Higher food import bills has been a way of life for about 12 months now, further scaled up by the Russia-Ukraine conflict. Image Credit: Bloomberg

Dubai: For UAE consumers who had been worried about their food bills, there is some respite. On grains and other key essentials, prices of imports have come down for each of the last three months, which is being reflected in shoppers’ payments on supermarket trips.

“Yes, grain prices are definitely off their April highs,” said Alan Smith, CEO of Abu Dhabi’s Agthia Group, and one of the biggest names in the Middle East’s retail F&B category. “The food price index had risen as much as 23 per cent in the last 12 months – so anything that stalls the price increase is good.”

Part of it is easing of on supply and logistics, and another part has been played by the start of shipments of wheat from warehouses in Ukraine. But a lot more of such shipments need to leave and the grains reaching their end-user markets – and onto consumers’ dining tables – for prices to keep dropping.

“The inflationary pressure on grains won’t be going away soon – the current situation should continue towards the end of the year, even into the first quarter,” said Smith.

The UAE moved quickly to secure its wheat supplies after the outbreak of the Russia-Ukraine war, signing a deal with India on the shipments. Agthia was one of the UAE companies handling these shipments.

On whether the company – which has been growing organically through regional acquisitions/stake purchases of F&B businesses – is making any further changes on its sourcing, Smith said: “There’s nothing drastic that has changed, we keep working to a Plan A, B, C…

Alan Smith of Agthia Group said: “Our number one focus remains ensuring adequate supply, whether it’s sugar – which we have in robust supply – and grains.”

About the chances of sourcing wheat from other countries, the CEO said: “We look at all potential sources. The aim is to have physical coverage, whether that’s having warehouse stocks or stocks in transit.”

Agthia’s first six-month revenues for 2022 totalled Dh2 billion, building on a strong first-quarter performance and ‘ongoing consolidation of strategic acquisitions’. The latest deal was for the Auf Group in Egypt, where Agthia picked up a majority stake. (Auf is in the healthy snacks and coffee category, and the founder-shareholders have retained their ties to the business post-deal.)

Mapping out the Auf deal

The Auf Group was an entity Agthia had an eye on for some time. “There were good conversations we had with the owners and we found their products would fit into our own snacking portfolio,” said Smith. “The actual deal may have taken longer than is the case usually. We had to be sure about all the assumptions we made before going in and on the robustness of the business.”

Steady on the deal side

In these two years, Agthia picked up a handful of regional businesses to beef up its portfolio. Those deals are paying off, as reflected in the H1-2022 results. On top of that, there is a major investment in Saudi planned – “The Dh90 million protein facility would be quite handy, both as a commitment in that important market and also because we are hitting capacity constraints in Jordan (on protein production),” the CEO said. “So, a Dh90 million commitment leaves quite a footprint in Saudi Arabia.”