Processed Frozen Food in the Gulf

Processed Frozen Food in the Gulf

  • The growth of processed frozen food industry in the Gulf is driven by convenience, as more and more families are now having both partners who are full time employed there is a growing demand for quick and easy cook meal solutions.
  • Going forward the growing health and wellness trend is expected to positively influence the eating habits of consumers who will be seeking fresher and leaner meat, lower-fat chicken and gluten-free products, as well as more vegetables.
  • Frozen processed food will remain more affordable than fresh produce, hence, consumers will still be willing to purchase frozen processed food even if they have to compromise on the health benefits.

The process of freezing food in order to preserve it is an age old practice, it freezes all the moisture present in the food to ice. This in turn slows down the growth of bacteria which is responsible for food degeneration. The method is mainly used in preserving food such as meats, seafood and vegetables.

In Processed Frozen Food industry the various products are frozen at extremely low temperature (- 40 degrees) through a method called flash freezing or blast freezing. Food Products frozen in the above manner do not require any further preservative to be added. Since microorganisms do not grow at temperatures’ below -9.5 degrees and the standard for storing and transporting frozen food products is -18 degrees, the products continue to maintain their original state so long as the cold chain remains intact.

In the Gulf this is a growing category and convenience seems to be the key driver of this growth. As more and more families are now having both partners who are full time employed there is a growing demand for quick and easy cook meal solutions. Processed Frozen Food is being seen as a key category which is fulfilling this need cutting across all nationalities.

The Product Group with its various sub groups & segments is highlighted below:

Product Groups Meat Seafood Dough Vegetable
Product Sub Groups Chicken Beef Shimps Fish Flat Breads Other Dough Prod. Vegetable Others
Product Segments Chicken Beef IQF Shrimps Fish Fillets Paratha Croissants IQF Vegetables Samosas
Burgers Burgers Breaded Shrimps Whole Fish Chappati Filled Puff Pastry SpringRolls
FrankFurters Kebabs Marinated Shrimps Fateera Pastry Sheets
Kebabs Meatballs Bread Sticks
Nuggets Pizza Base
Breaded Fillets Muffins & Cakes
Meatballs
Samosas
SpringRolls
IQF Cuts

The Frozen Food category in the GCC consists primarily of the above Product Groups, Sub Groups and Segments. However based the contribution of these Sub Groups and segments may vary from country to country in the region.

While Chicken Frankfurters is the biggest category contributing almost 45% of Processed Meat Group in UAE and Oman, Mince is the biggest contributor to the group in Saudi Arabia. However between Frankfurters, Mince, Burgers, Nuggets, Breaded Fillets & Kebabs they contribute more than 75% of the Processed Frozen Meat category throughout the region.

Processed Frozen Food in the Gulf1

Processed Frozen Food in the Gulf2

Frozen Sea food is another major category in most of the countries of GCC because of the strong consumer preference for seafood like Shrimps & Fish Fillet etc. Although its contribution to the overall Frozen Food market is not as big as Meat.

In the Frozen Dough Group flat breads sell across countries in the region due to the large population from South Asia, followed by others categories consisting of Croissants, Bread Sticks, Muffins & Cakes, and Pizza Base, etc which are mainly used by the Foodservice sector. The sales of Puff Pastry Sheets is predominantly during the Ramadhan season by both Foodservice and end Consumers.

In terms of the brands that are available in GCC we can classify them as follows:

  • International Brands
  • Regional/ Local Brands
  • In House Brands

Amongst the International brands we have Sadia from Brazil at the top of the list followed by Doux from France and Emborg from Denmark offering an assortment of products. There are also a host of other international brands present only in the Chicken Franks segment from Brazil, Denmark, France, Turkey, etc.

Regional brands are those which are produced within the region and have a region wide presence, like Americana, Al Kabeer, Al Areesh, Khaleej, Al Islami, etc. Then there are some local brands that are available in a select few countries of the region like As Saffa(Oman & UAE) and number of local brands in Saudi Arabia & Qatar. These brands offer an assortment of various products mainly in the frozen meat Group.

Processed Frozen Food in the Gulf3

Processed Frozen Food in the Gulf4

A number of major retailers have also extended their In-house brands into the Frozen Food category and are gradually taking over large part of the frozen food shelf. All major regional retailers like LULU, CARREFOUR, CO Ops, PANDA, etc have now got their in house brands contract manufactured and are occupying prime shelf space, however they are restricted to their own out lets only.

Going forward the growing health and wellness trend is expected to positively influence the eating habits of consumers who will be seeking fresher and leaner meat, lower-fat chicken and gluten-free products, as well as more vegetables. Vegetables are likely to replace carbohydrates, which will boost sales of frozen processed vegetables.

