The UAE hosts over 2,000 food and beverage manufacturing companies, generating $7.63 billion (AED28 billion) in annual revenue, constituting 25% of the country's manufacturing GDP, and ranks second only to the oil and gas industry, reported Wam, citing a report.

The UAE Food Beverage Business Group (FB Group) in its Annual UAE Food Industry Report for 2023, offering a detailed look into the thriving landscape of the food and beverage sector across the country.

The report analysed consumer preferences, the changing retail landscape and demand in each food segment on the backdrop of ever-evolving inflation rates and price fluctuations in the Middle East and African markets.

The report also underscored the urban trade universe's strong growth, emphasising key trends shaping the industry, the increasing importance of affordability in consumer brand choices.

Notably, the snacking and bakery categories are leading growth, surpassing overall sector expansion.

Despite price hikes, consumer preferences lean towards indulgent categories, indicating sustained demand for premium products. The report also highlights the dynamic growth of smaller players within the industry, outpacing market leaders.

The report encompasses insights from the Nielsen retail survey reflecting shifts in consumer spending patterns and consumption behaviour.

The findings were categorised into 7 FB baskets, with Ambient Food, Snacking and Bakery outpacing the overall FB market growth rate, with the bakery category growing over 50%.

The snacking category, chocolates, and biscuits are exhibiting robust growth and chocolates are leading at a 20% growth rate, driven by popular brands.

Meanwhile, the beverage segment saw remarkable growth in the UAE, with the sports drinks segment leading at 15%, despite an overall increase in soft drink prices by 134%, a trend being that small players in the beverage market are outperforming industry leaders.

The ambient food category has seen the much-anticipated recovery post-pandemic, with sub-segments such as eggs, cooking oil, and Desserts growing at 18%, 30%, and 21%, respectively, with all categories seeing price growth.

The survey further found that the dairy segment is growing at a rate of 16% on the back of increasing awareness among customers of the importance of balance and a healthy diet.

Meanwhile, the frozen food category, while experiencing slower overall growth, saw Frozen Meat as a standout, growing at 18%, outpacing the segment, driven primarily by price upgrades.

Finally, the Baby Food industry faces a paradox as inflation boosts topline growth through increased product prices, yet consumption declines due to a preference for mother feed and homemade alternatives, coupled with decreasing birth rates, necessitating industry adaptation to evolving market conditions.

Saleh Lootah, Chairman of the UAE Food Beverage Business Group, said: "The 2023 Annual Report reflects the resilience and dynamism of the UAE's food and beverage sector. The sustained growth in key segments and the emergence of smaller players as significant contributors underscore the industry's adaptability.

“As we navigate evolving consumer preferences and economic factors, the report serves as a valuable tool for stakeholders to make informed decisions and foster continued growth."

The report also sheds light on emerging trends, such as the decline in baby food and infant formula, the growth of organic baby food brands, and the increasing importance of affordability in consumer brand choices.