United Arab Emirates (UAE) - Fresh Produce Industry: Produce Marketing Association
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Fresh Produce Industry: UAE
Fresh Produce
Industry:
United Arab
Emirates (UAE)
2019
Fresh
FreshProduce
ProduceIndustry:
Industry:UAE
UAE
Table of Contents
I. Executive Summary 3
II. Country Overview 5
Opportunities and Challenges for Doing Business in the Fresh Produce Industry 6
III. Consumer Assessment 13
Macro Consumer Trends Impacting Fresh Produce Consumption and Sales 14
Consumer Purchasing Behavior 15
IV. Distribution Channel Analysis 20
Retail 20
Foodservice 21
Institutions 21
E-commerce 23
Informal Markets 23
Retail Environment 24
Foodservice Environment 27
V. Consumption and Food Supply 31
VI. Domestic Fresh Produce Insights and Related Investments 32
VII. Import Supply Chain Assessment 36
VIII. Trade Flow Assessment 38
Flow of Fresh and Frozen categories 38
Import Processes and Procedures 49
IX. Opportunities for US Suppliers 57
X. Key Trade Associations and Trade Shows 59
Trade Associations 59
XI. Sources 62
2
Fresh Produce Industry: UAE
I. Executive
Summary
The United Arab Emirates (UAE) is the fourth largest many have acquired farms outside the UAE to ramp
economy in the Middle East and Africa and one of the up operations, while others invested in innovative
most important trading hubs globally. Due to ex- solutions such as hydroponics. Despite these initia-
treme weather conditions and limited arable land, the tives, domestic supply remains limited, therefore, one
UAE relies on fresh produce imports to meet demand of the UAE’s strategic goals focuses on establishing a
from its growing population, mainly the influx of diversified import supplier landscape to ensure food
expatriates. The multiculturalism of the country’s ex- security.
patriate society (about 88% of the overall population) Similar to any other imported product, fresh pro-
results in diverse eating habits and a large foodser- duce must follow standard import regulations. For
vice sector offering a variety of cuisines, hence there instance, while fresh fruit and vegetables (except
is a diverse demand-structure within fresh produce. certain starchy roots) are exempt from the generally
UAE consumers are categorized by income level as imposed 5% import duty, they are still subject to the
well as origin. High-earners are increasingly inter- newly introduced 5% VAT, which is applicable on all
ested in healthy eating, which is driving demand for products. They also have to go through a set of pro-
organic produce and superfoods, such as kale and cedures to determine compliance with health and im-
berries, regardless of price. Low-income expatriates, port standards before they are approved for further
on the other hand, have showed price-conscious be- distribution and sale. The regulatory framework for
havior in recent years, which strengthened demand imports and standards is mostly based on GCC (Gulf
for staple products as well as discounted items. Cooperation Council) and GSO (GCC Standardization
Catering to this diversity, the country’s well-devel- Organization) requirements. The execution and spe-
oped modern retail infrastructure ensures a diverse cifics are then organized by the individual Emirates
portfolio of fruit and vegetables as well as prices. themselves.
Most supermarkets and hypermarkets as well as The UAE’s strategic geographic location on the Arabi-
leading importers have established relationships with an Peninsula facilitates the import process. Maritime
suppliers from around the globe to ensure year-round imports are the most common mode of transport,
supply. Local producers follow a similar strategy, and especially after one important land route was disrupt-
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Executive Summary
ed due to the closure of the Jordanian-Syrian border still presents opportunities for suppliers of high-qual-
between 2015 and 2018. The most common landing ity produce. As Asian and African suppliers dominate
port for ships carrying fresh produce to the UAE is the competitive lower priced produce segment,
Jebel Ali in Dubai, the largest and busiest port in the opportunities for suppliers are mainly found within
region. Dubai is also home to the Al Aweer Central the premium segment. Another premium subsector
Fruit and Vegetable Market, the heart of fresh fruit to explore is the organic market, which is benefiting
and vegetable trade in the country. from government initiatives to increase health aware-
Import procedures and regulations are mostly in line ness among UAE consumers since 2016. While do-
with international standards and the UAE has ensured mestic production within this sector will continue to
a trade-friendly environment with straightforward rise, it is unlikely that local farms will be able to satisfy
automated processes. Well-established infrastructure, demand throughout the year due to the dry climate.
a safe and stable environment and the presence of The main challenge for U.S. suppliers will be partner-
various free-trade zones have made the country one ing with leading retailers or one of the major distri-
of the most important destinations for re-exports in bution companies in the UAE, as they have already
the region. established long-term relationships with suppliers.
However, entering the UAE will also open the gate to
By combining the diversity in demand with a struc- the broader region, as most retailers and distributors
tured supply side, the country becomes an interest- work throughout the GCC.
ing market for fresh fruit and vegetables. The market
4
Fresh Produce Industry: UAE
II. Country
Overview
The United Arab Emirates (UAE) is a unique country favorable and liberal business environment, broad
with several factors that help drive robust interna- economic freedom, the presence of several free zones
tional trade, encourage economic development, and (i.e. free-trade areas), and low taxes. The country is
support opportunities for business development and also an interesting and exciting marketplace and
expansion. These factors include: demand is manifold.
• a large, multicultural society with varying tastes The presence of people from all over the world, be-
and demands for food; longing to various social classes and a broad variety
• a workforce, more than 88% of which is comprised of income brackets, explains demand for all types of
of expatriate workers from around the globe; fruit and vegetables at various levels of quality and
pricing. The fact that residents are mostly expatriates,
• a geographic location that places it between Africa, residing inside the country on work visas, ensures a
Asia and Europe; favorable demographic. However, this creates a level
• a major trading hub with free-trade zones and ex- of uncertainty regarding consumption levels in times
cellent infrastructure to import, export, and transit of economic difficulties, as loss of work usually means
products and goods within the country and to a return to their respective home country.
neighboring markets; and
The UAE is also home to a very diverse and significant
• a liberal and business-friendly environment, as well foodservice landscape, also supported by its position
as one of the most stable and safest markets in the as an important tourist hub. The growing presence
region. of restaurants and novel dishes portrayed as healthy
The main entry point for foods are the country’s sea- will likely continue to benefit sales of fresh fruit and
ports, where health official inspections and custom vegetables through this channel in the future.
clearance are usually completed within a few hours.
