AMI returns to Seattle this week after 4 days of exhibiting at the Gulfood 2010 trade show in Dubai, U.A.E.. Despite major economic obstacles currently faced by the majority of the world, the U.A.E.’s economy is strong and growing. Food and beverage products will continue to be one of the country’s largest imports. With a desert climate lending to unsuitable farming conditions and a booming hospitality and food service industry, the U.A.E. must rely on the importation of food and beverage products to sustain over 400 hotel kitchens, 11,000 high-end eating establishments, 450 franchise restaurants and an ever-growing fast food industry. Moreover, the country’s fast food and casual dining divisions are expected to enjoy growth of double digit proportions in 2010, resulting in higher demands for imported foodstuffs.
At the Gulfood show, AMI witnessed strong interest from Middle East food and beverage buyers looking to broaden their product lines and pioneer novel western food and beverage trends in the U.A.E., Saudi Arabia, Israel, India, North Africa, and other promising markets. Buyers flocked to the Big Train booth to sample our blended iced coffees, fruit tea smoothies, and chai teas, as iced and blended products are ideal refreshments for these arid regions.
Another notable observation is that many of the Middle East’s young professionals seem to be looking to unleash their entrepreneurial skills and open coffee shops, restaurants, and other hot spots where locals and tourists can escape from the heat and enjoy a refreshing iced beverage and delicious, innovative food. With menus consisting of mostly traditional items, novel foodstuffs give added value and appeal.
Another AMI client, Taylor Brothers Farms (producer of dried prunes and prune products), was also very popular at the Gulfood show. With a local production of dates, raisins, and figs, consumers in this part of the world are very familiar with dried fruits because of their convenience factor and longer shelf-life compared to fresh fruits in hot conditions. Taylor Brothers Farms’ prunes represented a new addition to dried fruit and nut traders’ product lines. Several prominent traders from the Middle East, North Africa, and as far away as Thailand and Indonesia came to visit our stand and buy products. We also drew a lot of attention from bakeries and chefs from many of Dubai’s top hotels for use in cakes, pastries, and other creations.
Other noted U.A.E. food trends include frozen foods (appealing because of their “locked-in freshness”), foods and beverages with added health benefits (antioxidants, probiotics, etc.), convenience items (quick and easy foods with a long shelf life), and energy drinks.
The U.A.E. and surrounding Gulf markets promise to be prosperous markets for AMI’s food and beverage clients in 2010 and beyond.
The Future of Europe: What U.S. Food & Beverage Exporters Need to Know
The pressure for fiscal discipline is great in Europe. Particularly among the PIIGS members (Portugal, Ireland, Italy, Greece and Spain), there are rising debt levels, high unemployment (18.8% in Spain last month), diminishing global competitiveness, and the potential need for a financial bailout of these members from stronger EU countries such as Germany and France.
U.S. exporters have enjoyed a weakening U.S. dollar vs. the Euro in the past several months. As recently as November 25 U.S. exporters were giving thanks to a Euro of US$1.51. The euro is currently at about US$1.35, a 9-month low and 8% decrease from its recent high. This directly impacts the price of U.S. exports in Europe, and causes not only our products to be less competitive but also EU importers to seek alternative sources of supply (for example Asia and Latin America). Given the debt crisis in Europe, a slower economic recovery than the U.S. and most other markets, and the expectation that the European Central Bank (ECB) will raise interest rates later than the U.S. Federal Reserve, U.S. exporters should expect the weakening Euro trend to continue.
Given this scenario, what strategies should U.S. exporters employ? Firstly, there is a need to diversify away from a Euro-centric export view to new, higher-growth markets such as Asia and the Middle East. Second, all costs in the export supply chain should be reviewed critically: are you receiving the lowest possible freight rates? Are your products classified correctly in the EU, thereby minimizing duty rates? Are you loading all fixed costs into your export products, or do you view exports as a marginal business which is incremental to your corporate P&L?
Finally, and most importantly, have you assessed your current distribution partners in the EU? Are you certain that existing partners in Europe are promoting your products effectively given potentially higher price points? Are you maximizing your EU distribution to gain critical mass and hence lower your market pricing?
U.S. food and beverage exporters today face a new paradigm in global markets. Consumers and the retail trade change more frequently, and products come in and out of favor quickly. Exporters need to be aware of these changes and affect them positively rather than allow these changes to impact them adversely. By being pro-active and staying ahead of the inevitable market changes, U.S. exporters will enjoy long-term, sustainable success and higher sales.