The GCC countries with high per capita income are among the most affluent countries in the world. Harsh climatic conditions necessitate their reliance on food imports which now account for about 90%.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: UAE 2011-5
United Arab Emirates
Guide for Doing Business in the GCC-5 Countries
The GCC countries with high per capita income are among the most affluent countries in the world.
Harsh climatic conditions necessitate their reliance on food imports which now account for about 90
percent of their food needs. Consequently, they offer excellent markets for food exporting countries.
SECTION I. MARKET OVERVIEW
The Gulf Cooperation Council-5 (GCC-5 ) countries covered by the Office of Agricultural Affairs (OAA) are a relatively
homogeneous group of small nations with a total population of 13 million. Energy is are the main source of revenue. Per
capita income levels are high (Qatar $179,000, U.A.E. – $49,600, Kuwait – $48,900, Bahrain - $40,300, and Oman -
$25,600), according to 2011 data. Inflation rates are between 10 and 15 percent, depending on the country.
Among the GCC countries, the United Arab Emirates (U.A.E.) with its larger population, larger influx of tourists and
businessmen coupled with its vibrant re-export activities is the largest market for food products, followed by Kuwait.
Within the U.A.E., Dubai is the country’s commercial center and the region’s trade hub. Efficient infrastructure (sea, land
and air ports), large free trade zones and a strong business orientation make Dubai an important commercial center in the
Middle East. Dubai derives sizable revenue from the re-export business and invests heavily in infrastructure, while luring
foreign investment and buyers. Other countries in the region and other Emirates in the UAE, particularly Abu Dhabi, the
capital, are following Dubai’s lead and model to improve their infrastructure and attract business interests.
The harsh climate, limited water resources and poor soil and water conditions continue to limit agricultural production in the
GCC-5. Consequently, the countries must import nearly 90 percent of their food needs, including raw materials for further
processing, and feed requirements. Annual GCC-5 food imports are estimated at $10 billion, of which the U.A.E. share is
about 60 percent. Rising populations and a dollar peg for all but one of the GCC-5 currencies have helped to boost exports
of U.S. agricultural products to the GCC-5, particularly consumer-ready food products which account for about 60 percent of
total U.S. food exports to the region. Due to the vast number of exit points, accurate re-export trade data are not available. It
is estimated that 40-50 percent of U.A.E. food imports are re-exported to Middle Eastern, Asian and African countries.
Population growth is not the only determining factor for the increase in food import growth. The level of investments in the
GCC-5 and consequent recruitment of skilled labor and executive officers, growing business and tourism travel are also
contributing factors to the growth in food imports. Prospects for coming years remain unclear in light of the global financial
situation. However, many food importers continue to report an improvement in sales and optimism about the future,
especially in retail foods. Prospects for luxury food items are less clear. Consumers demand for seafood products is met
through local production and imports from Oman, Iran and India. High-end specialized items are imported from other
countries, particularly the European Union. Small quantities of specialty U.S. sea foods are imported.
Population growth rates across the region are estimated at 3.5 percent annually. An interesting aspect of the GCC-5
population is that in Kuwait, Qatar and the U.A.E., the local population is outnumbered by expatriates, the majority of whom
are from Asia, particularly the Indian subcontinent, and, to a lesser extent, from other Arab countries. These expatriate
groups tend to perform manual labor and also occupy a sizable share of the clerical, technical and middle and upper
management positions. A significant population of Western expatriates from Europe and North America also work in
professional positions. In Dubai, home to the regional headquarters of most multi-national companies operating in the
Middle East, the expatriate population comprises an estimated 80 percent of the population. The expatriate community
throughout the GCC influences food product imports. Of the local population, a sizeable percentage travel annually
overseas, including the West for business, pleasure or to obtain university degrees, exposing them to Western and U.S.
foods. With the spread of international television via satellites and cable network, consumers buying decisions are being
influenced by region-wide advertising campaigns. Also, the increasing number of working women, particularly married ones,
has helped introduce new consumption patterns such as dining out, prepared and semi prepared meals.
