EXPORT OPPORTUNITY PROFILE (EOP) - Cakes & Pastries (Update) Export Consultancy Unit (ECU) Marketing Consultancy Division (MCD) Rabi I, 1428 ...
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EXPORT OPPORTUNITY PROFILE (EOP)
Cakes & Pastries (Update)
Export Consultancy Unit (ECU)
Marketing Consultancy Division (MCD)
Rabi I, 1428
(April, 2007)
Export Opportunity Profile
Cakes & Pastries
Purpose
The purpose of this Export Opportunity Profile (EOP) is to update the earlier EOP of
Rajab, 1424 (September, 2003) into the cursory investigation of the potential for
exporting cake and pastry products from the KSA to various international market sectors.
It is hoped that this updated EOP will provide local manufacturers with direction
indicators to potential export markets. The prospective opportunities identified in this
updated EOP should be used by the local producers to spot suitable export markets for
their respective products. However, it is highly recommended that once the local
companies have identified their respective export opportunities, they should undertake
more detailed primary and secondary market research and any other suitable
investigations to evaluate their specific potential, in an appropriate manner, in each/any of
the overseas territories selected.
Product & Application
Cakes and pastries form part of the ‘bakery products’ range that include bread (sliced,
buns and rolls), cakes (sliced cakes, cup cakes, etc.), and pastries (filled croissants, puff
pastry, pies, tarts, etc). The major raw materials involved in the manufacture of cake and
pastry products are wheat flour, sugar, salt, vegetables/meat/fruit, yeast, shortening, and
baking soda.
Pastry is defined as any of various baked foods made of dough or batter, composed of
flour, water and shortening, and having a crust made of paste. In general, cake and pastry
products can be classified into three main group products, namely:-
Cake (e.g. cup cake, sponge cake, round cake, small oblong cake, sweet cake, normal
cake, etc.).
Pastries (e.g. croissant, crepe, sweet roll, doughnuts, pastry, pies, etc.).
Arabic products that fall into the cake and pastry categories (sweet/savoury).
There is a considerably large range of cake and pastry products that are mostly available
in grocery stores although there are other outlets also – packaged in either suitably sized
cartons or packed in PP film. Both cakes and pastries can be sold either as (a) fresh, and
(b) frozen. Fresh products tend to have a naturally short shelf-life in ambient conditions
and need to be cooled/chilled to extend this life-cycle. Both fresh and frozen products
can be exported although, obviously, the former has a shorter shelf-life (as it is fresh, it
needs to be exported closer to home – chilled/cool condition), while the latter can be
exported farther distances (under refrigerated/cool/chilled conditions) as it has a longer
shelf-life.
Usually the local KSA supply of cakes and pastries stems from two main production
sources, namely:-
Regional bakeries – they have been able to develop their cake/pastry production on
the back of bread sales. Locally, this provides them with automatic coverage of
their customer-base and they are able to incur considerable distribution synergies,
thus, making them very competitive on price. Most of the production is
"unbranded", although some bakeries have branded their products.
In-store bakeries in the recent years there has been impressive improvement in
the variety and quality of in-store bakery production. In-store cakes are
competitively priced and they are considered to be major competitors to the
regional bakeries and pastry factories.
A third, un-named sector is the many small bakeries that operate throughout the Kingdom.
However, these small bakeries are unlikely to be looking to export as they only cater for
local demand. On the other hand, the two main sources of cake and pastry production are
likely to be the type of organisations that have already started or will start to look for
export opportunities.
Local Manufacturing Activities
In respect to cakes and pastry products, there are estimated to be around 26 producers
in the KSA. It should be noted that there are many other smaller bakeries in the KSA
who either produce small quantities of cakes and pastries or who produce these products
without a licence.
On a 2-shift basis, the indication of the currently installed capacity available for exports
appears to be in the region of 20% of the estimated total installed capacity. The chart
below provides estimates of local sales and exports for 2006:-
Product Est. of Total Tot. Inst. Local Sales Exports – Available Capacity Avail Cap - % of
Sector Active Cap. – –Tonne Tonne – Installed
Factories Tonne Tonne Capacity
TOTAL 26 56,000 43,000 1,500 11,500 20%
Total Installed Capacity – (Local Sales + Export Sales) = Surplus Installed Capacity Potentially Available for Export
56,000 – (43,000 + 1,500) = 11,500
From the table it can be clearly seen that there is local installed capacity available to
export. The KSA producers’ range of cake and pastry products should utilise the idle
capacity to export to countries where a demand exists for these products.
