TRENDS… food in the United Arab Emirates

| 07/02/2008 | Reply

Overview

The most widely quoted “value” for the current global halal foods market
is some US$580 billion, which is a market size of 1.6 billion consumers…give
or take! However, these figures continue to be reported in a number of
variant ways, depending on where they are being cited. For example, the
“value” amount is sometimes referred to as being a reflection of current
global “predominantly Muslim-countries” market size. Alternatively, it
is sometimes said to reflect current Muslim population levels at large,
including the diaspora spread cross Europe, North America, and other geographic
regions. However, the point here is not to engage in a complicated dissecting
of consumer statistics. Rather, it is to convey the unambiguously clear
message that whatever the market-size definition might precisely be, the
core number is definitely big and continues growing. Indeed, some analysts’
estimations calculate the anticipated growth as being higher than the
projected global rate of population increase.

Key Asian countries have the largest Muslim population bases in absolute
terms. However, their total food consumption is significantly less when
compared to most other “Muslim” regions. This is largely attributed by
analysts to the fact that most Muslim countries in Asia have a lower GDP
per capita, and hence lower consumer purchasing power. The larger Asian
countries also tend to have a lower per capita protein intake.

Compared to Asian countries, the Middle East-North Africa (MENA) markets
(and especially the members of the GCC–Gulf Cooperation Council1)
have relatively high levels of food consumption due largely to their higher
per capita incomes. Many are resource-rich, with significant oil and gas
deposits, but lacking in agricultural production capabilities. As a result,
they import on average some 80% of their food needs. Since their respective
populations are predominantly Muslim (when compared to countries like
China and India), food imports must essentially be halal (with only small
residual markets available to non-halal items).

Within the MENA region (i.e., defined for purposes of this exercise as
countries that exhibit a potentially realistic halal market of relevance
to Canadian agricultural and food exports, including Iraq and Iran which
border the Arabian/Persian Gulf), there is a Muslim population base of
roughly 350 million. Although the overall market size for the region is
substantial, its base is divided over some 17 countries, thereby making
the significance of each market relatively small when compared to the
well-over 100 million Muslim market populations of Southeast Asia (notably
Pakistan, Bangladesh, India, China, and in the case of Indonesia, nearly
200 million).

Regulatory Developments

Within the GCC countries specifically, efforts are now well-underway
to adopt the Codex Alimentarius’ General Guidelines for Use of the Term
“Halal” (CAC/GL 24-1997) into a common GCC standard. Two items are noteworthy
with respect to how this standard is expected to be applied. First, although
not specifically dealt with in the Codex Guidelines, GCC countries are
planning to limit the usage of the term “halal” to only those products
which contain an ingredient susceptible to being considered whether it
is halal in the first place (e.g., beef in canned soups, chicken in frozen
entrées, etc.). For example, a halal designation on products like
fruit juices, frozen vegetables, pulses, dried pasta, and the like (i.e.,
where there is no reasonable possibility of a potential non-halal ingredient),
will not be allowed when it is considered that the objective of a given
product’s manufacturer is simply to generate a marketing advantage. For
example, a product that would undoubtedly run into difficulties in this
regard (i.e., should the standard be accepted with its expected interpretation)
could be the planned launch of the brand “Halal Artesian Mineral Drinking
Water” from Fiji (via California of course!). Second, a halal claim will
not be allowed usage in a manner which might suggest doubt about the safety
of similar foods, nor claims that halal foods are nutritionally superior
to, or healthier than other foods.

