GN Focus | Gulf Food

Exploring the food chain

Increasing commodity prices, mergers and acquisitions, the rise of private labels and demand-driven supply chains all point to the success of the F&B industry in the UAE

  • By Sanaya Pavri | Feature Writer
  • Published: 00:00 February 19, 2012
  • GN Focus

  • Image Credit: Corbis
  • A picking machine works in a tomato planting base in Xihe Village of Manas County in northwest China’s Xinjiang Uygur Autonomous Region
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The word seasonal is almost never used in connection with food — fashion sure — but when was the last time you checked what was in season while scribbling your grocery list? We get our tomatoes, mangoes, cherries and blueberries throughout the year and the labels on the produce baskets read like the atlas — Hungarian aubergines, Californian oranges, Chinese ginger, Indian mangoes, Malay pineapples and Peruvian guavas. There is a complex yet precise system in place that ensures supermarkets, grocery stores and even little neighbourhood mom-and-pop outlets get the best of what is grown and harvested all over the world.

It is this appetising thought of having on your plate spices from the East, salmon from Norway, and strawberries from England that has fuelled many a historic voyage. One could even postulate that the forbearers of today's food supply industry are people such as Ferdinand Magellan (who went in search of the fabled Spice Islands and ended up charting the first circumnavigation of the globe), Vasco da Gama (who sailed the waters around Africa to India on a quest for spices), and Christopher Columbus (who sought gold and pepper but found the New World).

Thus, the inherent human trait to want what you don't have is the bedrock of the multibillion dollar food supply and management industry. In recent times there have been many other factors that have brought about new trends; to begin with, Euromonitor International forecasts that this year will see retail value reduced by 5 per cent or $200 billion (about Dh734 billion), compared to pre-crisis predictions.

Like other sectors, the food industry too was hit by the global economic downturn and there were a number of challenges that it had to overcome last year — sustainability, reductions in working capital, sluggish consumer spend, growing government regulations and food safety visibility. But having crossed that bridge, there is a cautious optimism in the air as new trends emerge.

 

Exploring trends

Last year saw the stagnation of the West and the growth in emerging markets, a trend that is expected to develop. The middle class continues to expand and Western brands are sought after more than ever, all of which has forced an unmatched re-alignment of strategic priorities in retailers and manufacturers in the West. Another trend that started last year and is set to continue for the next few is the rise in commodity prices. Price increases can be attributed to a number of factors. The demand for food in emerging nations such as China, India and Brazil was one factor, as were natural disasters and severe weather conditions experienced across the globe.

The industry is ripe for an increase in merger and acquisition activity. Companies that focused on cost reduction and operational improvements last year are coming out of the recession stronger and with available cash, whereas those that struggled without focusing on improving operations are good targets for takeover and can likely be obtained at a reduced price.

This year also anticipates an increase in private label products. With a leaner economy, consumers have come to expect quality at a lower cost and retailers are pushing food producers for additional private label items as they react to consumer needs.

Another big trend is being driven by demand-driven supply chains that present huge potential for better cost reduction and more satisfied customers. With each link in the supply chain being informed of current demand, there is an accurate response through increased inventory or more frequent deliveries, keeping supply in tune with demand.

Safety will continue to be a hot topic. The need for consumers to feel that their food supply chains are safe will continue to drive food safety initiatives.

 

The production process

As the industry responds to various factors, there are interesting journeys that food products go through. GN Focus tracks the journey of one of the country's most recent acquisitions, the French yoghurt brand Yoplait by Agthia Group, the leading Abu Dhabi-based F&B company. In 2010, Agthia entered into partnership with Yoplait Group to gain exclusive rights to manufacture and distribute fresh dairy products under the brand.

 

Farm to plate: the journey of French yoghurt brand Yoplait

1. The journey begins with the Research and Development Department sending their requirements to the Procurement Department. This is based on the recipe. The basic ingredients required are: milk powder, which is sourced from France; fruit preparations from Turkey, packaging labels from Spain and yoghurt culture from the UK. Ingredients are also sourced from different places depending on the harvest, crop, and prices.

2.The various ingredients are imported via sea freight and arrive at Agthia's new plant set-up in Abu Samra, where the company invested more than Dh47 million. But before they can be used the Quality Department ensures that each ingredient and every item meets internal quality standards, government regulation, and brand requirements.

3. All the ingredients are then handed over to operations for production, where depending on demand the factory can produce up to a maximum 16,000 tonnes of yoghurt in a day.

 

4. Once the yoghurt is produced it is filled into: 50g, 120g, 170g, 400g, 1kg and 2kg containers. After this each container is sealed and kept for a maximum of 24 hours in quarantine for quality checks. This is done with each batch.

 

 

5. Once checked, the quality department gives the go ahead to release the yoghurt. It is then handed over to the commercial department for dispatch and distributed through chiller trucks to various points in the UAE, finally ending up in stores such as Spinneys, Carrefour or Lulu.

—S.P.

GN Focus