Retail, hospitality projects to drive UAE F&B market growth

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Retail, hospitality projects to drive UAE F&B market growth

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Tourism will play a critical role in driving growth of retail and hospitality projects that feature food and beverage outlets, consultant says

Dubai: The UAE’s food and beverage (F&B) market is expected to expand in the next four years on the back of new retail and hospitality projects. Mall of the Emirates is planning to add 12 food and beverage outlets this summer as part of the second phase of its Dh1 billion redevelopment project.

InterContinental Hotels Group’s InterContinental Dubai Marina, due to open in the second quarter, is expected to have nine food and beverage venues.

Tourism will play a critical role in driving growth of retail and hospitality projects that feature food and beverage outlets, according to Colin Beaton, managing director of retail consultancy Limelight Creative Services. “Central to the growth of food and beverage is tourism,” he said.

Dubai attracted around 11 million hotel and hotel apartment guests in 2013, up 10.6 per cent over the previous year, according to Dubai’s Department of Tourism and Commerce Marketing (DTCM).

AdTech AdThe emirate has a target to bring in 20 million visitors by 2020. To achieve this, it will need to double the number of hotel rooms to reach between 140,000 and 160,000 by then from 80,000 in 2012. An additional 20,000 rooms is expected to enter the market by 2016, Issam Kazim, chief executive of the Dubai Corporation for Tourism and Commerce Marketing, an affiliate of DTCM, said last month.

“We expect much more tourists in the coming years-for leisure and business. Abu Dhabi is getting a profile as a tourism destination. Then there’s the Expo 2020 in Dubai [which is expected to attract 25 million visitors]. All of this is good for food services,” said Natalia Gorzawski, research analyst at Euromonitor International.

The packaged food market in the UAE, meanwhile, is expected to grow from $4.2 million (Dh15.4 million) in 2015 to $5.29 million in 2019, while the soft drinks market is forecast to rise from $1.69 million this year to $2.2 million in the next four years, according to data from research firm Euromonitor International.

Gorzawski said that the food and beverage market is growing faster than the overall retail market, which is anticipated to be valued at $34.98 million in 2015, although she did not say by how much.

Consumer confidence in the UAE remains steady, said Arslan Ashraf, regional managing director of Nielsen, a global research company.

According to a report by Nielsen, consumer confidence in the UAE grew by two index points to 114 in the fourth quarter of 2014 from the previous quarter.

Beaton said that consumers in the country are optimistic about economic conditions in the UAE and feel somewhat insulated from geopolitical and commodity price risk.

According to Euromonitor data, disposable income in the UAE is expected to increase by 8 per cent in 2015 from the previous year.

Healthy foods

A segment in the food and beverage market that has been growing in the last few years is healthy food, which is due to consumers’ shift towards healthier lifestyles, according to Euromonitor’s Gorzawski.

“We see a lot of new products. If you go to the supermarket, you will find coconut water brands. If you went five or six years ago, there would have been much less. You also see organic products now,” she said.

As consumers’ distaste for food they view as overly processed, grows, a number of companies are redeveloping their products to add more natural ingredients and reduce levels of ingredients that some consumers find objectionable, such as salt and sugar, as well as saturated and trans fats.

Kraft Foods said Tuesday that it was changing the formula for its Capri Sun drinks due to increasing demand for simpler and more natural ingredients in beverages. It will use sugar instead of high-fructose corn syrup (which is a less-natural substitute for sugar) in its original Capri Sun drinks, which is expected to reduce the number of calories in a 6-ounce pack from 60 to 50.

McDonald’s has also responded to consumers seeking fresh and healthy food by adding items like salads and wraps. However, its salads have failed to attract diners.