Gulfood, the world’s largest annual food and hospitality event, opens today in Dubai’s World Trade Centre. More than 4,800 companies from 120 countries are touting their wares with an eye on the burgeoning populations of the Middle East.
This year is the 20th incarnation of the international food festival, with its 120,000 square metres of space dwarfing Gulfood’s beginnings in 1987, when 65 companies from 13 countries had just a 2,000 square-metre space to exhibit products.
The UAE is a significant importer of food and relies heavily on exporting nations to deliver its foodstuffs. The biggest exporter of food to the country is China, closely followed by India. But for countries large and small – and whether they are new exhibitors or old – the Middle East is where the growth is.
Peru, for example, is making its fourth visit to the event after posting a massive 250 per cent increase in exports to the region from 2013 to the end of last year. Its exports to the Middle East are mostly fresh fruit and vegetables. However, it is trying to change the region’s seafood buying habits, which centre mainly on salmon and hammour, to include octopus, scallops and squid, each of which it has in abundance. But while the country’s exports to the region have nearly tripled, the total figure is still insignificant when compared with its global exports.
“Food exports to the Middle East region jumped 250 per cent from 2013 to 2014, but that still only accounted for US$5 million worth of produce,” said Alvaro Silva-Santisteban, the director of the trade, tourism and investment office of Peru in Dubai. “Peru exported $1.5 billion worth of food products last year, with 40 per cent going to North America and 45 per cent to Europe. The Middle East is important for us in terms of diversification of our markets. We can help with our superfoods, that are good for the diabetes problem here.”
France and Australia, two countries that have been present at the event since it began, will be exhibiting, with three new countries joining them this year – Estonia, Monaco and Uzbekistan.
The event has 700 companies on its waiting list to join the food bonanza, and the growth figures reported by previous exhibitors bear out the opportunity.
“France is very active on all GCC markets,” said Francois Sporrer, the French trade commissioner to the UAE.
“For instance, Saudi Arabia is considered the largest export market for French companies in food and beverage products, with $937m in 2013, showing an increase of more than 21 per cent compared to 2012. In 2013, France exported about €350m (Dh1.45bn) of agro-food products, a growth of 78 per cent compared to 2010.”
But the world’s two most populous countries still lead the way.
“The biggest exporter of food to the UAE is China, with more than $4.1bn worth of products in 2014,” said Rand El Samman, a communications officer with Euromonitor International. “Then comes India with about $3.5bn, then our Middle Eastern neighbours with $2.3bn, closely followed by the US with $2.2bn.”
Meanwhile, Saudi Arabia’s Aujan Coca Cola Beverages, which makes and distributes Rani and Barbican drinks in the Middle East, plans to invest US$500 million over the next three yeas in the regional beverage industry, the company said yesterday.
Aujan, which is participating in this week’s Gulfood show in Dubai, plans to invest in capacity expansion, a greater geographical coverage for its drinks and in brand development, the firm said yesterday.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Company profile
Name: Tratok Portal
Founded: 2017
Based: UAE
Sector: Travel & tourism
Size: 36 employees
Funding: Privately funded
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The bio
Studied up to grade 12 in Vatanappally, a village in India’s southern Thrissur district
Was a middle distance state athletics champion in school
Enjoys driving to Fujairah and Ras Al Khaimah with family
His dream is to continue working as a social worker and help people
Has seven diaries in which he has jotted down notes about his work and money he earned
Keeps the diaries in his car to remember his journey in the Emirates
The years Ramadan fell in May