Consumer pulse: high on convenience

Shoppers in the Gulf are more into convenience and less into premium products RECENT weak economic growth notwithstanding, the Middle East remains a significant consumer markets for poultry, dairy & livestock products, and continues to grow as tourism and business sectors flourish in the region. Currently, the region largely relies on imports to satisfy an aggregate demand estimated at more than 1.5 million MT of poultry alone. The rich diversity in cultural influences has augmented the demand from the hotel and restaurant industry, substantially due to the presence of tourists all year around, in addition to a large expatriate community. Hospitality growth is driving the surge in food demand, say the organisers of AGRA Middle East (AGRAme, 29-31 March 2010, Dubai), the region's biggest agribusiness trade event. Multi-billion dollar developments in the hospitality sector - $580bn in investments for over 900 hotels and resorts across the Middle East are in the pipeline to 2020 - are having a major impact on the Middle East's fast developing food production and agriculture industry. More than 60% of the total meat requirements of the region are met through imports. For example, UAE's domestic production satisfies only 20% of the total the Emirates?poultry demand, thus demonstrating a huge market potential. Overall, the UAE comfortably tops the regional Food & Drink Business Environment Ratings table for Q1 2010, according to Business Monitor International. According to the BMI report, the UAE has managed to retain its status as an attractive market for food and drink investors looking to expand their private-label sales. Saudi Arabia, which enjoys the world's second highest per capita consumption for poultry products, presents huge investment opportunities for the suppliers of meat, poultry & dairy products. The Kingdom ranks fourth behind Bahrain, Qatar and the UAE in the Food & Drink Business Environment Ratings table for Q1 2010, but BMI points out that the country's large population continues to make it attractive to volume seeking investors. Premiumisation on hold in the UAE Whilst it boast the region's wealthiest consumer base and a fairly large market by Gulf region standards, the UAE's sharp economic deceleration has affected its mass grocery retail (MGR) industry with belt-tightened consumers cutting back on higher value goods. BMI notes that whilst consumers have undoubtedly lost some of their appetite for premium products, the downturn has not curbed the structural development of the MGR industry, which is still less developed than most comparably high income states. "As in the case in the wider Gulf region, most hypermarket and supermarket outlets are still adjacent to shopping malls, which, although a tried-and-tested model, does little to satisfy convenience-conscious consumers who are indifferent to the plethora of value-added services that have become the staple of the country's largest outlets," the analyst said in its Food and Drink report on the UAE. Seizing upon the opportunities provided by this untapped market, a number of convenience store projects have been announced in 2009. Through to 2014, the report expects industry wide convenience store sales to outperform wider MGR sales, strengthening 54.5% to AED0.43bn. Shonil Chande, BMI food and drink analyst, said spending in the UAE is expected to post a minimal growth of 3 per cent in 2010 as consumers gradually regain their confidence and as the crisis- battered domestic economy moves toward recovery. "As the economy gets better, the natural effect on all consumer industries will likewise improve," he said on the sidelines of Gulfood 2010. The UAE food market, currently valued at about $6.78bn, could expect a yearly average growth of 4 to 5 per cent between 2011 and 2014, Mr Chande said, describing the projected growth as "perfectly normal for a mature market such aZoom Lebron XIII 13