Entrepreneurs Are Well Placed To Tap Into Opportunities Presented By The UAE's Food Security Agenda: Insights From A Dubai Chamber Analysis
The race to solve food security in the UAE, as well as the wider Middle East and North Africa (MENA) region, presents significant opportunity for startups and small businesses.
Read Full Article
That's according to the Dubai Chamber of Commerce and Industry, which signaled major demand for innovation in food manufacturing, agriculture, and halal food, for the post-pandemic future.
In a briefing held on the sidelines of Gulfood 2021 –the world's biggest annual food and beverage trade exhibition, which took place in Dubai last month– the Chamber said the value of online food and beverage sales in the UAE is projected to reach US$619 million by 2025, and record a compound annual growth (CAGR) of 8.5% over the 2020-2025 period.
Dubai Chamber's analysis, based on data from Euromonitor, also said online sales within the UAE’s food and beverage market surged 255% year-over-year in 2020 to reach $412 million.
Speaking at the event, Hassan Al Hashemi, Vice President of International Relations at Dubai Chamber, said that the digital transformation encouraged by the COVID-19 crisis had been a key factor in driving the exponential growth in the country's F&B e-commerce sales last year.
The upward trend was crucially supported by the nation's advanced technology infrastructure, world-class logistics facilities, high-internet penetration rate, and high disposable income, he added, driving Dubai to become "a leading example of a city that leveraged technology and global partnerships to enhance food security” to navigate challenges during the coronavirus outbreak.
From small grocers to giant chains, food retailers across the world saw their shelves stripped bare last year when panicked shoppers began hoarding supplies as worries about the coronavirus began to escalate in March.
Some outlets even imposed limits on the number of items each person could buy, with serious concerns about freight disruptions due to border closings and suspension of travel.
But, even though the majority of food consumed in the Gulf is imported, the UAE's shelves remained well-stocked despite global supply-chain challenges owing to the National Food Security 2051 that it crafted a few years ago, noted Mohammed Bin Sulaiman, Senior Manager – Business Relations at Dubai Chamber.
Key pillars of the strategy include facilitating global agri-business trade and diversifying international food sources, enhancing sustainable technology-enabled domestic food supply across the value chain, and enhancing capacity to respond to food security risks and crises.
Looking ahead, the Dubai Industrial Strategy 2030 –which is aimed at transforming the economy to a knowledge-based economy by having an innovative and sustainable industrial sector in the Emirate– will be central to increasing the output of F&B manufacturing, strengthening resilience and advancing food security, Bin Sulaiman added, which is where startups and small businesses have a crucial role to play with tremendous opportunities on the horizon.
“Startups are very much on our agenda [as] we are looking to localize some of the production capabilities,” he explained. “We live in a very harsh environment, we have scarcity of water... and as a result, we invite innovative companies and innovative solutions to come and showcase their solutions in this region.”
The UAE ranks first in the MENA region and 18th globally for attractiveness investment environment in the F&B sector, Bin Sulaiman said, and its status has been further augmented by the UAE government's proactive policy response during the crisis that has helped businesses keep the lights on despite the hard-hitting economic circumstances.
“2020 has been a very unusual year,” Bin Sulaiman said. “Many businesses came to a complete stop... So, the government rolled out a number of initiatives to help sustain the SMEs that are operating in Dubai [including] giving discounts and waivers on many terms, to ensure the private sector sustains through the very difficult period. The UAE government keeps on enhancing and trying to improve the business climate in the country. Several other initiatives have also been [introduced] such as the relaxation in the ownership of foreign companies operating on the mainland, major amendments to [residency and citizenship] laws to attract talent in sectors we think are critical and can add value to the economy, [and] a comprehensive economic stimulus package.”
Related: Ask The Expert: Mohammed Bin Sulaiman, Senior Manager, Business Relations, Dubai Chamber of Commerce and Industry
The relief and support measures have also been aided by the rapid progress of the vaccine rollout, Bin Sulaiman explained, adding that the recent normalization of relations with Israel, increased efforts and newly introduced incentives to attract foreign investment, the upcoming Expo, and resumption of tourism will be major driving factors in sustaining and growing the local F&B industry.
“The [UAE's] relationship with Israel was normalized in September, and since then trade [between] Israel and Dubai was about AED1 billion,” he said. “This is proof that our private sector is capable of addressing requirements for new markets when they open, as the city reinforces its position as an international business center. The UAE will continue to remain the most attractive market in the region and Dubai Chamber International Offices can help importers and re-exporters of food and beverage products to expand.”
Abundance of opportunities
In 2016, the Dubai Chamber of Commerce and Industry launched its entrepreneurship initiative Dubai Startup Hub, a platform for startups, entrepreneurs, developers, venture capitalists and students to learn about new opportunities and create new partnerships that stimulate economic growth.
More than 2,200 entrepreneurs benefited from Dubai Startup Hub’s programs in 2020, Bin Sulaiman said.
In particular, Dubai Startup Hub's flagship Market Access program –which continues to help innovative startups from across the world meet and secure deals with leading companies and government entities in Dubai– played a special role during the pandemic as it helped introduce entrepreneurs from different countries present their pandemic-friendly solutions to the market to in a time of urgent need for new solutions. Additional programs and events were also organized to meet the evolving needs of startups in Dubai in response to the new challenges and opportunities created by the COVID-19 crisis.
High-potential food product categories where the UAE can expand trade with other markets, include grains, vegetables and fruits, vertical crops, and healthy and halal food products according to Dr. Nizami Imamverdiyev, Economic Researcher - Economic Research & Business Development at Dubai Chamber.
The UAE recorded 6% growth in sales of fresh food products in the UAE in 2020, which reached $7.9 billion, he noted, and the sale of fresh food items in the UAE is expected to grow at a CAGR of 5.2% in the 2018-2023 period.
Dubai's F&B manufacturing contributes 13% of the manufacturing value add and 17% of the manufacturing output, he added, with increasing demand for processed cereals, meat, fruits, and vegetables.
Food systems are ripe for disruption to overcome the harsh desert region's severe agricultural constraints by creating controlled environments to cultivate produce. The UAE is already home to 1,000 hydroponic projects, Imamverdiyev said, and enormous potential exists in areas related to tackling drought and heat challenges, as well as tech-enabled development of salt-tolerant crops, and vertical and hydroponic farming.
In line with Dubai's aspiration to become halal food hub, the potential market for entrepreneurs and manufacturers of halal food is also huge, Imamverdiyev added, with global halal food expenditure forecast to reach $1.38 trillion by 2024. Meanwhile, healthy and organic food products sales witnessed strong growth in 2020 and creating additional new business opportunities in the F&B market.
With the UAE's ambition to become the highest-ranked country on the Global Food Security Index by 2051, startups and small businesses can take on a vital role in driving the next wave of innovation in the country's food security strategy.
More than 270 participants from 43 countries attended Dubai Chamber’s Gulfood Breakfast Briefing, which familiarized delegates with Dubai’s economy, business landscape and industry trends.
Related: Rising to the Challenge: The UAE's Innovation-Driven Food Security Movement