Ethical labels worth $2bn in UAE market

By Eliot Beer

- Last updated on GMT

Photo: iStock
Photo: iStock

Related tags: Uae

Sales of products with ethical labels of some sort reached more than US$2bn in the UAE last year, according to Euromonitor, with recycling and preservatives the main areas of focus.

The research firm’s new Passport Ethical Labels report looked at the prevalence of ethical labelling in the UAE market for the first time. It found the prevalence of ethical labels was not as high as in other regions, but forecast the market to grow quickly in the next few years, according to Alan Rownan, ethical labels analyst at Euromonitor.

Strong clean label growth forecast

In the UAE, ethical labels may not currently be as ubiquitous as in other regions particularly in Western Europe and North America, where there are a diverse range of initiatives and claims that consumers seek out on packaging. However, trends in the UAE are very much following the same pattern as these regions, albeit on a smaller scale​,” said Rownan.

Conveying to consumers the recyclability of a product has proven important globally, and the UAE is no exception. After recycling, clean label is set to experience the largest absolute growth of all packaged food, soft and hot drinks labels, growing by US$134m over the forecast period 2015-2020 in the UAE​,” he added. 

According to Rownan, the global clean label market will grow by US$12bn by 2020: “The UAE is seeing similar results, with sweet and savoury snacks leading the way, followed by soft drinks, driving absolute growth by US$32m and US$30m over the forecast period, respectively. As leading global players continue to include these claims on packaging, awareness in the UAE is likely to grow, and these will likely become of greater importance to consumers​.”

Labels need to resonate with consumers

Currently, only a limited number of ethical label categories are in wide use in the UAE: labels falling under Euromonitor’s “People/Values” category included some US$793m in sales, with no artificial preservatives, halal, and locally sourced being the most common. Under “Environment” the only label type to be at all common is can be recycled.

When asked why only these labels were common, Rownan said: “It may not be a matter of other ethical labels being held back, but manufacturers will likely holding off on including claims on packaging in markets where they are currently unlikely to resonate strongly with consumers. The cost of reformulation and the cost of revamping packaging to include claims are all likely to deter manufacturers from making a step until they can be certain that a significant portion of consumers are placing ethical labels as a high value priority when making their purchases​.”

But he suggested the long-term trend was towards more ethical labelling: “From a global perspective... increased levels of transparency and accountability by major food players has grown to be of paramount importance. Incorporating various ethical labels onto the packaging real estate of products goes a long way in addressing the concerns that consumers may have. 

There is growing demand that manufacturers go beyond compliance and make voluntary efforts to meet the ethical considerations of consumers and there is no evidence to suggest that the UAE is fighting this tide​,” he added.

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