With strong demographic and economic growth driving increased demand for modern international cuisine, the food industry in the United Arab Emirates (UAE) is experiencing a boom that has attracted the attention of various global players. Paul Cochrane investigates the opportunities presented by this rapidly expanding market.
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The UAE’s highly competitive food sector is expecting double-digit growth this year, driven by a 7% annual rise in the population, booming foodservice and tourism sectors and rapid economic expansion.
The UAE is experiencing swift economic expansion and population growth. The Emirates’ GDP increased by 23.5% in 2006 in nominal terms, while its population reached 4.3m this year, with some estimates predicting it could reach 10m by 2010. These sociological changes are not only expanding the area’s food market, they are also changing consumer habits.
“Before the market was commodity driven, but it’s now brand driven,” says Tarek El Dakhakhny, marketing manager for Gulf Food Industries (GFI), part of the Kuwait-based
In the past few years, Dakhakhny says, there has been a shift in market demand away from Chinese produced brands to local and international brands, spurred by better packaging and marketing.
However, he says, as elsewhere the rise of private label is proving a tough challenge for branded food manufacturers. “There is a fast growing market for private labels,” Dakhakhny adds.
Supermarket chains have been a major driving force behind the growth of private labels. The market has come to be dominated by France’s Carrefour and GÉANT, while regional chain Spinney’s has also established itself as an important player in the food retail sector.
“The threat of private label brands is growing, and Carrefour can always introduce their own brands as their bargaining power grows,” Dakhakhny observes.
With roughly three-quarters of the population foreign born, international food products are in high demand and represent a major growth opportunity. The large expatriate Asian population is driving demand for Asian products, particularly Indian and Pakistani foods, while European and American foods appeal to Western emigrants and the local populace alike.
The demand for international cuisine is also boosted by the UAE’s booming tourism sector. According to a report by Australian research group BIS Shrapnel, more than US$4.3bn is spent on food consumed outside the home each year. The UAE foodservice sector represents a major growth opportunity for processed food manufacturers. The sector posted annual growth of 11% in 2005 and 2006, when foodservice providers spent about $1.43bn on foods and ingredients bought at wholesale outlets.
With its immigrant guest-worker based economy an estimated 75% of the UAE’s population is made up of single men, a fact that has shaped the food industry in the region and led to increased demand for fast, easy-to-consume, low priced meals.
Commenting on the rise of the convenience category, Ebad Ahmadi, director of National Trading and Developing Enterprises (NTDE), says his company is working with international partners to exploit this growth opportunity. “We are going to expand our frozen food sector as it is big business, and will import from
The region’s booming food market has attracted the attention of international food producers, who are setting up shop in the GCC to get a larger slice of the Gulf’s $12bn food sector.
Nestlé is preparing to open a 100,000 square-metre factory in
With the continued expansion of the UAE’s food industry on the horizon, it is becoming increasingly important for global food manufacturers to assess the unique needs of the region and deliver tailored food products to consumers in the Gulf in order to take advantage of this area’s booming food market.
