Fresh Produce Industry: UAE Fresh Produce Industry: United Arab Emirates (UAE) 2019 FreshFresh Produce Produce Industry: Industry: UAE UAE Table of Contents I. Executive Summary 3 II. Country Overview 5 Opportunities and Challenges for Doing Business in the Fresh Produce Industry 6 III. Consumer Assessment 13 Macro Consumer Trends Impacting Fresh Produce Consumption and Sales 14 Consumer Purchasing Behavior 15 IV. Distribution Channel Analysis 20 Retail 20 Foodservice 21 Institutions 21 E-commerce 23 Informal Markets 23 Retail Environment 24 Foodservice Environment 27 V. Consumption and Food Supply 31 VI. Domestic Fresh Produce Insights and Related Investments 32 VII. Import Supply Chain Assessment 36 VIII. Trade Flow Assessment 38 Flow of Fresh and Frozen categories 38 Import Processes and Procedures 49 IX. Opportunities for US Suppliers 57 X. Key Trade Associations and Trade Shows 59 Trade Associations 59 XI. Sources 62 2 Fresh Produce Industry: UAE I. Executive Summary The United Arab Emirates (UAE) is the fourth largest many have acquired farms outside the UAE to ramp economy in the Middle East and Africa and one of the up operations, while others invested in innovative most important trading hubs globally. Due to ex- solutions such as hydroponics. Despite these initia- treme weather conditions and limited arable land, the tives, domestic supply remains limited, therefore, one UAE relies on fresh produce imports to meet demand of the UAE’s strategic goals focuses on establishing a from its growing population, mainly the influx of diversified import supplier landscape to ensure food expatriates. The multiculturalism of the country’s ex- security. patriate society (about 88% of the overall population) Similar to any other imported product, fresh pro- results in diverse eating habits and a large foodser- duce must follow standard import regulations. For vice sector offering a variety of cuisines, hence there instance, while fresh fruit and vegetables (except is a diverse demand-structure within fresh produce. certain starchy roots) are exempt from the generally UAE consumers are categorized by income level as imposed 5% import duty, they are still subject to the well as origin. High-earners are increasingly inter- newly introduced 5% VAT, which is applicable on all ested in healthy eating, which is driving demand for products. They also have to go through a set of pro- organic produce and superfoods, such as kale and cedures to determine compliance with health and im- berries, regardless of price. Low-income expatriates, port standards before they are approved for further on the other hand, have showed price-conscious be- distribution and sale. The regulatory framework for havior in recent years, which strengthened demand imports and standards is mostly based on GCC (Gulf for staple products as well as discounted items. Cooperation Council) and GSO (GCC Standardization Catering to this diversity, the country’s well-devel- Organization) requirements. The execution and spe- oped modern retail infrastructure ensures a diverse cifics are then organized by the individual Emirates portfolio of fruit and vegetables as well as prices. themselves. Most supermarkets and hypermarkets as well as The UAE’s strategic geographic location on the Arabi- leading importers have established relationships with an Peninsula facilitates the import process. Maritime suppliers from around the globe to ensure year-round imports are the most common mode of transport, supply. Local producers follow a similar strategy, and especially after one important land route was disrupt- 3 FreshFresh Produce Produce Industry: Industry: UAE UAE Executive Summary ed due to the closure of the Jordanian-Syrian border still presents opportunities for suppliers of high-qual- between 2015 and 2018. The most common landing ity produce. As Asian and African suppliers dominate port for ships carrying fresh produce to the UAE is the competitive lower priced produce segment, Jebel Ali in Dubai, the largest and busiest port in the opportunities for suppliers are mainly found within region. Dubai is also home to the Al Aweer Central the premium segment. Another premium subsector Fruit and Vegetable Market, the heart of fresh fruit to explore is the organic market, which is benefiting and vegetable trade in the country. from government initiatives to increase health aware- Import procedures and regulations are mostly in line ness among UAE consumers since 2016. While do- with international standards and the UAE has ensured mestic production within this sector will continue to a trade-friendly environment with straightforward rise, it is unlikely that local farms will be able to satisfy automated processes. Well-established infrastructure, demand throughout the year due to the dry climate. a safe and stable environment and the presence of The main challenge for U.S. suppliers will be partner- various free-trade zones have made the country one ing with leading retailers or one of the major distri- of the most important destinations for re-exports in bution companies in the UAE, as they have already the region. established long-term relationships with suppliers. However, entering the UAE will also open the gate to By combining the diversity in demand with a struc- the broader region, as most retailers and distributors tured supply side, the country becomes an interest- work throughout the GCC. ing market for fresh fruit and vegetables. The market 4 Fresh Produce Industry: UAE II. Country Overview The United Arab Emirates (UAE) is a unique country favorable and liberal business environment, broad with several factors that help drive robust interna- economic freedom, the presence of several free zones tional trade, encourage economic development, and (i.e. free-trade areas), and low taxes. The country is support opportunities for business development and also an interesting and exciting marketplace and expansion. These factors include: demand is manifold. • a large, multicultural society with varying tastes The presence of people from all over the world, be- and demands for food; longing to various social classes and a broad variety • a workforce, more than 88% of which is comprised of income brackets, explains demand for all types of of expatriate workers from around the globe; fruit and vegetables at various levels of quality and pricing. The fact that residents are mostly expatriates, • a geographic location that places it between Africa, residing inside the country on work visas, ensures a Asia and Europe; favorable demographic. However, this creates a level • a major trading hub with free-trade zones and ex- of uncertainty regarding consumption levels in times cellent infrastructure to import, export, and transit of economic difficulties, as loss of work usually means products and goods within the country and to a return to their respective home country. neighboring markets; and The UAE is also home to a very diverse and significant • a liberal and business-friendly environment, as well foodservice landscape, also supported by its position as one of the most stable and safest markets in the as an important tourist hub. The growing presence region. of restaurants and novel dishes portrayed as healthy The main entry point for foods are the country’s sea- will likely continue to benefit sales of fresh fruit and ports, where health official inspections and custom vegetables through this channel in the future. clearance are usually completed within a few hours. Doing business in general, and specifically within fresh produce, is therefore oftentimes easier than in many other countries. This is also supported by a 5 FreshFresh Produce Produce Industry: Industry: UAE UAE Country Overview Opportunities and Challenges For Doing Business in the Fresh Produce Industry According to recent government reports, imports VAT-related processes, compliance with labeling and still account for 80% of the country’s consumption product regulations and emergency strategies in case of fresh fruit and vegetables, even though support of import bans due to health considerations. for local agriculture has intensified over the years. As VAT requirements were introduced in 2018, there While the introduction of hydroponics is expected to have been incidents of technical problems related to boost domestic production, large-scale cultivation of implementing the new tax system. Several companies various crops seems unlikely due to weather condi- reported that imports were being held at the border, tions, water scarcity and lack of arable land. Import- as the customs department was unable to verify the ing fresh fruit and vegetables therefore appears an Tax Registration Number (TRN). The number identi- exciting field for investment. An additional advantage fies VAT-registered companies, which would usually is the broad knowledge and acceptance of English make payments during their VAT returns via the for business conversations, written correspondence, reverse-charge mechanism. With VAT regulations still and as an additional language to Arabic for important being in their infancy, similar problems may occur in documents, certificates, forms, and websites. the future. With fresh produce being imported from Moreover, import and registration procedures are all over the world, biosecurity risks are perceived to usually straightforward and largely supported by be high. To minimize such risks and ensure healthy modern online systems. The country also features and safe food, the Ministry of Climate Change and a clear