By Pratap John
Chief Business Reporter


Driven by high income levels, particularly in Qatar, the UAE and Saudi Arabia, and demand for innovation and growing health awareness, GCC markets will offer strong “premiumisation” opportunities in the food and drink industry throughout a forecast period up to 2019, a new report has shown.
This, according to BMI Research, a Fitch Group company, will benefit segments such as energy drinks, coffee and premium confectionery products.
However, in BMI’s view, mass-market opportunities will be limited in the region due to a limited consumer base, with the relative exception of Saudi Arabia, which stands out in the region with a population estimated at 31.5mn. On the other hand, it sees strong premiumisation opportunities in the food and drink industry over the next five years.
Household spending power is high in the GCC region, as households with net incomes above $25,000 account for 36.4% of the total in Saudi Arabia, 66.8% in the UAE and 79.2% in Qatar in 2015. High income levels will fuel demand for premium food and drink items, especially as governments across the region are seeking to enhance private consumption and diversify their economies. “Another driver of premiumisation will be consumer tastes for innovative products,” BMI Research said.
This is fuelled by high income levels — consumers with high spending power tend to have dynamically evolving tastes — as well as a strong expatriate presence. Rising tourism flows — especially in Dubai — will also fuel demand for innovative food products.
Growing demand for healthier products across the region will push food and drink manufacturers to develop products with better nutritional content, which are usually sold at higher price points.
Premiumisation will benefit some food and drink categories at the expense of others.
In the soft drinks category, BMI believes that energy drinks and fruit juices will benefit from growing health consciousness and demand for innovation.
“Consumers will gradually shift away from carbonates — traditionally the most popular soft drink category — in favour of healthier alternatives.
“While the GCC region has traditionally had more of a tea culture, we expect rapid growth in coffee sales, albeit from a low base. In particular, we hold a positive outlook for premium coffee chains, which will continue to be perceived a good places for socialising, especially on the back of the low levels of alcohol consumption in the region.
“Driven by demand for innovation and health awareness, we expect rapid premiumisation in the confectionery segment, driven by products like dark chocolate, which are perceived as healthier,” BMI Research said.