy lifestyles and foods rich in vitamins,  ~60% of the market is served through modern trade channels  Global fresh fruits & vegetables market is set to
minerals, fiber, and antioxidants, which have been shown to experience favorable growth driven by factors such as
protect against chronic diseases and cancer rising middle-class population, upsurge in disposable
COMPETITOR ANALYSIS income, rapid urbanization, changing consumer lifestyles
 Growing size of local food processing and packaged food and rise in veganism
industries that need fresh fruits and vegetables
 The major trends observed in this market include
 Additionally, increasing number of restaurants, juice centres increased share of fresh segment, rise of branding,
and hotels further scale the consumption of fruits and technological advancements and advent of online
vegetables grocery shopping
1Hydroponics: process of growing plants in sand, gravel, or liquid, with added nutrients but without soil 2
2Aquaponics: a system of aquaculture in which the waste produced by farmed fish or other aquatic creatures supplies the nutrients for plants grown hydroponically, which in turn purify the water
Source for global trends: Market Research, Statista
 FOOD PROCESSING
FRESH FRUITS AND VEGETABLE CUTS
ENABLING
SUPPLY
FACTORS
SCALABILITY AND LOCALIZATION IMPORT DEPENDENCY ENABLERS
Grade: Low Medium High
(Fruits) % (Veg.) %
 Easy access to labor, approval of foreign suppliers, and an expedited process for Country imports Country imports  Government supporting low financing cost ~75% of
licenses and permits will allow for quicker localization of the industry Ecuador 28.2% India 20.5% capex

 Saudi Arabia has an established F&B industry that benefits from state-of-the-art USA 17.3% Jordan 18.3%  Low corporate income tax (20%) on profits only
technologies and highly advanced packaging, cold chain facilities and distribution Philippines 9.0% Netherlands 18.0%  Protection against imports of low-priced finished
networks to enable efficient distribution of products across the country
Egypt 8.1% Oman 8.2% goods from neighboring countries
 Continued efforts in innovation and initiatives to support use of advanced technology to
Others 37.4% Others 35.0%  100% foreign direct ownership allowed
help in enhancing production efficiency
Source: UN COMTRADE, 2019
COST OF DOING BUSINESS IN KSA
VALUE CHAIN ANALYSIS
Factor Ranking Amongst Regional Peers

Importing/ sourcing Processing/

Growing Retail
wholesaling distribution Electricity tariffs for $48
industrial players /MWh

Productivity adjusted $3.3

wages /hour
 Use of modern methods of  Adopt efficient strategy to  Sorting, processing unit to  Invest in innovative customer
farming such as greenhouse procure vegetables (locally develop cut/value-added products outreach methods to enable early Logistics
farming, vertical farming, grown vs. regional trade) to and distribute via cold chain market penetration especially in Performance Index 3.2
hydroponics and ensure cost competitiveness  Del Monte is the largest player in HoReCa segment (1 – 5)
aquaponics to ensure chopped/ shredded segment and  Focus on modern trade route and
optimal utilization of natural Sunbulah is the largest player in maximum utilization of technology Customs Clearance
resources frozen, retail and, HoReCa Index 2.7
Current investment opportunity (1 – 5)
KEY STAKEHOLDERS
Ease of getting credit
(0 – 100)
50

HS code used: 0810 for fresh fruits, 0709 for fresh vegetables Bottom Top Top Top 3
25% 75% 50% 25%
DEFINITIONS
# SCORECARD SECTION DEFINITIONS
Size of market in value/volume in KSA and/or Region (MENA/GCC) covering future projections based on available estimates
1 Market size
from published /government sources
2 Demand drivers A select number of factors that will influence future demand for the related product/service
An overview of key financial metrics summarizing the investment opportunity along with the expected return based on the
3 Investment highlights
suggested investment size

4 Value proposition Summary of key differentiators that position KSA as a strategic choice over other regional/global peers

5 Market readiness An overview of KSA market structure, market maturity and level of participation by local and global players

6 Competitor analysis List of the local & international players manufacturing the underlying product in Saudi Arabia and their market share

7 Global trends Latest business developments within the sector/product category

Ease of scaling the business across the value chain or into new adjacent products or geographies that would maximize the
8 Scalability and localization
opportunity’s investment returns and the ability and potential to locally manufacture the product and its components
An overview of the countries from which Saudi Arabia is importing the product and their value/volume and share in total
9 Import dependency
imports
10 Value chain analysis The process or activities that would potentially need to be carried out to deliver the underlying product or service
Government institutions, organizations, and/or authorities that participate or influence the market for the underlying
11 Key stakeholders
product/service

12 Enablers Factors that enable investment in the underlying opportunity

Key factors that position KSA as a competitive destination for investment in the region. Productivity adjusted wages do not
13 Cost of doing business in KSA include cost of $1.23/hour towards annual recurring charges including work permit, resident identity (iqama) and health
insurance

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