UK-Europe-UAE road corridor, air freight: How Spinneys rewired its food supply network

Dubai: Spinneys, the DFM-listed premium grocer, turned to a new road freight corridor linking the UK and Europe with the UAE after disruptions around the Strait of Hormuz caused food shipments to be delayed by weeks and pushed container costs sharply higher, the supermarket chain’s chief executive has said.

The retailer completed 26 road freight shipments from the UK and Europe during the first half of the year, using a route through Turkey and Egypt to bring goods into the UAE by land.

The move was part of a wider effort to keep supermarket shelves stocked as the geopolitical crisis sent transit times soaring, drove container costs sharply higher, and threatened the steady flow of inventory into its UAE stores.

Spinneys currently sources around 40 per cent of its products through imports, while the remaining 60 per cent is sourced locally, including products made at its manufacturing facilities in Dubai.

The grocer responded to the crisis diversifying its supply chain — sourcing from different markets, rerouting sea cargo through alternative regional ports, increasing air freight and establishing a road corridor linking the UK and Europe to the UAE.

“We have two, three modes of supply,” Spinneys CEO Sunil Kumar told Gulf News, pointing to local farmers and distributors, as well as the company’s buying offices in Australia, the UK, Europe and the US.

The retail veteran's comments come after Spinneys announced its half-yearly results on Tuesday, where, despite the disruption, Spinneys' first-half revenue rose 5.1 per cent to Dh1.909 billion, helped by like-for-like sales growth, new stores, stronger Fresh and Private Label sales and increased online penetration.

The board approved an interim dividend of Dh122.4 million, equivalent to 3.40 fils per share.

Under normal conditions, sea freight from the UK or Europe takes about 30 days. During the height of the disruption in March, some shipments took 100 to 120 days, Kumar said.

With vessels unable to follow their normal routes into Dubai and Abu Dhabi, Spinneys diverted cargo through Khor Fakkan, Fujairah, Salalah in Oman and Jeddah.

The grocer imports around eight to 10 containers a day, making delays particularly difficult to manage. That prompted Spinneys to establish a road freight corridor from the UK and Europe through Turkey and Egypt and then by land into the UAE.

The route takes around 17 days, compared with roughly 40 days by sea under the disrupted conditions.

“It is much the lead time reduced drastically,” Kumar said.

The road route is more expensive than normal sea freight, but became a more viable option as maritime costs surged. Kumar said it could also prove useful for short-shelf-life products such as eggs, snacks and some ingredients, where speed can outweigh the additional transport cost.

The disruption came with a steep price tag. Kumar said a container that cost around $3,000 before the crisis rose to $17,000 during the disruption.

For shipments from the Americas, the cost jumped from around $4,860 to $24,600.

Prices have since eased but remain well above normal levels, with UK-Europe containers now costing around $7,000 and American-origin containers about $17,000, Kumar said.

“It's still extreme,” he said.

Spinneys is responding by looking for alternative sourcing markets, including Australia, New Zealand, South Africa, the UK and Europe, for products traditionally sourced from the US.

The pressure was also visible in the company's margins. First-half gross profit rose 4.1 per cent to Dh784 million, but gross margin narrowed to 41 from 41.5 per cent, with Spinneys citing higher freight costs, inflation, longer transit times and logistics disruption.

Despite all that, product availability remained between 83 and 88 per cent in the second quarter, while shipment delays fell to nine days in June from 38 days in March.

At the same time, consumers are becoming more cautious.

Spinneys' transaction volumes rose 6.1 per cent year-on-year to 21.8 million in the first half, but the average basket fell to Dh86.40.

“Customers are conscious that we are not buying big trolleys; rather, they choose to come on a daily basis or weekly basis to the store and buy in basket volume,” he said.

One factor behind the shift, he said, was Spinneys' decision to hold prices on 500 key-value stock-keeping units (SKUs), rather than pass all higher costs on to shoppers.

“We have deliberately, consciously taken the decision that we don't want to increase the price on key value lines, 500 SKUs which we have identified. We don't want to give that cost to customers,” Kumar said.

However, where costs could no longer be absorbed, Spinneys passed them on through higher recommended selling prices.

“So you may find if you don't require and you have an alternative solution and you have a substitution available within the store, then the customers probably buy lesser,” he said.

That behaviour is known in retail as “trading down” — choosing a cheaper alternative rather than buying the more expensive product.

Private-label products accounted for 47.3 per cent of Spinneys' revenue in the first half of 2026, with penetration increasing by 260 basis points year-on-year. Fresh products accounted for 64.5 per cent of sales.

Kumar said the company wants to expand private label across more categories because it gives Spinneys greater control over the product from sourcing and manufacturing through to logistics and pricing.

"We want to take private label into almost every category where we can offer the customer value," said Kumar.

The company is expanding its private-label range in areas including body wash, shampoos, conditioners and creams, and plans to launch its own vitamins range.

All said, Kumar is bullish when it comes to the region and the company's expansion to other markets.

Spinneys opened 11 stores across the UAE and Saudi Arabia over the 12 months to June, taking its gross selling area above one million square feet for the first time. The company employs close to 6,000 people across its operations as it continues to expand its retail and manufacturing footprint.

It also plans to open three more UAE stores by the end of 2026, while its first stores in Kuwait and the Philippines are planned for early Q1 2027. The company has also increased its stake in its Saudi business from 50 per cent to 70 per cent, strengthening its position in the Kingdom.

But, for Kumar, the upheaval has ultimately been a lesson in flexibility — and one that could outlast the crisis itself.

From finding new ports and overland routes to shifting sourcing between continents and making more products locally, Spinneys has had to build a business that can keep moving when its traditional routes cannot.

“Every crisis will bring and open many doors of opportunities,” Kumar said. “Whether it is in product assortment, how it has behaved in the business, as well as other business opportunities.”