Doing business in general, and specifically within
fresh produce, is therefore oftentimes easier than
in many other countries. This is also supported by a
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Opportunities and Challenges For Doing Business
in the Fresh Produce Industry
According to recent government reports, imports VAT-related processes, compliance with labeling and
still account for 80% of the country’s consumption product regulations and emergency strategies in case
of fresh fruit and vegetables, even though support of import bans due to health considerations.
for local agriculture has intensified over the years. As VAT requirements were introduced in 2018, there
While the introduction of hydroponics is expected to have been incidents of technical problems related to
boost domestic production, large-scale cultivation of implementing the new tax system. Several companies
various crops seems unlikely due to weather condi- reported that imports were being held at the border,
tions, water scarcity and lack of arable land. Import- as the customs department was unable to verify the
ing fresh fruit and vegetables therefore appears an Tax Registration Number (TRN). The number identi-
exciting field for investment. An additional advantage fies VAT-registered companies, which would usually
is the broad knowledge and acceptance of English make payments during their VAT returns via the
for business conversations, written correspondence, reverse-charge mechanism. With VAT regulations still
and as an additional language to Arabic for important being in their infancy, similar problems may occur in
documents, certificates, forms, and websites. the future. With fresh produce being imported from
Moreover, import and registration procedures are all over the world, biosecurity risks are perceived to
usually straightforward and largely supported by be high. To minimize such risks and ensure healthy
modern online systems. The country also features and safe food, the Ministry of Climate Change and
a clear set of regulations regarding labeling and Environment sometimes uses temporary bans on
packaging requirements and a list of necessary doc- specific regions or items. Imports from Kerala, for
uments and certificates, which can often be pre-ap- example, were suspended during the outbreak of the
proved online. The entire import procedure, including Nipa virus in 2018. In 2017, the ministry banned sev-
offloading, inspections, paperwork, and transporta- eral items from Egypt, Oman, Jordan, Lebanon, and
tion can usually be done within a few hours. Yemen due to high pesticide levels.
However, a trade license is needed to import and Inexperienced suppliers often face rejection at the
supply the UAE. Suppliers are advised to either work border due to labeling issues, duplicated or incorrect
with a local distribution company or target direct registration of food items, and non-adherence with
importers, including local grocery chains. Such part- ingredient specifications for processed products.
ners may help with some challenges companies face
when doing business in the UAE, such as handling
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Table 1 . Opportunities and Challenges for Businesses in the Fresh Produce Industry
• Broad acceptance of English for • Dry and hot weather
business conversation in addition • Water scarcity
to Arabic
• Lack of arable land
Opportunities
• Easy and quick import and
Challenges
registration procedures • Initiating investment in
hydroponics
• Clear set of regulations and
documents • Financial support for local
agriculture (however limited due
• Reliance on imports to lack of arable lands)
• Diverse demand due to the • VAT regulations in infancy
multicultural consumer base stage causes unclarity in tax
registration
Socio-Economic Conditions
Economic outlook tial items, such as food and beverages. Consumers
While the UAE is one of the wealthiest and most dy- started to adapt more price-conscious consumption
namic countries in the world, ranking 13th in terms of patterns, which benefited staples, such as potatoes,
GDP per capita in 2017, it has been experiencing an tomatoes, and onions but restrained growth for
economic slowdown since 2014. The country suffered more exotic fruit and vegetables. Notably, however,
under low oil prices and OPEC-induced oil production demand continued for produce items that are consid-
cuts, a drop in tourism due to currency devaluations ered nutritious and healthy, such as kale and various
in Russia, China, and Europe, as well as a more cau- berries, despite premium prices.
tious business and consumption environment after While economizing is the underlying sentiment,
the introduction of VAT in 2018. many consumers are still willing to pay a premium for
Real GDP growth hit rock bottom in 2017 with a rate products considered to be healthy, as rates of obesity,
of 0.8% but has since started to recover, and 2018 saw cardiovascular diseases and diabetes are on the rise.
GDP growth of 2.9%, as a result of government invest- Foods with exceptional nutritional profiles as well as
ments and preparations for the upcoming EXPO 2020 high-value products, such as organic produce, are
in Dubai and a set of reforms to encourage private therefore benefiting. Based on these two tendencies,
investments and boost growth. These developments many fresh fruit and vegetables continue to see good
are expected to further support growth in the coming growth in comparison to other food categories.
years, as shown in Chart 1. While GDP rates are set to Within the developed foodservice environment, sat-
peak between 2019 and 2020 because of the Expo in uration led to marginal growth, even though various
Dubai, the subsequent decline is expected to remain mixed-use retail development projects, such as La
above 2018 levels. Mer, Al Seef and Bluewaters in Dubai creating space
Nevertheless, the current state of the economy, and for exciting new venues. In this increasingly compet-
especially the introduction of the VAT, had a damp- itive environment, several existing players struggled
ening effect on consumer spending, even on essen- to face the dampened economic environment and
several brands and outlets reported closures.
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Country Overview
The total proportion of consumer spending allocated supplies, such as low-impact insecticides and fungi-
to food and beverages (14%) as well as its share of the cides that are environmentally safe and suitable for
country’s GDP (5%) remained below the global av- aquatic agriculture, as well as materials for protected
erages (16% and 9% respectively in 2017), as overall and organic farming are given to farmers for half of
income levels remained high and supported robust the standard market price.
spending on discretionary items. These rates are ex- The Ministry also signed a deal with Shalimar Biotech
pected to remain stable over the forecast period but Industries in 2018 to establish 12 vertical farms on
are unlikely to negatively impact consumer spending 7,600 square meters of land, further highlighting their
on food and beverages, including fresh food. interest in advancing production capacity and yields.