It will be interesting to see how this latter prohibition plays-out given
that at least one of the GCC’s biggest, most aggressive and influential
halal food manufacturers, Al Islami Foods, is clearly on record with
a corporate mission statement which argues that people need to know that
halal food is more nutritious than other types because of its “scientifically
proven health benefits.” Dubai-based Al Islami Foods’ halal portfolio
encompasses approximately 150 products, ranging from fresh and frozen
meat items such as burgers, sausages and seafood, to cheeses and vegetables.
Al Islami products are sold through supermarkets, restaurants, and
hotels, as well as to the likes of Emirates Airline…which is yet another
Dubai-based industry icon. The company is described by most Middle East
media as “a leading player in the GCC’s AED400 million (C$110 million)
processed food industry”. Al Islami is essentially the poster-child
of an enterprise which has amalgamated core halal values with the food
processing sector’s best standards and practices. This focus has and continues
to support its strong company growth2.

Al Islami is viewed by the halal food community (including the Malaysia-based
World Halal Forum/KasehDia) as a case-study success story of a corporation
which understands the potential and rewards of a commitment to the global
market for halal foods. Detractors (some would say cynics) have argued
in a number of public fora (and we witnessed same) that Al Islami
needn’t fret over or pontificate on its halal core of values, since their
corporate moniker has managed to usurp, trademark and register the religion’s
name itself. In any event, Al Islami has now moved well-beyond their
immediate Arabic base market in the MENA region, with sights now clearly
set on the EU and North America. They are also strong supporters of, and
players in, the growing corporate body that is aggressively promoting
the need for consolidation of the many disparate halal standards which
impact on the efficiency and growth of world halal trade. However, as
a clear case in point, how Al Islami will accept and/or adapt to an eventual
GCC regulation which would prohibit associating “halal” with being a more
nutritious/healthful food product, given their considerable investment
in using this marketing theme, remains to be seen.

Poultry

Within a relatively short period, poultry farming in the GCC was transformed
from a secondary industry into one capable of satisfying a considerable
part of the region’s demand for chicken meat and eggs. Meat production
was raised from its 184 thousand tonnes base, reaching 224 thousand
tonnes in 1986, and climbing to 433 thousand tonnes in 1995. By 2005,
the GCC had reached the 700 thousand tonnes mark, with production centralised
in Saudi Arabia, followed by the UAE and then Kuwait. In Saudi Arabia
there are approximately 300 poultry enterprises, nearly 20 of which are
considered large-scale, with a production capacity of 600 thousand tonnes
(2006). They also have a chick-producing capacity of about 500 million
units yearly.

Saudi Arabia imports more than US$9 billion (2005) worth of food and
agricultural products from around the world. In terms of poultry meat,
the Kingdom imported some 484 thousand tonnes of broiler meat of which
Brazilian exporters such as Sadia, Seara and Perdigao garnered a 78% market
share. The balance was divided between the EU (France), Argentina, and
small quantities from South Africa, Lebanon and ASEAN countries. U.S.
exports were minimal.

As we have seen, the UAE has experienced phenomenal economic growth and
development. With the resulting increase in resident expat professional
families, booming tourism, and large numbers of “visiting” foreign labourers,
the demand for food products is constantly becoming more diverse with
a consumer base that continues to open up to new products. In a typical
Dubai or Abu Dhabi hypermarket for example, there can be more than 30
variations on the chicken nugget theme. Here as well, Brazil dominates
the market segment, although an estimated half of these imports go to
local companies for additional processing given the very limited availability
of domestic poultry inputs. UAE manufacturers such as Al Islami Foods,
Al Kabeer, Al Areesh, Arctic Gold, Royal Meat and Emirates Meat already
export significant proportions of their production to other GCC and Middle
Eastern countries, as well as to North Africa, Iran, Afghanistan, and
even Central Asian markets.

In terms of a Canadian poultry presence in the UAE, Maple Lodge Farms’
Zabiha Halal brand of high value-added poultry products was introduced
in 2007. Although it remains early days, all indications are that their
quality branded line, including hot dogs, bacon strips and delicatessen
products, appear to be taking the market by storm, with significant orders
for retail distribution…and other market segments expected to soon follow.