HS Codings
The customs/tariff codes used for cake and pastries is indicated by the following 4 and 6-
digit HS (Harmonised System) Codes from Comtrade and the 8-digit HS Code used by the
KSA’s FTS (Foreign Trade Statistics) data:-
HS CODE DESCRIPTION
Comtrade No. KSA’s FTS No.
1905 - Baked bread, pastry, wafers, rice paper, biscuits, etc.
190590 - Communion wafers, rice paper, bakers wares nes
- 19059030 Pastries – excluding waffles and wafers
- 19059050 Cakes, gateau and the like
The above 4 and 6-digit HS Codes are internationally recognised codes that cover cakes
and pastry products produced anywhere in the world including the KSA. All countries are
allowed to add extra digits (eight digits and above) to the Code to narrow product
categories down and for their own statistical purposes.
In respect to this updated EOP, it should be noted that the above HS Code have been used
to identify export opportunities for the KSA’s cake and pastry products – i.e. as in the
original EOP. In terms of import/export statistics, it should be noted that the UN
Comtrade data is available only in 6-digits.
From the KSA’s Foreign Trade Statistics (FTS), it is estimated that cakes and pastries
(HS Codes 19059030 and 19059050 – 8-digit Code) represent about 33% (by volume) and
44% (by value) of the KSA’s exports in the Comtrade’s HS Code 190590 (6-digit Code)
category – this is based on a five year average of statistics. However, it should be noted
that this proportion is very likely to vary from country to country and is given here only as
a guide to the proportion of HS Code 190590 that represents cake and pastry products
exported by the KSA.
Major Importing Countries - International
The identification of the importing/exporting countries for HS Code 190590 products,
selected for this updated EOP, has been undertaken using the 6-digit UN Comtrade
statistics for the year 2005. Knowing the main importing countries can provide (a) an
indication of the market size in the particular target market, and (b) an indication of the
existing competition from other exporting countries (see section on competition/main
exporting countries). The main international importers and the countries they import from
are identified in the following chart:-
MAIN IMPORTING COUNTRIES MAIN EXPORTING COUNTRIES
VOLUME
COUNTRY VALUE $ SHARE %
Tonne
USA 1,083,041,597 13.0% 441,918.4 Canada, Mexico, Italy, Japan, China
UK 1,011,561,160 12.1% 435,605.4 France, Ireland, Germany, Belgium, Netherlands
Germany 825,140,000 9.9% 334,635.7 France, Italy, Netherlands, Belgium, Austria
France 698,476,407 8.4% 290,658.0 Germany, Belgium, Italy, Netherlands, Spain
Canada 396,360,518 4.7% 169,534.2 USA, Germany, China, UK, Belgium
Others 4,342,109,050 51.9% Belgium, Netherlands, Spain, Italy, Japan
TOTAL 8,356,688,732 100% 1,672,351.7 Source: Comtrade
Source: Comtrade
In the context of the chart, the data from the main importing countries indicates the size
of the import market in each of the target countries together with details of who are the
main countries supplying the import demand. For the KSA companies, the former
represents the market and the latter the competition. Additionally, for the KSA to enter
these markets a concerted effort by local companies to export could enable them, over
time, to enter these overseas markets and establish a market share - subject to their
prices being competitive and their distribution and after-sales service/support being able
to meet local (wholesale/retail) needs and requirements. As an example, the after-sales
service/support required to deal with product damages or the return of out-of-date
products (beyond their ‘sell-by date’ category) to distributors/producers.
However, to export products in the HS Code 190590 (e.g. cakes and pastries), two major
considerations need to be considered:- (a) to export a good, high quality product which
meets the taste requirements of its intended markets and (b) to transport the product in
a manner consistent with maintaining its quality and texture over a long period of time. To
achieve this, it may be important for the HS Code 190590 products to be transported
under cool/refrigerated conditions – both during the exporting cycle as well as during the
distribution of the product in the target country. This subject is discussed later in a
separate section dedicated to transportation.
The key to exporting ‘fresh’ products overseas is to ensure that appropriate
transportation vehicles (cool boxes, refrigeration) and logistical programmes are in place
to transport the products to the export market quickly. That systems are in place in the
target country to quickly clear the goods from Customs & Excise and have them
transported to a distribution warehouse. From the warehouse, distribution needs to be
undertaken rapidly to the relevant outlets for sale to end-users. Thus, great care needs
to be exercised to ensure the export logistics for these products are in place and
operating efficiently and effectively. With this range of products it is imperative that
they are rapidly transported, cleared from Customs and put on the importer’s shop shelves
before the products ‘sell-by date’ expires. If this cannot be achieved, then the local
producer could suffer a loss of reputation and ultimately sales as the date expired
products would not be sold and the KSA exporter could also face an additional charge for
the disposal of the outdated products in the concerned country.
