May 30, 2018

Savola Group, the leading food and retail investment group in the MENAT (Middle East, North Africa, and Turkey) region, has acquired a 51 percent controlling stake in Dubai-based Al Kabeer Group, a frozen food company with operations in Saudi Arabia, the UAE, Bahrain, and Oman.

The deal, which is valued at US$150 million, falls under Savola’s mandate to expand its holdings into more value-added food enterprises.

“The partnership is in line with Savola’s strategy to expand its investment portfolio and enter attractive, value-added categories within the overall food sector,” noted Huda Al Lawati, CIO, Savola Group. “The frozen food segment is forecast to continue growing, propelled by the increasing drive towards value & convenience.”

Founded in 1978, Al Kabeer has grown over the past 40 years to control processing plants, cold storage facilities, and corporate operations across 15 countries, reports Frozen Foods Biz. From these assets, the company produces lines of more than 300 frozen halal foods spanning poultry, seafood, meat, and vegetables, and including ready-meals, which are sold through more than 20,000 retail locations across the Middle East region.

“We are excited about the prospects of this transaction and adding a brand such as Al Kabeer into our portfolio of leading consumer brands in regional food and retail sectors,” said Anees Ahmad Moumina, chief executive officer of the Savola Group. “The investment represents building on the main pillars of our strategic portfolio, which spans food and retail sectors across the region.”

Savola has recently undertaken a strategy that has seen the group exit its non-core businesses, such as real estate and plastics, according to Forbes, in order to create a focus on investments in food and retail. Al Kabeer will be joining an impressive portfolio that includes majority stakes in the Saudi dairy leader, Almarai Co.; Herfy Food Services; one of the world’s biggest sugar refineries; and edible oil operations across the MENA region. The group also operates numerous grocery stores serving 134 million people, and controls the second largest delivery fleet in Saudi Arabia, according to the firm’s website.

This deal for Al Kabeer, which was financed through both operating cash flow and bank financing, is expected to be closed within the next six months, at which time Savola will earn the right to name an executive team for Al Kabeer and assume the majority of the company’s Board seats.

Frozen Food on Fire

Multiple shifts are occurring across the Middle East creating a growth scenario for frozen foods. Population growth, greater levels of disposable income, more working women, busier lifestyles, and growing distribution and infrastructure are all contributing, along with the convenience factor that frozen foods have to offer, to create a growth scenario for the category.

Frozen foods, along with chilled processed foods, chocolate confectionery, and snacks are expected to be the main drivers behind a compounded annual growth rate (CAGR) of 5.9 percent through 2020 for the food industry in Saudi Arabia, according to Frost & Sullivan.

“With all major supermarkets and hypermarkets in expansion mode, the private label segment is poised to experience significant growth over the next four years. An increase from 5 percent to 10 to 15 percent is expected by 2020,” David Anil Kumar, visionary science consultant at Frost & Sullivan, told The National in 2017.

-Lynda Kiernan