Keeping prices down amid Red Sea tensions is a struggle, say supermarket chiefs

UAE food companies have expressed concerns about keeping the cost of food down as the conflict in Gaza and tension in the Red Sea drive up prices. The soaring costs of insurance and containers, along with the expenses of diverting ships, and the resulting effect on supplies, are expected to exacerbate the situation, food representatives said. The National spoke to supermarket chiefs on the opening day of the Gulfood trade show. They said they are trying to keep prices stable but they might have no choice but to raise them if the situation continues. One of the UAE's leading supermarket chains said prices could rise in the second half of 2024. “During the pandemic in 2021 and 2022, food prices went up,” said Rajiv Warrier, chief executive of Choithrams. "But now there is a risk of prices going up again due to the impact of what is happening in the region between Israel and Gaza, as well as the Red Sea tensions. “If the situation takes more time, then we might see an increase in food prices by the second half of the year. It could impact inflation.” His company has more than 700 food brands in the GCC and 85 shops in the region, including 55 in the UAE. “There are problems with food delivery time because of trade routes," Mr Warrier said. "The goods have to go to longer routes to deliver the food to different parts of the world. “Another problem is the demand increases because there is a shortage of some products. “There is already an impact in terms of supply, cost and availability.” He said that products such as milk, oats and cereals are delivered from Europe and the US through his company to stores in the UAE, Bahrain and Qatar, but the current situation could soon affect prices. Yemen's Houthi rebels began attacking ships in the Red Sea, one of the world's busiest trade routes, late last year. The attacks were launched in response to the conflict in Gaza, with the Houthis promising to continue their offensive until Israel stops its attacks. Another leading UAE supermarket chain explained how it is was finding a solution to the issue by looking East to avoid issues with the Red Sea route – but it could also lead to increasing prices. “It is a global matter, affecting everyone,” said Saleem VI, chief operating officer of the Lulu Group. "We have sourcing offices in countries such as China, Philippines, Indonesia, Australia and Malaysia, which means we don't necessarily have to go through the Red Sea. “The shipping and insurance companies are increasing the costs because of changing the routes, and it might affect the food. “We have six months' store of food in the UAE and we are flying a lot of products in too.” Rakesh Jha, general manager of Al Maya Group, which operates supermarkets all over the GCC, said the conflict was causing a delay of up to 25 days for supplies. “It is a real concern for us. There is an increase in the cost of shipment. We are trying to navigate the matter,” said Mr Jha. “We are holding the prices as we keep three to four months of stock aside for all products, but we are monitoring costs.” He said the firm may have no choice but to eventually raise prices. Ashvin Subramanyam, chief executive at food production company Orkla India, said it was also seeing a delay in deliveries because of the conflict. “We have some concerns in getting the food," Mr Subramanyam said. "There is delay in the timing of deliveries. Container dispatch normally take 30 days but recently the time has expanded to 45 days. “There is a spike in logistic costs. At some point, we have to look at pricing options.” Gulfood is taking place at Dubai World Trade Centre until February 23.

Keeping prices down amid Red Sea tensions is a struggle, say supermarket chiefs

Insurance and container expenses add strain for food companies, along with supply concerns