The importance of agriculture and production of Arable land and water resources are limited, and
fresh produce inside the country could increase, how- long-term food security and self-sufficiency are con-
ever. The government started to actively support lo- sidered a key challenge and major strategic goal for
cal farmers, which may decrease demand for imports the coming years. While local production will remain
over time (and likely only modestly in the short- to a small part of the overall availability, it is expected to
medium-term). Manure, hydroponic and organic fer- grow on the back of these government initiatives.
tilizers, as well as integrated pest management (IPM)
Chart 1. Real GDP Growth 2018 – 2022 (%)
Source: Euromonitor International
Demographic dynamics greatly supported by relatively high net migration
The total population of the UAE stood at 9.3 million rates. As with many other countries in the Gulf region,
in 2018 and is expected to reach 9.9 million in 2022, the UAE relies on a large segment of foreign workers
with annual growth rates of around 1.5%. This is residing in the country on temporary work visas and
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is home to one of the most multicultural societies in Growth of service-based industries, for example, is
the world. In 2018, 88% of the country’s population expected to shift demand from male labor to female
were expatriates with estimates suggesting India, labor over the coming years. Men currently account
Pakistan, Bangladesh and the Philippines as the major for 69% of the population, and this is expected to
source countries. Due to the magnitude of foreign decrease to 67% in 2022 and to 65% by 2030. The
labor and the fact that dependents, including chil- importance of work opportunities for population
dren of most low-skilled workers, are raised in the growth through expatriates will also boost urban-
respective home country rather than in the UAE itself, ization rates even further. Even though most of the
net migration based on economic evolution is ex- population already lives in urban areas, rates are pro-
pected to remain the determining factor for popula- jected to increase from 87% in 2018 to 88% in 2022
tion growth and developments in the UAE over the and 89% in 2030.
coming years (see Chart 3).
Chart 2 . Population Size 2018 – 2022 (million)
Source: Euromonitor International
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Chart 3 . Population Size of Emiratis vs. Expats 2018 – 2022 (million)
Source: Euromonitor International
Business Environment
The UAE is one of the most liberal and busi- introduction of post retirement and long-term resi-
ness-friendly environments globally and is said to be dency options for expatriates and the possibility of
the easiest place to do business and one of the least 100% foreign ownership in companies. Such reforms
corrupt markets in the region. Minimal taxes, the strengthened the country’s position in the World
presence of several free-trade zones, and the absence Bank’s Ease of Doing Business Index, where the UAE
of a minimum capital requirement for starting a busi- now ranks 21st and is expected to reach 11th in 2019,
ness are some of the benefits the country has to offer. making it the leader among countries in the Middle
Nevertheless, the unfavorable economy in recent East and Africa (MEA).
years put pressure on many businesses and slowed Fresh produce replaces processed fruit
down new entrants. and vegetables
Foreign Direct Investment (FDI) intensity also nar- Overall, apparent consumption of imported frozen
rowed slightly from 2.7% of GDP in 2014 to 2.6% of fruit and vegetables saw slow growth in recent years,
GDP in 2016. The government therefore launched as consumers shifted towards fresh produce. Growing
several initiatives and reforms to stimulate growth health awareness is increasingly expressed through
and investment. Major changes include more flexible a desire to eat more natural foods, which dampened
visa access tools and procedures, the replacement of demand for processed fruit and vegetables. Shelf-sta-
the bank guarantee system for private sector employ- ble fruit, for example, saw retail sales decline (-1%) in
ees, with a low-cost insurance scheme, the 2017 and stagnate in 2018.
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Trading fresh fruit and vegetables in the UAE vegetables consumed in the UAE. Major focus areas in-
The government of the UAE invested heavily to es- clude new technologies, especially hydroponics (tackles
tablish one of the most trade-friendly environments the issue of water scarcity, as it uses up to 70% less water
globally. In addition to its liberal business framework, than regular farming, increases the growing season and
the presence of various free-trade zones, which allow avoids harmful chemicals), as well as sustainable cultiva-
full foreign ownership and a zero-taxation regime, the tion methods, with a special interest in organic farming.
country is also home to an advanced system of ware- The Abu Dhabi Farmers’ Services Center (ADFSC), for
houses and a sophisticated transportation infrastruc- example, was established in 2009 to support domes-
ture. This ensures good connectivity and quick and tic farming in Abu Dhabi through training, extension
efficient transportation within the country, between programs and a special fund to support adaptation
ports and free-trade zones. of greenhouse hydroponics methods in the Emirate.
To supply the domestic market, importers must have ADFSC can also certify farms as adhering to Global
a valid trade license and cannot operate out of a Good Agricultural Practices (Global GAP certifica-
free-trade zone. The country offers a general license, tion). Similar work is done by the Ministry of Climate
which can be used to import various goods or a spe- Change and Environment on a countrywide level.
cific license for food trading activity, which is more The ministry supports initiatives and programs to
cost effective. help with the adaptation of hydroponics and organic
farming methods and has partnered with the private
Under the “GCC Unified Customs Law and Single Cus- sector to boost developments in this field. Demand
toms Tariff”, fresh fruit and vegetables are exempt from for local produce was also supported by marketing
tariffs, while processed fruit and vegetables, (including activities, high media coverage and agreements with
frozen, dried and otherwise preserved produce, e.g. the country’s largest grocery retail chains to ensure
canned vegetables and fruit) are subject to a 5% duty broad availability and awareness among consumers
rate. The same rate applies to all kinds of roots and tu- in recent years.
bers with high starch or inulin content, such as cassava/
manioc, arrowroot, salep, Jerusalem artichokes or sweet Overview of the supply chain for fresh fruit
potatoes. Fresh fruit and vegetables are also exempt and vegetables
from the requirement of production/expiry informa- Fresh fruit and vegetables typically arrive in one of
tion on labeling. To ensure smooth and fast clearance the country’s seaports, especially Jebel Ali in Dubai,
at the entry point, most municipalities in the UAE offer the biggest and busiest port in the Middle-East. As
pre-shipment approval services for food labels1, prod- such, Al Aweer Market in Dubai is the center for the
ucts, and item registration. fresh fruit and vegetable trade in the country. Once
Domestic Agriculture the vessel arrives and the container is discharged, the
shipment undergoes a visual inspection by health
The country’s agriculture sector is highly impacted inspectors and customs to ensure compliance with
by its lack of arable land, limited water supplies and labeling regulations. They also confirm the validity
intense heat. To ensure food security and diversity, and presence of all documents and certificates. All
the government started to invest heavily abroad and food shipments are also subject to random laborato-
has signed a deal to establish an agricultural free ry analysis, which can delay delivery. Transportation
zone in Uganda for Emirati companies. Furthermore, within the port is usually be done through an exter-
support has been amplified for local production, nal hauler, nominated by the importer through the
which currently accounts for just 20% of all fruit and
1
More details will be found under the “import process and procedure” section
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Haulier Nomination Service on the UAE Trade Portal. including markets such as Al Aweer, hypermarkets,
After clearance, the hauler delivers the goods to the supermarkets, hotels, restaurants and institutions.