Table 1: U.S. Agricultural Exports to the GCC-5 Countries (Million U.S. Dollars, FOB)
Country CY 2008 CY 2009 CY 2010 January – July Comparison
CY 2010 CY 2011
Bahrain 57.8 33.5 45.1 23.8 30.1
Kuwait 161.9 130.9 147.9 86.1 120.1
Oman 82.7 45.0 49.0 20.4 60.5
Qatar 35.2 40.4 40.2* 29.3 36.7
U.A.E. 621.3 797.0 890.6* 418.5 504.4
Total GCC-5 425.5* 496.9* 683.9* 499.8 661.5*
High quality image of U.S. products. High price of U.S. goods
Weak dollar provides advantage as GCC Higher freight rates for U.S. foods compared to
currencies are pegged to the dollar other suppliers
except Kuwaiti Dinar
High regional per capita incomes. Significant competition from producers in EU, Asia,
Australia, New Zealand and, increasingly, from local
and regional processors.
Broad familiarity with U.S. culture. Large Indian subcontinent population with easy
access to "home grown" products and modest
Increasing interest in U.S. products. Lack of interest from some U.S. exporters who are
not willing to entertain small orders, consolidate
shipments and meet local labeling requirements.
Increasing number of tourists to Importers often want to start with small quantities
Bahrain, Oman and the U.A.E. in and consolidate shipments.
particular; U.S. military presence in
Kuwait and Qatar.
Low tariffs and relatively transparent Food products must carry production/expiry dates
import procedures. and Arabic labels.
SECTION II: EXPORTER BUSINESS TIPS
10. Be Willing to Entertain Smaller Orders, to Consolidate Shipments, or to Share a Shipment with Someone: In many
cases, local importers will want to purchase small initial quantities, particularly for new-to-market products, to test the
product's market potential and to develop the supplier/buyer relationship.
11. Be wary of Agency Agreements: In 1996, the UAE and Oman Governments decided to halt the registration of food
brands under the agency agreement, in an attempt to curb the increasing food prices. Since then, the UAE Government has
liberalized imports of essential products such as tea, edible oils, several dairy products, rice, and table eggs that had been
restricted under the agency agreements prior to 1996.
SECTION III: MARKET SECTOR STRUCTURE AND TRENDS
In 2010, U.S. agricultural, fishery and forestry product exports to the GCC-5 totaled $1,182 million, of which 60 percent
were consumer-ready foods and beverages. OAA Dubai estimates that 55 percent of this trade went directly to food retail.
In the case of the U.A.E., reliable trade sources estimate that up to 40 percent of imported foods are re-exported to other
GCC countries, East Africa, Iran, Iraq, Yemen, former Soviet Union countries, and South Asia.
The Hotel, Restaurant and Institution (HRI) sector consumes about 40 percent of imported U.S. consumer-ready foods and
beverages, particularly red and poultry meats. The HRI sector is expanding in the GCC-5 markets as countries develop their
tourism and business sectors. Numerous 5 star hotels have been added, particularly in the UAE, Oman and Qatar. However,
growth in this sector has slowed down in light of the global financial situation. Institutional demand is driven in large part by
large labor camps that provide housing for laborers and middle to lower wage workers, many of whom are from South and
East Asia. Semi-processed commodities like frozen chicken and rice are more in demand in this sector as compared to more
highly processed food products. U.S. military troops and ships are served by shipchandlers. Kuwait has become an
important re-export center to Iraq in general and to U.S. troops in particular. Products of particular demand in the HRI sector
in the GCC-5 include red meat, poultry meat, dairy products, rice, edible oils, nuts, processed and fresh fruits and vegetables,
snack foods, and processed eggs.
