Growth of the Indian Basmati Rice Market in the Arab World

Growth of the Indian Basmati Rice Market in the Arab World

  • Basmati rice is grown in the Indo-Pak subcontinent and is considered the most preferred variety of rice consumed in nearly all parts of the Arab world.
  • Due to the phenomenal growth in sales the Indian basmati market has moved from being just a commodity to being a branded commodity.
  • Indian basmati continues to enjoy a robust growth in the Arab markets, especially in the traditionally non-basmati markets like Jordan, Lebanon, Egypt, Iraq etc. This trend is likely to continue in the next few years and thereby offers tremendous opportunities for the rice traders in the region.

Rice has been a staple grain in Arab cuisine for ages. This is true not only for the Gulf Arab states, but also for the Levant (also known as the Eastern Mediterranean) and other Arab markets. The region has fulfilled its needs for rice largely from the Indo-Pak region, Egypt, and Thailand. Each of these rice growing regions provides rice of different varieties with varying properties and is thus used for different dishes. But the most popular variety of rice consumed is the basmati from India/Pakistan because of its distinct properties.

Some of the common properties of Indian basmati rice are:
  • Non-sticky, fluffy, remains separate after cooking
  • Elongates almost double on cooking
  • High volume expansion
  • Possesses the natural fragrance (aroma) characteristic of basmati
  • Easily digestible
Basmati rice is grown in the Indo-Pak subcontinent and is considered the most preferred variety of rice consumed in nearly all parts of the Arab world. It is used for making a number of dishes that are an integral part of Arab cuisine. Also a large number of the spices used in Arab cuisine are also those emphasized in Indian cuisine. This is a result of heavy trading and historical ties between the two regions, and also because many South Asian expats live in the Gulf Arab states.
Some of the common rice dishes in the Arab world are Mandy, Bukhary, Kawazy, Zurbian, Chicken Biryani, Mutton Biryani, Fish Biryani, Vegetable Biryani, Pulao Biryani, and plain rice both white and Sella (parboiled). Although Indian basmati rice has been the hot favorite of the Arabs of the Gulf Region, over the last few years we are seeing a phenomenal rise in the consumption of it in the Levant countries. The below chart elucidates this trend in the region.
Growth of the Indian Basmati Rice Market in the Arab World1
Growth of the Indian Basmati Rice Market in the Arab World2
Source: DGCIS Annual Export/APEDA
One of the reasons for this changing trend is the return of a number of native people who have been living in the Gulf back to their home countries, these people have developed a taste for dishes like Biryani—for which basmati is the most suitable rice.
The consumption of Indian basmati is also growing in the traditional basmati markets of the Gulf and Iran. This trend is likely to progress with the passage of time as people in the Arab world are likely to continue to patronize the Indian basmati rice and consumption continues to grow.
Due to the phenomenal growth in sales the Indian basmati market has moved from being just a commodity to being a branded commodity. There has been the emergence of a plethora of brands in this category across the Arab world. Tilda was the first mover in this direction immediately after the first gulf war in 1991. It has been the dominant player since then despite the entry of other brands like India Gate, Dawat, Kohinoor, Himalyan Crown, Indian Star, Dunar, Radikal, and Raindrop to name a few.
The entry of these new brands has also fragmented the Indian basmati rice market with most players bringing in more than one variety of Indian basmati. While Tilda was selling only the traditional Indian basmati, India Gate came into the market with a new variant called 1121 Indian basmati. While the former offered aroma as the key product attribute, which is most suitable for plain steamed rice and green peas pulao, the latter offered elongation post cooking (2.2 times the raw grain size) as the USP (unique selling point)—which is very suitable for all types of Biryanis.
The other brands like Dawat, Kohinoor, Dunar, etc. came in offering multiple variants of Indian basmati, which can be differentiated by the different packaging colors. Indian basmati is also sold in different forms with each country having its own market dynamic. While the lower gulf markets like the UAE, Oman, Qatar, Bahrain, and Kuwait are raw rice markets, the other markets like KSA (Kingdom of Saudi Arabia), Iraq, Yemen, Lebanon, Jordan, etc. are parboiled rice (also called Sella rice) markets. Parboiling is obtained by steam boiling the rice paddy before processing. This makes the cooking of various dishes like Mandi, Khabsah, etc. much easier.
Indian basmati continues to enjoy a robust growth in the Arab markets, especially in the traditionally non-basmati markets like Jordan, Lebanon, Egypt, Iraq etc. This trend is likely to continue in the next few years and thereby offers tremendous opportunities for the rice traders in the region.

The article is written by Subbooh Moid for Arab Business Review

To read more thought-leadership stuff by leaders from Arab Region, please visit Arab Business Review

Caution is the word of the day GCC Economies

Caution-GCC Economies

 

  • We live in an interconnected world and geopolitical developments in Ukraine and Syria are bound to add volatility in global geopolitical environment and influence small and large economies around the world.
  • Further, the economic environment is undergoing an unusual shift, through unorthodox and new policy making in Japan, US and Europe.
  • In such a situation small sized GCC economies, which are also dependent heavily on commodity prices and transit of goods, should exercise caution, and not get swayed by the rosy pictures stock markets around the world are painting.

