Food & Beverage Market
The functional food and drinks market remains relatively unknown to most countries in the Middle East. More wealthy countries, such as Saudi Arabia and the United Arab Emirates have witnessed slight growth in the past year, predominately due to increased awareness of general well-being among consumers. Less wealthy countries—such as Egypt and Israel—have seen negative growth in the market in 2014, mostly due to a lack of knowledge and income to spare.
Middle Easterners, in general, are not willing to change their diet for health reasons and would rather use supplements to incorporate vitamins and minerals into their diets. Although functional foods are not popular with consumers in the region, functional beverages appear to be a major focus in the Middle East. According to recent market research, functional fruit and vegetable drinks comprised one fifth of soft drink retail value in the Middle East in 2013. As obesity rates rise and the prevalence of micronutrient deficiency diseases remain an issue, it will be beneficial to explore opportunities within health and wellness juice. Health and wellness still remains a niche in the Middle East, as the majority of consumer and resident nutritional knowledge remains limited. Because juice is very popular in the region, producing naturally healthy juice will likely be a strong opportunity for manufacturers to enter the marketplace. Many companies have attempted to introduce sugar-free or Stevia juices into the marketplace without much luck. What have been popular in the region are functional beverages that include superfruits in the ingredients. It is imperative that manufacturers create flavors that resonate with local consumers.
In Israel, functional products saw a slight decrease in value compared to previous years. The market is growing in the region. Though the competition is intensifying, dropping prices and affecting overall sales, the market is experiencing growth—particularly in United Arab Emirates and Saudi Arabia. Government initiatives and exhibitions in these countries have served to raise awareness of the importance of following a healthy diet. Because obesity rates are skyrocketing, it is extremely important for consumers to increase the amount of functional food and beverage products into their everyday diets. Manufactures are now focusing on labeling products with specific, associated health benefits. Helping spread awareness of the health benefits of functional food and beverage products through labeling and advertisement will likely help increase popularity, especially in the more affluent countries.
The competitive landscape in the Middle East is fragmented between domestic and international players, both of which enjoy brand recognition and loyalty. Targeting prime locations in shopping centers and hypermarkets that receive high customer traffic has helped companies increase sales. Because independent, small grocers have not been successful selling functional products, consumers can typically only find them in larger markets. Internet retailing has not yet made a significant impact in the region, mostly due to the lack of a presence of domestic websites within health and wellness. However, the Internet has and will remain a valuable tool for garnering information about health and wellness products.
Although the immediate future of the functional foods and beverages products market looks grim for most countries in the Middle East, there is hope for United Arab Emirates and Saudi Arabia. Functional products are expected to gain further ground in 2015 as well as over the forecast period. The expected increase in the number of high-income consumers should also help support a higher consumer demand over the forecasted period.
