The Rapid Growth in the Food and Beverage Market in the UAE

by Zaara 21, Jan 2022

The Rapid Growth in the Food and Beverage Market in the UAE

The United Arab Emirates leads the way the food and beverage market in the Middle East region, helped by a rising number of tourists. In particular, international and home-grown F&B brands continue to attract the nation and Dubai. Food and beverages are the second largest industry globally, important in general for the local UAE, for the GCC and the region's large-scale economic growth and diversification.

With the Dubai Expo 2020 and other global occasions in the region, considering the fierce competition in the F&B sector of the UAE, it does provide reasons for a positive mindset as the country continues to change as a tourist destination.

The tall structures, the glittering gold jewellery industry, the buzzing local markets, and the burgeoning economy are renowned for many events in Dubai.

But Dubai is also starting to become known for its food processing companies/food trading companies in the face of the rising and rapidly expanding tourism industry.

In recent times, the food industry in Dubai has seen exponential growth. Most of this can be attributed to the changing eating out habits of locals in Dubai and the increasing expatriate population.

A variety of F&B investors from homegrown and foreign brands continue to be drawn to this emirate.

The love and craze for food have significantly increased on the global front over the last few years. Over the past few years, the Food and Beverage Industry has seen significant growth and is projected to expand to a great extent. The retail sales for apparel, white goods, and footwear have been diminishing globally and are replaced by the food and beverage industry. The United Arab Emirates ranks first in investors and company owners’ minds regarding business integration.

Food and Beverage Market in the UAE

With increasingly discerning clients, the F&B market in the UAE is exceptionally competitive. Some F&B companies have been forced to make difficult decisions, for instance, to close poorer performing outlets, albeit much-needed, and some have exited brands that suffered in the regional market. In contrast, restaurants have worked to advance a few aspects of their operations over the last few years. It seems like this might be the time for them to take a 360-degree look at their company: from the relevance of the concept in the market to organisational agility, to support function efficiency and results-driven financial monitoring.

Strength

  • The UAE economy is projected to withstand growth and remain stable.
  • The market climate in the region is one of the most favourable.
  • The UAE ranked 70.4 for the F&B sector by Business Monitor International BMI in RRI (Risk/Reward Index), above the world average of 50 points.
  • Because of the high buying power for F&B, the economy was able to withstand the impact of VAT in the food industry.
  • For MGR majors, a large younger population signifies a significant economic resource. 49.2 percent of the people in the Emirates are young people.
  • The UAE remains the most attractive food and beverage market in the country. Investors, and the only nation in the country to rank BMI RRI in the top 10 markets worldwide
  • High disposable income tolerates growing demand for luxury goods and natural foods.
  • Focusing on the growth of the halal sector by government authorities and working on the establishment of halal standards
  • An emerging field of online F&B distribution that has demonstrated strong demand
  • The nation is now more than 80% self-sufficient in milk and nearly 40% self-sufficient in egg demand.
  • The UAE continues to endorse projects for organic farming.

Growth Rate

  • Food Sales - Estimated growth in food sales of 4.6 per cent in 2019 and an average compound growth rate of 6 per cent for 2019-2023.
  • In 2019, sales of beverages will rise by 6.9 per cent and in 2019-2022 at an average compound rate of 6 per cent.
  • The driving force of growth in the food industry in the UAE will remain the preference for quality food, with the increase of health awareness also a key trend.
  • Dairy Sales - As dairy demand increases in line with more advanced consumer tastes, dairy sales will experience strong growth, growing at a CAGR of 6.9 per cent.
  • Baked Food - Baked items are expected to hit a CAGR of 7.1 per cent in sales over the years to 2022 in the Emirates. The growing adoption of diversified consumption designs will drive this.

Opportunities

In recent years, the food processing industry in the UAE has been experiencing a phase of substantial expansion. The trend is expected to continue as foreign investment and government efforts to increase domestic food production and self-sufficiency, production facilities have begun to emerge and diversify.

Value-added Dairy Commodities

  • The high level of milk consumption in the UAE enables large regional players to join the market.
  • Milk supply consumption per capita is high, at around 80-85 kg per year, and this lucrative industry is highly vibrant and competitive, with many milk companies in operation.
  • Opportunities for expansion in value-added milk products such as yoghurt, butter and cheese

Development in Food Services (restaurants)

  • With a diverse population and an appetite for different brands, the food services industry has grown to become a significant industry in the UAE, with more than 16,000 outlets and shopping centres.

Key Drivers of Food and Beverage Industry in the UAE

The food and beverage industry stands as one of the world's most productive markets. The following points are the industry’s leading drivers when it comes to the United Arab Emirates zone.

  • The demographics-the high degree of youth presence
  • Elevated growth in GDP
  • Strong per-capita GDP
  • A multi-cultural foundation
  • A dedicated destination for visitors
  • Continuous progress in the tourism, retail and hospitality sectors
  • The high demand for F&B products for fitness, lifestyle and luxury-related products
  • The extensive demand for competition
  • Shows and Activities
  • Expo 2020 upcoming
  • The United Arab Emirates has more than 200 different nationalities with different cultural values and food tastes.