Major Importing Countries - Regional
The major importing countries for HS Code 190590 products are outside the Middle East
Region. Hence to enter these international markets, the KSA producer will need time and
funds to:- (a) identify local taste requirements, (b) ascertain whether it is possible to sell
fresh and/or frozen products, (c) investigate the market potential properly, then (d)
develop an export marketing plan that could be successfully implemented – based on the
requirements of the target markets, and finally (e) set-up suitable operations and
appropriate logistical support facilities in the selected countries.
While the exporter is developing his medium to long terms plans to potentially enter
international markets, a short term development that can be more easily set up, is to
expand into markets in the surrounding countries and the Region as a whole. While the
markets closer to home are relatively small, they nonetheless offer the exporter the
potential to develop nearby markets for the KSA’s HS Code 190590 products, although in
some markets there could be competition from local producers as well as other imports.
The table below, uses UN Comtrade data for 2005 to identified:- (a) the size of the
import market in several nearby countries, and (b) any KSA recorded imports into those
markets, as per the following table:-
IMPORTING IMPORTS from WORLD IMPORTS from KSA KSA MARKET SHARE % of
VALUE $ VOLUME - VALUE $ VOLUME - WORLD IMPORTS (value
COUNTRY
Kg Kg terms)
Bahrain 15,224,802 5,952,369 5,649,520 2,771,234 37.1%
India 2,419,525 1,539,638 145 60 0.01%
Iran 22,968 18,770 n/a n/a n/a
Jordan 4,842,088 4,948,809 950,346 556,108 19.6%
Morocco 2,476,210 1,450,746 13,152 12,336 0.5%
Oman 11,701,370 6,152,965 3,103,011 1,623,510 26.5%
Pakistan 1,439,228 1,117,760 60,852 50,018 4.2%
Qatar 5,659,275 2,792,718 2,619,485 1,433,408 46.3%
Sudan 3,269,048 1,349,686 1,945,852 803,380 59.5%
Tunisia 492,686 247,393 27,163 7,874 5.5%
Turkey 5,426,953 1,514,693 188 15 0.003%
Yemen 1,366,670 1,994,042 826,838 967,301 60.5%
TOTAL 54,340,823 29,079,589 15,196,552 8,225,244 28.0%
Source: Comtrade
Countries closer to home offer potential export opportunities for the local producers, but
the respective market size for the Countries is relatively small in comparison to the major
importers. However, this should not deter the local producer from entering nearby
markets as this can:- (a) help to iron out any initial export problems that the local
exporter may experience due to implementation of his export delivery systems in the
nearby markets, and (b) help the exporter to develop a good, working export marketing
plan that can be tried out in nearby countries before being implemented in more distant
export locations.
Needless to say, quality and using appropriate transportation methods to maintain the
quality, taste and texture of the product are important – hence, refrigerated transport is
an essential part of the exporting cycle as well as being necessary for logistical purposes
in the target country. As stated earlier, this subject is covered in a separate section of
this updated EOP.
Market Trends – Imports & Exports
To provide a better insight for local producers of products in the HS Code 190590, the
tables below provide some historic information on world product trends. These can be
utilised, in a general manner, to provide some indication of likely future trends for the
products:-
(US$) 2001 2002 2003 2004 2005 CAGR %
Imports 4,747,905,017 5,566,011,627 6,573,585,859 7,657,326,777 8,356,688,732 12.0%
Exports 4,516,839,760 5,235,513,702 6,349,133,683 7,540,532,781 8,258,257,395 12.8%
Source: Comtrade
The import and export trend over the five years above, show a substantial growth in value
terms – with the compound annual growth rate (CAGR) being around 12.0% and 12.8%
respectively. The international market is huge with ample room for the KSA’s exporters
to develop a market niche for themselves in their respective potential target countries.
The rising birth rate in developing countries augurs well for exporters as the under 15’s to
25’s could account for around 50% or more of the population. This provides the exporter
with the opportunity to develop market niche products that meet the taste and price
parameters of the targeted youth in the selected target countries. Further improvements
in product quality, texture and variety could also open-up new niche markets for the more
fastidious older generation in these and other countries.
