LONDON, 26 November 2005 — Saudi food group Savola will seek to invest outside its domestic market, mainly in Egypt, after EU reforms are implemented, company officials said yesterday.
The group supplies Saudi Arabia, the Middle East and North African countries with edible oils, sugar and dairy products, and says it owns the largest retail food chain in the Middle East - the Azizia Panda supermarkets.
Middle Eastern sugar manufacturers will have a great opportunity to expand in the region and export to some European countries, said Mohammed Al-Klaiby, chief operating officer of Savola.
“After the EU reforms are implemented, the sugar market will become more stable and EU sugar output will be limited, which will give us a great chance to expand our operations and exports to more countries in the region,” Al-Klaiby told Reuters.
EU agriculture ministers struck a landmark deal on Thursday to overhaul the bloc’s subsidy-laden sugar policy, slashing prices by more than a third and offering generous payoffs to farmers willing to abandon beet growing. Savola could expand its operations in Saudi Arabia. “Savola might build a new refinery in Saudi Arabia as we think there will be far less competition from the EU manufacturers,” Al-Klaiby said by telephone.
Analysts believe Europe’s sugar industry will shrink after the EU reforms are implemented as only the most efficient producers will survive.
Savola’s United Sugar Company unit in Saudi Arabia plans to raise its annual refinery production capacity to 1.2 million tons by the end of 2007 from 805,000 tons this year.
The company is also building a refinery in Ain Al-Shukhna in Egypt’s Suez City, which will be completed by the end of 2006. The refinery’s capacity is projected to be 750,000 tons per year and will cost around $107 million.
