UAE food and beverage manufacturing sector thrives, generating AED 28 billion in annual revenue

The UAE is home to more than 2,000 food and beverage manufacturing companies, generating US$7.63 billion (AED28 billion) in annual revenue, making up 25 percent of the country’s manufacturing GDP and ranking second only to the oil and gas industry..

This was revealed by the United Arab Emirates. Food and Beverage Business Group (FB Group) in its Annual UAE Food Industry Report for 2023, which provides a detailed insight into the thriving food and beverage sector landscape across the country.

For the first time, the report offers an analysis of consumer preferences, the changing retail landscape and demand in each food segment in the context of constantly evolving inflation rates and price fluctuations in the Middle East and Africa markets. .

The report also highlights the strong growth of the urban retail universe, emphasizing the key trends shaping the industry and the growing importance of affordability in consumers’ brand choices. In particular, the snacks and bakery categories are leading growth, outpacing overall sector expansion. Despite price increases, consumer preferences are leaning toward indulgent categories, indicating sustained demand for premium products. The report also highlights the dynamic growth of smaller players within the industry, overtaking market leaders.

The report covers data from Nielsen’s retail survey that reflects changes in consumer spending patterns and consumer behavior.

The findings were categorized into 7 FB baskets, where Ambient Food, Snacking and Bakery surpassed the overall FB market growth rate, and the bakery category grew by more than 50%. The snacks, chocolates and cookies category is showing solid growth with chocolates leading with a 20% growth rate, driven by popular brands. Meanwhile, the beverage segment saw notable growth in the UAE, with the sports drinks segment leading with 15%, despite an overall increase in soft drink prices of 134%, a trend that indicates that small Players in the beverage market are outperforming industry leaders. The ambient foods category has seen the long-awaited post-pandemic recovery, with sub-segments such as eggs, cooking oil and desserts growing 18%, 30% and 21%, respectively, and all categories seeing a price increase.

The survey further found that the dairy segment is growing at a rate of 16% thanks to increased awareness among customers about the importance of balance and a healthy diet. Meanwhile, the frozen food category, while experiencing slower overall growth, featured frozen meat, with 18% growth outperforming the segment, driven primarily by pricing improvements. Finally, the baby food industry faces a paradox, as inflation drives income growth through rising product prices, but consumption declines due to a preference for mother’s foods and homemade alternatives, along with with declining birth rates, requiring industry adaptation to changing market conditions.

Commenting on the report, Saleh Lootah, Chairman of the UAE Food and Beverage Business Group, fixed,

“The 2023 Annual Report reflects the resilience and dynamism of the UAE’s food and beverage sector. Sustained growth in key segments and the emergence of smaller players as major contributors underline the adaptability of the industry. As we navigate evolving consumer preferences and economic factors, the report serves as a valuable tool for stakeholders to make informed decisions and foster continued growth.”

The report also sheds light on emerging trends, such as the decline of baby foods and infant formulas, the growth of organic baby food brands, and the growing importance of affordability in consumers’ brand choices.

News source: Emirates News Agency