Pretty packets drive Gulf beverage sales

By Eliot Beer

- Last updated on GMT

Pretty packets drive Gulf beverage sales

Related tags: Energy drinks, Middle east, United arab emirates

For Middle East beverage consumers, it’s what’s on the outside that counts, as buyers focus on packaging and marketing over contents, according to a Euromonitor report.

UAE and Saudi buyers are most concerned with the look and presentation of their drinks, said Euromonitor in its report “Top Five Beverage Trends In the Middle East and North Africa​”. In the UAE particularly, popular health concerns, such as diabetes, are driving beverage purchasing decisions.

Contents overlooked

Deep knowledge about nutritional benefits is rare, and buying decisions are often based on a promising label or even recent coverage of functional ingredients by famous TV show hosts like Dr Oz or Oprah. High sugar or fat contents are thereby often overlooked​,” said the report.

Furthermore, the assumption that chilled products in PET bottles are fresh, and therefore automatically healthy, impacts developments in important segments of the market; demand for concentrates and ambient juices is witnessing a slowdown, while growth rates for chilled juices, regardless of their juice content, are flourishing​,” it added.

In Saudi Arabia, health concerns are also driving up sales of juice products, with manufacturers again keen to promote a healthy image through product labelling. But the major trend in Saudi Arabia remains the controversial energy drink segment.

Warning labels ignored

Due to the ban on alcohol, energy drinks are often seen as a substitute leisure drink due to its high caffeine content. Also, following the sports trend, consumers associate energy drinks with fitness. Saudi Arabia boasts one of the largest and fastest growing young populations, and energy drinks are seen to be an impulse purchase by this group​,” the report said.

However, in 2014, after reviewing adverse effects of energy drinks through various studies, the government has banned energy drink advertising and forced manufacturers such as Red Bull to carry health warnings. Manufacturers are also banned from sponsoring any sport, social or cultural event​,” it added.

Despite this, energy drinks remain extremely popular in the kingdom, and consumers are not deterred by warning labels, according to Euromonitor. The popularity of energy drinks is also behind the move by both Pepsi and Coca-Cola to slim can designs, which are now widely available in the UAE and Saudi Arabia.

The kingdom has also seen a significant rise in new non-carbonated beverages, driven by consumers’ health concerns and an interest in new flavours. Euromonitor highlights Good Night Drink, PepsiCo’s Frutz, and Nestlé's Pink Grapefruit Perrier as significant breakthrough products in this segment.

In the UAE, beverage makers are facing pressure from government-imposed price caps, as well as the continued dominance of highly price-sensitive consumers at the low end of the market. But rising global ingredient costs are putting increasing pressure on UAE manufacturers, particularly in the juice segment.

Juice manufacturers are struggling to remain profitable, as production and ingredient costs are rising globally. To bypass the regulatory environment, companies downgraded in terms of juice content or combined a new packaging design with a decreased pack size​,” said the report.

Related topics: Beverage

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