Business | Markets
UAE food market poised for explosive growth
The value of food and non-alcoholic beverages purchased by the UAE food sector was valued at Dh5.25 billion in wholesale prices.
- By Shakir Husain, Staff Reporter
- Published: 00:00 August 30, 2006
- Image Credit: Gulf News
- The food sector is considered significantly large for a relatively small population of 4.3 million.
Dubai: The value of food and non-alcoholic beverages purchased by the UAE food sector was valued at Dh5.25 billion in wholesale prices.
However, the market is worth Dh16 billion in retail terms, according to BIS Shrapnel, an Australia-based economic research firm.
Food imports by the UAE are unusually large for a country of its size and the market is poised for massive growth in the next five years, according to studies.
The increase in population and tourism expansion will be key factors fuelling this growth, and top food exporters like Malaysia and Australia are relishing the prospect.
A similar market study conducted by the Malaysian Trade Centre in Dubai noted Dubai imported Dh5.4 billion worth of food products in 2005. Re-exports amounted to Dh1.8 billion.
BIS projects the total value of spending in the UAE's food service industry to touch Dh6.47 billion in wholesale prices in 2006. The market is expected to grow at a rate of 11 per cent per annum.
"This conservative growth estimate could well be exceeded if population growth, tourism and social changes surpass expectations and boost expenditure," BIS said.
The food sector is considered significantly large for a relatively small population of 4.3 million.
"The UAE food service market is larger and more important than is initially apparent and is also growing at rates not seen in any developed countries of the world," according to BIS.
Dubai and Abu Dhabi account for 80 per cent of food demand in the seven emirates.
The Malaysian study estimates about 80 per cent of food products available in the country are imported.
Both Malaysian and Australian studies note that the food market in the UAE is extremely price sensitive and drives product and brand choice in most distribution channels.
"This is due to both a high level of competition and the low income of much of the population," BIS study said.
But it adds that the highest growth for food and beverage suppliers will be in the premium channels that serve tourists and wealthier residents and citizens.
The price sensitivity is seen having implications for the sourcing of products as Asia is growing in importance as a market for importing food into the UAE.
Fast facts
- The UAE is growing rapidly, with population growth averaging over seven per cent per annum.
- Three-quarters of the UAE's population is non-national, with a large percentage of this segment being male bachelors, who are more disposed to purchasing ready-to-eat meals.
- Most people in the UAE eat at least one meal per day while on the job, pushing up demand for fast, easy-to-consume, low-price meals.
- A major factor supporting the growth of the food industry in the UAE is tourism. More than six million tourists visited the UAE in 2005.
- Hotels account for 17 per cent of total food service expenditure.
- Asian cuisine is the most popular of all cuisines and is growing the fastest.
- Lebanese food is also continuing to be popular as it suits Arab tastes and is also relatively healthy.
- Coffee chains are showing impressive growth.
- The largest food service channel is restaurants, closely followed by street outlets.
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