Food and beverage to the United Arab Emirates
Trends and opportunities
Due to the lack of agriculture in the Gulf Cooperative Council (GCC), food imports are significant, forming 70 per cent of the all food requirements. Due to extensive trade liberalisation, a high percentage of imported products (approximately 50 per cent) are further re-exported to GCC countries, former Soviet states, the Indian subcontinent and Africa.
Food and agriculture exports from Australia continues to be the most important export component of trade and investment with the Middle East and North Africa region at A$3.9 billion annually. The 130 passenger flights per week between Australia and Dubai further bolster the food and agriculture export base, with fresh horticulture, dairy and meat occupying much of the freight on flights.
It is estimated that by 2020 the United Arab Emirates (UAE) will spend US$16.7 billion on food products (Source: Business Monitor International, UAE Food and Drink Report Q1 2017). Rising incomes coupled with a high dependence on imports presents opportunities for Australian food and beverage exporters, particularly in the high-value processed foods sector as well as whole, organic and functional food and beverage items. Food sales are projected to maintain a solid 7.1 per cent annual average growth rate during 2017-2020, thanks to increasing health awareness, which will prompt customers to consume more high value food items (Source: Business Monitor International, UAE Food & Drink Report Q1 2017). Modern retail and hypermarket, premium food services, hospitality and manufacturing are just some of the areas that have seen a significant growth in investment.
For Australian exporters, trade opportunities 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 has emerged as a major re-exporting hub, primarily due to its strategic location and has therefore become a significant link in the region’s food chain, supported by strong logistics, recognised standards and practices, and well-established transportation routes (air, sea and land).
A rapidly growing tourist population and emerging affluence has encouraged demand for high quality, organic and specialised foods. The introduction of hypermarkets and superstores is reshaping the retail sector, 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. Despite the presence of food processing companies, there still remains a considerable gap in food processing and packaging capabilities, something that Australia can showcase through innovation and collaboration. The UAE also plays a leading role in the development of standards (GCC and MENA wide) in the fast growing halal food industry.
Key sector openings include:
- fast food: ready-to-eat, chilled, bakery goods and dairy products
- processed food: fresh ready-to-cook products, pre-cut vegetables, pre-marinated meats, processed, canned/preserved and frozen food
- health food
- organic food
- soft drinks and flavoured water.
Food suppliers from all over the world vigorously compete for market share. European Union (EU), United States (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 dollar can add to the price, making products less competitive.
Most items are sourced locally from exclusive agents and major supermarket chains import some of their products direct from overseas suppliers.
The US dominates the high quality snack market and EU 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.
Australia is still looked upon as a source for premium, whole and organic food with product traceability and clean label ingredients at the forefront.
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 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.
No alcohol can be used as an ingredient, additive or treatment. Import of pork and pork products are permitted, but are very strictly regulated and the market is limited to expat communities. No food labels can have pictures or recipes listing pork or alcohol. Alcoholic beverages are available in the UAE, but their import is restricted to licensed importers who source wine and spirits from around the world, including a growing number of brands from Australia.
Products require a health certificate attesting that the product is fit for human consumption, issued by the governmental health authority at the country of origin is mandatory. For genetically modified organism (GMO) and organic declarations, certificates from respective bodies are required as well.
Labelling is one of the most important issues for food exporters and you must be sure to include production and expiry dates, which need to be printed on the original package or label. Arabic labelling is a requisite and can be printed on a sticker.
The origins of all animal fats must be stated.
Labels for imported goods need to have the following as standard, but are subject to change. Always check 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 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. It is prohibited to write 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). 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
- month, year for products with a shelf life over six months.
With few exceptions, all food items are required to have at least half of their shelf life remaining at the time of import.
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 with a strong emphasis on mutual respect and building trust. Regular visits, stopovers and attendance at exhibitions would help reinforce to customers your interest in their market and commitment to a strong partnership.
The UAE is a regional hub for trade exhibitions. In particular the Gulfood exhibition that takes place yearly in the month of February is now the largest food and beverage show in the world. Austrade arranges activities which bring local and Australian business people together each year.
There is a big difference between the commercial laws in the UAE and Australia, which if not understood, can result in decisions that impede the growth of business. It is very important to understand the legal context.
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 transshipment 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.
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
Abu Dhabi Chamber of Commerce and Industry
Emirates Authority for Standardization and Metrology
Sharjah Chamber of Commerce and Industry
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