Competition - Major & Regional Exporting Countries
On an international basis, the analysis of the UN Comtrade’s 2005 export statistics (6-
digit) indicate the top exporting countries for HS Code 190590 products to be the
follows:-
MAIN EXPORTERS
VOLUME MAIN IMPORTING COUNTRIES
COUNTRY VALUE $ SHARE %
Tonnes
Germany 1,341,231,000 16.2% 578,513.6 France, Austria, UK, Netherlands, Belgium
France 855,744,852 10.4% 362,648.8 Germany, UK, Belgium, Spain, Italy
Belgium 758,328,350 9.2% 270,916.2 UK, Netherlands, France, Germany, Sweden
Italy 706,952,404 8.6% 212,045.1 Germany, France, UK, Spain, USA
USA 574,944,072 7.0% 282,305.7 Canada, Mexico, Japan, UK, S. Korea
Others 4,021,056,717 48.6% EU-25, Canada, UK, Netherlands, Spain
TOTAL 8,258,257,395 100% 1,706,429.4 Source: Comtrade
Source: Comtrade
Within each of these countries there are going to be a number of companies that could be
classified as competitors, since they are likely to be exporting to the major importing
countries mentioned above.
From a practical point of view it is more appropriate to look to markets closer to hand, in
the surrounding countries in the Region to determine market potential. This is because of
the following reasons:-
Using cool/refrigerated transport to deliver products to neighbouring areas is more
practical and less costly than transporting cool/refrigerated products to more
distant places.
Any damage caused to products due to temperature related problems could
adversely affect the profit margin – as in the worst-case scenario, the products
may have to be discarded due to temperature damage.
Shorter transportation distances, with less likelihood of delays, can also help to
minimise possibilities of damage to the product due to any temperature variations.
Reducing the delivery times enable the product’s ‘expiry/use-by date’ to be
extended to the maximum possible timeframe allowable for the products
concerned.
As KSA exports develop, they will tend to compete directly with the major cake and
pastry exporting companies and distributors from a range of exporting countries – near
and far. As exporting countries have usually established their distribution and sales
networks in the respective markets, the local KSA companies should evaluate and
understand how these countries and their respective companies have managed to carve a
market for their respective producers and products. This evaluation should assist the
KSA producers to identify what actions they need to undertaken to establish export
markets for their own products. For the KSA to compete effectively and efficiently, a
concerted effort by the local companies will need to be undertaken in a systematic way
and possibly an initial start could be made by developing an effective working export plan.
An initial market size can be estimated from the main importing countries, whose import
statistics provide a rough indication of the market size for imports within their respective
markets. In the same manner, identifying the exporters to those markets will enable the
local KSA producer to identify the countries that will be in competition with them in their
respective export markets.
Estimate of Importer’s Landed Costs
An indication of average landed cost is provided to assist the local producer to gauge
initial exporting costs to a particular country. These costs do not include duties/taxes or
local distributor mark-ups, etc. It should also be noted that many producers make a
particular product in various quality grades and this is reflected in their final price for
these products. While these producers may have a ‘base’, ‘medium’ and/or ‘high’ price
and/or quality levels, these price ranges cannot be easily identified from the trade data.
The 2005 cost indications given in the charts below reflect only the average landed costs
of all the goods in the HS Code 190590 category.
In relation to the countries in the Region, an estimate of the average landed costs, for
world/KSA imports, are indicated in the following charts, on a $/kg basis:-
Landed Cost $/kg
IMPORTS from IMPORTS
IMPORTING COUNTRY
WORLD from KSA
Bahrain 2.56 2.04
India 1.57 2.42
Iran 1.22 -
Jordan 0.98 1.71
Morocco 1.71 1.07
Oman 1.90 1.91
Pakistan 1.29 1.22
Qatar 2.03 1.83
Sudan 2.42 2.42
Tunisia 1.99 3.45
Turkey 3.58 -
Yemen 0.69 0.85
AVERAGE LANDED COST $/kg 1.87 1.85
Source: Comtrade
Likewise from the import/export statistics, it has been possible to ascertain an estimate
of the landed costs for HS Code 190590 products for the five major world importers. As
this information may also assist the local companies, details of ‘ball park’ landed costs are
provided in the following chart:-
Landed Cost $/kg
MAJOR WORLD IMPORTERS – AVERAGE LANDED COST $/kg AVERAGE LANDED
USA UK Germany France Canada COST $/kg
2.45 2.32 2.47 2.40 2.34 2.40
Source: Comtrade
This information should assist local KSA companies to ascertain, in a very general way,
whether their respective products are likely to be competitive in the above identified
export markets. Landed costs are normally based on CIF value - purely as a general guide,
it is estimated that the difference between FOB and CIF costs is somewhere in the region
of 10% to 15% of FOB.
Product Packaging
Many of the cakes and pastries produced in the KSA are wrapped in oriented polypropylene
film. Other materials such as polystyrene and aluminium trays are also used for packaging
tray items. In the context of exports, the exporter needs to ensure that the cakes and
pastries are packed in an appropriate and suitable manner for the target country. This
may mean changing the packaging material/method so as to be suitable for export – and
most importantly to meet the legal packaging requirement of the country concerned.
