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Sector Trends Analysis - Packaged food trends in the Gulf Cooperation Council (GCC)

April 2018

Executive summary

The Gulf Cooperation Council (GCC) states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates are home to a young, predominantly muslim, population. This population is growing in size and expected to reach over 50 million by the year 2020. According to Euromonitor International, Saudi Arabia (26.5 million) and the United Arab Emirates (8.2 million) are the two largest populations in the region, both with large expatriate populations, open to global food trends and used to traditional retail formats for their grocery needs.

The packaged food market saw an increasing demand for health and wellness food products which are products with perceived health benefits. Governments in the GCC are trying to lower the rate of obesity and diabetes by applying food-education initiatives.

The United Arab Emirates (UAE) is Canada's largest GCC agri-food and food products export partner, representing 82% of all GCC imports in 2016. Saudi Arabia is the only other substantial export destination with 11% of the market, while the other GCC partners purchase a combined 6.3% of Canadian products.

Contents

Gulf Cooperation Council Trends

The six Gulf states which constitute the GCC are oil and gas producers, relatively stable, wealthy, and enjoy the highest standards of living in the Middle East. However, consumer confidence mirrors the oil market conditions and thus shows a great deal of fluctuation. The GCC population is largely English-speaking, educated and the six countries have a large expatriate population which has a profound influence on the grocery selection in supermarkets, as well as on the local food culture. They are also avid consumers of luxury goods and services.

Per-capita income in the GCC averaged US$47,500 in 2016. This high per-capita income is contributing to driving demand for imported goods and foods. In fact, almost 90% of foods are imported due to the agricultural limitations of the region.

The GCC region saw a fast-developing hospitality and grocery retail industry as a whole, which offers real opportunities for Canadian exporters. The hospitality sector, and particularly ethnic restaurants, is experiencing growing demand for quality food products. Canada's reputation as a producer of high quality agricultural products gives exporters a competitive advantage, particularly in the packaged food industry.

Population growth and societal changes such as working women, in addition to increasing income per capita and a booming tourism industry are drivers of changing food consumption in the GCC region. Euromonitor International indicates that the GCC is a fast growing market, with consumer spending on food and non-alcoholic beverages reaching US$95.2 billion in 2016.

In addition, there are upcoming market opportunities in GCC states. For instance, the UAE will be hosting Expo 2020 in October 2020, and Qatar will be hosting the World Cup in November 2022. These events represent tremendous market opportunities for the packaged food market, in particular for the food service industry.

Packaged food market characteristics

The retail value of all packaged foods sold in the GCC, including those in the health and wellness category, was US$30.4 billion in 2016 (Euromonitor, 2017). The value of packaged food sales has been steadily increasing from 2012 to 2016 by a compound annual growth rate of 8.7%. The retail value of packaged foods sales is expected to reach US$43.6 billion by the year 2021, increasing by a compound annual growth rate of 7.5% from 2017 to 2021 (Euromonitor, 2017).

Almarai Co. Ltd. led the market in 2016 with a 7.4% market share, followed by Nestlé SA with 4.9%, and Mars Inc. with 3.7%. The top three segments in terms of sales were: dairy, baked goods, and confectionary. However, the highest growth for 2016 was seen in the spreads category (11%), followed by ice-cream and frozen desserts (10.8%) and baby food (10.7%).

A potential challenge that should be noted by Canadian exporters is that the government in the UAE enforces a strict price policy for most packaged food products, which results in manufacturers rarely being permitted to increase their prices. However, many value-added products are exempt from these regulations.

Spending and consumption

Dairy products retail sales in the GCC countries in US$ millions
Country 2012 2013 2014 2015 2016 CAGR
(2012-2016)
Saudi Arabia 3,065.00 3,427.80 3,706.20 4,014.20 4,221.40 9%
United Arab Emirates 1,058.20 1,130.20 1,202.20 1,279.60 1,360.50 7%
Kuwait 558.1 610.9 672 679.7 733.1 10%
Oman 336 375.5 416.3 456.6 488.5 14%
Qatar 242.2 281.8 325.3 360.1 403.4 8%
Bahrain 107.6 120.6 133.2 140.5 152.1 6%
Source: Euromonitor, 2017
Bakery products retail sales in the GCC countries in US$ millions
Country 2012 2013 2014 2015 2016 CAGR
(2012-2016)
Saudi Arabia 3,613.90 3,986.60 4,315.70 4,659.10 5,041.50 N/A
Kuwait 411.4 454.1 488.2 519.5 546.4 7%
United Arab Emirates 380.9 407.2 437 473.9 503.7 9%
Oman 336.1 390.7 416.8 444 467.7 N/A
Bahrain N/A N/A N/A N/A N/A 9%
Qatar N/A N/A N/A N/A N/A 7%

