UAE Food Retail Industry Opportunities Analysis

UAE and Saudi Arabia are the major food consumption countries during the forecast period. As the country-wise share in total GCC food consumption is not to much change until 2021. The consumption of food in the UAE as well as other GCC is project to expand at a CAGR of 4.2% from an estimate 48.1 million MT in 2016 to 59.2 million MT in 2021. The main reason of this growth is an increase in higher per capita income. As the overall GCC economies stage a sustained economic recovery from the recent downturn. During the forecast period, UAE is projecting to grow by 4.4% to 10.1 million.

Despite of several challenges/thread (which would discussed in my other article of UAE market) to UAE grocery market, there are several areas where the said industry can take benefits and overcome the impacts of challenges.

Fresh and Halal Food:

The fresh and halal food demand is significantly increasing day by day. According to recent estimates from Euromonitor International (http://www.euromonitor.com/united-arab-emirates ), the sales of fresh foodstuffs in the UAE are anticipate to increase and as per estimation and it would increased from AED 27 billion in year 2016 to AED 30 billion in year 2017. Whereas, the sales of packaged food products is expecting to reach AED 19 billion. And the packaged tea and coffee product’s sales value is expecting an increase upto AED 4.4 billion by 2020. The organic packaged food products are expecting to significantly enhance sales up to AED 145 million in the same year.

Attraction for Foreign Investments:

Due to large market place and high hospitality rate, the number of current and new companies invests in the food and retail sector of UAE. The French export has grown not only in the UAE but also across the Middle East with the region representing over 3% of French food exports. The 22nd edition of Gulfood, taking place from February 26 to March 02, 2017 at the Dubai World Trade Centre, is all set to see a stronger French Pavilion comprising 70 companies divided in four key sectors (Food Specialists, Dairy Section, Beverages Section and Meat & Poultry Section).

For the first time at Gulfood, France represented under the label ‘Made in France Made with Love’ highlighting the French food industry’s values and commitment towards quality. Moreover, there will be ‘Made in France’ baby products, eggs, cheese, white & brown sugar, sauces, baked goods and desserts pastry, meat and ready meals, processed fruits and soft drinks and many others.

The Middle East is one of the largest importers of French dairy products. The French exports have grown not only in the UAE, but also across the Middle East with the region representing over 3% of French food exports. Saudi Arabia is considered as the largest export market for French companies in the F&B sector accounting for about $1 billion in 2015.

UAE F&B Market Going Strong:

According to the KPMG 2015 F&B Survey, eating out market in the UAE continues to perform strongly with many residents now eating out more frequently and spending more compared to a year ago. As per survey’s findings which was comprising respondents from a mix of Emirati and GCC nationals (including Arab, Asian and Western expatriates) revealed that 66% go out for dinner at least once during the week with an average spend on eating out per person being AED 120.

It is estimate that by the year 2019, the number of F&B outlets will increase by around 1,600. Further Euromonitor predicts the UAE F&B market to grow from $11.3 billion in 2014 to $13.2 billion in 2018. These positive facts and figures also encourage a lot of new investors to invest more in the said sector.

Investments in Food Production Sector:

Due to high food demand and low food production, the UAE has to go for some other options. So, that the country’s food demand can be met from various alternatives. And for this, it has made multiple measures to secure the food supply. It includes investments in abroad farm-lands and parallel to this it is also improving domestic productivity by using new technologies. The UAE has already invested handsome amount in different countries like Namibia, South Africa, Tunisia, Morocco, Algeria, Sudan and Egypt to secure food supply. However, weaker infrastructure, poor security, local hostility, and political unrest have affected some of the projects. The country has option shift at safer havens like Eastern Europe, Australia, and North and South America.

The UAE government has also invested heavily in providing the latest technology to improve land and water management. The space technology is usually use for enhancing crop productivity and reduce agricultural costs. This involves using satellites equipped with remote sensing technology for monitoring plant growth and activity, irrigation needs and environmental conditions.

UAE Grocery & Food Industry opportunities Analysis

Source: ―UAE‘s food imports to rise to $400b in 10 years‖, Gulf News, March 31, 2015. Scarcity and Abundance: UAE Food and Water Security‖, Future Directions International, November 25, 2014

Change in Life Style:

The growing number of working couples also caused the increase in spending on packaged foods and ready meals. Moreover, their busy lifestyles along with awareness about nutritional baby foods is the main reason in rise in demand of products (milk formula, dried & prepared baby food etc).

Sales of baby food in the UAE was estimating at AED 511 million (US$ 139.1 million) in 2016 and projecting to reach AED 677 million (US$ 184.3 million) in 2021, indicating an annualized growth rate of 5.8%. So, keeping in view this class, the industry giant can offer more products to them for better sale and margins.

UAE Retail Market opportunity Analysis Growing Demand for Healthy and Organic Foods:

The overall trend of healthy/organic food is increasing in all over the world and UAE is also in front-runner.. In 2015, sales of natural/organic food products in the country grew from 55% to 90% respectively from 2010. The Sales of healthy (hygienic) packaged foods in the UAE is growing by 9.2% annually. And it would increase from US$ 230 million in year 2015 to US$ 357 million by year 2020. The high visibility of organic, gluten-free and low-carbohydrate foods in supermarket’s racks is a proof to the popularity of products.

The UAE government also has been making efforts to boost domestic organic produce by providing farming inputs. It include various measure like fertilizers, seeds and pesticides to organic farmers at half the market price. In the four years to November 2015, the Emirates Authority for Standardization and Metrology has certified 103 organic farms. As per Ministry of Environment and Water strategic 2014-2016, they will increase the area under organic farming by 5% p/a..

Some Ending Lines:

The overall UAE Grocery and food industry is going well and business gurus are hoping positive changes in coming future. There are certain factors which create hindrance in the industry’s growth. But favorable thing is that these factors are well highlight to each and every responsible person of the country’s administrators. Since the willingness of the Govt. is also really encouraging towards the growth of the said industry. And we can see huge investments which were done in recent past for meeting the future challenges of this industry.

Author: admin

Fakhar is a textile professional with more than 15 years of experience in the fields of Marketing, Merchandising, Sourcing, Liaison, Training & Development, Industrial Relations. Being a keen observer, he constantly tracks the textile innovations and other notable events. And whatever he thinks, is interesting and informative, share the same along with his own understanding and opinion. He loves book reading, cricket and chess.

370 thoughts on “UAE Food Retail Industry Opportunities Analysis”

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