UAE – The United Arab Emirates (UAE) as well as the Kingdom of Saudi Arabia (KSA) are some of the most strategic markets for food and beverage companies in the Gulf region and despite the COVID-19 crisis and the looming economic recession, the food & beverage market is projected to register steady growth throughout 2020 and reach US$80 billion.
This is according to an industry analysis conducted by research firm, Frost & Sullivan titled the ‘2020 Outlook of the KSA and UAE F&B Market’, which attributes the growth to increased consumer expenditure on food and beverage products.
Frost & Sullivan estimates that the overall expenditure on F&B in the UAE will increase by 6.9% year-on-year (YoY), and reach US$37 billion in 2020 from US$34.6 billion in 2019.
At the same time, the analysis projects overall expenditure on food and beverage products in the Kingdom of Saudi Arabia to witness a 5.4% YoY growth and hit US$50.6 billion. The combined market is therefore expected to surpass the US$80 billion mark this year.
As a key take away, Frost & Sullivan notes that product differentiation and innovation in terms of taste, flavors, and ingredients will remain key success factors for market participants in both markets.
“Rising health awareness, product differentiation, and convenience of online food platforms are key factors to drive the F&B market in the KSA and UAE,” said Prithvijit Roy, Food & Nutrition Consultant at Frost & Sullivan.
Roy highlights that, served as a center-of-plate item, cereals continue to be the most consumed food item in both nations, followed by value-added dairy products, fruits and vegetables, and meat-based products.
“Focusing on alternatives (such as organic, whole-wheat, and gluten-free products) and fortified foods, the majority of F&B market leaders are achieving higher margins and revenues through innovation and constantly creating variety,” Roy adds.
“Further, increasing awareness and attempts by governments to curb the intake of unhealthy food items will push the demand for organic and balanced foods.”
To take advantage of the growing F&B market in the KSA and UAE, the company said that vendors should focus on the some of the key opportunities driving demand in the region.
According to the research firm, there is a notable rapid surge in demand for packaged food as a result of changing lifestyles in both countries. The analysis further identified growing awareness of organic food and increasing adoption of different cuisines due to Dubai’s sizeable expatriate population.
Notably, the Frost & Sullivan projects a shift towards domestic production as a critical step in achieving food sufficiency and security per Saudi Vision 2030 and UAE National Food Security Strategy 2051.
“The agriculture segment will adopt the Internet of Things (IoT) for food processing and traceability” and “meat processing, dairy, and confectionery segments are becoming increasingly attractive to foreign investors,” says the research firm.
Increased social media participation from the younger population and financial independence is also expected to drive consumer preferences towards premium products, offering a unique consumption experience.