Trends & Opportunities in the UAE Food & Beverage Market

The food and beverage industry in the United Arab Emirates is substantially the most flourishing sector. Several factors together play a major role in empowering the rapid growth of this industry. With a higher number of expats settling in the country with high disposable income and urban lifestyle, a growing flood of tourists and foreign investments as well as the ever-changing tastes in customers’ food habits, the UAE food market is thriving steadily. 

Reasons to invest in the Food and Beverage industry UAE

Dubai is indeed a heaven where people build their lives, through business or their respective professions. It is a global hub for several industries and giant commercial projects. However, there are reasons why one should consider investing in the UAE food market. For instance – 

• Boost tourism

Dubai in UAE is a haven of rich cultural heritage. Diversified preferences and culture constantly swirl in this luxurious city. Similarly, there is a huge demand for a variety of cuisines representing those cultures and tastes. This way, food businesses make a lot of profit from the interest generated by tourists as well as locals. This further calls for more tourist footfalls and enhanced tourism culture. 

• New inventions

When it comes to innovations and regulations, UAE is the base. Global events like Dubai Expo and Gulffood manufacturing serve as a platform for presenting global products, solutions, inventions, and technologies for the food and beverage industry. It also provides a stage for entrepreneurs and activists to discuss concerns regarding rising food prices, sustainable growth, balancing inflation, food engineering, and more. 

• Efficient infrastructure

The goal of the UAE government is to make Dubai one of the world’s most ultra-modern cities by the year 2050. And therefore, they ensure that Dubai is solace with the best amenities for the general public so that they find maximum ease in their day-to-day operations. 

• Easy to form a company

It is no secret that UAE offers a smooth and hassle-free business setup process. Companies have the liberty to choose Dubai mainland or Dubai Free zone as their work base. Since both regions have their own rules and regulations, it is easy to start any business with proper guidance and techniques. 

• Unparalleled hospitality

Dubai is best known for its hotel industry. Developments like Burj al Arab and Atlantis the Royal are forerunners in their industry. Areas such as Downtown Dubai, JBR, Dubai Marina, etc. are well-known for the variety of food they serve. Undoubtedly, the hospitality of these places tends to bring an explosion in the food and beverage market in the UAE. 

Effect of the Covid-19 on the UAE’s Food & Beverage Industry

The year 2020 brought a drastic change in the global food service as well as the UAE food market. The nationwide lockdown affected all businesses grievously, including restaurants and cafes where customers could not seek for the next few months. Moreover, the independent F&B companies weren’t able to allay the crisis due to the lack of proper support systems and supply chain partners. Even entities without an online business model incorporated into their current businesses were affected equivalently. On the whole, the pandemic year was a disaster for the global food & beverage industry. Therefore, food business operators had to make a reconstructive change in their business models to stay resilient.  

Rise of Q-Commerce 

Q-commerce or Quick commerce emerged as a huge trend swiftly in e-commerce post the COVID-19 pandemic. Undoubtedly, the pandemic accelerated digital transformation across the globe. And hence, the rise in Q-commerce brought convenience into the consumer’s lifestyle. Ordering food became a quicker and much better option to cope with unprecedented times. Additionally, the varied choices of food items and options to track orders in real-time provided order transparency as well as delivery satisfaction to customers. They could access every movement, right from the placement of the order to the exact time of delivery. 

Currently, the F&B market of UAE is the second-largest market for online food service in the whole MENA region. This is because of the various business strategies the industry uses to cater to market demand thus gaining competitive power. These strategies include a combination of cloud kitchens, franchising, mergers and acquisitions, virtual branding, partnerships with communal platforms, third-party delivery operators, etc. 

Technological advancements 

Technology has changed every aspect of our world, including food. Even though QR-coded menus, contactless delivery models, and cashless payment methods were always there, they came to a trend in recent times as their utilization accelerated 10-fold. In addition, the installation of robots in restaurants became a globally accepted model. In fact, in UAE, hotels like ECOS Dubai at Al Furjan use robots to receive guests and also show them around. 

Furthermore, cloud kitchens helped reduce rental costs and increase revenue. So, in short, digitalization has made a deep invasion into every aspect of the food and beverage industry. 

F&B industry after Covid-19 

As convenience and personal safety are the predominant factors during these times, F&B businesses initiated a new trend of delivering food within 45 minutes or less. This, thus, provoked many more entities to join the Q-commerce network. But also, they had to endure various challenges and pressures in order to attract customers and gain authority.  

Another notable feature of the UAE’s tremendous way of handling the COVID-19 crisis was the Expo 2020 which brought a surge in tourism, enabling the F&B industry to bounce back successfully, thereby recovering the economy as a whole. 

Although the revenue of restaurateurs lowered during the first half of 2020, with the collective efforts of the UAE government and the public, the economy revived with relaxed lockdown restrictions, implementation of free vaccination drives, and careful monitoring of regulations. Eventually, during the second half of the year, the dine-in option for customers in the restaurants began to pick up slowly and returned to normal gradually. 

Now that the UAE food market is back on the track with full vigor, the food and beverage entities must ensure to introduce unique and authentic experiences to their consumers in order to maintain customer loyalty. Furthermore, bringing innovative solutions for better delivery would definitely call for an upward growth course in the long run, following rapid technological transformation, extensive internet distribution, and the permanent shift in consumer behaviors such as convenience, ease, and safety. 

