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With new-age buyers, frozen food in the Gulf on the rise
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Monday, 10 February, 2020, 08 : 00 AM [IST]
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Dr P A Raajeswari and R Pragatheeswari
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Improved living standards and urbanisation, the presence of a high percentage of expatriates, tourists, as well as young consumers, are driving the demand for ready-to-eat, canned, processed, preserved and frozen foods in the Gulf.
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 per cent driven by increasing number 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.
The UAE frozen food market is forecasted to grow at a CAGR of 9.3% during the period (2019-2024). The market is highly impacted by increasing demand for convenience food products due to busy work schedules of people. The percentage of women joining the workforce has increased which has led to high dependence on ready-to-cook solutions. The need for advanced technologies that preserve produce becomes more relevant in the case of the Gulf countries given the region’s dry climate and lack of arable land in the region.
Market fortuity for frozen food industries in Gulf
Growth within the Middle-East’s frozen food 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.
Frozen bakery goods
Middle-Eastern countries like Kuwait, the UAE and Qatar are some of the busiest nations of the world where there is a marked consumer preference 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.
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 is expected to draw over 95,000 visitors and exhibitors from 120 countries. The 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 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.
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 the UAE, with estimated retail sales of US$20 billion and US$4 billion respectively in 2015. Also it’s one of the major remarketing site for many products.
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, fresh produce is expensive. There is a growing demand for frozen food especially in frozen food segment owing to higher price of fresh vegetables and seafood in the region.
Key market trends in the last decade
The frozen meat and fish market among all other segments is contributing to the revenue growth of the frozen foods in the UAE. The consumer preference for frozen meat is rising, in part due to the hygiene issues associated with making available fresh products.
The frozen food category in the GCC consists primarily of the above product groups, sub groups and segments. However based the contribution of these sub groups and segments may vary from country to country in the region.
While Chicken Frankfurters is the biggest category contributing almost 45% of processed meat group in the UAE and Oman, Mince is the biggest contributor to the group in Saudi Arabia. However between Frankfurters, Mince, Burgers, Nuggets, Breaded Fillets and Kebabs they contribute more than 75% of the processed frozen meat category throughout the region.
Frozen Seafood is another major category in most of the countries of GCC because of the strong consumer preference for seafood like shrimps and fish fillet. Although its contribution to the overall frozen food market is not as big as meat.
In the Frozen Dough group flat breads sell across countries in the region due to the large population from South Asia, followed by others categories consisting of Croissants, Bread Sticks, Muffins & Cakes, and Pizza Base, which are mainly used by the foodservice sector. The sales of puff pastry sheets is predominantly during the Ramadhan season by both foodservice and end-consumers.
In Crisp, going forward the growing health and wellness trend is expected to positively influence the eating habits of consumers who will be seeking fresher and leaner meat, lower-fat chicken and gluten-free products, as well as more vegetables. Vegetables are likely to replace carbohydrates, which will boost sales of frozen processed vegetables.
(Raajeswari is assistant and Pragatheeswari is Ph.D scholar, Avinashilingam Institute for Home Science and Higher Education for Women, Coimbatore. They can be reached at raajraajeswari@gmail.com)
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