The UAE food packaging market has been forecast to increase at a compound annual growth rate (CAGR) of 6.45% over the next five years.
Driven by a substantial increase in the population, packaged food sales have increased strongly in both volume and value terms in the UAE since 2007. Whereas the economic crisis caused a slow-down in sales of some higher priced foods and consumers shifted to cheaper alternatives such as canned/preserved food, in 2011 and 2012 there was a reversal of this trend.
Concerned about food price inflation due to rising commodity prices, the UAE government implemented a number of measures towards the end of 2011/2012 and imposed price caps on many staple foods, thus constraining value growth.
According to a recent report, 'The Future of the Food Packaging Market in the UAE to 2017,' the largest category in the industry is predicted to be the meat category, which will reach a value of approximately AED4 billion by the year 2017, after reaching a total of over AED2.7 billion in 2012.
The confectionary category is estimated to see the largest growth in the UAE food packaging industry, growing 9.08% between 2012 and 2017. Dairy food on the other hand will witness a slowdown in CAGR growth of 3.04% in the same period.
Hypermarkets dominate distribution of packaged food in the UAE and also registered the largest increase in sales over the 2007-2012 period. The channel emerged as the winner during the economic crisis by offering price promotions and the availability of bulk packs with a lower unit price and continues to attract consumers with its wide product range. In addition, convenience stores also increased in popularity as a suitable channel for top up purchases.
An additional report, titled 'Packaged Food in the United Arab Emirates,' has stated that multinational players continued to lead sales in what is a fragmented market. Nestlé continued to lead sales in 2012 even though Mars made more headway due to its success in confectionery.
At GBO level, the list of the top five players was rounded off by the newly created Mondelez International as well as two players from the region - Almarai and Modern Bakeries. Smaller players continue to be driven out of the market, partly due to the demise of supermarkets and small independent grocers and the on-going expansion of hypermarkets.
For more information on the UAE food packaging market, see the latest research: UAE Food Packaging Market
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