Beef

Australia and New Zealand own a significant share of the UAE retail market
for beef. Their respective products also dominate the foodservice segment,
along with U.S. beef. The aftermath of the BSE situation in the EU has
kept European product out of the market, however they were never a particularly
big player in either the UAE or GCC. Progress is being made to re-open
GCC markets to the EU, with the likes of Prime Minister Ahern visiting
the Gulf in early 2007 to push for a lifting of the ban on Irish beef.
However, at this juncture, only Dutch veal is blessed with access.

For its part, Canada regained UAE market access in December 2005 for
under-thirty-month (UTM) beef. Several Canadian veal and beef exporters
from Quebec, Ontario and Alberta are aggressively pursuing sales opportunities…particularly
with respect to the higher-end of the foodservice spectrum (mainly 5-star
hotel-restaurants). Broadening access for Canadian beef/veal within the
GCC (including for over-thirty month beef) remains a Canadian priority,
along with determined efforts directed at re-opening the GCC market to
Canadian live bovine animal exports.

Australia and New Zealand’s commitment to the halal market is well-illustrated
by the fact that their respective total lamb-slaughters are 100% and 98%
halal, and their beef-cattle halal slaughters are also significant. This
has been driven largely by their markets in Southeast Asia, but obviously
plays an important supportive role to their overall marketing efforts.
in the MENA region. In 2006, Australia’s red meat exports to the Middle
East attained record levels. Beef exports jumped from a small base to
reach 3,312 tonnes. The increases were largely accounted for by Saudi
Arabia (204%) and Qatar (51%), but their key market of Dubai was relatively
stable at 2% growth. Australia’s total annual beef sales revenue from
the Middle East exceeds US$234 million, and live bovine animal exports
to the region add another US$245 million. At time of writing, we have
no reason to doubt that they are on track to repeat this performance.

In 2007, Meat and Livestock Australia launched a new halal brand for
their red meats in the Middle East, aimed at reinforcing in consumers’
minds the seriousness with which Australia takes its strict halal standards.
The new brand appears on retail meat packs at point-of-sale. In fact,
Australia is the only non-Muslim country in the world that underpins the
integrity of its halal animal slaughter through legislation…a fact which
they understandably promote strongly in the Middle East.

At this stage, the Australians also seem to own the Wagyu beef market
in Dubai. The products’ availability on menus is dependant on most restaurants’
budgets (given its premium price). For example, the prestigious 7-star
Burj Al Arab hotel’s not-too-shabby Al Muntaha beanery, along with the
hotel’s poolside and in-room dining sales of 320 g burgers, uses some
900 kg of Wagyu a month. Strip loin and rib eye cuts reportedly cost
them up to US$163 per portion, and they deal with two suppliers given
the limited availability (which is probably in part attributable to their
using only a 9 grade (or better) on the marbling 4-to-10 scale, as we
understand it). Another good example is The Fairmont Dubai’s offering
of an impressive list of Wagyu cuts including fillet mignon, New York
strip loin, prime rib eye, and T-bone. There are of course others.

Australian beef also gets considerable press attention and a marketing
boost from their sponsorship of Black Box Culinary Challenges, with over
5 events in the region being held so far. These challenges are designed
to provide young Chefs with a platform to showcase their skills, combined
with the featuring of quality Australian beef products. Some 27 different
countries around the world (and counting), have held the Challenge since
the marketing concept’s inception in1996. Truly nifty marketing by Meat
and Livestock Australia indeed!

On the U.S. export front, Rastelli Foods launched its Pureland Black
Angus beef in the Middle East. With offices in Bahrain, Kuwait and Dubai,
they claim to be the only supplier of 100% pure (genetically tested) Black
Angus in the region. Initially offering whole primal cuts, they are also
in a position to offer a range of portioned meats. They are also important
suppliers to the U.S. military bases in Europe, Africa and the Middle
East, and ship a total of some 250 40-foot containers a week to these
outlets. Rastelli notes that the high marbling score have resulted in
more than 68% of their cattle being turned into the upper two-thirds of
choice and prime cuts.

