The Statista Market Forecast paints a positive picture for the food and beverage (F&B) industry in Gulf Cooperation Council (GCC) countries. Projections indicate a growth rate of 4.39 percent from 2024 to 2028, with anticipated revenue reaching $135.5 billion this year. Within this market, the confectionery and snacks segment is expected to be the largest, potentially reaching $23.10 billion.
Several factors contribute to this upward trend, including population growth, a thriving tourism industry, and evolving consumer preferences. .According to a report by Alpen Capital, a Dubai-based investment banking firm, food consumption in the GCC region is on the upswing. Projections indicate that by 2027, Saudi Arabia, the United Arab Emirates (UAE), Bahrain, Kuwait, Oman, and Qatar will collectively consume 56.2 million metric tons of food, reflecting the region’s expanding appetite.
Although Saudi Arabia currently holds the title of the largest consumer in the GCC, its market share is anticipated to experience a slight decline, dropping from 57.1 percent in 2022 to 55.5 percent in 2027. Conversely, the UAE is poised to see a modest increase in its share, climbing from 18 percent to 18.5 percent during the same period.
The UAE stands out with its thriving food and beverage (F&B) manufacturing sector, boasting over 2,000 companies in the field. Forecasts from the UAE Food & Beverage Business Group anticipate robust growth in F&B manufacturing, with projections reaching $23.2 billion by 2025. Moreover, the UAE has been actively investing in its food sector to bolster food safety, sustainability, and infrastructure. Plans for a new digital platform are underway to promote investments and opportunities in the UAE’s F&B industry.
Meanwhile, in Saudi Arabia, the F&B market was valued at $28 billion in 2023, playing a pivotal role in driving tourism by blending rich culinary traditions with modern gastronomic experiences. Beyond traditional dining, there’s a growing interest in food technology, delivery platforms, and sustainability initiatives. These developments align with Vision 2030’s objectives of economic diversification and promoting healthier lifestyles.
Key Growth Factors
Anantharaman Ramanathan, the Group Director of Finance at IFFCO Group, emphasized the immense potential for growth and innovation within the GCC Food Industry. Situated strategically and with a burgeoning population, the region provides fertile ground for food businesses to flourish. Ramanathan, representing a leading UAE-based manufacturer of mass-market food products, highlighted the rising consumer awareness of health and sustainability as pivotal factors reshaping preferences and propelling the industry towards healthier and more sustainable options.
The increasing prominence of sustainability aligns with consumers’ inclination towards healthier food choices and businesses’ prioritization of eco-friendly practices. Alongside this trend, several other major growth drivers are influencing the GCC’s F&B industry.
Favourable Demographics
The GCC’s food sector is propelled by a growing population, consisting of youth, working-class professionals, and a significant proportion of expatriates. This diverse consumer base has led to an increased demand for a variety of cuisines, spanning from Arabic to international fare. With the region’s population projected to reach 62.2 million by 2027, this demand is expected to continue rising. Additionally, the approval of a unified visa is anticipated to provide substantial support to the sector.
Digital Growth
In recent years, the F&B market in the region has undergone significant digital transformation. The widespread adoption of food delivery apps and online reservation systems has become prominent. Furthermore, the emergence of artificial intelligence (AI) is poised to revolutionize the industry. Experts foresee AI-driven menu customization, augmented reality dining experiences, and efficient supply chain management as key factors driving growth in the sector.
Government Support
Governments across the GCC are implementing extensive measures to bolster food security and production. This includes optimizing logistics and increasing investments in the industry. For instance, Saudi Arabia is allocating approximately 7 percent of its industrial sector funding, totaling over SAR94 billion, to food manufacturing to enhance self-sufficiency. Additionally, several GCC countries have implemented policy reforms and launched long-term strategies. For example, the UAE’s National Strategy for Food Security aims to lead in the Global Food Security Index by 2051.
Opportunities for Entrepreneurs and Investors
The F&B industry in the region presents numerous opportunities for both entrepreneurs and investors. With a large population and diverse consumer preferences, businesses can introduce various restaurant concepts catering to different tastes. This includes traditional cuisines, global offerings, unique fusion concepts, and niche gastronomic experiences.
Investors interested in the digital aspect of the market can explore opportunities in food technology, such as delivery platforms and management tools. As the demand for food continues to grow, there is a need for tech-driven solutions to improve efficiency. Additionally, with sustainability becoming increasingly important, there is potential to champion healthy and eco-friendly initiatives, such as sourcing organic ingredients and reducing waste.
Beyond the core F&B sector, ancillary services like logistics, packaging, and food safety provide additional avenues for innovation and investment.
Challenges to Address
Despite promising growth prospects, the F&B industry in the GCC faces several challenges. The Alpen Capital report highlights global economic downturns and geopolitical conflicts as significant hurdles. These tensions could exacerbate inflation, disrupt food security, and cause disruptions in supply chains. Additionally, there are concerns about agricultural and environmental degradation, with the GCC region experiencing aridity, high temperatures, limited rainfall, and scarce non-renewable groundwater resources, making traditional agriculture difficult.
Given the limited arable land, GCC nations heavily rely on food imports, a vulnerability highlighted by the recent pandemic. Recent data indicates that over 85 percent of the region’s food requirements are imported, exposing the GCC to global price fluctuations and inflationary pressures due to supply chain disruptions. Addressing these challenges will be essential for ensuring food security and sustainability in the region.
A Promising Future
The F&B industry in the GCC presents promising prospects for growth and creativity. With a burgeoning population, ongoing digitalization, and governmental backing, there’s ample opportunity for entrepreneurs and investors to thrive. However, it’s crucial to navigate challenges such as global conflicts and environmental limitations.
As the industry progresses, embracing technological innovations and sustainable practices is paramount. These initiatives are integral to ensuring the long-term success and resilience of the F&B market in the GCC region.
