Opportunities for British businesses in the United Arab Emirates
As the UK’s food and drink businesses continue to plan their recovery from the pandemic, exports will be a key part of their strategy.
And in the wake of Brexit, it will be even more important to identify opportunities in markets all around the world.
There will be many such opportunities, but a report just published by the British Centres for Business (BCB), which we have close relationship with, picks out the United Arab Emirates (UAE) as a particularly attractive potential market for UK exporters.
In fact, UK exports to the UAE are already growing. Data from the Food & Drink Federation shows UK food and drink businesses exported £80m worth of products to the country in the first quarter of the year, a 7% increase on the same period of 2019. That put the UAE well inside the top 10 destinations for UK food and drink exports beyond the European Union.
The BCB’s report suggests there’s now significant potential to build on these strong foundations. The coronavirus pandemic has, of course, had serious impacts on the UAE’s food and drink sector over the past six months, particularly on businesses that serve the airline catering sector and the hotel, restaurant and café (Horeca) industry. But supermarkets and other retailers have reported increased sales and the sector as a whole is still expected to grow this year. Total spending on food and drink in the UAE is forecast to rise 6.9% to £29.7bn in 2020, albeit with 90% of sales coming from retail compared to 70% in previous years. In e-commerce, sales are expected to rise at an average of 34% a year between 2019 and 2025.
The BCB points to several important trends in food and drink spending in the UAE, which has a young, well-educated and relatively affluent population.
In retail, the report highlights the growth of private-label products in supermarkets, with many grocers expanding their range of own-label goods. It also picks out significant growth in health and wellness. Demand for organic food in the UK, for example, is growing at 20% a year. The report points out that several supermarkets are also launching ready-to-cook and ready-to-eat stations, with consumers able to have meals prepared while they do the rest of their shopping.
In e-commerce, meanwhile, BCB points to very rapid growth of home deliveries even before the coronavirus pandemic. The pandemic has accelerated this trend, plus providers are now experimenting with innovations such as same-day deliveries.
Even in struggling sectors, there are reasons to be optimistic. The report predicts the Horeca sector will bounce back in 2021, and a growing focus on healthy fast food is one interesting area to explore. In airline catering, recovery will clearly depend on how quickly aviation gets back to full speed, but the region’s airlines and airports are gradually stepping up operations.
Opportunities for UK exporters
British brands are well-regarded in the UAE. The BCB reports that there are a number of growing segments where UK exporters have a good opportunity to meet demand.
- Private labelling – supermarkets are on the look out for new products to add to their own-brand ranges. UK suppliers are especially sought after in areas such as breakfast cereals, cookies and biscuits, spreads and sauces, sugar, oils, coffee and packaged seafood.
- Healthy food – consumers are interested in natural and organic foods, but also in areas such as probiotic supplements and drinks. Gluten-free food and sustainably produced foods are also key areas. Supermarkets are increasing their ranges in these areas, but there are also a growing number of specialist stores opening across the UAE.
- Plant-based and vegan foods – these are also increasing in popularity in the UAE.
- Meat – amid global supply chain issues related to the pandemic, supermarkets and other retailers are seeking new suppliers of meat. The UK’s geographical proximity compared to competitors such as Australia and New Zealand is an important advantage. Plus, the British meat industry has a strong reputation for safe, high-quality beef and lamb.
- Baking ingredients – sales of baking ingredients soared by up to 150% during the pandemic and this trend is expected to continue.
For UK food and drink companies interested in the UAE opportunity, we are well-placed to help, with industry specialists and regional representatives who can help British exporters enter the market or increase their sales.
To discuss how Santander can help your business during the coronavirus pandemic or to find out more about food and drink opportunities in UAE, please contact ccbsectorinsights@santander.co.uk