GCC food processing set for boom

By Eliot Beer

- Last updated on GMT

Companies have made major investments in food processing in the region in recent years
Companies have made major investments in food processing in the region in recent years

Related tags: Food processing, Food

The GCC food processing sector will see dramatic growth over the next few years, averaging 8.5% per year up to 2018, according to a new report.

The high growth rate is partially a result of an increasing drive to process food locally, instead of relying on imports of processed food, claimed the report from Frost & Sullivan. Instead, food producers are moving towards importing raw ingredients, then manufacturing the finished products within the region.

Cut imports, boost value

With an increased focus on local food processing so as to decrease dependency on imports and increase value to cost, the food processing industry in the GCC is set for high growth. Also, about 54% of the population in the GCC is under the age of 25, making the region a potentially favourable market for products such as biscuits, snacks, and confectionery items​,” said Aparajith Balan, programme manager for the chemicals and foods practice in the Middle East and North Africa at Frost & Sullivan.

An increasing number of companies have invested in major food processing facilities within the GCC in recent years, such as UAE-based National Food Products Company​ (NFPC) and Al Khaili​. As well as local producers, international firms have also built factories to serve the regional market, including Brazil’s BRF​ and India’s Bakers Circle​.

In terms of the makeup of the packaged food sector, the Frost & Sullivan report said bakery products made up the largest single proportion, at 30%, with dairy products making up 25% of the sector. The biggest players were Saudi Arabia’s Almarai, which controlled 9% of the sector, Nestle Arabia with 5%, and Danone on 4%.

Growth from health foods

The report suggests healthy and innovative packaged foods present a good growth opportunity for regional brands, along with organic products, promoted through specially-designed retail spaces. In the longer term, though, it predicts growth will come from successful diversification and integration within the industry, as well as through effective branding.

Frost & Sullivan also identifies a bright future for organic food in the GCC, which it says will benefit from increasing governmental focus on the sector and the resulting drive to establish new organic farms across the region. The report predicts the GCC market for organic food will reach US$1.5bn by 2018.

In total the GCC food retail sector will reach US$155bn in value by 2018, according to the report. Growth in the sector will increasingly come from the move towards “organised food retailing”, with consumers demanding more food options thanks to exposure to global markets.  

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