Furthermore, the convenience factor will continue to drive this Segment as consumers will lead busier lifestyles and seek easier meal options. The product offering of Frozen Food is likely to see a change from the current “Ready to Cook” products to “Ready to eat” or “Heat & Eat” kind of options so we are likely to see a growth in Flash Fried products in the meats subgroup or Pre baked Parathas etc. in the Dough sub group.

Frozen processed food will remain more affordable than fresh produce, hence, consumers will still be willing to purchase frozen processed food even if they have to compromise on the health benefits. However the demand for lower-fat and organic frozen processed food items is likely to grow steadily over time.

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

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The Surge in Online Classifieds

The Surge in Online Classifieds

  • Recent data reveals that classifieds ads are migrating to the Internet. The number of printed classifieds ads in MENA is shrinking, while Arabic language online classifieds websites are booming. 
  • The shift to online classifieds has improved the experience of consumer-to-consumer and business-to-consumer selling and buying. It also created billions of dollars in value for start-up founders and their investors.
  • Globally, online classifieds is a business that is mostly local or regional, where global websites are usually of low value outside their geographical area. For this reason, the region’s homegrown online classifieds companies have high growth potentials.

If you like to get your hands dirty with an inky, fat and heavy print classifieds newspaper made out of dead trees on a Friday or Saturday morning, and circle classifieds that are of interest using that bold red pen, over a cup of coffee, then you must have noticed that the number of classified ads has shrunk. This is especially true in the autos and real-estate segments, as the volume of ads has fallen over the past couple of years and even more so during the last 12 months.

Where did the classified advertisements go? You won’t have to look far. Just pick up your computer or smart device, do a quick search, or download a regional classifieds app, and you’ll find all you’ve missed and much more.

Between 2000 and 2010, US newspaper classifieds revenue fell from $19.6 billion to less than $6 billion. In fact, today most cities in the US don’t have a classifieds print newspaper.

Europe did not need long to follow. A couple of years ago, France’s most iconic classifieds paper –which was the inspiration behind many of the classifieds prints in the Middle East– decided to stop printing. While we are yet to see leading classifieds newspapers in the region shut down, it’s easy to predict that this may happen in less than 5 years.

A look into the regional print classifieds industry reveals that business from classifieds listings has stopped growing 2 or 3 years ago, while most titles have witnessed 20 to 30 percent decline in revenues and volume of ads last year. This year seems to be following suit.

While this may be bad news for publishers who made a bet on print classifieds, and set a blind eye to the obvious shift to online classifieds, the migration of classified advertising to the Internet has been a win-win for all. This includes consumers, small and medium-sized companies, and online classifieds start-ups and their investors.  The shift drastically improved the experience of consumer-to-consumer and business-to-consumer selling and buying. It also created billions of dollars in value for start-up founders and their investors around the world, which made-up -multiple times- for the lost value in print classifieds. Despite starting mostly with a free offering, online classifieds have been able to prove their success in monetizing users infinitely more than print classifieds, in a far more scalable manner, and with much higher margins.

It is not an exaggeration that more than 50 percent of the 135 million Internet users in the Arab world rarely use a print classifieds newspaper. From a seller or service provider’s perspective, one can get immediate gratification and results by posting ads for free, or paying a small fee, to get premium exposure without having to leave the comfort of his couch or wait for the newspaper print date. For example if you want to sell your car or house, all you’d have to do is pull out your smartphone, take few photos, tick a few boxes, and boom, your advertisement would be online.

From a user’s perspective, spending hours going through print pages and circling ads, setting-up comparison tables, writing down phone numbers and waiting for next week’s edition for new options is now replaced by a sophisticated search that allows you to look for cars by brand, year, body type, fuel type, and price, get in touch by email or phone, and set-up alerts in case what a user wants is not available now, but could become available in the next minutes or hours. The same great experience applies to real-estate, jobs, electronics, services, and whatever buy/sell category you can imagine.

To understand the seismic nature of the shift that happened in the past few years, approximately 25 percent of Internet users in the Arab world have used online classifieds. This put the total audience of top regional classifieds websites at an estimate of more than 35 million users per month by mid-2014. This includes varying using habits from daily to weekly or more, which far exceeds not only the audience of print classifieds, but that of all print media in the Arab world –be it daily, weekly, or monthly.

On a country basis, a leading classifieds website in Saudi Arabia for example reaches 250-400 thousand users a day, depending on the day of the week, while the leading newspaper and leading classifieds weekly in the country prints no more than half this number on their best day. In terms of depth, classifieds websites usually have tens of thousands of postings per day, compared to a maximum of several hundred posts in the daily, and low one-digit thousand posts in weekly print classifieds.

Online classifieds have become so popular in the Arab world that in some countries the leading classifieds website is more popular than Facebook. This is the case for leading Arabic classifieds website OpenSooq.com, which is a leader in its category in several countries including Saudi Arabia, Kuwait and Jordan. With a simple, easy to use website and popular iOS and Android apps, OpenSooq is not only leading in countries that have mature online audiences, but also in countries where the number of Internet users is growing very quickly via smartphones, such as Iraq and Libya.

