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Euromonitor: COVID-19 bolsters local food production in the Middle East

The Gulf Cooperation Council (GCC) region and other Middle Eastern countries have built a food economy that relies heavily on imports for non-perishable goods. However, due to supply chain constraints engendered by the COVID-19 pandemic, the region has been pushed to source more locally-produced products, according to research from Euromonitor.

Euromonitor reported that local manufacturers can take advantage of a consumer predisposition for purchasing non-perishable goods. As is the case for many other countries, the pandemic has bolstered sales in the non-perishable packaged food sector within the Middle East. These turbocharged sales are fueled by fears that global manufacturing will falter. At the same time, Euromonitor's research confirmed that pricing for imported products is not spiking as some predictions outlined.

To tap into this market for non-perishables, local companies within the GCC can position themselves to promote the longevity of their products like UHT milk and frozen food, which are not typically viewed as essential but could help consumers stock their pantries as international supply chains struggle to keep up. Euromonitor noted that the snacks category is benefitting particularly well from the changes in consumer demand and it forecast the segment to continue growing as consumers stay inside with restricted movement.

While local producers can capitalize on consumer demand for non-perishables, monthly price charts from Euromonitor show that international imported goods are not suffering from price hikes. “On the contrary, we can even expect some softening due to the strong US dollar, which could potentially make imported goods cheaper,” according to the report. Many GCC currencies are pegged to the U.S. dollar which has seen an increase in strength in recent weeks.

Still, prices have fluctuated. For the month ending on March 22, price chats show that condiments, dairy, confectionery and breakfast cereals have increased in median price in the United Arab Emirates. Snack bars, rice, pasta and ready meals have decreased in price. Soup and edible oils have held steady.

To help alleviate the economic effects of COVID-19 on retail, Euromonitor pointed out the opportunity presented by e-commerce. Research from Euromonitor International’s Digital Connectivity Index shows that e-commerce sales have grown steadily in the United Arab Emirates since 2009. In addition, the country is now ranked 14th globally in both fixed and mobile broadband and has developed a blockchain ecosystem to facilitate secure payment solutions. With such capabilities in place, e-commerce can make up the loss in foot traffic caused by quarantine measures and can help facilitate the localization of supply chains. For agile retailers and foodservice purveyors, this channel offers the chance to continue serving consumers through localized partnerships for sourcing products and serving locally-made home delivery from restaurants.