Source: Euromonitor, 2017

N/A = No data available

Confectionary products retail sales in the GCC countries in US$ millions
Country 2012 2013 2014 2015 2016 CAGR
(2012-2016)
Saudi Arabia 1,491.70 1,695.20 1,870.30 2,051.60 2,056.90 11%
United Arab Emirates 301.1 349.9 386 433.2 464.7 7%
Kuwait 201.1 215.8 234.9 248.9 266.4 7%
Qatar 139.8 167.8 199.5 227.1 253.8 16%
Oman 114.8 129.1 140.9 146.4 152.2 8%
Bahrain 79 89.9 100.7 108.8 118.2 11%

Source: Euromonitor, 2017

N/A = No data available

Key categories

Nutrition and staples

Main Categories

Forecasts for 2017-2021

Retail sales of nutrition and staples in the GCC by category historic in US$ millions
Category 2012 2013 2014 2015 2016 *CAGR
(2012-2016)
Total nutrition/staples 12,164.0 13,420.5 14,530.1 15,594.3 16,621.4 8%
Dairy 5,367.2 5,946.7 6,455.2 6,930.7 7,359.1 8%
Bread 2,152.4 2,340.6 2,487.6 2,641.8 2,788.8 7%
Rice 1,789.3 1,919.3 2,070.9 2,183.7 2,327.1 7%
Baby food 1,122.0 1,277.4 1,373.3 1,525.5 1,684.3 11%
Oils and fats 768.6 874.5 980.2 1,055.4 1,111.7 10%
Spreads 322.4 367.0 412.3 448.2 489.7 11%
Breakfast cereals 251.8 277.4 301.2 326.6 342.8 8%
Noodles 256.5 273.5 294.3 317.6 340.7 7%
Pasta 133.8 144.1 155.1 164.8 177.2 7%

Source: Euromonitor, 2017

*CAGR = Compound Annual Growth Rate

Retail sales of nutrition and staples in the GCC by category forecast in US$ millions
Category 2017 2018 2019 2020 2021 *CAGR
(2017-2021)
Total nutrition/staples 17,636.9 18,843.3 20,141.4 21,552.1 23,073.6 7%
Dairy 7,797.3 8,312.8 8,876.7 9,492.9 10,161.6 6%
Bread 2,942.4 3,124.8 3,298.7 3,488.2 3,686.8 7%
Rice 2,426.3 2,548.8 2,687.0 2,830.5 2,980.1 7%
Baby food 1,855.3 2,056.2 2,280.6 2,530.5 2,802.1 6%
Edible oils 1,168.2 1,240.6 1,315.4 1,396.3 1,481.4 5%
Spreads 534.9 589.5 647.5 711.5 781.3 8%
Noodles 363.4 388.2 416.0 442.5 475.3 10%
Breakfast cereals 359.6 378.0 398.7 421.2 446.6 7%
Pasta 189.5 204.4 220.8 238.5 258.4 11%

Source: Euromonitor, 2017

*CAGR = Compound Annual Growth Rate

The combined efforts of the GCC governments, manufacturers and the media will continue to fuel rising health awareness especially amongst consumers in the United Arab Emirates and Saudi Arabia over the forecast period (2017-2021). This trend should have a strong influence in packaged food, where companies are expected to introduce more health and wellness products.

Euromonitor International has noted that, reduced fat and reduced sugar products also saw increased shelf-space, especially in ice cream, dairy, confectionery and oils and fats. The manufacturers are also ensuring that the product labels clearly communicate any health benefits. For this reason, many product labels clearly mention the inclusion of nutrients such as vitamins and minerals, whole wheat content, cholesterol-free and pre-probiotic in order to attract consumers' attention.

Impulse and indulgence products

Main categories

Forecasts for 2017-2021

Retail sales of impulse and indulgence products in the GCC by segment
Historic in US$ millions
Category 2012 2013 2014 2015 2016 *CAGR
(2012-2016)
Total impulse and indulgence products 6,299.5 7,096.3 7,852.7 8,628.4 9,274.4 10.2%
Pastries 1,622.3 1,812.1 1,976.2 2,153.8 2,354.1 9.8%
Savoury Snacks 1,432.2 1,587.2 1,765.5 1,941.8 2,145.9 10.6%
Chocolate Confectionery 1,365.8 1,580.8 1,766.7 1,959.2 1,961.5 9.5%
Cakes 828.8 937.5 1,033.4 1,127.5 1,230.4 10.4%
Sweet Biscuits 508.6 569.3 628.7 692.2 755.0 10.4%
Ice Cream 441.6 494.7 551.6 610.3 668.7 10.9%
Snack Bars 100.2 114.7 130.6 143.6 158.8 12.2%