importer’s warehouse. Large retail chains, such as Lulu Hypermarket, JM
Everyone conducting business inside the UAE needs a Foods and Spinneys Group Ltd, however, usually work
valid trade license. Suppliers trying to enter the mar- directly with suppliers, which helps reduce the price
ket have different options, but most work with a local of fresh food for end consumers. Price differences
partner, who operates as the importer and is also between supermarket chains usually arise because
often the one distributing the product to wholesalers, of quality differences, rather than distribution system
costs.
Chart 4 . Supply Chain Infrastructure for Fruit and Vegetables
12Fresh Produce Industry: UAE
III. Consumer
Assessment
Country of origin, income level and social class, as Chart 5. Social Class Distribution in the United
well as the current imbalance between men and Arab Emirates in 2018
women, are all important factors determining general
demand and product preferences within fresh fruit
and vegetables.
In terms of ethnicity, South Asians are said to be the
largest population group, although nearly all nation-
alities are present in the UAE. In terms of income,
Knight Frank’s (property consultancy) 2017 Wealth
Report estimates the number of ultra-high net-worth
individuals in the UAE at 1,5002. While this group is
able and eager to enjoy a luxurious life with all its
perks, there are an estimated 4.5 million low-income
migrant workers3 (often men), who typically share
accommodation and spend most of their income
on essentials or send money back to their families in
Source: Euromonitor International
their respective home countries.
Despite these imbalances, there are still some import-
ant macro-trends visible across the population. Health
awareness, increasing demand for convenience, and
a more conscientious spending approach in the face
of the current economic situation have shaped con-
Ultra-high net-worth individuals (UHNWI): A person with a net worth of over US$30m excluding their primary residence. According to this report, the overall number in sumption of fresh produce in terms of type, quality and
the Middle East stood at 7,370 individuals, with the UAE thereby accounting for 20% of overall UHNWI’s in the region.
The term “workers” refers here to blue collar workers, defined by a profession that requires manual labour. As wages within these sectors remain relatively low in the UAE, pricing in recent years. They are also expected to be the
most blue-collar workers would fall under social classes D and E.
main variables for future developments.
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Table 2. Affordability of Fresh Produce by Social Class (Shaded cells indicate affordable produce)
Annual Income
Social Class Types of produce that can be afforded by each class
bracket (US$)
Basic and staples4 Organic5 Superfood6
Social Class A > US$ 44,367
US$ 33,275
Social Class B –
US$ 44,367
US$ 22,183
Social Class C –
US$ 33,274
US$ 11,092
Social Class D –
US$ 22,182
Social Class E < US$ 11,092
Source: Euromonitor International
Macro Consumer Trends Impacting Fresh Produce
Consumption and Sales
Health awareness and demand for sustainability therefore often categorized as a superfood. Kale, as
boost growth for fresh fruit and vegetables well as various berries, such as blueberries and acai,
Health awareness is neither a new, nor a UAE-specif- are benefiting from this development, regardless of
ic trend, but its impact is increasing steadily. Given their high unit prices.
the government and media spotlight on high and Another important field is organic produce, which
increasing rates of obesity, diabetes and cardiovas- is further supported by all major retail chains. Carre-
cular diseases in the country, consumers are trying to four, for example, increased its organic fresh fruit and
adopt healthier eating habits. Consumer preferences vegetable portfolio from cucumbers and apples to
are therefore slowly shifting from better-for-you and a wide range of items, including herbs, mushrooms
fortified products towards food that is perceived as and starchy roots since 2016. A similar development
less processed or more natural. This trend is natural- was observed in Spinney’s, a supermarket designed
ly benefiting fresh fruit and vegetables, especially to target high-income expatriates from Europe and
items with a reportedly superior nutritional value and North America. The retail chain used the introduction
4
Fruit and vegetables eaten routinely and in such quantities that it constitutes a dominant portion of a standard diet in the UAE. Examples include onions, tomatoes and potatoes.
5
Organic food production must comply with the standards of organic farming. Prices for organic produce are above average
6
Superfoods are defined as nutrient-rich foods. Examples within vegetables and fruit include kale and berries. They often feature high prices in the UAE.
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of various organic items for a broad in-store market- Demand for convenience in combination with grow-
ing campaign in 2016 to create an image as a retailer ing health awareness also led to an established mar-
specializing in healthy and organic foods. ket for healthy meal plans, such as Right Bite, Simply
Local produce is also benefiting from the trend and Healthy Diets and Kcal. These plans are often guided
received an additional boost through recent govern- by a nutritionist and include the delivery of at least
ment support for sustainable, domestic agriculture. three healthy meals a day throughout the week. De-
An important consumer group for such premium signed to deliver a nutritious diet to consumers, most
products, and fresh fruit and vegetables in general, of these meals are based on large portions of fresh
are parents. This led to high inclusion rates of fresh vegetables and fruit. A similar development can be
fruit in school lunches throughout the country. observed in the HORECA channel. Hotels and restau-
rants are experiencing increasing demand for health-
Growing demand for convenience holds risks ier meals and have therefore adjusted their menus to
and opportunities for fresh produce include more salads, fresh fruit snacks, desserts, and
Demand for convenience is growing all over the world dishes rich in vegetables.
