News From : DagangHalal.com (20 Apr 2009)
On the back of a deteriorating global climate and the stream of bad news emanating from the country itself, we have lowered our real GDP forecast for the UAE to just 1.0% in 2009. With real-estate prices falling, a slew of high-profile construction projects cancelled, shipping volumes dropping and oil prices falling, it is clear that the UAE cannot escape unscathed from the global economic slowdown. However, as discussed in the newly published UAE Food & Drink Report for Q209, investments are still continuing apace in the country’s food and drink sector.
One subsector that has received considerable attention in recent months is the halal food industry. In December 2008, Prairie Halal Foods, a Canadian-owned food firm, announced plans to explore opportunities at the premium end of the retail sector after opening its first Middle East office in Dubai in the previous month. The company markets and develops high-value halal meats from Canada, and plans to introduce new delicacies into the Middle East such as buffalo meat, which is a healthier alternative to most red meats.
Meanwhile, locally based Al Islami Foods, a leading halal food producer in the Gulf Region, entered the Saudi Arabian market after reaching a strategic distribution agreement with Arabian Trading Supplies, one of the main distributors in Saudi Arabia. Arabian Trading Supplies will distribute a range of Al Islami´s halal products under the Co-op Islami fascia. The new range will include a variety of premium products such as processed meat and frozen seafood. Moreover, the firm is intent on growing its presence in the Gulf Co-operation Council (GCC) states, including Qatar, Bahrain, Kuwait and Oman, in 2009.
BMI believes that both companies are likely to enjoy success, for the Middle Eastern halal food industry is growing rapidly. Dynamic income growth in the UAE has led to consumers demanding better quality and a wider selection of meat products. Moreover, halal products are generally perceived to be healthier, which has boosted sales as consumers join the global health trend. The emirates of Dubai and Abu Dhabi in particular have shown a fondness for premium and healthier products, which in our opinion is a trend that will not slow markedly despite the profound effects of the global financial crisis.
In fact, on the consumer front, we believe that GCC consumers will remain more bullish than their Western counterparts and are much less likely to trade down to cheaper private-label products or to shop at discount stores. While a slight deterioration in consumer sentiment is unavoidable owing to the severity of the global crisis, the fact that the GCC block will be one of the few regions to register respectable economic growth in 2009 means that the psychological impact to consumer confidence will be far less pronounced than in the West. Instead, we expect a mild regression in the trend towards trading up to premium food and drink products, but do not foresee this deterring investments like those outlined above.