Source: Euromonitor, 2017

*CAGR = Compound Annual Growth Rate

Retail sales of impulse and indulgence products in the GCC, by segment
Forecast in US$ millions
Category 2017 2018 2019 2020 2021 CAGR
(2017-2021)
Total impulse and indulgence products 9,992.3 10,930.4 11,910.9 12,998.1 14,199.0 9.2%
Pastries 2,572.9 2,844.0 3,121.5 3,437.7 3,789.0 10.2%
Savoury snacks 2,370.1 2,629.9 2,915.2 3,226.3 3,566.8 10.8%
Chocolate confectionery 1,980.7 2,086.5 2,189.0 2,303.0 2,427.1 5.2%
Cakes 1,344.7 1,481.6 1,619.8 1,776.5 1,953.8 9.8%
Sweet biscuits 822.3 902.1 986.1 1,074.4 1,170.6 9.2%
Ice cream 731.6 802.7 880.4 966.4 1,062.2 9.8%
Snack bars 170.0 183.6 198.9 213.8 229.5 7.8%

Source: Euromonitor, 2017

*CAGR = Compound Annual Growth Rate

Meal solutions

Main category

Forecasts for 2017-2021

Retail sales of meal solutions in the GCC, by segment
Historic in US$ millions
Category 2012 2013 2014 2015 2016 *CAGR
(2012-2016)
Total meal solutions 1,599.2 1,720.2 1,842.5 1,952.8 2,075.9 7.2%
Sauces, dressings and condiments 735.7 791 850.1 903.1 964.1 7.0%
Processed fruit and vegetables 449.7 483 515.1 543.1 573.5 6.3%
Frozen processed fruit and vegetables 192.1 208.6 223.7 237.5 251.8 7.0%
Dessert mixes 90.3 95.9 101.9 108.1 115.0 6.2%
Soup 78.3 84.6 89.8 94.6 100.3 6.4%
Ready meals 53.1 57.1 61.9 66.4 71.2 7.6%
Dinner mixes N/A N/A N/A N/A N/A N/C

Source: Euromonitor, 2017

*CAGR = Compound Annual Growth Rate

N/A = Not Available N/C=Not Calculable

Retail sales of meal solutions in the GCC, by segment
forecast in US$ millions
Category 2017 2018 2019 2020 2021 CAGR
(2017-2021)
Total meal solutions 2,197.0 2,339.0 2,489.0 2,646.0 2,817.0 6.4%
Sauces, dressings and condiments 1,024.8 1,100.8 1,179.2 1,260.0 1,347.2 7.1%
Processed fruit and vegetables 603.1 634.8 669.9 707.7 749.8 5.6%
Frozen processed fruit and vegetables 266.8 282.8 301.3 321.2 344.0 6.6%
Dessert mixes 122.0 129.3 136.6 144.0 151.7 5.6%
Soup 105.1 111.5 117.2 123.3 129.0 5.3%
Ready meals 75.2 79.7 84.6 90.0 95.6 6.2%
Dinner mixes N/A N/A N/A N/A N/A N/C

Source: Euromonitor, 2017

*CAGR = Compound Annual Growth Rate

N/A = Not Available N/C=Not Calculable

Packaged food in foodservice

The recent opening of exclusive foodservice outlets and the expansion of menus by existing players in the GCC has caused an increase in supplying power by distributers. According to Euromonitor, the growing demand for sandwiches among foodservice consumers, both for breakfast and for snacks, has led to dynamic growth in the chilled processed red meat category in terms of volume sales in 2016.

Despite a recent economic slowdown due to falling oil prices, an increasing number of delivery foodservice outlets such as ‘Talabat.com' and ‘hellofood' have also played a part in keeping the industry on its feet. Consumers in the GCC do not seem to be cutting down on their favorite past time of eating out. Certain religious events and practices such as the pilgrimage seasons as well as Ramadan have also contributed to the continuing boost in seasonal sales within the sector.

In the UAE, the progressive development of consumer foodservice as a whole was sustained by steady growth in tourism and investments in new infrastructure projects in preparation for EXPO 2020. Furthermore, many single male consumers and people living in shared housing without kitchen facilities continued to rely heavily on foodservice outlets.

One of the most prominent suppliers of packaged food products to foodservice outlets in the United Arab Emirates in 2016 was Federal Foods. It distributes Sadia, Whitworths and other well-known packaged food brands to foodservice outlets. In order to address the needs of its clients, the company is committed to developing exceptional solutions using its long term understanding of the foodservice business.

Conclusion

The GCC will continue to have limited local agricultural production, a growing demand for imported food products, and a strong re-export market. Canadian agro-food products are regarded as high-quality with a unique North American image.

As GCC governments develop initiatives to increase health awareness, there will be opportunities for Canadians to export products that have perceived health benefits, particularly with regard to obesity, diabetes, and heart disease.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

For additional information on Gulfood 2018 please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-Food Canada
ben.berry@canada.ca

Resources

Sector trend analysis: Packaged food in the GCC
Global Analysis Report

Prepared by: Hadi el Zein, Market Analyst (Co-op student)

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2018).

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