The Middle Eastern retail market presents huge potential for global fresh fruits and vegetable providers to sell top quality produce at a premium, especially berries, provided exporters can guarantee supply consistency and find the right local partner.

According to local retail research, opportunities are ripe in countries like the United Arab Emirates (UAE), Egypt and Saudi Arabia.

Dubai in particular offers great growth prospects thanks to its burgeoning tourism sector and a booming population that is driven by a diverse community of expatriates, including westerners, Arabs and South Asians.

"The greatest opportunity in this region, especially in the UAE, is the consumer appetite for high quality or luxury produce because the current standard of quality is relatively low," a Dubai-based Middle East retail analyst, who wishes not to be named, tells www.freshfruitportal.com.

"Fresh, produce has an average shelf-life of a few days, depending on the fruit or vegetable, and certainly a much shorter shelf-life than in those markets where the product is grown," the analyst explains.

With the Middle East having to import the vast majority of its food, shelf-life apparently plays the biggest role in consumer purchasing decisions.

As such, it is thought that consumers would be willing to pay a premium if international suppliers can deliver a premium offer with great quality, flavor and freshness as close to just picked as possible.

"There is definite demand from retailers for really high quality produce," the Dubai analyst claims.

Patricia Johnson, a global food and drink analyst at Mintel, agrees.

"Rising incomes and demand for luxury ingredients is opening opportunities for premium meal options," she says.

However, not all consumer groups within the region have the same attitude toward paying a premium.

"The South Asian expats are more price sensitive whereas the Western and Arab expats are more price elastic and therefore more willing to pay extra," the Dubai analyst points out.

Johnson corroborates, adding that expats and affluent consumers are having a 'profound influence' on the grocery selection in supermarkets, as well as the local food culture.

"Young and affluent Western food-loving consumers are driving growth and demand for imported goods and foods in the Middle East," she says.

In particular, young populations, increased foreign exposure and large expat populations are increasing the demand for Western-style foods at foodservice and retail.

But in order to succeed, the Dubai analyst says exporters must not only deliver top quality produce but guarantee consistency in their supply.

In addition, the winning combination is to find a local importer or distribution partner that has the ability to maintain the cool chain for your produce, given that selling direct to most retailers in the Middle East is not feasible.

"Selling direct to a retailer in the Middle East depends on the scale of that retailer," the analyst explains.

"Spinneys for example has the scale to buy direct from big suppliers but the majority don't, so you need a local partner such as Barakat or Kibsons."

Market research also suggests that fresh produce suppliers to the Middle East need to offer creativity in terms of packaging.

"Retailers are looking for different packaging formats that can create growth," the analyst notes.

In the berry category for example, consumers would resonate well with smaller-sized and pre-packed options that are ideal for children’s lunch boxes.

Demand is high for fruits and vegetables

Food consumption is expanding in the Middle East due largely to the region’s population influx, its rising GDP and the growing interest in eating healthily.

"There is a general focus on health, plus there is a high diabetes issue among the local population so healthy eating is becoming more of a concern," says the Dubai-based analyst.

Fresh fruit and vegetables currently account for 22% of retail sales in the UAE, with berries – blueberries, raspberries and strawberries – representing the largest growth category.

Convenience and e-commerce slowly emerging

In general, the retail landscape remains stable and growing in the Middle East, according to market research, given that local families wholly own or hold a share in most retail players.

Over the next five years most UAE-based retailers are on target for expansion via new store openings.

Kantar Retail iQ forecasts that Carrefour alone will grow its UAE store portfolio to 58 outlets by 2018, up from around 37 stores currently.

"Carrefour, which started with hypermarkets, is now looking at rolling out new store formats like neighborhood stores that are more closely aligned to a convenience offer," the Dubai analyst reveals.

However, although local research points towards growth for convenience retailing in the Middle East, there are some limitations.

"There is very little in terms of convenience store development in the Middle East as grocery operators tend to prefer to open larger format stores initially," explains Planet Retail global research director Robert Gregory.

"The Sultan Center and Spinneys operate c-stores and while it is expected that these formats will become more popular the forecourts will continue to play a growing role in the future."

Likewise, although e-commerce is technically available in the region, interest among consumers is apparently not yet at the same level.

"Many shoppers in the Middle East still prefer to go into a store to choose their food," points out Gregory.

"Also, many households have maids so shopping in stores is not an issue because the maid can visit the grocery store on a daily basis."

Despite the slow take-up, a number of different food retailers are starting to roll out a home grocery delivery service in the Middle East.

Géant, which operates a couple of stores in the UAE, is already offering online shopping, while a handful of stand-alone online food delivery businesses have also been established, including Fresh 2 Door, Ripe, and Talabat.

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