When it comes to competition with GCC countries, the United Arab Emirates has set a benchmark. After looking at the region's growth, the MENA region has researched to understand the promise that the F&B market holds.

In this blog, we highlight five reasons for the rapid growth in the food and beverage market in the UAE -

Global Tourism Hub

Despite being an oil-fuelled economy, Dubai has transformed into a melting pot of global cultures in the Middle East over the past few decades. For business and pleasure, expatriates worldwide visit Dubai, some even settle down there for good. It has contributed to a multicultural blend of people. Given the richness of the gentry, the market for world cuisines has increased. The influx of tourists from Russia, India, and other parts of Asia is steady.

Dubai is also a hub for international business conferences, meetings, and conventions, which is why many business travellers are in Dubai at any given time. The government also continues to host festivals to draw more tourists, including the Dubai Shopping Festival. Changes in eating habits have occurred among locals. Sixty-seven per cent of people eat dinner every weekend, and 44 per cent eat out or grab a takeaway lunch every day, according to a KPMG survey. Sixty-six per cent of individuals go out once a month for brunch.

World-Famous Restaurants

There is something for every foodie in Dubai, from traditional Thai fare to Indonesian cuisine to directly from the Emirate kitchens. In particular, street food is famous for being tasty, cheap and readily available. Restaurants are very popular with locals and visitors, such as Zaroob, Tom and Serg, Bu Qtair, Din Tai Fung, Ravi restaurant, Calicut Paragon.

Free Business Setup Regions

There exist several free zones in Dubai and many other parts of the UAE. These free zones are intended to provide foreign investors with favourable locations and economic policies for setting up businesses in Dubai. These free zones give international investors advantages in terms of relaxed customs and taxation policies.

For example, there are minimum or no taxes, 0 percent corporate tax, 0 per cent income tax, and no customs duties in the free zone. These make the company set up in the food industry of Dubai a genuinely ambitious venture. Contact Commitbiz business consultants who will guide you to build a profitable restaurant business setup in Dubai, whether you want to open a new restaurant chain or set up a franchise of existing restaurants.

State of the Art Facilities

You don't need to worry about infrastructure specifications in Dubai, and the Emirate is at par with international infrastructure, modern facilities and architecture standards. Food and shopping go hand in hand for tourists and to help the world-famous malls in Dubai. Dubai Mall is the largest mall in the world. The City Walk Mall in Jumeirah is known for its culinary concepts featuring Michelin.

In Jebel Ali, the Outage Village has luxury food and beverage stores to help shoppers shop during the day. In Jumeirah, Mercato mall is renowned for its family-friendly experience and delicious bakery shops.

In Dubai Creek, the famous Dubai Marina Mall, the Wafi mall offers tourists and locals a great dining experience.

Quick Licencing Procedures

While business conditions are favourable, it goes without saying that the UAE government is searching for foreigners who want to invest in the UAE. The simple business registration and licencing procedures are a testament to this fact. Limited Liability Company, Free Zone Company, Branch of a foreign company, Branch of a local company are the types of company you may create. Some forms of business require a local sponsor to be present.

There are advantages associated with each, and you have to determine which fits your business plan better and go ahead with your dream business's restaurant licencing registration. Commitbiz will also direct you through this process, as we discussed before, so you can concentrate on making a successful venture for your company. If you are pursuing an alcohol licence, it is understood that there is a particular procedure for obtaining the same ownership and the authorities charge an extra fee.

The UAE is one of the top 10 markets in the country in the retail room. In the food and beverage industry, 30% of new brands set up shops themselves in 2015.

The most popular cuisines are Indian, Italian and Arabic, and fast service and casual restaurant environments are preferred. Cafes are ubiquitous as a concept in the area, and chicken is a favourite food item.

Besides this, an essential factor is a location. To run a successful food company, having the idea right and listening to consumer needs is crucial. The food quality matters as much as your restaurant hospitality’s staff.

Since the industry is rising so fast, it has been struggling with several restaurants that have not been able to keep up with demand. Therefore, having a long-term strategic strategy that factors in the economy and rising competition will help keep the company afloat for years to come.

The UAE region is a solely lucrative destination for the food and beverage industry; we may conclude. There are a vast number of possibilities that occur in the UAE under the umbrella of company incorporation. Coping with the initial phases is one of the most critical components, as the country has to comply with legal laws and regulations. The inclusion of even a slight fault could result in the business proceedings being cancelled. Company investors and owners tend to go forward with competent business consultants who are seasoned and possess the industry’s expertise to escape such unnecessary circumstances.

Company incorporation consultants such as Commitbiz Consultants take the utmost caution while providing the best business setup strategies. From the incorporation process to the development of critical pillars, such as finding an office space, accounting, taxation, product promotion and legal procedures, we take care of all your business needs. Our consultants are well-versed in the process and have tailored strategies to suit your organisation's needs.

Have questions on how to get started?

Write to us at [email protected], and we will be happy to help you.

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