Global Opportunities. in the Food and Beverage Sector

Transcription

1 Global Opportunities in the Food and Beverage Sector

2 Dubai Exports The all prevailing increase in demand for foodstuffs throughout the world, coupled with UAE s inherent strengths in the value addition and production of different types of food and drinks have raised the potential for UAE products to reach all corners of the world. Dubai, already a global trade hub, in the coming years will increasingly see a larger volume of food items passing through its ports with the Sea-Air Dubai Logistics Corridor in Jebel Ali. With the highly advanced and sophisticated logistics infrastructure in place, global businesses are increasingly using Dubai and the UAE to establish their operations to export their food products globally, be it Africa or the CIS. DP World, Dubai s port operator along with Dubai World Central and Dubai Airports, are augmenting their sophisticated warehousing and logistic facilities to cope with the growing demand from companies, ranging from small and medium to multinationals in this sector. Dubai Exports, since its inception has been focusing on the growth of exports in the Food and Beverage (among other selected) sectors. This focus have yielded dividends through increasing demand both for investment in the UAE as well as for the export and re-export of F&B products from Dubai and the UAE. Markets like Africa and Asia (apart form the Middle East itself) have been critical for growth and our strategies to increase business ties with countries in these regions have led to marked increases in F&B trade through Dubai. Promoting F&B exports through participation in business missions and global flagship exhibitions like World Food Moscow, Anuga, Sial, Food Africa, Malaysia International Food & Beverage Trade Fair can, and have helped UAE s exporters to establish themselves in these markets over the years. Increasing demand from global markets, increases the potential of F&B producers, here in the United Arab Emirates to expand and enter new markets through their exports. We hope this report, prepared in cooperation with COFACE, a globally operating credit insurer, offering companies solutions against the risk of financial default of their buyers for export, will help you understand the global F&B market and how Dubai Exports plays a small part in moving food across the world. End. Saed Al Awadi, CEO- Dubai Exports

3 Coface The Food sector is an important industry of the UAE economy and Dubai particularly is a key hub for Food exports. Government agencies such as the Dubai Exports is doing a lot to support the development of the export sector and are providing constant guidance, advice and practical support to traders in this aspect. It is estimated that the food exports from Dubai reached AED 9.7 billion in 2014 an increase of 4% from 2013 figures of AED 9.3 billion. This increase is attributed to global population growth, rising middle class and high disposable incomes. Also, Halal food is an important component of this food market. It has a lot of potential to grow exponentially in the next five years due to- increased awareness, increase in growth of Muslim population and rising incomes in Muslim dominated countries. However to sustain growth in trade companies have to overcome challenges such as:-lack of information on country risks and business environment, accuracy of information on buyers, inefficient credit management policies, access to finance. Having said that, support from a credit insurance company can, firstly, safeguard revenue stream from bad debt loss due to unforeseen nonpayment, slow payment or insolvencies due to commercial and/or political risks. Secondly, it can also improve borrowing power and increase available capital by converting receivables into a performing asset. Finally, strengthen structure and discipline for credit decision making. Coface has over 70 years experience in working alongside companies, and our constant aim is to support their development and making their trade safe in domestic as well as international markets. With the strong growth momentum that we see in the region and particularly based on the robust growth of the Food Sector, I believe that Coface s services will be of much value for Food companies trading in and out of the region. We hope that this joint publication from Dubai Exports & Coface helps you get valuable insights into the Food sector and encourages your export ambitions for the future. Mr. Massimo Falcioni, CEO- Middle East Countries Coface

4 Global Economics

5 The Expansion Landscape Taken from Grant Thornton Expanding horizons: Food and Beverage looks for growth

6 The Keys to Global Success Capitalising on international F&B efforts requires innovation and adaptation of processes, products and strategies. Successful companies: But even when all signals point to going global, F&B executives face an array of challenges. These include geopolitical uncertainty; distribution and logistics limitations for perishable goods; food safety regulations that vary by country, region, state or province; and a tireless battle for shelf space. tailor their products, packaging and messaging to the cultures and lifestyles of their destination markets explore local market dynamics, competitors and distribution channels in those areas identify the most profitable product opportunities build an informed picture of potential pitfalls have a clear understanding of regulatory requirements in every jurisdiction in which they operate understand the mind-sets of partners and build long lasting, profitable relationships Taken from Grant Thornton Expanding horizons: Food and Beverage looks for growth

7 The Keys to Global Success Global F&B growth is fed by changing demographics around the world. Successful expansion will rely on technology to find and understand consumers and to manage increasingly demanding safety and regulatory issues. The growing middle class Keeping up with changing population dynamics can strain food and beverage providers as they try to stay ahead of the trends. Middle classes are growing throughout the world, even in countries where disposable income was once considered a luxury. Complex supply chains F&B companies can increasingly purchase ingredients from across the globe. This broadens opportunities but complicates supply chains. Companies will have to integrate varied regulations and customer requirements into their supply-chain procurement, monitoring and tracking capabilities. The power of technology F&B companies use technology, the internet and social media to adapt to shifting consumer behaviours at home and abroad. Entering new markets Successful market entry requires keen insights into local market dynamics. Taken from Grant Thornton Expanding horizons: Food and Beverage looks for growth