 

Recent events in Ukraine and the long term unresolved situation in Syria have been the source of many questions about long term effects to the geopolitical and economic environment. Needless to say we live in a very interconnected and globalized world and such events are bound to add to an increasing volatility in the global geopolitical environment that is bound to influence economies around the world. 

Such events come on the back of a very unusual economic environment whereby we are witnessing the unfolding of unorthodox and new policy making: Japan’s monetary policy, Fed’s unwinding or fiscal stimulus, the Euro ever present crisis and a US stock market that seems to no longer relate to the real economy. Therefore, regardless of the personal opinions we may hold on any particular event it is necessary to process these events and reconcile their potential effects with the economic decisions that we make today or that we plan to make tomorrow.

CAUTION is therefore the word that comes to mind when I reconcile geopolitical events in progress with economic indicators coming out of several G7 economies. And therefore CAUTION applies to smaller size economies like the UAE or the GULF that are much dependent on both commodities prices and transit of goods. The recent over-subscription of the Dubai IPO of Marka is a sign that ought to be evaluated carefully.

I would like to motivate my CAUTION advice by aggregating some key facts from around the globe as it is often difficult to cut through the clout of main stream media and especially the halo effect of the new Dow Jones records. Following are some of the warning signs around the globe:

  • Japan: Abenomics shock economic therapy is generating concerning effects: the plunging yen has crushed the Japenese purchasing power in spite of the growth in the stock market may have given the illusion for someone to get richer. The recent 15% correction may make the illusion disappear, especially if the USD/JPY breaks below 102. At the end all that will be left for the Japanese people is a soaring energy bill and ever increasing food prices. Japanese wages have been falling for 22 straight months with a fall of 0.4% in March only. In the latest news, Sony slashes profit outlook by 70% thanks to Abenomics.
  • China: The official Chinese PMI index misses expectations. As a correlated ripple effect: Australian PMI (greatly correlated to China) declined by more than 3 percentage points to its lowest point in nine months (6 consequent months of contraction);
  • USD: While the Dow Jones seems to continue its rally some of the fundamentals of the US economy don’t seem very rosy, signaling once again a strong decoupling between the stock market and the “real” economy. The below data doesn’t give us much confidence in US consumer spending and overall US demand.
    • During the “recovery” period 2010-14 employment gains have taken place only in low-wage industries while during the recession employment losses took place mostly in high to mid wage industries
    • While the US population has kept growing since 2007 there are approximately 1.3 million jobs less
    • 20% of US families don’t have at least a family member employed
    • Consumer spending for durable goods in the USA has dropped 3.23% since last November 2013
      • Lower-wage industries constituted 22 percent of recession losses, but 44 percent of recovery growth.
      • Mid-wage industries constituted 37 percent of recession losses, but only 26 percent of recovery growth.
      • Higher-wage industries constituted 41 percent of recession losses, and 30 percent of recovery growth.
    • As of today 56% of US citizen own subprime credit
    • 90% of the jobs in the USA pay an average of less than 35,000 USD per year
  • Ukraine: the instability is bound to generate a more rigid contraposition between Russia on one side and the USD & Europe on the other. While sanctions so far have been more formal than substantial the rhetoric is increasing on both sides and there may be instability pass onto the economic system increasing its volatility and impacting energy prices.
  • EU parliamentary elections: while the EU periphery keeps on evidencing clear signs of weakness (Italy, Greece, Spain, Portugal) new elections are looming. Word from the street is that parties against the EURO are gaining significant strength and are bound to acquire a sizeable stake in the new European parliament. If that turns into reality there may be some hard questions put on the plate of the European Union leadership and whether fundamental union regulations are to be readdressed.

Therefore, CAUTION must be the word of the day. In the post 2008 world we have accepted as systemic a much higher volatility index which makes it a bit more difficult to evaluate wider base economic and stock market swings. We just need to analyze the speeches of the heads of the Central Banks to realize that they are leaving for themselves wide arrays of options sometimes at odds with each other. Economic indicators are more difficult to read. In such an environment positions should be short, optimism measured and cash an invaluable asset to give investors the ability to ride with profits both the “bull” and perhaps the “bear” coming our way. 

Sources:

http://economyincrisis.org/content/all-sign-point-to-a-servant-economy

http://www.nelp.org/page/content/lowwagerecovery2014/

http://time.com/2742/nearly-half-of-america-lives-paycheck-to-paycheck/

http://www.bls.gov/news.release/ocwage.nr0.htm?_ga=1.73666065.22471688.1396473081

 

The article is written by Luca Gorlero for Arab Business Review

To read more thought-leadership stuff by leaders from Arab Region, please visit Arab Business Review