in line with rapid urbanization and rising numbers of Economic uncertainty supports sales of sta-
working women and single-person households as well ples as well as discounted products
as generally busier lifestyles. The UAE is ahead of many
countries in this regard. Most of the population resides In the current economic climate, grocery shoppers in
in the country on working visas, resulting in high overall the UAE are more price conscious than ever. Even many
employment rates among men and women. Further- mid- and high-income consumers started to focus on
more, most of the population already lives in cities and essentials and discounted products. While various fresh
a large number of inhabitants are either living alone food products are considered staples, consumers are
or in shared accommodation. All these factors support still cautious and on the look-out for value for money. In
demand for convenient solutions. Among a price-sensi- this situation, discounts and promotions are often the
tive consumer segment, this supports sales of processed best tool to grab the consumer attention, a tactic widely
food and regular foodservice visits and has a nega- applied by most grocery chains. Onions, tomatoes and
tive impact on demand for fresh fruit and vegetables eggplants are especially important, as all three are used
through retail. Among busy mid- and high-income con- in everyday cooking by many nationalities residing in
sumers, however, demand for convenience and growing the UAE. Potatoes are also popular, as they are a staple in
health awareness are boosting sales of higher priced South Asian dishes.
options, such as pre-packaged or ready to eat products.
Consumer Purchasing Behavior
Consumption and Factors Affecting Consumer Behavior
Overall consumer expenditure on food and beverag- segments based on country of origin, income levels
es stood at US$17 billion in 2018, accounting for 14% and overall living situation, gender and social class.
of overall consumer spending and 5% of the country’s Future changes within this framework can therefore
GDP. These rates would suggest consumption pat- impact demand levels for fresh fruit and vegetables
terns similar to developed countries in Europe and through retail and foodservice as well as overall pref-
North America. The reality however is more diverse, erences in terms of quality, pricing-levels and type.
and consumption differs vastly between consumer
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Popularity of shared accomodation supports options through foodservice outlets, is expected to
demand for convenience and HORECA sales see a further boost.
The fact that 88% of the country’s inhabitants are Diverse cuisines and eating habits on the back
expatriates with temporary residency has a strong of a multicultural society
effect on average household sizes and general living The UAE is home to nationalities and ethnicities from
conditions. To sponsor one’s family, an expatriate all over the world and while most are exposed to
must meet certain criteria in terms of salary and different cuisines every now and then, many adhere
housing. As large parts of society do not meet these to their traditional dishes and ingredients most of the
criteria, expatriates with lower and even middle time. This explains the large presence of South Asian
incomes often come alone and support their family restaurants as well as strong demand for ingredients
through remittances. typically used to prepare dishes popular on the Indi-
This phenomenon explains the relatively large pres- an subcontinent. Onions and tomatoes, for example,
ence of shared accommodation, where expatriates are always in demand, as they build the base for all
rent separate rooms or so-called bed spaces. Access curries. Potatoes are of similar importance as they are
to kitchen facilities can be limited in such living ar- used as an ingredient and a side dish in meat-based
rangements and inhabitants are therefore more likely meals. Vegetarian dishes, on the other hand, often
to eat out or eat processed foods rather than prepare feature okra (also known as bhindi), lauki (a long
a home-cooked meal, using fresh fruit and vegetables green pumpkin) and eggplant.
as cooking ingredients. This consumer group relies Middle Eastern cuisine, especially Levantine dishes,
on shelf-stable products and ready meals as well as is another popular genre. Lebanese cuisine enjoys
restaurants, cafes and delivery services. Neverthe- growing popularity among Arab and non-Arab expa-
less, growing health awareness has opened the way triates and has therefore experienced good growth.
for ready-to eat fruit and vegetable bowls, prepared Tomatoes, cucumbers, parsley, eggplant and cour-
salads as well as healthy food catering services and gette are all staples and used in several important
meal plans. appetizers as well as main dishes.
Larger households on the other hand, especially Neither the share of expatriates in the overall popu-
those with children and stay-at-home mums, are lation, nor the ethnic composition of UAE society are
more likely to prepare traditional home-cooked meals expected to see dramatic changes over the coming
on a regular basis. Demand for fresh fruit and vegeta- years, and trends in terms of preferences are therefore
bles among this consumer group is therefore high. expected to remain relatively stable.
Growing number of women supports culture Income levels and social class determine con-
of healthy eating at home sumption patterns and preferences
Health awareness as well as cooking at home is tra- Consumption patterns are highly impacted by
ditionally more likely among women than men. The income level and social class. Consumers with low
large presence of male expatriates sees men currently wages, often from South Asia, are more likely to seek
accounting for 69% of the population. This supports out discounts and promotions, while expatriates
the country’s foodservice culture as well as high with large incomes usually prioritize quality and
demand for processed foods. As the share of women convenience. Growth of potatoes, for example, was
is expected to grow over the coming years, reach- supported by rising demand for economy options
ing 33% in 2022 and 35% in 2030, demand for fresh from Egypt as well as convenient premium options,
vegetables and fruit, as well as plant-based healthy
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such as baby potatoes. While economizing appeared growth on the back of an economic recovery over the
the general sentiment since 2014, current devel- coming four years. GDP, consumer expenditure and con-
opments suggest a further diversification over the sumer spending on food and beverages are expected to
coming years: Social classes E7 and A8 are forecast to show similar growth rates of around 4% between 2019
expand the fastest by 2030 with growth of 22% and and 2020 and 3% annually between 2020 and 2022.
23% respectively between 2018 and 2030, which will Fresh food is therefore expected to see even stronger
provide opportunities within the economy and the growth, benefiting from health awareness and a wider
premium segment alike. range of convenient options.
Overall consumer spending on food and bev- It is however important to note that this growth in
erages on the rise per capita spending on food and beverages follows a
Per capita consumer expenditure on food and bever- massive drop between 2014 and 2015 and marginal
ages grew significantly between 2017 and 2018 due to growth between 2015 and 2017, reflecting the eco-
the introduction of VAT and is expected to see further nomic climate during these years.
Chart 6 . Per Capita Consumer Spending on Food and Non-Alcoholic Beverages (US$)
Source: Euromonitor International
7
Social Class E refers to individuals with a gross income less than 50% of the average gross income of all individuals aged 15+. This class may include blue-collar workers who could also be majorly working in
the construction sector. They usually reside in shared accommodation in neighborhoods distant from the city center.
