UAE Market report shows good growth for Halal sector

United Arab Emirates Food and Drink Report Q2 2009 – a new market research

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On the back of a deteriorating global climate and the stream of bad
news emanating from the country itself, we have lowered our real GDP forecast
for the UAE to just 1.0% in 2009.

With real-estate prices falling, a
slew of high-profile construction projects cancelled, shipping volumes
dropping and oil prices
falling, it is clear that the UAE cannot escape unscathed from the
global economic slowdown.

However, as discussed in the newly published
UAE Food & Drink Report for Q209, investments are still continuing apace in the country?s food and drink sector.

One subsector that has received considerable attention in recent months
is the halal food industry.

In December 2008, Prairie Halal Foods, a
Canadian-owned food firm, announced plans to explore opportunities at
the premium end of the retail sector
after opening its first Middle East office in Dubai in the previous

The company markets and develops high-value halal meats from
Canada, and plans to introduce new delicacies into the Middle East such
as buffalo meat, which is a healthier alternative to most red meats.

Meanwhile, locally based Al Islami Foods, a leading halal food producer
in the Gulf Region, entered the Saudi Arabian market after reaching a
strategic distribution agreement with Arabian Trading Supplies, one of
the main distributors in Saudi Arabia.

Arabian Trading Supplies will
distribute a range of Al Islami´s halal products under the Co-op Islami
fascia. The new range will include a variety of premium products such
as processed meat and frozen seafood.

Moreover, the firm is intent on
growing its presence in the Gulf Co-operation Council (GCC) states,
including Qatar, Bahrain, Kuwait and Oman, in 2009.

BMI believes that both companies are likely to enjoy success, for the
Middle Eastern halal food industry is growing rapidly. Dynamic income
growth in the UAE has led to consumers demanding better quality and a
wider selection of meat products.

Moreover, halal products are
generally perceived to be healthier, which has boosted sales as
consumers join the global health trend. The emirates of Dubai and Abu
Dhabi in particular have shown a fondness for premium and healthier
products, which in our opinion is a trend that will not slow markedly
despite the profound effects of the global financial crisis.

In fact, on the consumer front, we believe that GCC consumers will
remain more bullish than their Western counterparts and are much less
likely to trade down to cheaper private-label products or to shop at
discount stores.

While a slight deterioration in consumer sentiment is
unavoidable owing to the severity of the global crisis, the fact that
the GCC block will be one of the few regions to register respectable
economic growth in 2009 means that the psychological impact to consumer
confidence will be far less pronounced than in the West.

Instead, we
expect a mild regression in the trend towards trading up to premium
food and drink products, but do not foresee this deterring investments
like those outlined above.