Much has been said about the growth of the Middle Eastern and North African market over the last 10-15 years. UK food exports jumped a staggering 62.3% between 2009 and 2019, before progress was halted by the COVID-19 pandemic.
That growth was largely driven by the UAE. A country which experienced huge investment and increasing globalisation over the period.
But now, as COVID-19 enters the endemic stage, the market is expected to pick up again and with added ferocity. Read on to find out why now is the time for UK food exporters to explore the Middle Eastern market.
More countries in the region are welcoming globalisation.
What makes the Middle Eastern market so exciting now that COVID-19 restrictions are being lifted, is the multitude of countries adopting a more globalised approach.
It is no longer just UAE driving food exports to the region. In fact, Saudi Arabia and Qatar are two markets looking to welcome more tourists, expats and improve their perception on the world stage.
Consequently there is opportunity for UK food exporters.
Expats, drawn in by the opportunities and low tax rates will be keen to spend some of that extra disposable income on home comforts that UK food businesses can lucratively provide. The increasingly globalised outlook will inevitably spike demand for high quality British produce from locals too.
The food service and hospitality inward investment figures for Saudi are really impressive. When you look at population and GDP in comparison to UAE, then there are some great opportunities there... also alongside Qatar.
Andrew Williams, Head of Food & Drink Sector, Santander UK
No doubt, the UAE still comfortably leads the way for UK exporters in terms of globalisation and infrastructure for exporters right now.
But as you can see above, there are emerging opportunities in neighbouring countries, which could really amplify demand for British business in the coming decade.
First mover advantage is likely to play a large part in the success of businesses moving into these markets.
Passenger numbers to the region are returning.
Now that travel restrictions are being lifted and passenger numbers are returning to a more typical level, there are opportunities for food and drink exporters.
Dubai airport particularly, is a major international hub for transport. It is expected customer traffic through the airport will reach 56 million in 2022. More than double the passenger numbers seen during the peak of the pandemic.
Why is this important? Well, an increase in planes flying into the region means much more space for cargo. That results in several key benefits for exporters:
- Downward pressure on freight rates.
- Increasing flexibility.
- Bigger market size.
The combination of those factors makes the Middle Eastern market potentially a lot more profitable for firms looking to expand in that region.
Brexit uncertainty makes the EU market more difficult to negotiate.
The reality of Brexit is increasing complexity for UK food and drink exporters to the EU market. We are still in a scenario where certifications and requirements aren't clear for some companies. The long-term relationship between the UK and EU still isn't decided on certain goods, such as Products of Animal Origin (POAO).
Consequently, some businesses are looking elsewhere for markets which can compensate for this loss in trade and geographically, the Middle East makes the most sense. It is a wealthy market and the next closest for UK exporters, so the costs involved are lower.
Many exporters are considering other markets. The Gulf is quite easy to access and there is a great demand for UK products and brands. It's ripe for UK food and drink manufacturers.
Andrew Williams, Head of Food & Drink Sector, Santander UK
With the increased visitors to the region, continued investment in hotels and tourist attractions, the Middle Eastern market is an attractive alternative to the turbulence being experienced in the UK and EU's relationship. Particularly around foodstuffs.
Legislation requirements not as different as you expect
UK food and drink exporters benefit from a strong reputation in terms of safety standards on the world stage. Such are the stringent measures in place to enter the UK market.
This means there are less legislative hurdles than expected to jump over when looking at a market such as the Middle East. The high standards in place already are likely to be sufficient for this part of the world. UK brands are trusted.
However, that doesn't mean legislatively there wouldn't be challenges. Of course, there are restrictions on the sale of alcohol in the Gulf market. Some exporters are doing well in this space though, as rules are relaxed. There are also Halal requirements for Products of Animal Origin.
Packaging is another area to be wary of. April 2022 sees the introduction of a tax in the UK for any packaging which does not contain at least 30% recycling plastics. Similar rules could follow suit for the Middle Eastern market which is increasingly focused on sustainability. For example, in the last couple of years, the UAE has phased out free single-use plastic bags. Following a similar move made by the UK in 2015.
There's real concern I think about the plastic packaging tax coming in very shortly and many manufacturers are adapting supplies where they can.
Consumer expectations are also high in international markets. We've seen examples of buyers really liking the product, but the packaging needs further development to meet current and future recyclable or biodegradable standards.
Andrew Williams, Head of Food & Drink Sector, Santander UK
Overall, reason to be optimistic for food and drink exporters
The way that the Middle East is bouncing back after COVID-19 restrictions is cause for real excitement. For so many reasons, exporters have a really good opportunity over the next 10 years to capitalise on the market.
British food and drink exporters are highly rated in the region, which is continually becoming more globalised.
UAE have sent the benchmark over the last 15 years, turning itself into a hugely significant location on the world stage. It is now a hub for international transport and a huge tourist destination.
Other countries in the region have seen the success and wealth that has been achieved and want a piece of that pie. There has never been a better time to look at the Middle East as an export opportunity.
I think all the markets, not just Saudi and Qatar, have something to offer. I would regard it as a positive opportunity for the next 10 years for UK businesses.
Andrew Williams, Head of Food & Drink Sector, Santander UK
Food and drink logistics is a specialism of WTA. We have decades of experience, with food and drink supply chain expertise covering all corners of the globe. If you would like help with your exports to the Middle East, or any other region, allow our carefully assembled team of talented food logistics managers help you on that journey. Speak to Samantha Mitchell, Associate Director of WTA Food today.
