UK Food exporters are looking to the Middle East for growth. Is your company behind the curve?

Brexit fears, a threatened boycott of British produce post-Brexit over GM contamination fears by the EU, price spikes, supply issues and the usual litany of floods and extreme weather are making life interesting for British food companies.

Whether primary producers or food processors and manufacturers, food has been in the news lately. The emergence of a black market in lettuce brought on by poor growing conditions across the Mediterranean, media campaigns highlighting shrinking pack sizes (thank you Toblerone) and price spikes have put British food companies under pressure to explore other avenues for growth.

One of the more notable is the Gulf with its growing population and seemingly bottomless appetite for both investment and partnerships. The Middle East market for packaged Food and Beverages is tipped to reach US$2.2 trillion by 2020. In KPMG’s latest ‘Hungry For More?’ report, Anuraj Bajpai Partner and Head of Retail in the Lower Gulf describes the latest drivers of F&B success in the Gulf, “Innovation, whether in terms of menu enhancements or new ways of understanding consumer preferences is a differentiator. The wide array of formats, concepts and cuisines offered in the UAE mirrors its varied demographics.”

With long-term market indicators remaining positive, Bajpai is keen to point out the region is not without challenges. ”Operators need to understand and predict customer behaviour – which can be challenging.”

Showcasing the Very Best of British

British companies attending Gulfood 2017 in Dubai are anticipating a bumper year, with a weak pound driving food exports to the region. Sterling is hovering around $1.24, having slipped from a high of $1.49 prior to the UK’s decision to leave the European Union. This currency move has translated into a significant advantage for meat and dairy exporters. Premium lamb, traditionally one of Britain’s most expensive meats, is enjoying renewed popularity in the region.

Nasco, a British wholesale of brands including Weetabix, John West tuna and Ribena is expecting its best show in five years, “Our business in January has already shown a 30-40 per cent pick up on last year,” said Ashish Vidani, a Nasco Director.

Birmingham’s Food State International is expanding its product range including its new London Flavours crisps and snacks range. “Our business in this region is growing, it has been really successful for us. The value of the pound is helping, but it’s a dynamic market which constantly demands new product,” commented Lisa Burrows, Project & Marketing Manager.

Gulfood is the world’s biggest annual food and hospitality show, connecting exporters with buyers and distributor from the Middle East, Africa and South Asia. In 2017, Gulfoood spans more than 1 million square feet of exhibition space for 5,000 international exhibitors, including more than 1,000 new-to-show food and beverage producers.

So what?

British investors with a direct or indirect investment in the food and beverage sector have enjoyed sound returns in the past few years. Sustained demand coupled with the release of new products, packaging and retail displays have offset some of the market volatility. However, with the traditional European export market under pressure due in part to the uncertainty associated with the May Government’s Brexit strategy, British domestic growth is under a cloud. For investors, this is cause for anxiety. In a post-Europe environment companies that do not have an effective international growth strategy in place are likely to struggle. The Gulf holds out the prospect of continuing to be a bright spot on the world’s growth map.