DYNAMIC MARKET TRENDS IN THE MIDDLE EAST'S THRIVING F&B SECTOR

BY MICHAEL VAN SALLANDT, HEAD OF FUNCTIONAL FATS, APICAL

The Middle East's food and beverage (F&B) manufacturing industry has been experiencing significant growth in recent years, and it is expected to remain on this strong trajectory.

The fast-moving consumer goods (FMCG) market is projected to grow at a compound annual growth rate (CAGR) of 5.2% through 2026, driven by the region's diverse and rapidly growing population of more than 10 million people. The recent Ramadan season also depicted this with a projected leap in retail sales and consumer spending.

As the demand for F&B products continues to rise, manufacturers in the Middle East are accelerating efforts to stay ahead of market trends while producing high-quality, innovative, and wide-ranging products to meet the evolving preferences of consumers.

Product innovation is a key driver for the Middle East's F&B manufacturing sector – and increasingly so. A surge in tourists vacationing in the region, as well as expatriates migrating to the region, is fuelling this growing demand. Manufacturers are constantly seeking to differentiate their products to meet the evolving preferences of consumers. This includes developing new flavours and textures while expanding to plant-based and vegan options, which is increasingly apparent with hotels and restaurants diversifying their menus to cater to this booming segment.

F&B manufacturers are looking for alternatives to animal-based fats and oils, food ingredients that improve their product profile, and ingredients that are heat-stable and suit the local climate – Apical has been at the forefront of product innovation in this realm. As a leading producer of functional and specialty fats, its versatile product range made from sustainably sourced plant-based fats and oils offers the same functional benefits as traditional animal-based fats and oils.

Recent data shows that 60% of consumers in Europe, the Middle East, and Africa (EMEA) have become more conscious about their health following the COVID-19 pandemic. As it relates specifically to the Middle East, a survey found that 67% of the region's shoppers believe that they are now healthier when compared to the global average of 51%.

To ensure manufacturers provide healthier food options, many countries have taken various steps such as introducing regulations that limit the use of trans fat in food products, including the UAE. By developing a range of products that have zerotrans fats, Apical enables food manufacturers to obtain the same functional benefits as traditional fats and maintain the desired functionality and taste of their products – while meeting regulatory requirements.

When selecting palm oil-based food ingredients, partnering with suppliers that have been certified by the Roundtable on Sustainable Palm Oil (RSPO) is crucial – it ensures that the production of the end goods meets strict environmental and social criteria.

Basic oils and fats, alongside specialised fats for baking and chocolates, are key product segments for the Middle East. Many delicacies prepared by Arab households and expatriates regularly use such products as they play a key role in determining the taste, quality, and presentation of food items. As such, it is rather normal to see a spike in sales for these product segments during Ramadan and have it hold steady throughout each calendar year.

Cocoa Butter Replacer (CBR) in particular has seen strong demand from customers in the UAE and other GCC countries looking for high-quality ingredients. Similarly, there is also great demand for Cocoa Butter Substitutes (CBS) in countries such as Egypt. Both CBR and CBS are costeffective solutions that can replace cocoa butter without compromising on product quality or sensory attributes. Used in many food products, including chocolates, confectionery, baked goods, and spreads, it is developed to mimic the same desirable texture, mouthfeel, and stability of cocoa butter.

Additionally, CBS and CBR enable manufacturers to cater to halal requirements in the Middle East as they can be sourced from halalcertified vegetable fats.

In today's conscious consumer market, purchasing sustainably sourced products via a traceable and transparent supply chain has become a crucial factor. The F&B manufacturing sector in the Middle East is increasingly recognising the importance of sustainability to address environmental challenges and meet consumer expectations. By sourcing ingredients from reputable suppliers and conducting thorough quality testing, they are able to meet regulatory requirements, maintain consistent product quality, and build the trust of consumers.

With its role as a food ingredient provider, Apical has an unwavering traceabilityto-origin commitment and stringent quality control measures in place to ensure the safety and integrity of its products. Despite the complexities of a highly fragmented and complex supply chain, Apical has achieved a 99.98% Traceability to Plantation (TTP), enabling manufacturers to rest assured that their ingredients are ethically sourced with evidence of the origin and journey of the ingredients. These traceability commitments also extend to Apical2030, a strategic sustainability initiative with ten time-bound targets across four strategic pillars, namely Transformative Partnerships, Climate Action, Green Innovation, and Inclusive Progress. Targets include a 50% reduction in GHG emissions by 2030, net zero by 2050, and partnering with communities to improve their welfare under the Sustainable Living Village program, among others. These commitments align with many of UAE's sustainability priorities, including the UAE Net Zero by 2050 strategic initiative.

To excel in the FMCG space, manufacturers must continuously monitor the pulse of F&B market trends, cater to evolving consumer needs, drive innovation to meet their changing demands, and enter new markets to capture growth.