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Strengths of the UAE food market

• Favorable business climate 
• Stable economy 
• The UAE F&B market rated 70.4 in the Risk/Reward Index 
• Ability to absorb the impact of VAT on the food industry 
• The most attractive food and beverage market in the world 
• Increasing demand for luxury goods and healthy food 
• Focus on the growth of the halal sector, thus establishing halal standards 
• Strong demand for online F&B distribution 
• The majority of the population is self-sufficient in demand for milk and eggs 
• Endorsement of organic farming projects 

Trends in Food and Beverage industry UAE

• Changing consumer tastes and preferences 
• Food safety and sustainability 
• Transparency in the food industry 
• Increasing overheads as well as uncertainty 
• Innovations 
• Differentiation 
• Mergers and Acquisition 
• Increase in the sale of Food & Beverage 
• Preference for quality food 
• Increased health awareness 
• Strong growth in the sale of dairy products as well as baked goods 

Opportunities in the UAE Food & Beverage Sector 

• With a substantial expansion in the food processing industry in recent years, the United Arab Emirates is expected to welcome more foreign investments and increased support from the government in order to improve domestic food production as well as self-sufficiency. Besides, the food production facilities in the UAE have begun to grow and diversify. 
• Increase in value-added dairy products 
• The high level of milk consumption in the UAE would empower local players to join the market. 
• The dairy industry in the UAE F&B is highly lucrative, extremely vibrant, and competitive as well. Thus, there are ample opportunities for growth in value-added dairy products such as yogurt, butter, cheese, etc. 
• With a diverse population and a constant demand for different brands, there has been tremendous growth in the food services in the UAE, such as restaurants, cafes, etc. And therefore, the Food and Beverage industry UAE has expanded to become a major industry in the country, with over 16,000 food outlets and shopping centers. 

Some of the highly used market choices in the F&B sector in UAE are as follows:- 

• Hotels 
• Restaurants and cafes 
• Bakeries 
• Butchery 
• Food trucks 
• Catering units 
• Food factories 
• Warehouses 
• Manufacturers and suppliers of food packaging products 
• Canteens in schools, hospitals, and corporate offices 

Why the UAE food market will tend to grow?

Since the UAE’s F&B sector is fiercely competitive, investors might have to face certain challenges and make difficult decisions, such as introducing intriguing brands in specific regions where it is difficult for them to thrive or removing underperforming outlets from a prime location. 

On the contrary, the food chain services in the UAE have made significant advancements in the last few years. Therefore, opening a restaurant in UAE would prove to be extremely profitable. However, before setting on to such endeavors, it is important to consider all the prominent factors of business such as organizational agility, market relevance, etc. this particular step would assist in making the organization successful by promoting efficiency and result-oriented financial monitoring. 

Additionally, the fluctuating oil prices and geo-political disruptions never had any impact on the UAE’s food and beverage industry. Moreover, the government has also been spending a lot on domestic construction and developmental projects. This thus had a major impact on the expansion of UAE’s food sector by 22% in the past five years and is assumed to grow further in the near future.  

Impact of Abu Dhabi Vision 2030 and Dubai Expo 2020 

Abu Dhabi Vision 2030 and Dubai Expo 2020, the country’s major initiatives were to encourage investors to utilize their money in the respective Emirates. In addition, Dubai began several development projects to prepare for the grand six-month event, World Expo. These projects included airports, malls, skyscrapers, hotels, extension projects, theme parks, and other relevant attractions. On the other hand, Abu Dhabi’s newly opened airport terminal and ongoing growth initiatives are expected to strengthen its position as the nation’s cultural capital. 

However, it hasn’t been the first time that an event like this has helped any country to kickstart its economic development for the long term. For example, Chicago’s World fair in 1893 helped the country rebuild itself after the devastating fire breakout in 1891. The introduction of every new location or event facilitates restaurateurs or food business owners to break into the market and develop their businesses. Apart from that, the population rise and improved GDP also fuel restaurant demand in the region. 

UAE’s climate is mostly high temperatures, combined with a conservative population. Consequently, indoor places and family-friendly venues such as malls, and dine-in restaurants have become more popular. And as a result of this, there can be an expected increase in food traffic because of the population growth and GDP per capita in the coming years. In fact, UAE is already witnessing a surge in food and beverage products at present. Freshly brewed coffees, halal meat, cereals, and organically produced fruits & vegetables in a variety of categories are now available in the UAE food market. 

Summing up 

The global food industry is now seeing a major boost which has the potential to bring great business opportunities to investors worldwide. Similarly, establishing a food business in UAE can be a vital option for business owners. Even the UAE government serves as a huge base for F&B business owners that would facilitate them to succeed in their respective ventures. Initially, it may seem like a dangerous task to deal with the incorporation process, but the owners and entrepreneurs can seek the assistance of business advisors who hold good experience in dealing with such challenges.  

No matter what business you wish to start or what size your food company is, be it a restaurant, food truck, catering unit, or bakery, Shuraa Business Setup can help you get the required license for your food business. Shuraa considers the needs of its clients and works accordingly by handling each step of the incorporation process. So, while we take care of business formation, you can focus on planning your venture. 

Call our expert advisors today at +971 44081900 and get a free consultation. You can also email at info@shuraa.com.