Americana Company in Kuwait: basic information and stock market overview

Americana Group is a food company that is situated in Kuwait. Americana was founded in the year 1963. It started out with a small number of traditional business activities in Kuwait and has since gone ahead to substantially grow and become the largest food company in the Arab World as well as the Middle East expanse. Initially, the Americana group was a family-owned company by the Al-Kharafi family. The owners have an international business interest portfolio that takes into account food, finance, oil and gas, real estate and telecoms. However, in 2016, the Al-Kharafi family sold almost 67% of its stake to the Adeptio group, an investment group led by Mohamed Alabbar for a value of $2.4 billion. Moreover, at the outset of 2017, the Adeptio group finalized the mandatory takeover offer that remained in the company's stockholding (Reuters, 2016).

The company's main business operations includes transmitting food products all across the Middle East and North Africa expanse. The lines of business include the manufacture of food products as well as having outlets that operate food and beverage. The company operates in the consumer goods sector. Americana operates in the Manufacturing Consumer Packaged Goods industry. At the present moment, the Americana Group has 23 restaurant chains spread across 14 nations with more than 1,700 business outlets. Americana Group is a public company and its stocks are traded in the Boursa Kuwait exchange market. It became listed in the exchange market in 1984. Its stock symbol is S.A.K. It has a market capitalization of 988.93 million Kuwaiti Dinar (Boursa Kuwait, 2017).

Americana Group's key drivers for revenues and expenses takes into account manufacturing of food items, beverages, as well as other food stuffs together with the importation and selling of such food stuff at retail and wholesale. In addition, the company operates one of the most renowned brands in the Quick Service, Casual Dining and Fine Dining business classifications. Some of these brands consist of Pizza Hut, KFC, Costa Coffee, Red Lobster and TGI Friday's (Americana Group, 2017). Americana Group's consumer food collection and range consists of 9 consumer food brands that have grown and progressed to become household names and classification frontrunners in the Middle East and North Africa expanse. Americana Group's primary business is in meat and poultry, preserved food, dairy foodstuffs, frozen tubers and vegetables, and salty appetizers (Americana Group, 2017). The sales or revenue of the Americana Group have been steady over the past five years. The revenues generated in the 2016 financial year was 946.47 million Kuwaiti Dinar. The company experienced a net income growth of 5.26% with a gross income of 108 million Kuwaiti Dinar (The Wall Street Journal, 2017).

Within the food industry, Americana Group operates and competes on two fronts, which are consumer foods and restaurants. Americana is the franchise partner within the region for international food brands like Kentucky Fried Chicken (KFC), Pizza Hut, Taco Bell and Costa Coffee. On the consumer foods front, Americana Group operates Americana Meat, which has come to be the biggest meat-processing operation in the Middle East region with a market share of 45%. Americana also has manufacturing business operations that include Americana Cake, Cairo Poultry Processing Company, as well as Egyptian Canning Company (Thomas, 2009). Americana Group faces intense competition within its industry from expanding global and international companies. Its top competitors include Starbucks Corporation, Quickfood SA, Krispy Kreme Doughnuts, Inc., and Burger King Worldwide, Inc. (Food Business Review, 2017). To increase its competitive advantage, Kuwait Food Company sold a majority of its stake, 66.79% of the stockholding to Gulf-based investment firm Adeptio for $2.35 billion. The upside of this financial transaction is that Americana will obtain additional capital for investment from the Gulf-based investment group. As perceived, subsequent to the acquisition, the net profit of Americana increased by 31% (Reuters, 2016). Moreover, Adeptio's mandatory acquisition of Americana' remaining 26.63% stake was declared complete at the start of this year (Mubasher, 2017).

Market position is delineated as the competitive standing of a firm or its products in a certain market as measured by items retailed, revenue, distribution coverage, the extent of using the product, and consumer discernments and views. More often than not, firms can enhance their market position by means of price competition, quality augmentation, product invention, augmented or targeted distribution, or by impelling consumer insights by means of promotion and marketing (Chernev, 2014). Americana has positioned itself in the consumer market as the biggest and leading food manufacturers and also as the major operators of fast-food brands. Position takes into account the practice of designing a company's brand, image and value in order for the consumers within the target segment comprehend what the company or brand signifies or represents in line with its competitors. In this case, the Americana Group occupies a quality, extensiveness range, and convenient position. As a result, the Americana Group is conveying a message to consumers and attempting to establish a competitive advantage that it expects will attract and fascinate consumers within a sub-segment of the target market. Therefore, apart from the consumers that have a preference for convenience foodstuffs, Americana seeks to appeal to the consumers that have a preference for fast foods and Western lifestyles (Wilson and Gilligan, 2012).

