Globally, the consumption of frozen foods has risen steadily in the last decade. Worldwide frozen food market is expected to reach US$293.7 billion by 2019, at a CAGR of 3.9 percent driven by increasing numbers of modern retail formats, especially in new economies markets where the availability of a greater variety of ready-to-eat meals, pasta, seafood and exotic meats has attracted time-conscious consumers, leading to a noticeable increase in demand. Globally the demand for frozen food is rising and the GCC market is no exception. The region already imports 70 per cent of its food requirements and it is likely to double to US$53.1 billion by 2020 forecasts MEED.
The growing influence of western food habits among people has increased the demand for packaged food products in the GCC. This is further supported by high urbanisation, the presence of a high percentage of expatriates, tourism, as well as young consumers, which is driving the demand for ready-to-eat, canned, processed, preserved and frozen foods. The need for advanced technologies like IQF that preserves produce becomes more relevant in the case of the GCC given the region’s dry climate and lack of arable land in the region.
Market opportunities GCC presents for frozen food players:
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Growth within the Middle East’s F&B market is driven by its diverse consumer groups which have an appetite for a wide range of cuisines. For example, the UAE is home to over 200 nationalities, while the number of tourists flocking to the country continues to grow every year. Dubai alone is expected to accommodate 25 million visitors by 2020. The region’s hospitality sector is in the midst of rapid expansion, and several new hotel and retail projects are in the pipeline, especially within the UAE and Saudi Arabia. Large shopping malls and hotels are still the preferred locations to open new restaurants due to the growing number of tourists. According to a report from Al Masah Capital, Dubai is expected to add 57,000 hotel rooms in hotels and serviced apartments by 2020. With new hotels and restaurants looking to cater to the changing needs and demand of tourists, this presents a large opportunity for frozen food players.
Frozen Bakery Goods
Middle Eastern countries like Kuwait, UAE, and Qatar are some of the busiest nations of the world where there is a marked consumer prefer to consume ready-to-eat products. The region does not have a well-established domestic market for frozen bakery goods, and currently importing them. This market is unexplored and presents an opportunity for multinational companies to enter the domestic market, with the concept of private labels, to exploit the market. New age retail formats of hypermarkets and supermarkets are gaining popularity among busy consumers in the GCC.
Tourism & Trade Shows
The Gulf is famous for some of the world’s largest shopping expos and F&B events. The region’s largest food trade show next year is expected to draw over 95,000 visitors and exhibitors from 120 countries. 2020 Expo will be a major factor in driving tourism growth to the UAE, which in return should boost demand and consumption of food and beverage products with 25 million visitors expected to attend the six-month mega event to Dubai.
Innovation Driven by New Age Consumer Preferences
The new age consumers in the Gulf are sophisticated when it comes to their food shopping and eating habits, who spend on high quality and healthy food. They are increasingly looking to try new types of cuisines and food products, while they are also demanding convenient delivery options which cater to their busy lifestyles. Most F&B majors continue to innovate and experiment with multiple product offerings and models to cater to this growing consumer segment, very few players are able to sustain their disruptions successfully.
The Region’s Emergence as Major Re-export Hub for Food Products
The GCC has a great geographical advantage, it is an entrepôt of commodities and cultures. Countries of the region like UAE are a major re-export hub for food products that are imported to the region from Africa, Eurasia and Latin America. It is also home to many of the world’s largest commercial ports which are designed to high capacity.
Expansion of Modern Retail
The rapid expansion of cold chain distribution networks for frozen food in supermarkets and hypermarkets in the region is driving the demand for packaged and frozen foods in the region. It is choices in the Middle East regions as frozen processed halal meat and poultry, cold drinks and flavoured milk increase in popularity. Two of the largest packaged food and frozen markets in the GCC are Saudi Arabia and UAE, with estimated retail sales of US$20 billion and US$4 billion respectively in 2015.
Increase in Fresh Produce Price in the Region
Demand for vegetables as a substitute for carbohydrates and demand for seafood is increasing primarily owing to a shift towards protein-rich diets and increased demand for exotic fish species, such as shrimp and oysters. However, prices for fresh produce is expensive. There is a growing demand for frozen food especially in frozen food segment owing to a higher price of fresh vegetables and seafood in the region.
The ‘Frozen Advantage’
Food waste across the Middle East has surged in recent years. In Saudi Arabia alone, the estimated economic impact of food waste is US$13.3 billion per year, while in the UAE, 40 per cent of the country’s total waste is derived from food. The advantageous Individual Quick Freezing technology ensures that the product remains as fresh and nutritious as it was at the time of first defrost, bringing the “farm to table” goodness to the consumer’s kitchen. The same principle is applied in case of meat and seafood too. The Gulf is currently experiencing several developments that are increasing consumption levels of frozen food across the region. A growing presence of women in the workplace has led to increasing levels of frozen and pre-packaged food as convenience becomes key. With greater market opportunities across this region, frozen food companies greatly stand to benefit.
About the Author
Mithun Appaiah presently the CEO of Innovative Foods Ltd makers of the brand Sumeru, is an expert with Food & Beverage industry expertise across the spectrum of Sales, key account management, customer marketing, logistics, business development, P&L management, developing new business channels, E-commerce and start-up acceleration.
The Outlook for the Frozen Food Market in the Gulf region