The U.S. Meat Export Federation continued to promote beef in Dubai by
again deploying the ever-popular Chef Jay McCarthy. McCarthy’s specialty
is in holding Texas Beef seminars with Dubai’s foodservice sector, and
these are inevitably well attended events in this market.

The Brazilians and South Africans also developed a toehold in 2007 as
new suppliers to the UAE market. More broadly in the region (measured
January-September 2007), Egypt remains the second largest destination
for Brazilian raw meat exports at US$283.6 million, losing out only to
Russia. Brazil’s exports to other Arab markets see Algeria in 9th position
(US$81.1 million), and Saudi Arabia in 10th spot (US$73.5 million,
up nearly 17% over 2006). Lebanon is also an important destination (US$6
million), which reflects a 101% increase over 2006. Egypt also plays a
prominent role by ranking 7th for Brazil’s processed meat exports, with
Saudi Arabia and the UAE coming-in at 14th and 15th positions respectively
for this product category.

Indeed, even the Bangladeshis are now in line to launch that country’s
first-ever meat exports, sending halal certified beef products to the
region. We didn’t realise this, but apparently (according to the FAO)
Bangladesh has one of the world’s biggest livestock herds, with goats
and cattle being their mainstays…who would have thought! Although the
country has never exported meat, the current initiative apparently came
about from a government offer of a 20% export subsidy. They are projecting
exports of some US$50,000 worth of meat a day, and are reported to have
clearance from UAE plant inspectors in-hand.

Halal Certification

In August 2007, Canada received approval from the UAE (i.e., the General
Secretariat of Municipalities) for a second Canadian Islamic association
to act as a halal certifying body for exports to this market. As a result,
the Islamic Food and Nutrition Council of America (IFANCA-CANADA) joined
the Islamic Society of North America (ISNA), as approved halal certifiers
for this purpose. This compares with some 7-8 approved Australian certifiers,
5 in the U.S. (which includes IFANCA’s Chicago-based parent organization),
and 1 in New Zealand. IFANCA (Canada) has subsequently registered
itself in Canada under the new name of The Islamic Food and Nutrition
Council of Canada, and both it and ISNA are headquartered in Toronto.
Within the MENA region, the requirement for having a halal approval inspection
visit is unique to the UAE.

In June 2007, the UAE’s General Secretariat of Municipalities advised
that it intends to introduce cost-recovery fees for the initial inspections
of Islamic societies (AED5,000/C$1,400), and slaughter facilities (AED10,000/C$2,800)
related to providing halal approval licences for export to the UAE. In
addition, they have proposed annual renewal fees of AED1,500/C$420 and
AED5,000/C$1,400 respectively. At time of writing, none of the major halal
exporters to the UAE (e.g., Australia, New Zealand, the U.S.) have submitted
to paying these fees. There also appears to be some discord at the GCC
level between several of its members (notably the Saudis) taking exception
to the proposed fees. Several members have reportedly shown little enthusiasm
for buying-in to a unified GCC approach on establishing such a fee structure,
as is currently being championed by the UAE. The bottom line, at this
point in time, sees the situation with respect to the enforced application
of the UAE fees (which we understand would be unique to the “halal” world)
to be in a state of flux and uncertainty.

Trade Development

A number of events and activities in the UAE have and will continue to
lend themselves to promotional opportunities for Canadian halal product
exports. For example, halal foods are prominently exhibited at the annual
Gulfood trade show in Dubai (see: www.gulfood.com).
In 2007, the activities related to this major food event included a specific
halal focus through the hosting of a Halal Industry Dialogue event. A
key speaker at this venue was Canada’s Falah Alizzi, who is Maple Lodge
Farms’ Zabiha Halal Category Manager. The seminar was organized and sponsored
by the Malaysia-based World Halal Forum, and the operative theme used
to promote the event was “Going Global with Halal”.