8
Social Class A refers to individuals with a gross income over 200% of the average gross income of all individuals aged 15+. This class may include managerial, administrative or professional positions residing
in central areas in the UAE.
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Per capita consumption of fresh fruit and veg- consumption levels in the US (134kg per capita) as well
etables above global averages as many European countries, such as Germany (129kg
Per capita consumption of fresh fruit and vegetables per capita) or the United Kingdom (134kg per capita).
in the UAE stood at an average rate of 236kg in 2018, Factors for superior growth on the other hand are
significantly higher than the average for the Middle more traditional, such as population growth and an
East Africa (MEA) region (82kg per capita) and global expected recovery of the economy. Other important
levels (206kg per capita) in the same year. Further- factors are very country-specific, such as a growing
more, consumption is set to reach 266kg per capita in share for women in a society currently dominated
2022, which equates to 13% growth for this time peri- by men. Women are not only more likely to cook at
od, significantly higher than the 9% increase forecast home on a regular basis, but also to follow a health-
on global levels or the 8% increase projected for MEA ier, plant-based diet. This will likely also affect the
region over the same period. foodservice environment and the country might see
This reflects developments and tendencies in many a growing number of healthy restaurants, catering
important source countries for UAE expatriates, such services, and meal plans, which should naturally
as India (207kg per capita), Pakistan (204kg per capita), strengthen average demand for fresh fruit and vege-
the Philippines (171kg per capita) and Egypt (297kg tables per outlet.
per capita). Eating habits and specific diets usually pre- An additional boost for foodservice demand is ex-
vail, explaining the strong demand for fresh vegetables pected through the recovery of the tourism sector:
and fruit in the UAE in general and certain types, such 2018 saw a return of Russian and Chinese visitors as
as potatoes, onions and tomatoes specifically. well as new arrivals and a growing number of transit
Furthermore, high incomes and low levels of private visitors due to significant visa policy changes. Fur-
cultivation in the country boost sales even further. The thermore, the global buzz about eating healthy and
high use of vegetables in Mediterranean and Asian more natural foods, is highly supported by the media
cuisines in comparison to North American and Eu- and official authorities in the UAE and therefore, an-
ropean dishes also explains significant differences in other variable to support growth.
Product Preferences
The UAE vegetable market is dominated by varieties ingredients, such as parsley and coriander. A similar
popular on the Indian subcontinent, such as potatoes, development could be observed within fruit, where
tomatoes and onions. Unsurprisingly, these three oranges, tangerines and mandarins, as well as ba-
vegetables accounted for a combined total volume nanas and apples, remained the preferred choice in
share (including retail, foodservice and institutional the UAE. They are popular among consumers from all
sales) of 59% and a retail volume share of 51% in over the world and used for freshly squeezed juices.
2018 in the UAE. In value terms, retail sales share was The strongest growth rates, however, were achieved
significantly lower with only 41% due to low price by fruit categorized as superfoods. Especially berries,
levels. Growth rates for all three however remained such as acai, strawberries and cranberries/blueber-
moderate and mainly supported through population ries, which all saw demand levels rise, regardless of
growth and growing demand for healthier, plant- their traditionally high unit prices.
based meals through the foodservice landscape. Consumers in the UAE are usually aware and very
More dynamic were vegetable types with supposedly adaptive to trends within the global healthy eating
superior nutritional profiles, such as kale and salad movement. Social media platforms are popular and
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widely used. Preferences therefore change often ucts and is seen as more hygienic by many. Consum-
based on recommendations by important TV person- ers also appreciate the convenience of placing the
alities, such as Dr Oz, websites, such as webMD.com, item directly inside their grocery bags or trolleys.
or influencers and bloggers, especially the growing While only 17% of all fruit and vegetables were sold in
number of health-conscious eaters in the #foodies a pre-packaged format in 2013, this figure increased
community – a trending hashtag on social media to 20% in 2017. Furthermore, ready-to-eat, pre-cut
channels like Facebook and Instagram. vegetables and fruit as well as prepared salads and
Growth of pre-packaged products in line with freshly squeezed juices are also gaining momentum.
premiumization and growing demand for Most retailers offer a variety of such items in a dedi-
convenience cated section for chilled ready-meals. Most include a
While most fruit and vegetables are still sold loose, small plastic fork or spoon to facilitate on-the-go con-
packaging is becoming more common. Organic sumption. Nevertheless, unpackaged products con-
produce as well as premium products prone to being tinue to dominate, especially in the value-for-money
crushed, such as berries or cherry tomatoes, are often segment, as consumers prefer to check products
offered in a pre-packaged format. The extra protec- individually for quality to make sure they choose the
tion underlines the premium character of such prod- best ones.
19Fresh Produce Industry: UAE
IV. Distribution
Channel Analysis
Retail
The most important channel for fresh fruit and veg- munity of price-conscious consumers. These two de-
etable sales is retail, accounting for 50% of fruit sales velopments reflect overall sentiments among consum-
and 72% of vegetable sales in 2017.9 ers in a country split between the economic difficulties
The grocery retail environment in the UAE is domi- of recent years and the slow beginning of a recovery
nated by chained hypermarkets and supermarkets process: the need for lower-priced products among the
catering to different price and consumer segments as country’s low-skilled laborers and growing demand for
well as to the manifold demands of the country’s mul- convenience from high-income expatriates with busy
ticultural society. In 2018, 84% of grocery retail sales schedules. Sales of fresh fruit and vegetables are bene-
were made through modern grocery retailers, with fiting from both consumer segments. Items considered
hypermarkets alone accounting for 60% of overall staples remain important to price-conscious consum-
grocery retailing. ers, while expatriates with higher salaries increasingly
seek convenient options to live a healthy lifestyle. As a
A key trend in recent years was the expansion of con- result, pre-packaged, washed, cut and even seasoned
venience stores and smaller supermarkets, with Carre- vegetables and fruit are witnessing good demand.
four Market and Carrefour Express outlets penetrating
metro stations and upscale urban neighborhoods. The Most retail chains, like Carrefour, Lulu and Spinney’s
country also saw the introduction of Viva, the country’s import directly from suppliers, while traditional gro-
first discounter in 2018. Landmark group, the owner of cers, including so called “baqalas” often work with a
Viva, promised prices up to 30% lower than other out- distributor. Purchases are also done directly through
lets. While convenience stores and small supermarkets wholesale vegetable and fruit markets, especially Al
benefit from the growing demand for convenience, Aweer in Dubai.