Product Labelling
It is important for the exporter to be fully aware of the labelling requirements for the
country of destination of goods because if the imported products do not conform to the
local labelling laws, they may not be allowed into the target country. For this reason, a
sample of the labelling requirements for food products in several Arab countries is
provided below:-
COUNTRY LABELLING REQUIREMENTS
Packaged items (goods) imported in a saleable form must be labelled in Arabic with the following information in a non-erasable
manner:- The name of the product, its trademark (if any), type of product and its brand name/trademark, product description,
Egypt the product’s technical data and mode of operation, international marks and information that should be observed during
transportation and handling, country of origin, and dates of production and expiration. Translation is not required for proper
names. Appropriate labelling can be provided by the Egyptian importer.
The Lebanese Customs Directorate enforces labelling and marking requirements - containers not marked properly may not be
imported .The information preferably should be in Arabic ,but French or English is accepted. Imports of bread, bread flour and
semolina, fresh butter , edible oils and fats, pharmaceutical preparations and druggists’ sundries, sugars, syrup, vinegar must
conform to special labelling requirements. Package sizes for all types of past must be one kilogram, 350 grams or 500grams and
the weight must be labelled on each package in the language of the country of origin. Regulations for imported canned or preserved
foodstuffs require each label to contain the following information:- New weight :The net weight is considered to the weight of the
Lebanon
foodstuffs, excluding the weight of the can or container. Artificial colouring :If canned or preserved foodstuffs contain added
artificial colouring substances, the label must contain the words "artificially coloured ", or it must state that these foodstuffs
contain added colouring substances. Preservatives or added substances: If the foodstuffs contain preservative, improving, added
chemicals, the label must state the presence of such additives and give the name of these additives. Dates of manufacture and
expiration: The date of canning, bottling, or packaging and the date of expiration must be stated expressly on the product. Code is
not acceptable .
Food, dairy products, and medicines must be labelled. The labelling should include: name of producer/exporter, ingredients, date of
Syria
manufacturing, and date of expiration.
Production and expiration dates must be shown on foodstuffs packaging and containers in all the United Arab Emirates. The dates
must be integrated fully into the foodstuffs packaging, such as printed on the label or imprinted on the container, Stickers and
rubber stamps are not acceptable. The sequence of the expiration dates should be day, followed by months, then year; or month
followed by year. Month followed day then year is acceptable but may be questioned. No other sequence is allowed. All fats and oils
used as ingredients must be identified on the labels. Labels must be in Arabic or Arabic and English. Arabic stickers are acceptable
UAE
provided they contain all required information and do not contradict or conceal any part of the original label. Labels for foodstuffs
must show the following information: name of commodity, gross and net weight or size, list of ingredients and additives (including
preservatives and flavouring or colouring agents) in descending order of proportion (exact percentages not required); name and
address of manufacturer or packer; country of origin; production and expiry dates in English numerals (even if the product has an
indefinite shelf life).
Labels should indicate (a) the descriptive name of the product, (b) the list of ingredients, including food additives, in descending
order by weight, (c) the name, address, and telephone number of the manufacturer or distributor, (d) net weight or volume in
Yemen metric unites, (e) instructions for storage and use, when applicable .in addition, the following details may be required in a new
market: country- of- origin information, product expiration date, percentage of major product ingredients special food additive
codes, and nutrition information based on the destination country’s regulations.
Transportation
Refrigerated/cool box mode of transport could be required for the movement of some or
all types of cake and pastry products, whether it is for distribution locally or for haulage
to export markets – by road, rail, sea or air. A first-class cooling/refrigerated system
essentially needs to have good sealing abilities and the ability to remain fully operational at
all times during the period of transportation to keep the product temperature at the
required levels. Careful attention to the pattern of container loading and unloading will
also help to conserve the low temperature environment within the refrigerated container.
The enemy of all refrigerated transport systems is heat, as it will affect the temperature
and, therefore, reduce the quality of the product being delivered - which is precisely what
has to be avoided. By fulfilling these conditions and choosing a good refrigeration system
and first-rate transporters/shippers, it should be possible to deliver good quality products
into export markets.
One mode of transport is refrigerated containers that can be hauled by road, rail or sea
and are available in a number of sizes. As a rule of thumb, a refrigerated/cool box/chiller,
road haulage container costs about 25% more than a similar conventional container. It is
always a good idea for the exporter to develop a good working relationship with a good
shipping organisation that can assist the company to export its products to targeted
markets.
All road haulage within the Kingdom is usually undertaken using 20 or 40-foot trailers.
Loads up to 22 tonnes can use the road system without any special permission, however,
loads over this tonnage require a special police licence.