In addition to Canadian exhibitors participating at Gulfood, two substantial
Canadian agri-food exporter trade missions took place during 2007. The
results of all these combined major activities (i.e., there were also
innumerable singular visits) were important to both immediate business,
as well as the future for Canadian halal products in this region. For
example, Canada Agra worked tirelessly over the year to get Maple Lodge
Farms’ chicken-based deli products established in the UAE, with an end
result seeing a very promising agreement signed with Spinneys, a well-established
and major UAE retailer and distributor to all market segments in the UAE
and Oman. We understand the agreement also covers beef and veal, as well
as a future potential for pork products, given the important expat consumer
group that Spinneys attracts and services. Abingdon Meat Packers (Caistor,
Ontario), Abitco (Guelph, Ontario), Wagyu Canada/Kobe Classic Beef (Camrose,
Alberta), the Alberta Livestock Industry Development Fund (Edmonton, Alberta),
Rexdale Food Specialties (Woodbridge, Ontario), and the Canadian Halal
Export Alliance (Toronto, Ontario) are all illustrative of exporters and
organizations that attracted considerable attention during the course
of their visits to Saudi Arabia and the UAE market…and we of course
apologise to whomever we might have missed mentioning during this very
busy year on the halal-front.

Another venue which holds some modest promise is the Halal World Expo.
Its inaugural show took place in Abu Dhabi in December 2007 (see:
www.halalworldexpo.com). The
look of the show was crisp, professionally organized and the promotional
effort by the organizers in the year leading up to its staging was determined.
However, exhibitor participation was modest, which is not unexpected with
a first-time event, and reviews were mixed. The 2008 Expo is scheduled
to take place in November, and it will be interesting to see whether the
demand in this regional market for a specific halal trade show will grow,
as well as assess whether its staging at a non-Dubai venue best supports
and encourages such demand. We applaud this initial effort, however we
prefer not being overly judgmental, and will therefore reserve offering
recommendations or criticisms at this point.

A further Canadian twist in the halal food segment was the announcement
that Vancouver-based vLinx, which claims to be the largest virtual marketplace
dealing with foodstuffs on the net, has designed a new link as an exclusive
business-to-business window for halal foods. Launched in this region at
the Halal World Expo, vLinx’s Halal Exchange (www.Halalexchange.com)
brings another important Canadian dimension to the global halal market.
The Emirate of Ras Al Khaimah (UAE) announced it will support this virtual
halal market and offer suppliers both storage and logistic facilities
to help develop regional opportunities.

Cautionary Tale

The headline screamed in a bold font that must have been size 86, which
we won’t try to replicate here, “Is there alcohol in my ice cream?” It
was suitably tabloid-adorned with the photo of an innocent 4-year old
child staring forlornly into her dessert bowl. The issue centred on the
discovery by some astute consumer (or maybe it was the competition!) that
there were popular brands of ice cream containing traces of alcohol which
were being sold at supermarkets and gas stations across the UAE. Some
56 Wall’s (UK) novelty products were the target, prompting their corporate
Customer Care Advisor to comment that Wall’s ice cream only contains 0.0001%
ethanol, which might even be evaporated by the time a consumer tucks-in
to their favourite Magnum Classic or Solero Exotic. The minuscule amounts
of alcohol are said to act as a medium for flavours and colours.

The Dubai Municipality’s Food Control Section responded by noting that
even though the religious aspect of using very small amounts of alcohol
in food preparations might be debatable, the law remains very clear. In
short, it is prohibited to sell openly any food items containing “even
one iota” of alcohol…with the exception of naturally occurring alcohol
resulting from the aging process of a product. “It doesn’t matter” they
said “if 1% or 0.0000001% is added and evaporates, it is still not allowed.”
The bottom line for potential Canadian exporters is clear and worthy of
taking note…the subject of halal products, and the enforcement of regulations
that support same, is taken seriously in the UAE and by extension, in
the GCC as a whole.

