Middle East to lead global health and wellness packaged food growth over next five years: Study

MENA beat out its closest competitor sub-saharan Africa (8.8%) by just 1.1% with a predicted growth rate of 9.9%, but in terms of absolute value analysts predicted that MENA will be worth three times more by 2023 at US$31.5bn as opposed to the latter’s US$10.7bn.

According to Euromonitor’s Gulfood Industry Outlook Report 2019, this was partly attributed to an expanding middle class ‘who, with a higher income, are more likely to spend on health and wellness products that are often priced higher than more conventional packaged food’.

In relation to this, modern retailers in the region have invested in private label premium lines to tackle growing consumer demand for more economical healthy food options. An example was Carrefour, which developed a ‘Healthy Kitchen Section’ in a number of UAE outlets providing  various organic packaged food items.

Additionally, MENA was also expected to top the global charts for meat and poultry industry growth at 5.2%, beating second-places Latin America (2.9%) and third-placed sub-saharan Africa (2.5%) by a large margin.

The analysts added that an increased demand for halal meat was the main reason for growth in the region, as it was an ‘important feature of life across Muslim communities’.

“Demand for halal meat is set to escalate, [especially] in the Middle East and North Africa region, [where] nearly all meat is halal by default, providing a potent market base,” they said.

By 2050, one-third of the global population was predicted to be Muslim, which led them to recommend processed meat manufacturers to acquire halal certification.

Challenges ahead for snacks

Market growth for the Confectionery, Snacks and Ready-to-Eat category in MENA was predicted to be mainly led by Egypt and Saudi Arabia, the two largest markets in the region.

“Sweet Biscuits are widely consumed in Egypt, and [its] double-digit growth over the 2013 to 2018 period is expected to continue, [so] companies such as Nestle Egypt and PepsiCo Egypt would consider adding [more] products in this category,” said the report.

That said, all other products within the category were expected to see tougher times ahead in the country, due to the devaluation of the Egyptian pound which would ‘imported raw materials costlier to local producers and imported finished products expensive for the average consumer’.

A similar trend was observed for Saudi Arabia, which was projected to show strong market growth for ice cream, but poor performance in other products due to the 5% VAT introduction in the country.

The analysts recommended paying attention to the current trends for this category, which were flavour innovation, the adultification of products (adult-only flavours like alcohol-flavoured chips and ice creams), and label transparency.

Discounters: The future of retail?

According to the report, product value is expected to move beyond price point in the next five years, and is already showing signs in this direction currently.

“Value now includes elements of price, convenience, quality, sustainability and exclusivity,” said the analysts.

“Taking these elements into consideration has become key in helping brands and retailers connects with their customers and keeping their loyalty.”

They added that omnichannel engagement had become a key factor for success, as have technological innovations and discounter strategies.

“Searching for value has become an underlying driver of consumer purchase decisions, especially after the global economic crisis of 2007- 2008. Despite economic recovery, growth has been slow and consumer confidence has not improved to pre-crisis level,” said the report.

“The discounter channel in grocery retailing will the fastest growing channel despite being heavily concentrated in a few countries.”

Globally, discounters accounted for just 5% of grocery retailing worldwide last year, a number expected to reach 5.7% by 2023.