Road transport to surrounding countries is usually undertaken using a 40-foot trailer. In
many surrounding countries (Lebanon, Jordan, Syria, Turkey and Yemen) the Saudi
registered cabs pulling the trailers has to be changed at the border of the target country,
to a locally registered cab before the goods-trailer can be delivered to the purchaser – in
Yemen the cab changeover occurs in the city of Hudaydah. As will be appreciated,
transport costs are subject to negotiation between the exporter and the transporter and,
hence, it is not possible to provide precise data on the subject.
Export/Trade Barriers & Opportunities
There are a number of export/trade barriers and opportunities that are identified below:-
Company Specific Barriers & Opportunities
Lack of availability of commercial information or not having undertaken market
research can be considered to be a barrier to entry, as specific country profiles
that could highlight opportunities would not come to light.
The internal corporate export structure and manpower resources could be a barrier
or an advantage for companies. In this instance, some KSA companies are
developing their export capabilities but perhaps need to put more emphasis on this
development.
Investment in manpower development for export and good MIS (management
information systems) could pay dividends in the future.
Many overseas companies will only purchase from those companies that have
secured ISO 9000 certification and in some instances not having this certification
could be a barrier.
Market Specific Barriers & Opportunities
Specifically for the food sector, the following points should be considered:-
o Slow movement of goods could become a barrier due to ‘use-by/expiry date’
limitations, which could affect the shelf-life of the product concerned.
o Matching the temperature needs of the product with the correct type of
transportation vehicle to be used for delivery – e.g. frozen food shipped in
refrigerated trucks.
o Time delays due to any reason could affect the products in terms of:-
Shelf-life (shelf-life of cakes and pastries could be reduced due to
transportation in incorrect vehicle type).
‘Use-by date’ expires prior to it being put on a shelf for sale and
purchased.
Temperature requirements are not met correctly – during transportation, storage
and shelf presentation. As inappropriate transportation/storage could lead to
damage, etc.
Desk research should initially be carried out to determine the market viability for
entry – this can be undertaken through written data relating to the target country
and also via the internet.
Having a good and reputable local agents/distributors can be a benefit as:-
o The exchange of information between the two parties minimises the
information barriers and allows the exporter to have a better understanding
of his target export markets.
o Enables the exporter to have a physical representative in the target market,
someone who is responsible for local distribution and sales.
Conversely for the exporter, not knowing what is happening in the selected target
export markets becomes a barrier.
Selecting an inactive and/or poor agent/distributor could bar the exporter from
marketing their good properly and professionally in the target market and, thus,
this could be a barrier.
In terms of the KSA’s overseas competition (companies outside the GCC wishing to
export to the GCC), the unification of the GCC tariffs will be a barrier for imports
for them. However, it will be a positive aspect for the KSA producers exporting to
neighbouring GCC countries.
Customs duties/tariffs can be a barrier for exporters - importing countries in many
instances use this mechanism as a means of protecting their local industry.
Trade agreements between two countries can sometimes either reduce
duties/tariffs or exempt them. This means that in some instances a number of
countries may have a preferential tariff advantage over other countries.
The full implementation of the Arab Free Trade Market Agreement, will now help
to bring down tariff barriers for KSA exporters selling their goods into these
countries.
