Euromonitor’s latest report on the UAE’s packaging sector gives an upbeat outlook, that the sector remains on track for continuing market expansion.Based on its research last year, the research company predicts “strong value growth at constant 2014 prices” for food packaging.
“High average income levels” insulated the country from an economic downturn at the start of the period analysed by Euromonitor while a recovery towards the end of the review period prompted higher spending and a flurry of fresh expat arrivals.
As a percentage, the research company expects the market’s growth to slow. But in absolute terms, packaging’s rise is poised to accelerate, set for “stronger growth for many product areas at the end of the review period”, according to the company.
“Ongoing strong growth will be linked to economic growth and strong outlet volume expansion for convenience stores, supermarkets, and hypermarkets,” said Euromonitor. “Growth will also be fuelled by population growth, particularly among the Asian and Western expatriate populations”
Other trends at work in the market include escalating concerns over health as well as the continuing dominance of multinationals in sales and of hypermarkets and supermarkets in distribution.
Towards the close of last year, Euromonitor found “growing concern” over the UAE’s high levels of obesity and overweightness.
“Consequently, many consumers are seeking to shift towards healthier diets or to lose weight,” said Euromonitor.
“Meal replacement slimming notably saw the strongest current value growth across packaged food in 2014. Many consumers are, however, unwilling to wholly sacrifice indulgent food, with products such as chocolate confectionery and packaged/industrial cakes thus seeing a shift towards smaller pack sizes as consumers seek stronger portion control.”
Meanwhile, multinationals maintained their lead in sales, buoyed by the UAE’s “multinational consumer base”, said the research house.
“Saudi players are notably strong, with dairy giant Almarai being the leading player overall thanks to its efficient distribution network in the United Arab Emirates,” said Euromonitor.
“Many consumers meanwhile prefer the reassurance of strong global brands, with this benefiting Nestlé, Mars, and Saudi Snack Foods, the representative of PepsiCo brands such as Lay’s.”
But the leading domestic player in 2014 was Al Ain Dairy, which was found to be particularly strong in drinking milk products and yoghurt.
Hypermarkets and supermarkets also played a leading role in sales, reflecting the UAE’s “highly developed” modern grocery retailers.
For packaged foods, hypermarkets remain “the dominant channel overall”. “This is not only due to hypermarkets offering wide ranges and attractive price promotions but also due to a strong mall culture, with many combining grocery shopping with trips to shopping malls,” said Euromonitor.
“There was, however, growing demand for local grocery retailers at the end of the review period, due to increasingly busy lifestyles, with convenience stores thus gaining share in 2014.”