About 300 food processing firms operate in the UAE and a smaller number of food processors in other Gulf countries such as
Kuwait, Oman and Bahrain. This sector consumes much of the bulk of U.S. intermediate and semi-processed products sold
in the region. In the food-processing sector, U.S. ingredients are mainly used in the following product categories – flour and
bakery products, vegetable oil, canned beans, carbonated and non carbonated beverages, chicken franks, manufactured snack
foods and reconstituted juices. A soybean crushing facilities with a 4 million metric ton processing capacity/year is
operating in the UAE. It is currently used for crushing rapeseed and soybeans for the production of oil and meals. Soybeans
are sourced from the United States and Latin America. Local dairies and poultry farms are not large enough to meet local
demand. Consequently, a number of local companies reconstitute dairy products from milk powder, primarily sourced from
Europe, New Zealand and Australia. It is expected that an increasing number of multinational food companies will look to
tie up with local processors. A major U.S. food manufacturer has built a cheese processing plant in Bahrain to serve the
MENA area. More details on the food-processing sector in the U.A.E. are available in the Food Processing Sector Gain
Food Retail Consolidation: Like many developed countries around the globe, the food retail sector in the Gulf region is
undergoing consolidation due to greater competition. Hypermarkets are transforming the local retail sector by forcing local
entities to expand and/or upgrade existing facilities to remain competitive. A major U.A.E.-based importer, distributor and
retailer is upgrading and expanding its hypermarket/mega store chain in the region. Several other local retailers are doing the
same, targeting both upscale and more middle class consumers and trying to fill particular niches for premium foods. These
retailers often rely on customer feedback in making purchasing decisions. Consumer cooperatives are strong in the UAE and
Kuwait markets, and to a lesser extent in Qatar. While they dominate almost 70 percent of the retail market in Kuwait, they
have a 25 percent market share in the U.A.E. In addition to their loyal local shareholders and customers, the Coops attract a
wide range of middle class consumers of Arab and Indian origin. Increasingly, several retail chains are providing home
delivery service to their customers. The casualties of this competition will likely be small and some medium-sized groceries,
depending on their locations. The number of mom-and-pop stores is on decline; however, many should survive given the
multiple services they provide to their customers.
Tourism’s Potential: The Gulf region offers business and casual visitors excellent wintertime weather, a long inviting
coastline for water activities, and first-rate hotels with top quality food and services. In addition, the region offers some of
the richest international events ranging from golf and tennis tournaments, formula 1 car racing (in Bahrain and UAE), horse-
racing largest purse (Dubai), power boat racing, camel races and a host of trade events that garner broad attendance from
across the Middle East and beyond. The GCC-5 countries, in particular the U.A.E. are working hard to make travel to this
region more pleasurable. Overall, OAA Dubai projects U.S. food export growth to the GCC-5 at 5-10 percent annually for
the next few years.
Trends in promotion/market strategies and tactics: Promotions and aggressive product marketing are essential, in view of
the intense competition between countries, companies and brands, not only to gain but to also maintain market share.
Newcomers to this market should be prepared to include product marketing and promotional support in their plan as the
importer may not be prepared to invest in new-to-market products without initial support from the supplier.
While the spread of satellite channels are making multi-market adverting easier, the cost for small to medium size companies
could be prohibitive. Regular in-store promotions and newspaper ads are still the most commonly applied advertising tools in
SECTION IV: BEST HIGH-VALUE PRODUCT PROSPECTS
1. Almonds (shelled)
2. Beef & products (chilled & frozen) 10. Breakfast Cereals
3. Poultry Meat (frozen parts) 11. Confectionary Products
4. Snack foods 12. Frozen Vegetables
5. Fresh Apples & Pears 13. Pulses
6. Edible oils 14. Planting Seeds
7. Cheeses 15. Sweeteners & Beverage Bases
8. Fruit and vegetable juices 16. Pet Foods
9. Condiments and Sauces 17. Rice
SECTION V: KEY CONTACTS AND FURTHER INFORMATION
U.S. MAILING ADDRESS: OFFICE OF AGRICULTURAL AFFAIRS
6020 Dubai Place
Dulles, VA 20189-6020
LOCAL MAILING ADDRESS: OFFICE OF AGRICULTURAL AFFAIRS
U.S. CONSULATE GENERAL
P.O. BOX 121777
DUBAI, UNITED ARAB EMIRATES
Pertinent Government Food Import Contacts:
Bahrain: Mr. Ahmed Al Mannai, Head of Food & Water Control Section,
Ministry of Health
Telephone: 973-17-273-683 Fax: 973-17-279-253
Kuwait: Eng. Esteglal A. Al Mussallam, Manager Imported Food Department
Telephone: 965-2487-4969/5387 Fax: 965-2487-9706
Oman: Mr. Saleh M. Al-Zadjali, Director
Specifications & Measurements, Ministry of Commerce
Telephone: 968-248-13418 Fax: 968-248-15992
Qatar: Dr. Mohamed Al Thani, Director of Public Health Department,
Ministry of Public Health
Telephone: 974-4407-0100; Fax: 974-4407-0818
(Abu Dhabi) Mr. Rashed Mohamed Al Shariqi, Director General
Abu Dhabi Food Control Authority
Telephone: 971-2-672-5007 Fax: 971-2-678-5961
(Dubai) Mr. Khalid M. Sherif, Director
Food Control Department
Telephone: 971-4-206-4200 Fax: 971-4-223-1905