In the specific case of Wall’s, their products were back in retail freezers
several months later, once Dubai’s Food Control Section had their laboratory
tests in hand. These confirmed the company’s assertions that there was
no alcohol to be found in the final products. Nevertheless, one can appreciate
the significant disruption and cost this imposed, and the control authority
still awaits confirmation from the distributor that no alcohol was added
during the production process as well.

Halal Tourism

A further niche and growing trend to keep an eye on is the rise in “halal
tourism” in the Middle East generally. This is particularly noteworthy
for the UAE given that it is identified by many researchers in the sector
as one of the rising stars, and becoming one of the major tourist destinations
over the next 5 years (along with the likes of China and Croatia). Some
have even noted that there is a market for a halal startup airline, such
as the budget airline established by the Vatican earlier in 2007, to transport
pilgrims to holy sites. They see a halal airline as being able to provide
food prepared according to Muslim religious requirements, as well as the
inclusion of onboard calls to prayer, copies of the Koran in seatbacks,
religious programming on in-flight entertainment and provision of separate
sections for male and female travellers. They argue that there is a dearth
in the supply of halal tourism products, citing Dubai’s non-alcoholic
Ice Bar-whose interior ice-finishings, from tables to chandeliers, are
by the way all from Canada-as an example to be copied.

The trend is also illustrated by Dubai-based hospitality group Al Mulla’s
recent launching of three Sharia-compliant hotel brands, with a strategic
plan to deliver 30 properties internationally by the end of 2008.
They will target properties in Saudi Arabia, Jordan, Egypt, Malaysia,
Thailand and the UAE, before they tackle Europe. Al Mulla claims that
the Muslim travellers contribute 10% to the world tourism market, with
an average spend of 10-50% higher than the average leisure traveller.
Their properties will not sell alcohol, and will only serve halal prepared
food.

Conclusion

When it comes to halal consumer-wants, some analysts say that “ignoring
this group would be like missing the Hispanic boom of the 1990s”. Although
they are referring to the potential of the U.S. market which is set at
around 10 million Muslims, we know today that it is only the rarest of
households in many parts of the world (and certainly in North America),
that would not have a jar of salsa on-the-go in the fridge, or nacho chips
in the cupboard. One could easily venture that, from a Canadian perspective,
there’s plenty to take immediate advantage of in the readily accessible
U.S. market for the uninitiated halal exporter. Once the investment has
been made in establishing oneself in this relatively near and comfortable
export environment, the significant opportunities presented by the rest
of the halal world open themselves to being realistically considered.
And in this regard, the Middle East-North Africa- Arabian Gulf region
lends itself fully to building on such a potential tactical approach.

NOTA: most of the statistical information contained in the TRENDS…food
in the UAE series is gathered from secondary sources. All views expressed
are those of the author alone, and are not to be confused with Government
of Canada policy on any given matter.


1. Members of the GCC include Saudi Arabia, the United
Arab Emirates, Oman, Kuwait, Bahrain and Qatar.

2. In 2007, Al Islami enjoyed a bumper year, with
sales growth projected at 49% (domestic market) and 120% (globally), a
2-point increase in market share, and a market leader position (25% share)
in the UAE’s frozen chicken retail market. In this same year, they signed
memoranda of understanding with state-owned organizations in the UAE and
Malaysia, as well as agreed to distribution and franchise deals in Egypt
and Iran. They also signed a strategic joint venture with 3663 First for
Foodservice (the UK’s leading company in this segment with sales over
US$2 billion a year), which is pivotal to their plans to tap into the
EU’s US$16 billion halal market. Their corporate target is an annual turnover
of AED1 billion (roughly C$280 million) within the next 5 years. Al Islami’s
exports currently account for 35% of its total revenue.

Category: Middle East & Africa

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