(Last updated: 25 Aug 2011)

Trends and opportunities

The market

Due to the country’s limited sustenance on agriculture, over 80 per cent of its food products are imported into the United Arab Emirates (UAE). A high percentage of imported products (approximately 50 per cent) are further re-exported to Gulf Cooperative Council (GCC) countries, former Soviet states, the Indian subcontinent and Eastern Africa.

It is estimated that the UAE population would spend US$7.7 billion on food products in 2011, with this figure expected to rise to US$9.59 billion by 2014. According to the report published by Collins International, the average spending in the UAE stands at US$14,400 annually with an average of US$23,000 for Emiratis followed by Western expatriates US$19,500, GCC nationals US$13,500 and Asian US$10,000.

The UAE food industry can be split into three main sectors: food retail, food processing, and food services.

The UAE’s mass growing retail sector is the largest by value in the GCC with sales to US$5.4 million in 2011 accounts for 70 per cent of the total food and drink market. It is expected to rise to US$6.92 by 2014 (Zawya, February 2011).

Food sold in retail outlets consist of 75-80 per cent imported consumer-ready products, and 20-25 per cent locally processed foods. Locally produced food, accounting for only 15 per cent of the market includes cultivated products (vegetables), animal products (dairy products, poultry and eggs) and seafood.

Large retail chains such as Carrefour, Spinneys and Lulu dominate the big format supermarket trade with a 50 per cent share in the market. Store sales by independent retailers (Co-ops) account for 21 per cent, small grocery/convenience stores 28 per cent and wholesalers around one per cent.

The UAE Government has a keen interest in fostering the development of the food processing industry having invested some US$1.4 billion since 1994 to develop a value-added food-manufacturing sector to target local and re-export markets. The result is that there are around 150 food processing plants in the country representing a large chunk of the region’s food manufacturing capability. Dubai’s food processing industry is worth approximately US$3 billion and achieves growth of 11 per cent per annum. Major food processing plants include vegetable oils, soft drinks and juices, snack foods, pasta, confectionary and dairy products.

The UAE foodservice market has risen by 11 per cent per annum in the last two years and accounts for US$3.54 billion. This increase is in response to changing market dynamics, rising demographics, commerce income and tourism and expanding infrastructure developments (especially in Abu Dhabi). Meat, poultry and fish accounted for 30 per cent of purchases by the UAE’ s food service sector, followed by dairy products at 13 per cent and rice, pasta, cereals and gourmet condiments also at 13 per cent.

Food security dominates government priorities and economic planning, there has been growing interest to be self-reliant by producing own food rather than encouraging imports. The Abu Dhabi Government has invested heavily in over 8,000 organic farms to ensure growers get the best in terms of assistance in agricultural input and expertise to manage the source of the food supply chain.

Opportunities

For Australian exporters, trade opportunities in the UAE exist in most food categories. However, the market is highly competitive given the UAE’s open trade policies. In some instances consumption is small, so opportunities exist for consolidators of mixed consignments.

The UAE, and particularly Dubai, have taken active steps to position themselves on the world map as the top tourist destination. As a result, the food service sector is a strong growth area given the significant expansion of the tourism sector and the large number of new hotels and resorts being opened in the UAE. Currently, Dubai has approximately 364 hotels (ranging from one- to five-star), with 46,000 rooms in addition 186 hotel apartments. Abu Dhabi is a close second behind Dubai adding 10,000 new hotel rooms.

This rapidly growing population and emerging affluence in the UAE has spiralled the demand for high quality, organic and specialised foods. In addition, the introduction of hypermarkets and superstores is reshaping the retail sector thus providing a diverse range of food to supplement the taste preferences of a large expatriate population. In recent years, there has been a shift in food habits from traditional to Western-style convenience foods..

Competitive environment

Food suppliers from all over the world vigorously compete for market share in the UAE. European Union, US and Asian products pose the greatest competition to Australian products as lower freight rates work in favour of these suppliers. It is acknowledged that Australia can compete on quality but higher freight costs and the strong Australian dollar can add to the price making products less competitive.

Most items are sourced locally from exclusive agents. The major supermarket chains import some of their products direct from overseas suppliers.

The US dominates the high quality snack market. European companies, under license from American manufacturers, dominate the cereals market.

Australia is one of the major suppliers of beef and lamb with strong competition from US, Brazil, China, New Zealand and the India subcontinent. France, Australia, UK and Holland dominate the market for cheese.

Tariffs, regulations and customs

The UAE and other members of the GCC (Bahrain, Kuwait, Oman, Qatar and Saudi Arabia) are attempting to put together uniform laws relating to labelling, shelf life and food safety for the region.

However, there still exist differences in regulations where members fail to reach agreement so each GCC country has its own specific regulations.

The UAE regulates that food and beverage items imported into the country are subject to a five per cent import duty (excluding alcoholic beverages).

Certain products are exempted from this duty. For further details please contact Austrade.

No alcohol can be used as an ingredient or additive. Import of pork and pork products are permitted but are very strictly regulated.

