Gabon Food and Drink Report Q2 2012

BMI View: Relative to a number of other Central and West African economies, our outlook for growth inGabon's food, drink and retail sectors is actually fairly modest. That said, we are talking about modestgrowth by regional standards and a 2012 food consumption and soft drink sales growth forecast of 7.5%and 5.3% respectively is hardly uninspiring when compared to the wider emerging market universe. Ourless constructive view towards Gabon's consumer sector is largely due to our mildly less positive viewtowards the country's economy. Oil production in Gabon is in decline and despite ambitious governmentdiversification plans, there is still an overreliance on this sector for growth and employment.

Key Forecasts:

A weaker economic outlook for Gabon that elsewhere in the region, means we expect per capita foodconsumption growth to average a lower 4% annually out to 2016Mass grocery retail sales growth will average 13.1% annually to 2016Beer sales will grow by 3.1% in 2012, with growth accelerating over our five-year forecast period toaverage 4.4% annually to 2016

Key Trends:

Population Growth: In line with the wider Sub-Saharan African region, a major part of West and CentralAfrica's appeal to investors is its favourable population dynamics. Obviously Nigeria, with its massivepopulation, leads the pack in this regard. Gabon is very much at the opposite end of the scale. Like mostof its regional peers, it will enjoy very strong population growth over our forecast - the size of thecountry's population forecast to increase by 75% out to 2050. Also in keeping with broader regionaldynamics, Gabon has a very positive age profile, with 46% of the country's population under the age of20 in 2012. However, growth is coming from a very low base. Gabon's population stood at just 1.6mn in2012 and this marks it out as significantly less attractive than many of its neighbours.

Formalisation of Retailing: Right throughout the region, our forecasts for Mass Grocery Retail salesgrowth outstrip our forecasts for Food Consumption growth, although it should be noted that both arebroadly impressive. The outperformance of retail will be a result of the ongoing formalisation of thesector and the fact that it is, in most cases, coming from an exceptionally low base. The addition of just afew modern retail outlets, which cause shoppers to trade up and away from traditional independent storesand marketplaces, will have a massive impact on growth in the sector. In Gabon, we estimate that onlyaround 3 to 4% of grocery retail sales are accounted for by the organised sector and this provides strongprospects for growth in spite of the limited size of the potential audience.

Risk/Reward Ratings: Gabon falls in 14th place out of 16 regional markets that are ranked for Sub-Saharan Africa within BMI's Food & Drink Risk/Reward Ratings. The country's Rewards score is low byregional standards - a product of relatively high existing spending levels and a small population.However, the country also falls below the regional average in terms of Risk, albeit just. This combines togive Gabon a disappointing score within the overall regional table.