Exports to drive Egyptian FMCG sector

Fast-moving consumer goods (FMCG) producers and retailers in Egypt face a somewhat mixed outlook in the short term, with limits on disposable incomes and high inflation making many Egyptians cautious about overspending. However, with such favourable demographics, long-term prospects appear more positive as the economy recovers, consumer confidence rises and export opportunities open up.

Following the civil unrest and political turnover of 2013, FMCG manufacturers reported a drop in sales and disruptions in production. While protests have ebbed and business activity is on the rise, future growth and a strengthening of investor and consumer confidence depend on both political, fiscal and economic stability being maintained.

According to a report issued by the Information and Decision Support Centre (IDSC), an advisory unit for the cabinet, consumer confidence climbed sharply in the beginning of the year, up 11.9% to 112.8 points in January. According to the IDSC statement in February, this jump into solidly positive sentiment was a result of Egyptians believing that income levels and living conditions had improved.

The shift upwards is a welcome one. Tamer El Araby, managing director for market information and research firm Nielsen in Egypt and the Levant, said that Egyptian consumer confidence had been fluctuating from one quarter to another, a reflection of spontaneous behavioural responses to the ongoing events and challenges.

El Araby was speaking after Nielsen released the results of its latest consumer confidence survey in late February, which showed a 7% dip in sentiment at the end of 2013, coming off a 6% rise in the third quarter. However, notwithstanding the retreat, El Araby said consumer confidence would rebound in the longer term.