8 The Barriers to Entry F&B companies must research new markets before making costly expansion decisions. These assessments will locate the best opportunities; flag the most significant barriers; and identify government and industry resources that can help maximise return on investment. Market potential The global F&B retail industry is expected to grow to US$5,776 billion in 2017.To earn a share of that opportunity, F&B executives need to look beyond their traditional borders. Culture Even as cross-cultural exchanges increase and geographic barriers break down, national and ethnic traditions remain strong both in how consumers view products and in how businesses and executives interact. Optimising business structures Identify the business structure/s that can be used in the region you plan to enter. Supply chain and distribution channels Develop detailed maps of how your goods will move throughout a region from suppliers to retailers to customers. Taken from Grant Thornton Expanding horizons: Food and Beverage looks for growth

9 The Barriers to Entry (continued) Regulation and compliance Regulatory requirements often form a lengthy checklist. They include inspection standards, labelling and product claims, traceability processes, and recall procedures.. Intellectual property It is important to understand the intellectual property regime in each target country, and how those regulations may or may not have an impact on your products. Tariff and tax implications Tariffs are typically collected on imported goods to generate income and/or to protect domestic industries. These taxes can significantly raise the prices of your products in comparison to domestic goods and even squeeze you out of the market. Currency issues Be aware of any currency control issues that may prevent you from repatriating funds. Some countries have few restrictions for transferring cash out of the country, while others dictate the volume and method. Taken from Grant Thornton Expanding horizons: Food and Beverage looks for growth

10 Healthy Eating Premium Pricing

11 Healthy Eating Trends In Asia-Pacific, the importance of food attributes largely mirrors the global averages, with a few exceptions. In Europe, comparatively smaller percentages rate health attributes as a very important influencing factor for purchase decisions In Africa/Middle East, beneficial ingredients are particularly important with foods that are high in protein (43%) and fortified with calcium (44%), vitamin (43%) and minerals (40%) considered very important all above the global average. In Latin America, less is more attributes are particularly appealing in this region, including low/no cholesterol (25 percentage points {pp} above the global average), low/no fat (+24 pp) and low salt/sodium (+22 pp). In North America, there is an absence of high fructose corn syrup, which is above the global average.

12 Key Trends Continuously investing in healthier product offerings: By 2015, sales of natural and organic foods and beverages in the US are expected to surpass US$78 billion, up from US$39 billion in 2010, according to the Natural and Organic Foods and Beverages in the US report, published by US-based market research company Packaged Facts, in July Packaged goods companies are responding well to this shift toward healthier lifestyles, by using organic or bioactive ingredients in their products. They are likely to invest in new technologies such as high hydrostatic pressure and ultraviolet irradiation to introduce safer products. This is, however, expected to inevitably mean higher production costs for these companies in the long run. Developing standardized nutrition labels: Consumers today are increasingly looking for simple, easy-tocomprehend and uniform labeling on the packaged goods they purchase. Therefore, to reinforce the adoption of health and safety practices by packaged goods companies, nutrition labeling guidelines across the globe are likely to increase in the future. Adopting safe and innovative packaging technologies: With the increase in demand for fresh packaged food products and increased concerns about food safety, companies are adopting active and smart packaging technology, in order to increase the shelf life of their food products. By 2015, the global market for active and smart packaging technology for food and beverages is expected to increase at a CAGR of 8.2 percent, from US$15.8 million in 2010 to US$23.5 million. Taken from KPMG INTERNATIONAL, Issues Monitor, Sharing knowledge on topical issues in the Food, Drink and Consumer Goods Industry June 2012, Volume 11

13 Key Trends Convenience for Foodies. Continued interest in home cooking has been driven by cooking shows on TV and by blogging foodies. It's seen as fashionable, fun and social, as well as healthy and cost-effective. It has driven demand for a greater choice of fresh foods, ingredients for cooking from scratch and a wider use of recipe suggestions by manufacturers and retailers. Marketing to Millennials. The so-called Millennial generation, generally aged between 15 and 35, now accounts for about a third of the global population and is tech savvy and socially engaged. They are well informed, want to try something different and are generally less brand loyal than older consumers. They want to connect with products and brands and know the story behind them. Snacks Rise to the Occasion. Formal mealtimes are continuing to decline in popularity and growing numbers of foods and drinks are now considered to be snacks. Quick, healthy foods are tending to replace traditional meal occasions and more snacks are targeted at specific moments of consumption, with different demand influences at different times of day. Good Fats, Good Carbs. With concerns over obesity, there is a growing emphasis on unsaturated and natural fats and oils that has seen rising interest in omega-3 fatty acid content, as well as the return of butter to favour as a natural, tasty alternative to artificial margarines that may be high in trans fats. In the same way, naturally occurring sugar is being favoured at the expense of added sugars and artificial sweeteners. Taken from FoodBev Media Ltd

14 Global overview of nutrition labeling regulations

15 Global Halal Food Market Taken from State of the Global Islamic Economy Report 2013

16 Global Halal Food Market Taken from State of the Global Islamic Economy Report 2013

17 Coface Country Risk Assessment Map Source: Coface

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