Food makers seek organic growth from healthy trend

UAE is credited with leading the way in region with its awareness of need for better nutrition.

DUBAI. 24th February  2010. Khalid Hajjar, Regional Manager for AlYasra Food Company at their stand at the Gulfood exhibition in Dubai yesterday(weds)  Stephen Lock   /  The National  FOR BUSINESS
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DUBAI // Health-conscious shoppers have sparked growing interest in selling organic foods across the Middle East and the UAE wants to play a key role. The IFFCO Group, which is based in the UAE and is one of the largest food makers in the region, is to introduce organic products within six months.

And the Kuwait-based food maker Al Yasra Food will invest between US$50 million (Dh183.6m) and $100m to expand its organics division in the UAE over the next five to 10 years. Mostafa Sidki, the managing director of IFFCO, produces brands including Noor cooking oils and Tiffany chocolates, said an increasing number of shoppers were looking for more nutritious alternatives. "We do see the awareness is increasing," Mr Sidki said. "Mothers are more keen to feed their kids much healthier products. Definitely, there is an overall increase in the awareness towards harmful chemicals, towards pesticides and artificial colours."

Al Yasra is relocating the global centre of its organics division to Dubai because nutrition awareness is highest in the Emirates, said Khalid Hajjar, the manager of the company's organics division for the MENA region. "In the organics market, the UAE is probably one of the most sophisticated markets," Mr Hajjar said. "Consumers are more sophisticated and understand the concept and the benefits very well. So this would be a great launching pad."

Mr Hajjar estimates that the organic food market across the GCC is worth $300m a year. Shonil Chande, a food and drink analyst with the UK-based research firm Business Monitor International, said he expected growing demand for organic food products. "There are two main factors here: high incomes in general and health consciousness is rising," Mr Chonde said. "I think that all indications are that it will be a growth market."

Mr Sidki said IFFCO was aiming for 10 per cent of its products to be organic in the next five years. Mr Hajjar said Al Yasra was also looking into establishing an organic food factory in the UAE or Kuwait within the next six to eight months. The company also plans to invest in converting farms in the region to organic cultivation and sell their produce under its brand, he added. Al Yasra is also working to establish an organic certification body in the region, possibly in the UAE.

"The idea is to set the standards GCC-wide and hopefully Middle East-wide," Mr Hajjar said. "Just as you have in the UK, you see the Soil Association stamp or whatever and you know that product has been through the process in order to be called organic." But one stumbling block for organic producers is the price. A survey by the online market research company YouGov last year showed that 21 per cent of UAE residents were no longer buying organic foods. Of the 33 per cent who said they had not bought organic food at all, two-thirds blamed the high cost.

Mr Sidki anticipated that IFFCO's organic products would be priced between 15 and 25 per cent higher than its conventional products. "Organics have been way overpriced for the consumer and this has limited the market sector in general," he said. "Yes, it will command a premium, but not that overpriced." Del Monte Foods UAE has looked into selling organic products to the region, but was deterred by high shipping costs and small quantities, said Virginie De Beco, the company's marketing manager for MENA.

"So far it is still at the beginning of the trend, but for sure in the future when the acceptance will be higher the price will be going down as well," Ms De Beco said.