Distributors in the Potential Export Markets
In the international market, it can be quite difficult for local exporter to easily identify:-
(a) their potential local competition, and (b) possible local agents/distributors that they
can work with in that target markets. Any exporter wishing to develop overseas markets
will need to undertake initial primary and secondary market research to identify the
relevant information that needs to be sought from that market. The short list below,
identifying distributors for cake and pastry products, is a representative example,
amongst many, of the information needed to identify and contact overseas agents who are
dealing in the selected target markets. This and further information can be obtained via
the website www.kompass.com
COUNTRY COMPANY DISTRIBUTION SECTOR CONTACT DETAILS
Exhibition Road, Hoora, Manama, Bahrain
Bread, cakes and pastry
Bahrain Caesar's Confectionary Phone:+ 973 291761
(trade)
Fax:+ 973 714770
16, Ismail Mohy El-Din St., Ard El-Golf,
Cakes and pastry products, Heliopolis,Cairo, Cairo, Egypt
Egypt Multi Foods
frozen Phone:+ 20 2 4142468 ; + 20 2 4197572
Fax:+ 20 2 4142468 / 97572 ( Tel & Fax )
Beg. of Asiaee Highway,Qaem Square,
Pastry containing chocolate, 91735 Mashhad, Iran
Iran Nan-e Ghodse Razavi
vanilla cream, coconut Phone:+ 98 511 6654002-8
Fax:+ 98 511 6658000
Wooden Bakery building, Highway
Zalka (Metn), Lebanon
Bread, cakes and pastry
Lebanon Wooden Bakery Sarl Phone:+ 961 1 900411 / 900412 / 901209
(trade)
Mob.:+ 961 3 741500
Fax:+ 961 1 901209
Port Commercial Centre, Al Mina Business
District,
Bread, cakes and pastry Opp Oman Flour Mill, Ruwi 112, Oman
Oman Al Mina Bakery
(trade) Phone:+ 968 714084,561365
Fax:+ 968 560750
Telex : 5255
Worcester Road, Evesham, Worcs WR11
Cakes and pastry products, 4QU, UK
UK Dawn Foods Ltd
frozen Phone:+ 44 1386 41241
Fax:+ 44 1386 443608
Range of cakes including:- (a) 37, Rue du Maréchal Joffre, 67390
filled, (b) fruit. Marckolsheim, France
France Kuchenmeister
Croissants Phone:+ 33 3 88 58 64 20
Pastries and cakes, fresh Fax:+ 33 3 88 74 91 95
PO Box 5927 Sharjah, Indl. Area No. 1
Greenhouse Cakes and pastry products, Sharjah, United Arab Emirates
Supermarket frozen Phone:+ 971 6 5332218
Fax:+ 971 6 5336631
Range of cakes including:- (a) PO Box 10603 Dubai, Salahuddin St.
plain, (b) filled, (c) fruit, (d) Dubai, United Arab Emirates
UAE sponge, (e) chocolate covered, Phone:+ 971 4 2666615,2666795
(f) iced, (g) cakes for special Fax:+ 971 4 2660811
Al Jadeed Bakery occasions.
Pastry, flaky
Croissants
Éclairs
Doughnuts
Source: Kompass
Taxes & Duties
Tariffs for cake and pastry products vary considerably from country to country and the
following charts identify the specific and general duty rates for the HS Code under
review. Wherever possible, the basis for the application of the general tariffs and duties
is also identified. It is important for the KSA exporter to note that the ‘general tariff
and duty terms for imports’ are in addition to the duties/tariff stated in the chart below.
Overlooking these additional costs could impinge seriously on the export profitability of
the exporter.
GENERAL TARIFF & DUTY TERMS for IMPORTS
COUNTRY NOMINAL TARIFF RATES
(Additional Taxes Added to the Nominal Tariff Rates)
There is a 6% goods and services tax applied on FOB + duty.
Commercial shipments to the Eastern provinces of New
Brunswick, Newfoundland, and Nova Scotia are subject to an
Canada 4% - 9.5% MFN*
additional 8% Provincial Tax. Quebec and Ontario collect the 8%
Provincial Tax, however, on personal shipments (not on
commercial shipments). All Candaian taxes are applied on FOB.
Effective March 1, 2004, a Reconstruction Levy of 5% of the
total taxable Customs value of all goods imported into Iraq from
all countries will be applied. Exceptions are food, medicine,
There is no tariff for products
Iraq clothing, books, humanitarian goods; goods imported by the CPA,
going to Iraq
Coalition forces, reconstruction contractors, NGOs, international
organisations, diplomats, and Coalition governments; and goods
imported under Oil for Food contracts.
EU tariff rates are based on CIF value. Value Added Tax (VAT)
is based on CIF + Duty. ‘Standard VAT’ applies for most
products and Exceptions are noted in ‘Reduced VAT’ (food is
often, but not always, in this category) – rates for some of the
major EU Countries are:-
3.8% - 9.7%
COUNTRY STANDARD VAT% REDUCED VAT%
+ 15.9 – 60.5 Euro/100 kg/net ** United 17.5% 0 – 5%
European Kingdom
Union
France 19.5% 5.5%
Germany 16% 7%
Belgium 21% 12%
Italy 20% 9%
Netherlands 19% 6%
Austria 20% 10%
Spain 16% 7%
Ireland 21% 10%
There is a 1% Landing Charge applied on CIF, as well as taxes by
the city, state, and central authorities respectively that total
India 30% MFN*
roughly 22%. However, the effective tax rate could be as much
as 26%. All taxes are applied on CIF + duty + landing charge.
There is a value added tax (VAT) that varies between
Morocco 49% 0% and 20%, depending on the product, and is applied
on CIF + duty.
There is a 15% sales tax applied on CIF + duty. Additional taxes
Pakistan 25%
may apply (no further information regarding this is available).