Viva is expected to profit from the country’s large com-
9
Data excludes fruit and vegetables targeted at food processors.
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Foodservice
The second most important channel for fresh pro- izing in healthy meal delivery services and guided
duce is the foodservice sector, which accounted for nutrition plans. Many existing restaurants upped
39% of fruit sales and 24% of vegetable sales in 2017. their offering of salads, vegetarian options, freshly
The strong share for this channel is explained by the squeezed juices and fruit-based desserts, often fea-
large and diverse foodservice landscape in the UAE. turing superfoods, such as blueberries, kale or acai.
Fruit are especially important, as many outlets, in- Unsurprisingly, organic offerings and restaurants also
cluding full service restaurants and cafes offer freshly benefited. In this environment, high-priced, quality
squeezed juices. The country is also home to many ingredients are expected to remain in strong demand
street stalls, kiosks and small fast food outlets offer- through a growing number of foodservice outlets.
ing a broad selection of freshly prepared juices and However, rising awareness and availability of locally
milkshakes at affordable prices, as well as a growing grown organic products may create fierce competi-
number of premium juice outlets in the health and tion for imported produce.
wellness spectrum. Hotels and chained restaurants often work with large
The foodservice sector is currently suffering below distributors, like Fresh Fruits Company or Barakat, a
marginal growth rates and high saturation levels, due large fresh fruit and vegetable processor, with products
to the dampened economic climate and a continued such as fresh juices, ready-to-eat, cut, and washed fruit
lull in tourism arrivals. The upcoming Expo 2020 in and vegetables that are sold through modern grocery
Dubai, a slow return of Chinese and Russian tour- retailers. Smaller outlets on the other hand are more
ists as well as general economic improvements are likely to work with SME distributors or go directly to
expected to support a recovery of the whole sector in the Al Aweer wholesale market. SME distributors in the
the coming years. However, while overall demand lev- UAE often compete by offering credit. Payment terms
els are expected to rise, individual outlets might still can exceed more than three months. An interesting
see a decline. Several development and retail projects development is the announcement of Carrefour enter-
as well as the growing number of meal plan options ing the wholesale business. Carrefour Wholesale will
are set to increase competition significantly. benefit from its owner company’s (Majid Al Futtaim)
strategic role in the HORECA channel. The holding
Fruit and vegetable sales through foodservice are also group owns several outlets in this segment and Carre-
benefiting from growing demand for healthy alter- four Wholesale will start by supplying these 13 hotels
natives. The country became home to many healthy in summer 2019.
restaurants and cafés but also to companies special-
Institutions
Institutional sales account for a small share of fresh currently rare and the overall need for construction
produce sales, 10% and 4% of fresh fruit and vegeta- workers much lower than in the past. Sales to labor
bles respectively in 2017. camps are estimated to experience a slowdown as a re-
Fresh fruit and vegetables usually reach institutions sult. Nevertheless, the sheer size of this sector and the
through foodservice providers and caterers. Import- possibility of a recovery make it an interesting segment
ant recipients are labor camps, healthcare providers, for suppliers of staples in lower price segments.
and educational institutions. While planned develop- Good opportunities await sales in the healthcare
ment projects are realized and finalized, new ones are sector, as the government tries to establish the UAE
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as a medical tourist destination. Enhanced facilities proportion to the number of students, etc. Catering
and treatments could therefore not only benefit companies entering the bidding also need to be
medical tourism, but also increase local demand. certified for health standards and transport vehicles
Many Emiratis still travel to hospitals in Europe, North must be licensed by food inspection authorities. Pri-
America and Asia for treatment, while expatriates vate sector procurement on the other hand is largely
often go back to their respective home countries. In dependent on the type and quality of services. Most
line with growing treatment options to tackle obesity, caterers have a website, while contracting opportuni-
cardiovascular diseases and diabetes in the coun- ties are also often listed in newspapers.
try, demand for fresh fruit and vegetables through
this channel is expected to surge. Demand for high Chart 7. Percentage of Sales of Fruit Across
quality produce could rise in line, as privately paying Distribution Channels in 2017
medical tourists are likely to expect exceptional care
in all regards.
Similar developments are expected within the edu-
cational sector, as parents are increasingly worried
about their children’s diets. As expatriates pay high
annual school tuition fees, parents expect high stan-
dards in all regards, including school catering.
Institutional sales in the UAE largely follow interna-
tional standards in terms of procedures. Supply of
food and beverages is mostly outsourced to a food-
service provider or caterer. Public sector decisions
on which provider or caterer are based on a tender
process with companies bidding on contracts. The
Source: Euromonitor International
main variables impacting the decision are price, quali-
ty and time management. The tender process usually Chart 8 . Percentage of Sales of Vegetables10 Across
ranges between two weeks and 45 days. New tenders Distribution Channels in 2017
are offered every year at which point the contract for
existing suppliers may get revised.
