Bakery products market of the flashy United Arab Emirates

05 June 20206 min reading

While bread remains an integral food item in the UAE menu, a lot of changes have been observed in this category in recent years. Increasing demographic diversity has made consumer tastes more sophisticated, and bakery manufacturers are trying to respond to this with a wider range of premium products.

The United Arab Emirates (UAE) consists of 7 emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah, and Umm Al Quwain. This is a land of magnificence and flashiness. And of course the desire to get the “most”. This made life to be built on consumption. In the Emirates. “The highest building in the world", "the biggest shopping center in the world", "the best hotel in the world", "the biggest artificial island in the world", "the biggest food fair in the world", etc. are all in this land.

The UAE population is steadily increasing thanks to foreign workers. According to the IMF, the population reached 10.7 million in 2019. The population of the capital Abu Dhabi is 2.5 million. It is estimated that 81% of the people living in the capital cityof Abu Dhabi are non-UEA citizens. This is the case for the whole country. Foreigners working in the country with a residence permit constitute 80% of the UAE population.

The local people are called "Emirati" here. They make up about 20% of the population. 60% of foreigners are from Far Asia (India, Pakistan, Bangladesh, Philippines), 18% are from Iran and Middle East (Lebanon, Syria, Egypt), and 5% are from western countries (especially British). The rate of foreign nationals in the country is constantly increasing. That is to say, the UAE looks like an immigrant country. In this framework, 90% of the workforce in the country are foreigners.

Far Asian immigrants, which constitute the primary source of labor in the UAE, work in labor-intensive sectors, primarily in construction; UAE nationals are employed as servants in the public sector. Europeans and Lebanon nationals are assigned for executive or consultant positions in private companies or public companies.

OPEN AND COMPETITIVE MARKET The UAE market is a competitive, price-sensitive, and open market. Therefore, it is possible to find goods from almost every country in the UAE. As the country's agricultural and industrial production is inadequate, most of the needs are met through imports. International competition in the market is very intense and it is necessary to have a competitive advantage to keep it in the market.

When it comes to the UAE, the importance of factors such as quality, shelf life (production and expiry date), after-sales service and compliance with standards should not be overlooked. When determining the price, the prices of competing products should be taken into consideration. It is difficult for a brand or firm that has lost confidence to hold onto this market again.

Due to its low population, diverse social structure, and different consumer characteristics, it is more appropriate to enter the UAE (especially Dubai) market to catch foreign demands from the countries of the region rather than the domestic demand. In this framework, foreign companies planning long-term business/trade in the region prefer to operate from offices/branches, especially in Dubai or free zones.

Thus; Dubai finds a place of appeal beyond the borders of the country, from the Gulf Region to the Far East and Africa. It is a trade center where other countries in the region (Iran, Iraq, S. Arabia, Pakistan, Egypt, Lebanon etc.) source goods and services.

Many international companies, especially American and European ones, track the markets of Saudi Arabia, other Gulf countries, and nearby African countries, as well as the UAE market by opening a representative office in Dubai.

Dubai is the center of international trade / industrial fairs in the region. Exhibitors and visitors from the Middle Eastern, African, and Asian countries have the opportunity to meet at the “Dubai Fairs” held every year. Being the commercial center of the country, Dubai is a market where competition is very intense.

While bread remains an integral food item in the UAE menu, a lot of changes have been observed in this category in recent years. Increasing demographic diversity has made consumer tastes more sophisticated, and bakery manufacturers are trying to respond to this with a wider range of premium products.

Health awareness continues to increase in the UAE and partially affects consumer food options. The consumer base has expanded in recent years, and many manufacturers and retailers have begun to offer healthier products. While dessert mixes were first introduced as affordable options, consumer needs have evolved faster than expected.

A LEADER PLAYER: MODERN BAKERY In the UAE, where the habit of eating out is strong, the demand for more sophisticated artistic bakery goods continues to increase. Moder Bakery, the country's largest bakery producer, is operating in the United Arab Emirates. With a history of 40 years, Modern Bakery is a leading brand in bakery products. In addition to making solid contracts with modern and traditional retailers, it also benefits from a very strong distribution channel.

As a small-scale family business, Modern Bakery started its business in 1975 by producing Arab bread, pastries, Arabic desserts, and confectionery with its 80 employees. Today, although Modern Bakery is the largest bakery producer in the UAE, it continues to retain its family business identity. It has over 1,500 employees and can produce 1 million donuts and rolls daily. Diversifying and expanding its product range to meet the needs of its growing customer base, Modern Bakery now produces 2,500 different bakery products, bread, pastries, Arabic desserts, candies, cakes, cakes, and biscuits.

Focusing on a diverse product base and superior customer service, Modern Bakery has emerger as a respected and recognizable international brand in the UAE, GCC, Africa, Asia, and the Levant for many customers. THE AMERICANA GROUP LAUNCHED ITS BRAND CALLED ‘BAKERY’ The Americana Group, a Middle Eastern firm, operates 25 food production facilities in the UAE. The group is considered one of the largest food production and distribution companies in the region. With the launch of the Bakery brand, the Americana Group has expanded its profile to include a wide range of frozen baked goods. It introduces homemade baked goods that can be easily prepared at home.

According to the researches, UAE bakery products, and cereals sector is expected to grow on the value basis in the 2018-2023 period.

Bread and rolls are the largest categories in the UAE bakery and cereals industry in both value and volume.

The category of cakes, pastries, and sweet pies is expected to record the fastest increase in the period 2018-2023.

Hypermarkets and supermarkets are the largest distribution channels for bread and bakery products.

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