Resilience and Growth: UAE's Food & Beverage Sector Hits US$ 7.63 Billion in Annual Revenue
Mokshita P.
10x Industry

Resilience and Growth: UAE's Food & Beverage Sector Hits US$ 7.63 Billion in Annual Revenue

Snacking and Bakery Categories Lead, Small Players Outpace Market Leaders; F&B Manufacturing Set to Reach US$ 23.2 Billion by 2025, Says UAE F&B Business Group Report.

The UAE Food & Beverage Business Group has revealed its highly-anticipated Annual UAE Food Industry Report for 2023. The comprehensive report provides an in-depth analysis of the flourishing landscape of the food and beverage sector in the country, offering insights into consumer preferences, evolving retail dynamics, and the demand for various food segments amidst fluctuating inflation rates and price variations in the Middle East and African markets.

For the first time, the report delves into the urban trade universe's robust growth, emphasising key trends shaping the industry. It underscores the increasing significance of affordability in consumer brand choices, with the snacking and bakery categories leading the growth charge, surpassing the overall expansion of the sector. Despite price hikes, consumers show a clear inclination towards indulgent categories, indicating a sustained demand for premium products. Notably, smaller players within the industry are showcased as dynamic contributors, outpacing market leaders.

The UAE, home to over 2,000 food and beverage manufacturing companies, has emerged as a powerhouse, generating an annual revenue of US$ 7.63 billion. This constitutes a substantial 25 percent of the country's manufacturing GDP, placing the sector second only to the oil and gas industry. The report draws from insights gathered through the Nielsen retail survey, reflecting shifts in consumer spending patterns and consumption behaviour.

One of the report's key projections is the steady growth of F&B manufacturing, expected to reach an impressive US$ 23.2 billion by 2025.

Key Highlights:

The report categorises findings into seven F&B baskets, with Ambient Food, Snacking, and Bakery outpacing the overall F&B market growth rate. The bakery category emerges as a standout, boasting over 50 percent growth. Snacking categories, including chocolates and biscuits, exhibit robust growth, with chocolates leading at an impressive 20 percent growth rate, driven by popular brands.

In the beverage segment, the UAE witnesses remarkable growth, with the sports drinks category leading at 15 percent. This is despite an overall increase in soft drink prices by 134 percent, with smaller players outperforming industry leaders. The ambient food category, including sub-segments such as eggs, cooking oil, and desserts, shows a much-anticipated recovery post-pandemic, growing at 18 percent, 30 percent, and 21 percent, respectively.

The survey highlights the dairy segment's growth at 16 percent, driven by increasing customer awareness of the importance of balance and a healthy diet. Frozen Meat emerges as a standout in the frozen food category, growing at 18 percent, outpacing the segment due to price upgrades. However, the baby food industry faces a paradox with inflation boosting top-line growth through increased product prices, while consumption declines due to a preference for mother feed and homemade alternatives, coupled with decreasing birth rates.

Saleh Lootah, Chairman of the UAE Food & Beverage Business Group, commented on the report, stating, "The 2023 Annual Report reflects the resilience and dynamism of the UAE's food and beverage sector. The sustained growth in key segments and the emergence of smaller players as significant contributors underscore the industry's adaptability. 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, including the decline in baby food and infant formula, the growth of organic baby food brands, and the increasing importance of affordability in consumer brand choices.