Companies entering the bidding are usually required
to be licensed and registered with the official author-
ities in the UAE. The provision of work samples with
various institutions as well as government and federal
authorities is an advantage and bids with condition-
al stipulations or reservations by any bidder can be
rejected. Bidding firms must provide a provisional
bank guarantee letter valid for 90 days and drafted
in Arabic for a requested amount. The contract terms
usually include key performance indicators (KPIs), for
example a tender for school catering involves timings
of the lunch provision, required number of staff in Source: Euromonitor International
10
Including starchy roots
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E-Commerce
E-commerce developments within fresh fruit and Another e-commerce trend caused by growing de-
vegetables are mainly shaped by growing demand mand for healthy and convenient food solutions are
for convenience combined with growing health fresh fruit and vegetable boxes as well as DIY cooking
awareness among UAE consumers. Online retailing boxes and meal plans. DIY cooking boxes are deliv-
however does not seem an adequate alternative to ered to consumer doorsteps and contain all pre-mea-
brick and mortar stores, as consumers often prefer to sured ingredients including herbs, vegetables and
visually check fruit and vegetables to choose the best fruit as well as clear instructions on preparing a
quality options. healthy meal at home. Fruit and vegetables boxes,
Nevertheless, internet retailing is expanding rapid- on the other hand, feature a selection of fruit and
ly in the UAE, highly supported by the tech-savvy vegetables, often based on seasonal availability. Such
community, a growing need for convenience and boxes are usually subscription based and marketed
an ambition by the government of Dubai, to create for their convenience and as a good way to increase
the “smartest city in the world”. The e-commerce fresh produce intake and home-cooked meals in gen-
grocery segment is currently witnessing a shift from eral. As many importers offer such delivery services
pure players, like trolley.ae and supermarket.ae to these options are also advertised as fresh and bud-
third-party services, such as InstaShop and ElGrocer. get-friendly, as they skip the middleman. Important
These companies collaborate with grocery retailers examples are Nassar Al Refaee Vegetables & Fruits
throughout the country to facilitate a fast and un- Trading (NRTC) and Kibsons International. While NRTC
complicated home delivery service, presenting a offers boxes, baskets and an online system to choose
challenge for pure e-grocery players. Such third-party manually, Kibsons also includes cooking boxes in
marketplaces usually offer mobile-based apps. The their portfolio.
growing home delivery trend from pure players, Meal plans on the other hand target busy, single
delivery apps and even traditional brick and mortar consumers, in most cases, with a desire for weight
grocery retailers who run their own independent on- management. Such meal plans are usually compiled
line platforms solidifies the need for an omnichannel and monitored by a nutritionist, who also discusses
strategy for large players in the market. Emke Group goals and progress in regular consultation sessions.
(Lulu Group) for example introduced a click-and-col- Key to e-commerce in all its forms is cash-on-deliv-
lect model, which allows consumers to make online ery which is still the preferred mode of payment for
purchases and pick them up at a later point from a online shoppers in the UAE.
designated Lulu Supermarket.
Informal Markets
The UAE is home to three different kinds of fruit and with Al Aweer in Dubai being the most prominent.
vegetable markets. The most important are large, Every notable importer, including Barakat, Fresh
dedicated wholesale markets, where importers and Fruits Company and Nassar Al Refaee (NRTC) has a
distributors offer their products to restaurant owners store presence there. After consultation with vendors
and grocery retailers. These markets also feature a throughout 2015 and in preparation for the Expo
retail section for everyday consumers, looking for a 2020 in Dubai, the government decided to renovate
bargain. Such markets can be found in every Emirate, Al Aweer. By the end of 2019, the market will boast
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300 extra parking spaces, air-conditioned halls with between October and May in Dubai’s Business Bay
dedicated wholesale, retail and farmers sections, area, while Deerfield Farmer’s Market saw a relaunch
cycling paths and a pathway for smart trolleys. in October 2018. The latter was opened as an initia-
Another important type of market are fruit and veg- tive of Abu Dhabi Municipality and the Abu Dhabi
etable stalls and small markets in more remote areas. Farmers Services Center and will close by the end of
These are found especially towards the border with March 2019 for the hot summer months – a return
Oman, where fresh fruit and vegetables from the UAE in autumn is not yet confirmed. The most prominent
and Oman are sold for low prices. These markets can farmer’s market in the UAE however is Ripe market,
be outside or in dedicated market halls. Both whole- which started in 2011 as a weekly food and crafts
sale markets and smaller vegetable markets are usual- market in Dubai. Ripe Fresh Trading LLC, the company
ly open throughout the year and on a daily basis. behind the market now organizes a weekly market in
Abu Dhabi and one in Dubai. The company is also the
A relatively new and expanding phenomenon in the owner of four dedicated organic Ripe shops in Dubai.
UAE are more traditional farmer’s markets, which The Ripe outdoor markets in Abu Dhabi and Dubai
open only on weekends and cater solely to private are seasonal and usually open between October and
consumers. These open markets focus on local and/ April. In Dubai, Ripe is also open inside the Times
or organic and seasonal produce and run during Square Center mall during the hot summer months
the cooler months11. For example, Baker & Spice, a (May to October).
chain of shops and restaurants, runs a pop-up market
Retail Environment
Fresh fruit and vegetables are primarily sold through venience and upscale quality among the country’s
one of the country’s 10,221 grocery retailers. Modern business elite and on the other the need for cheaper
grocery retailing, with more than 35 different chains options in the face of the economic limitations many
and an overall outlet count of 1,273, accounts for the consumers are currently experiencing.
lion’s share of value sales. The main store type within Similarly conflicting, are marketing strategies within
grocery retailing are hypermarkets, generating 60% the fresh produce segment. Higher-priced organic
of sales through grocery retailers, followed by super- products as well as pre-cut and packaged fruit and
markets with a share of 19% and forecourt retailers vegetables increased their presence significantly in all
and convenience stores accounting for a combined major retail chains since 2016. At the same time, pro-
share of 5%. Further growth in modern grocery retail- motions and discounts for staples are often essential
ing in the coming years is expected through the new- to lure price-conscious consumers into retail outlets.
ly introduced discounter chain Viva and the expan-
sion of smaller supermarkets and convenience stores, Traditional grocery retailing, mainly composed of so
especially Carrefour Market and Carrefour Express. called “baqalas”, are continuously losing importance
and accounted for merely 16% of sales in 2018. These
Grocery retailing, including sales of fresh produce, is outlets are highly affected by increasingly stringent
therefore expected to follow two opposing trends. On regulations regarding facilities and structures, espe-
one hand it will cater to the growing demand for con- cially in Abu Dhabi. Nevertheless, traditional grocers
Cool months in the UAE are usually between November and April, where the temperature gradually drops at the beginning and increases at the end of this period. Winter season is between the end of
11
December and the end of March.
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