Gulfood 2021: For UAE's food brands, online portals are next battleground after supermarket shelves
With more grocery shopping going online, new brands have tough time gaining visibility
Dubai: There’s a rush on among food brands in the UAE to get listed – and visible – on the big online marketplaces, much like the demand that used to be here for a prominent spot on supermarket shelves..
More so after COVID-19 pushed more shoppers to stick with online purchases for their grocery needs. But getting that visibility comes at a cost. And even if brands are willing to pay the cost, there’s no guarantee that online will be able to spot them in an increasingly crowded online food market.
“Online visibility is highly valued - FMCG brands can spend up to 30 per cent of the sales price on marketing efforts,” said Sandeep Ganediwalla, Regional Partner at RedSeer Consulting, a retail-focussed consultancy. “Promotions on online marketplaces are perceived to have higher returns on investments as the customer intent to purchase is higher compared to other digital mediums.
“Online marketplaces provide multiple options such as banners, preferential slots on searches and newsletters to aid food brands in their discovery.
“The prevalence of this is seen in Amazon, where it has emerged as the third largest digital advertising channel for brands after Google and Facebook.” (Now, if more of the day-to-day shopping needs of UAE and other Gulf residents get transacted online, Amazon could well be cutting the gap between it and the other two.)
Expanding food universe
The region’s biggest online marketplaces have been steadily adding to their food offerings, and some estimates place this category as making up 10-15 per cent of their sales already. Much of that increase happened after COVID-19. In addition, there are the delivery portals now selling food and consumer goods, with the promise of faster delivery times of the freshest.
Degrees of difficulty
Even if brands – including newer ones trying their luck in the UAE – have the marketing and promotional funds to make an online push, getting the desired results will not be easy. Any aspiring tea brand will still have to take on the legacy and marketing muscle of Lipton, or any of the other established names. It’s the same in just about every other category, where analysts say the dominant brands can still win on pricing and presence.
“Third-party online platforms in this region are for some strange reason complex and difficult [to deal with] than in mature markets,” said Hasan Mahbub, Managing Director of Emerging World fzc, which is the overseas business development agent of Pran-RFL Group in Bangladesh. (Pran is one of the biggest snacks and beverages brand to emerge from the Subcontinent in recent years.)
“Yes, brands are being listed, but the process is still time consuming.”
* 50% are choosing food that help boost immunity more often while almost 46% are taking supplements to fend off COVID-19 more often;
* 47% are having fresh fruit and vegetables more often;
* 33% are having sweet treats less often.
Credit: Irish Food Board
Create own presence
Food and food-focussed retail brands, at least some of them, are now building their own online channels to get their products to the market. Adil Trading, the Indian ethnic foodstuffs retailer, uses a hybrid model – own portal plus sell through others’ platforms.)
Mahbub says the ‘Pran’ brand is working towards that same end, but with some tweaks “We are developing and promoting our own marketplace since we are having difficulties with third-parties,” he added. “Faster and free delivery is what will help food brands gain visibility, in addition to the regular promotions that are in the physical market.”
Consumption patterns
COVID-19 has brought on changes in every aspect of living – that includes our choice of food consumption. “The origins and provenance of food choices is increasingly more important to shoppers in the UAE with a sharper focus on food safety standards as well,” according to findings from a survey done by the Irish Food Board (Bord Bia).
* 52 per cent of adults in the UAE feel the traceability of their food and drink is more important;
* 56 per cent feel the food safety standards are more important now.
As important as origin, more shoppers want to be assured they are buying into quality.
* 4 in 10 adults are buying better quality foods in general as a result of the pandemic;
* 48 per cent say that it is more important now to buy natural;
* 1 in 3 adults are scratch cooking and learning to cook using recipes more often.
Clear logistics issues
Compared to the situation in April and May of last year, food and supermarket retailers – especially those who scaled up their online operations post COVID-19 - have by and large resolved the availability and delivery issues they faced initially.
All of which will come in handy as online grocery shopping will continue to add more shoppers…. And retain a good number of those who came in during the pandemic.
For food brands, online is the new battleground for visibility. They will need to use the same go-for-broke tactics they used on supermarket shelves to get on shoppers’ radar. And even bring in new strategies…