The UAE Food and Beverages Business Group and Nielsen IQ insights detailed their success in its recent UAE Food and Beverage Annual Report.
“The beverage category in particular has displayed remarkable growth post-COVID-19 from Q4 2021 onwards,” NielsenIQ Director SMB Adeel Durrani told the floor during a live event focused on the analysis of the report’s findings.
“This can be attributed to increased tourism from the Dubai Expo 2020 as well as other social events which have helped to boost demand, [in addition to] the performance of smaller local players in the sector.
“We are seeing that the industry is in fact currently being dominated by these smaller players, with the top 31 to 100 ranked manufacturers growing at twice the pace (14.7% growth) of the overall category average (7.8%).”
These smaller names include drinking water brands Lago and Abant that are leading the premium water category which grew some 17%; as well as Freez and Rita that are leading the premium soft drink category which grew 134% overall.
“The key drivers of growth in this category are premiumisation, innovation and increased reach – [but when looking] at the water segment it is clear that local players are dominating this,” he added.
“That said, within the sports drinks segment which is growing particularly quickly at 15%, global giants are still dominating particularly Red Bull – resulting in this brand being the only player in the market to increase its prices (by 2%) when all others offered price discounts by some 4%.”
The overall sports drinks segment saw an average 3.8% drop in prices, but most of the other segments saw price hikes such as Juices (10.3% increase) and Coffee (12.7% increase), leading to a category average increase of 2.4% compared to two years prior.
Another major performer in the UAE market was the snacking category, which saw an impressive 15.9% overall average growth in the past year and emerged in second place behind the bakery segment.
“Snacking has been the second biggest flourishing basket in the market, driven by consumption and price increases and led by chocolates and biscuits,” Durrani said.
“Chocolates in particular grew at the fastest rate of 20% due to 11% increased consumption; and some of the best-performing brands here were M&Ms and Best of Minis.
“Also interesting in the snacking category has been the performance of private label products, where we have seen private label outperform the category average at 17.8% growth especially in the nuts and biscuits segments.
“Overall it is clear that consumers are continuing to purchase snacks – both sweet and salty – on a regular basis despite the clear price increases that have been taking place in the category such as 10.8% increase in Salty Snacks and 15% increase in Biscuits compared to two years prior.
“This has also led to an increased preference for premium and super premium products, as mass products have also been hit by this price increase – meaning brands such as Rocher, Loacker and Barcel are [doing well] in each respective segment.”
Bakery - growth trends unclear
The Bakery category emerged as the top-performing category in the UAE in terms of growth, but a great deal of this has been attributed to price hikes and other economic reasons, leading the underlying growth trends less clear than pre-pandemic.
“Bakery is the fastest-growing category in the food industry driven by strong consumption and rising food prices – significant growth has been seen due to factors such as inflation and rising input costs,” he added.
“The growth here can also be attributed to changing consumer preferences [but once again this can be linked back to economic concerns] as consumers are increasingly opting for baked goods as a cost-effective alternative to more expensive food items.”
As an example, one of the best-performing bakery products in the market has been croissants, with increased demand seen for this as not only a snack but also a cheaper breakfast item than cereals which have seen a price surge.
“The Premium segment is the only segment in the bakery sector that is witnessing growth [with consumers adjusting] to new bread prices and associating this segment with higher quality and thus willing to pay a premium price,” he said.
“Premium bread brands such as Yaumi and Lusine [have seen growth] even with an overall category price increase of 8.5% compared to two years back, and croissant prices growing 19.3% overall.
“The healthier factor is playing strongly here, with consumers increasingly seeking out baked goods that are made with natural ingredients and free from additives and preservatives.
“[But it should be noted that] it is the bigger players that have been flourishing so far due to their adaptability to changing market conditions with the top five market players such as Almarai contributing 23.7% of growth – smaller players that are not within the Top 100 have seen a decline of -47.6%, and private label bakery has grown just 1% so it is clear that agility is crucial to drive growth in this market.”