After a long period of double-digit rise, per capita expenditure is at stake in the country. The food sector of the Gulf Cooperation Council (GCC) is beginning to level off. Regional players explore opportunities for mergers and acquisitions (M&A) to expand and sustain growth in their portfolios, but there is a lack of viable objectives. Nonetheless, it is still possible for businesses in the field by tapping into changes in the way individuals spend money on food, they expand.
Consumption is currently developing in other countries at this stage in their growth. The GCC mix moves away from staple commodities to value-added, convenient and healthier alternatives. It is a vital opportunity for existing food players in the country and start-ups, entrepreneurs and businesses in related sectors, such as food distribution.
The dynamics of the food and beverage sector in the area have been examined to understand better the opportunity in four most promising categories: snacks, spreads, cooked meals and ready-to-drink (RTD) drinks, along with an overarching trend that cuts through classes: healthy diets. The GCC zone also offers attractive investment opportunities regardless of the different types of’ maturity and industry structure.
Five Promising Options
The GCC’s four excellent categories are snacks, spreads, prepared meals, and RTD beverages — plus one attractive theme that cuts across categories: healthier diets.
1. Snacks
The snacks category includes sweets, gum, bars (including cereal and energy bars), snacks with salt and fruit, and chocolate. Over the past ten years, countries in this category have registered the most extensive series of innovative product launches.
Primarily it is included in two segments -
a) Health-oriented Products
Most snacks’ category comes from a shift among customers towards healthier items, which is only starting to occur. Hold on to the GCC, and for the near future, it is likely to play out. Instead, people are searching for low-sugar options rather than candy bars. Likewise, fitness-oriented customers opt for high-protein bars, commonly advertised to improve energy or help people recover from a workout.
It should be encouraged by numerous health-related government programmes in the GCC market for wholesome snacks.
b) Premium Commodities
There is an increasing demand for items and healthy snacks, and They have ingredients of higher quality. It is particularly true in chocolate bars, where customers are looking for more premium and expensive products because of their higher quality and natural ingredients, cocoa-rich products. In response, chocolate companies differentiate themselves by distinguishing themselves by unusual cocoa and components with more complex elements.
2. Spreads
The spreads category encompasses savoury items such as dips, meat pastes, sandwich fillers, and vegetable pastes, along with sweet spaces from caramel, berries, honey, syrup, and nuts. The group for snacks shows the largest total number of releases and spreads over the past ten years. The highest growth in new product launches and a more considerable rise in new product launches fresh players' penetration.
The trend of greater understanding of health stimulates more significant demand for some forms of spreads, such as those containing antioxidants and high levels of protein levels, or vitamin and mineral-enhanced spreads.
3. Meals
The category of meals comprises packaged meals that only require heating, meal kits (in which individually packaged meals need to be assembled by the consumer ingredients), sandwiches/wraps, salads ready to eat, and instant salads, pasta, and rice. The most considerable difference between developed markets and the GCC is seen in this category, where the demand for prepared meals is in its earliest stages. In developed markets, where new products represent this demand, this pattern is already well known.
4. RTD Beverages
The RTD category includes RTD coffee, RTD tea, substitute meals, drinks, and juice or water-based carbonated drinks. It does not encompass soft drinks and colas, for example. There is a significant shortage of RTD offerings in the GCC compared to developed markets, particularly in chilled items, as is the case with prepared meals. However, some regulatory developments could soon stimulate market activity.
The retail market, which is maturing, brings more penetration of modern trade outlets with more comprehensive ranges of chilled outlets goods, in this category, should lead to growth.
Rising demand for meal replacement has seen developed markets rise around drinks. These drugs enable individuals to gain weight by supplementing them (Meals), lose weight (by missing meals), or fulfil other nutrition needs.
5. Cross-category Health
An enticing trend that covers the four categories is also available: healthy diets. Over the past 15 years, looking at new product releases, most are based on organic, vegan, low sugar, or gluten-free.
Strategic Options to Seize the Opportunity
Companies that are assisting in penetrating the good categories have several strategic alternatives.
1. Organically Building up Offerings
A variety of startups have entered these categories in developed markets and flourished. To minimise up-front production investments, existing food manufacturers may also use a greenfield strategy or seek co-packing agreements. Nonetheless, building technology capabilities within existing. It can be time-consuming and expensive for organisations.
2. Setting up Joint Projects with Foreign Entities
Regional players can also enter into joint ventures with foreign companies. Players can locate and store some of these inventions In the field shelves. To accelerate creating a joint venture, investors and regional players may also invest and help develop themselves in the GCC by investing in emerging players or start-ups in other markets.
Conclusion
The food and beverage industry is at a turning point in the GCC. Based on economic development and the study of productive product launches in those markets, the region’s most attractive growth prospects over the next five to 15 years can be set up. Companies who wish to enter these segments will need to quickly recognise the region's customer desires and build up the requisite innovation capabilities rapidly, possibly collaborating and leveraging their experience with existing players in other markets. This unique opportunity will allow those who do so to capitalise on it.
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