The company's foundations begin with a small trading organization unveiled in 1962 that launched the very initial branch of the Wimpy fast-food chain in the Middle East in 1970. In the present day, Americana boasts of having a two-edged approach centered on franchise strategic alliances with international food and beverage brand owners on one side, and on the other side, investment in food-processing business operations. This two-pronged approach has facilitated Americana to become one of the biggest food corporations in the Middle East (Thomas, 2009). In accordance to Bitar (2015), the UAE imports 85% of its food. In addition, the food imports are expected to increase from $100 billion at the present moment to $400 billion in the next 10 years. In addition, having positioned itself in the Egyptian expanse, which includes arable land that is situated along the River Nile, the arable, dairy, and livestock farms have facilitated Americana Group to source raw materials for manufacturing and control regional demand for convenience and fast foods. For the time being, Americana's strategic alliances with worldwide fast-food corporations anticipated the increase in regional demand for fast food as Western eating ways and lifestyles have prevailed across the Arabian Gulf (Thomas, 2009).

One of the key aspects within the industry that is of major concern encompasses health concerns. In particular, health campaigners are significantly concerned regarding the Gulf Cooperation Council's escalating rates of obesity, heart disease, diabetes as well as other sicknesses that are caused by poor diet and lack of exercising. In accordance to Thomas (2009), Kuwait is placed at the eighth position in the World Health Organization confederation table of nations with overweight populaces. In addition, the nation is ranked amongst the top five with regard to prevalence in increasing rates of diabetes together with the United Arab Emirates (UAE), Bahrain, and Saudi Arabia (Thomas, 2009). Despite the fact that government administrations in nations across the Middle East region are yet to efficaciously deal with this particular issue, or undertake stringent measures to put into effect healthy eating policies, and when such actions are undertaken, Americana Group could face significant pressure to alter its product mix and line of items (Thomas, 2009).

A positive impact for the industry in which Americana operates is growth. There is a projected increase in the demand for food in Kuwait, the Gulf Cooperation Council, and more extensively, the Middle East. It is expected that the retail populaces and retail sector will be protracting. In addition, eating habits across the Middle East region are shifting away from having a preference for unprocessed foodstuffs and commodities towards processed convenient foods. This implies that Americana anticipates an increase in its consumer base in the forthcoming years. Statistics indicate that food sales are projected to grow at a rate of 5% to 10% every year. In addition, the GCC and Middle East region is experiencing a greater shift towards the Western lifestyle. This implies an increased level of demand for American brands such as KFC, Krispy Creme, and Pizza Hut. This a major growth prospect for Americana in its business operation, expansion and revenue generation. Moreover, Kuwait and Middle East are expected to continue experiencing growth and development. This implies the creation of more regional shopping centers and supermarkets. Facilities such as supermarkets and hypermarkets constitute just about 50% of the sales for fast-moving consumer goods. In addition, being set in the food industry, there is less likelihood that the economy will have a depressing impact on Americana's business operations. As a result, more and more consumers will have a preference for convenient foodstuffs and this will give Americana a better competitive edge (Thomas, 2009).

References

Americana Group. (2017). About us: Our Group. Retrieved from: http://www.americana-group.com/About-Us/Our-Group.aspx

Bitar, Z. (2015). UAE's food imports to rise to $400b in 10 years. Gulf News. Retrieved from: http://gulfnews.com/business/sectors/investment/uae-s-food-imports-to-rise-to-400b-in-10-years-1.1482864

Boursa Kuwait. (2017). Stock Profile: Kuwait Food Company (Americana) (S.A.K.). Retrieved from: http://www.boursakuwait.com/stock/stock.aspx?stk=704

Chernev, A. (2014). Strategic marketing management. Cerebellum Press.

Food Business Review. (2017). Kuwait Food Company (Americana) K.S.C.P. FBR. Retrieved from: http://www.food-business-review.com/companies/kuwait_food_company_americana_sak

Mubasher. (2017). UAE Adeptio seals Americana takeover. Retrieved from: http://english.mubasher.info/news/3067792/UAE-Adeptio-seals-Americana-takeover

Reuters. (2016). Adeptio completes $2.35bn deal for stake in Kuwait's Americana. Arabian Business. Retrieved from: http://www.arabianbusiness.com/adeptio-completes-2-35bn-deal-for-stake-in-kuwait-s-americana-649812.html

Reuters. (2016). Dubai group pays $2.4 billion for control of Kuwait's Americana. Retrieved from: http://www.reuters.com/article/us-americana-m-a-idUSKCN0Z40OW

The Wall Street Journal. (2017). Kuwait Food Co. (Americana) S.A.K. Retrieved from: http://quotes.wsj.com/KW/XKUW/FOOD/financials

Thomas, K. (2009). Business Close-up: Americana Group. Farm Land Grab. Retrieved from: http://www.farmlandgrab.org/2861

Wilson, R. M., & Gilligan, C. (2012). Strategic marketing management. Routledge.