Kraft Foods MEA is preparing for the mid-April opening of its Bahraini production plant which will produce Kraft cheese and Tang powdered beverages for export across the Middle East. The 60,000m² plant is located in Bahrain's International Investment Park and represents an investment of $40USmn. Kraft has said that this new production plant is expected to contribute $120USmn annually in wages, raw and packaging materials and operations. This investment presents the first direct investment by Kraft Foods in the Gulf region and will be one of the largest food and beverage manufacturing plants owned by a multinational company in the Gulf Co-operation Council (GCC) region, indicating the growing importance of this region to food and drink producers.

Kraft is the world's second largest food and beverage company with 2007 sales of 37.24bn and a presence in more than 150 countries. Kraft Foods has marketed products in the Middle East since the 1930s and, in the last decade, has built production facilities in Morocco, Egypt and South Africa. A key component of the company's global strategy is to focus on high-growth developing markets, such as China, Russia, India and the Middle East, and away from low-growth, established markets, such as Europe and America. Patrick Satamian, the vice president and area director of the Middle East and Africa said, 'The Bahrain plant opening gives us a competitive edge in growing our market share in this region as it will enable us to meet consumer demand more efficiently and quickly.'

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Bahrain Macroeconomic Data

e/f = BMI estimate/forecast. Source: Bahrain Monetary Authority, BMI

Like many of its regional peers, Bahrain is enjoying the current oil price boom while at the same time trying to diversify its economy away from the hydrocarbons industry in anticipation of future price falls. The need is particularly pressing in Bahrain in light of its relatively small oil reserves, but its diversification efforts are also more advanced - non-oil sectors already account for more than 85% of real GDP. Thanks to its relatively cosmopolitan outlook, modern economy, favorable regulatory structure and excellent communications and transportation infrastructure, many multinational firms doing business in the Gulf are based in Bahrain, with the attractiveness of setting up shop on the island reflected in Bahrain's strong investment inflows.

The new Kraft plant should allow for greater production efficiencies and ability to respond to local preferences and customer demands and will allow the company to introduce products that have not yet been available in the region because they were unsuitable for import from overseas plants. Apart from the creation of more than 250 jobs, the factory should also improve the local supply chain and increase the skilled labour pool, another priority area for the local government.