No food labels can have pictures or recipes listing pork or alcohol. Alcoholic beverages are available in the UAE but their import is strictly restricted to licensed importers who source wine and spirits from around the world including a growing number of brands from Australia.

A health certificate attesting that the product is fit for human consumption, issued by the governmental health authority at the country of origin. In Australia, Australian Quarantine Inspection Service (AQIS) provide two types of documents, depending on the product category:

1. If dairy, fish, seafood, meat, ie. fresh foods, then a health certificate is produced
2. If processed foods, of virtually all sorts, then a certificate as to condition is produced. It is a mandatory requirement to mention the clause ‘Fit for Human Consumption’ on the certificate.

Industry standards

Labelling is one of the most important issues for food exporters and you must be sure to include production and expiry dates, which needs to be printed on the original package or label. Arabic labelling is a requisite and can be printed on sticker.

The origins of all animal fats must also be stated.

Labels for imported goods need to have the following as standard, but please note that these are subject to change. You should always check for the latest regulations with the buyer when you are planning to export products to the UAE:

It is mandatory that food pre-packages be labelled with the following:

• Brand name
• Ingredients (arranged according to weight or volume)
• Manufacturers' name and address
• Net weight or volume
• Country of origin
• Lot (batch) number
• Special storage and preparation instructions, if any. Display of nutritional information is optional (except for products with special uses such as baby food, food for patients, etc)
• Production and expiration dates must be clearly printed, embossed or engraved; and should be difficult to erase. The expiry date must be printed in the following order depending on the shelf life: day, month and year for products having a shelf life of six months or less; or month and year for products with a shelf life over six months. It is also prohibited to write such dates manually or indicate them on a sticker (even on the sticker used for Arabic translation). Double dates are not allowed (such as indicating more than one production or expiration dates).

With few exceptions, all food items are required to have at least half of their shelf life remaining at the time of import. Frozen meat and poultry products must be imported within four months of their date of production irrespective of their shelf life.

A halal certificate issued by a UAE approved Islamic centre in Australia is compulsory for exporting any meat, poultry products or products containing gelatine. This documentation may also require attestation by the Australia Arab Chamber of Commerce and UAE Embassy.

Marketing your products and services

The UAE, with its aggressive spending and high import propensity presents vast opportunities for Australian businesses in the food industry. However, the large number of players, lack of Internet information, and different business culture makes it difficult for Australian companies to identify the most important contacts and secure appointments.

Relationships are key to doing business and emphasis weighs heavily on mutual respect and building trust. Regular visits, stopovers and attendance at exhibitions would help reinforce the customers your interest in their markets and commitment to a strong partnership.

Austrade's experienced Business Development Managers are members of key food sector business groups and provide input into a number of industry directories. They are well connected with key business people and able to open doors on behalf of Australian companies. Austrade arranges frequent business delegations to the UAE and appointment programs for companies making individual visits.

The UAE is a regional hub for trade exhibitions. Austrade arranges activities which bring local and Australian business people together at a number of key trade exhibitions each year.

There is a big difference between the commercial laws in the UAE and Australia, which if not understood by Australian companies, can result in decisions that impede the growth of business. It is very important to understand the legal context. Austrade provides information about agency/distribution agreements and costs as well as franchise regulations and the different types of commercial entities open to Australian companies.

Austrade can also refer Australian companies to providers of professional services, such as lawyers and accountants.

Distribution channels

Import and land distribution of food products is carried out by the private sector.

Government intervention is limited to health regulations and labelling requirements. Many importers in Oman, Qatar, Bahrain and Kuwait buy food items via the UAE, since individual orders from these countries tend to be less than the minimum required by suppliers. Thus, container-sized loads are shipped to the UAE and broken down into smaller quantities for transhipment to these countries.

Large importers are often integrated with logistics and distribution companies, who supply to wholesalers and retailers. Some of the large importers and distributors run their own retail outlets as well. The UAE distribution industry is very advanced, with sophisticated warehousing (cold chains) and inventory systems. The smaller organisations that do not own their own warehouses still have access through rented facilities.

Transport

Food items enter the UAE primarily via seaports with free trade zones situated in all the Emirates. The Jebel Ali port in Dubai is the world's largest man-made port, highly regarded for its expertise and precision in cargo handling. There is also cargo handling facilities attached to the international airport, called cargo 'villages'. Dubai Cargo Village handles more air cargo than any other airport in the region, much of it coming into Dubai by sea and going out by air mainly to Europe.

Links and industry contacts

Government, business and trade resources for United Arab Emirates

Abu Dhabi Chamber of Commerce and Industry – www.abudhabichamber.ae
Dubai International – www.dubaiairport.com
Dubai Chamber – www.dubaichamber.com
Dubai Municipality – www.dm.gov.ae
Sharjah Chamber of Commerce and Industry – www.sharjah.gov.ae

UAE Interact – www.uaeinteract.com

Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

A list of Austrade offices (in alphabetical order of country) is also available.