All good imported into Syria are subject to Customs Duty and
Unified Tax. Unified Tax is a surcharge on all imported goods
and ranges from 6% to 35%. There is a direct relationship
between Customs Duty and Unified Tax, as per the following:-
CUSTOMS DUTY % UNIFIED TAX %
1 6
2 11
3–6 12
7 – 11 13
12 – 18 14
19 – 23 15
24 – 28 16
29 - 30 17
All KSA products exempt from 31 - 36 18
Syria
duty 37 - 40 19
41 - 45 20
46 - 50 21
51 - 55 22
56 - 59 23
60 - 64 24
65 - 69 25
70 - 74 26
75 - 78 27
79 - 83 28
84 - 88 29
89 - 93 30
94 -98 31
99 -100 32
Exceeding 100% 35
2% of CIF value + Customs Duty: ex 1905, ex 1906 (Kenafa,
Hareesa, Awamma, Barasiq and pies other than pizza, uncombined
with catering service).
VAT of 13% applies on CIF + duty value.
Jordan 20% - 30% MFN* General Sales Tax: 13% of c.i.f. value + customs duty, with the
following exception:1905.90.300 / 1905.90.400
Imports from Algeria, Bahrain, Israel, Lebanon, Libya, Morocco,
Palestine, Saudi Arabia and the United States may be eligible for
preferential treatment.
Duty rates are ad valorem based on CIF value. VAT of 10% is
Lebanon 20% MFN* charged on Value + Duty. Municipal Tax: 3.5% of duty paid value.
Stamp Tax: LBP 3.00 per LBP 1,000.00 of the value of the goods.
For most goods there is an 18% value added tax (VAT). For basic
Turkey 3.8% - 9.7% necessities and foodstuffs the rate is 8%. For electronics and
some luxury items the rate is 26%. Tax is applied on CIF + duty.
* MFN = Most Favoured Nation
** Goods of subheadings 1905 90, presented in the form of an assortment, are subject to an agricultural
component (EA) fixed according to the average content in milkfats, milk proteins, sucrose, isoglucose,
glucose and starch of the assortment as a whole.
It should be stressed that governments can change duty/tariff rates whenever they
consider it appropriate. Hence, the KSA exporter is encouraged to check the duty/tariff
applicable in his target country at the time of exporting.
Conclusions & Recommendations
In conclusion, the KSA is estimated to have about 11,500 tonnes of surplus installed
capacity of cake and pastry products which could be exported, and this equates to a
conservative export potential of around $21.3 million (SR79.8 million). The aim of this
report is to identify major importing countries for the cake and pastry products, which
could represent an export opportunity for Saudi producers. The following are the main
highlights of the report:-
World Imports
o The major importing countries for the concerned HS Code 190590, were
the USA, UK, Germany, France, and Canada.
o The total value of imports to these countries, in 2005, was in the region
of $8,356.7 million, a substantial increase in trade from the previous
EOP of Rajab 1424 (September, 2003).
o For the KSA exporter the Regional countries could be investigated to
ascertain the commercial probability and viability of entering these
potential target markets – bearing in mind that cakes and pastries are a
difficult product to transport as they can require cooling/refrigeration
during transport, storage, and for some products while they are being
displayed.
o In 2005, the import data indicates an average international landed cost
for the above HS Code to be in the range of $2.40/kg. While the
Regional average landed cost for the HS Code was in the region of $1.85
- $1.87/kg. Transportation, fuel and labour costs, in developed countries,
are likely to be the reasons for the higher prices in the international
markets as against the Regional MENA markets.
World Exports
o The major international exporting countries for the HS Code 190590,
were Germany, France, Belgium, Italy, and the USA.
o The total value of world exports in 2005, was in the region of $8,258.3
million.
o The KSA exporter should investigate these countries to ascertain how
they have developed their export markets and what are their techno-
commercial and financial parameters for exporting.
Arabian & Other Nearby Countries
o Although the surrounding market is relatively small, several KSA
exporters have started to develop their export markets in these
countries.
o More effort needs to be undertaken by the local exporters to enable the
KSA to become a major exporting Country to the surrounding Arab and
non-Arab Countries in the Middle East and North Africa.
In summary, while some exporting is being undertaken, more effort could be directed
towards developing further export markets - some export opportunities have been
identified above. It is believed that these markets offer promise to local producers and
the local companies are encouraged to undertake evaluation of these markets to assess
their exporting potential.
Furthermore, the KSA producers are encouraged to contact local export insurance and
credit institutions in order to utilise the available facilities for export credit and the
insurance programmes cover for higher risk countries. Additionally, the Saudi Export
Program (SEP), operated by the Saudi Fund for Development (SFD) in Riyadh, is in a
position to assist potential KSA exporters to expand their export activities and assist
them to increase their sales volumes to more countries while trying to minimise risk.
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