In expat-dominated countries such as UAE, Qatar, and Oman, English-language generic classifieds website Dubizzle has done well by focusing on business-to-consumer advertising in sectors such as real estate, offering advanced search functionalities, and a more elaborate user interface.

OpenSooq.com and Dubizzle are joined by category leaders who have focused on specific verticals, such as Propertyfinder, focused on real estate in the UAE, and Haraj, the undisputed leader in automotive classifieds in Saudi Arabia.

Globally, online classifieds is a business that is mostly local or regional, where global websites are usually of low value outside their geographical area. The sector is also usually one of the first categories to mature with emergence of regional leaders. This has been the case indeed in MENA, with the business leaders in online classifieds mostly being home-grown start-ups that are now valued at tens of millions of dollars. That’s just for starters, as they have tremendous growth potential ahead of them.  I’d advise you to keep an eye on this sector.

The article is written by Khaldoon Tabaza for Arab Business Review

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

The MENA Franchising Opportunity and Success Factors

The MENA Franchising Opportunity

 

  • The franchise economy in Middle East and North Africa (MENA) is worth $30 billion and is growing by 27% per annum. High disposable income of consumers, favorable regulations, and a young and upwardly mobile consumer market are the key factors driving growth. GCC nations are at the forefront of growing the franchise economy in the Middle East, while Egypt is the leading franchising destination among African nations.
  • Food and beverage (particularly fast food) sector is the biggest beneficiary of the growing franchise economy, while other sectors like education, maintenance and health services, are underdeveloped and are growing slowly.
  • International brands looking to expand rapidly into the MENA region usually prefer to opt for the master franchising (also called as sub-franchising or multi franchising) format.
  • A strategic entry into the franchise market of the region must also take into account the legal, regulatory, cultural, religious and social norms that define the preferences of the governments and consumers.
  • Just Falafel stands out as a success story – adopting the franchising route has this Middle Eastern start-up expand to 18 different countries with more than 900 outlets, increase its sales by 35 times, and become the Biggest Falafel Franchise in the World.

 

The franchise economy in Middle East and North Africa (MENA) is worth $30 billion and is growing rapidly. As per Middle East and North Africa Franchise Association (MENAFA), the franchise industry in the Middle East and North Africa is worth over $30 billion today, and is growing at a CAGR of around 27% annually. Concentration of high net-worth individuals, favorable regulations, and a young and upwardly mobile consumer market are the key attractions for franchisors looking to expand their operations within the region. On the other hand, the driving factors for franchises and local governments are the entrepreneurial opportunities presented by the franchising model, job creation, and the ability to inject international grade skills and processes into the economy. Further, investors also feel more confident opening a store under the umbrella of a large, multi-national corporation, as they expect franchises to respect the strict quality standards issued by the mother company, and also benefit from the well-established operating, marketing, and accounting practices of the franchisor. 

Not surprisingly, GCC nations are at the forefront of growing the franchise economy in the Middle East, while Egypt is the leading franchising destination among African nations. With a combined population of 1.4 billion, a GDP of $1.9 trillionan affluent customer base and (relatively) business friendly environment, the Gulf Cooperative Council (GCC) – Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman – presents the biggest opportunity for existing and potential franchisors and franchisees in MENA. 

GCC consumers demand exclusive, superior and high quality product, and therefore are the right target segment for international brands looking to make an inroad into the region via the franchise mode. This is clearly reflected in the fact that in GCC, more than 50% of retail sales are generated from international brands and in the leading malls the retail mix is as much as 80/20 (international brands versus home-grown).  As a result, GCC malls tend to host a department store franchisee location, e.g. Saks at Kingdom Mall in Riyadh, Bloomingdale’s at Dubai Mall, or Harvey Nichols at the Mall of the Emirates in Dubai. 

Within Africa, the Egyptian franchise sector grew from 25 international brands in 1999 to 360 in 2010 and 430 in 2012, as per the Egyptian Franchise Development Association (EFDA). The biggest drivers of franchising in Egypt have been 1) the knowledge transfer from foreign franchisors (who wish to collaborate with franchises having the requisite local knowledge); and 2) job creation – the franchise sector in the country employees more than 55,000 nationals and this number is expected to grow further in the coming years as franchisors target the upper and upper-middle classes in the country. 

Food and beverage (particularly fast food) sector is the biggest beneficiary of the growing franchise economy in MENA. Franchised and licensed business have permeated all sectors including education, transportation and tourism; however, like with the rest of the world, the franchising model has found a natural home in the retail and food and beverage (F&B) sectors.  Within the GCC countries, fast food is expected to account for 40% of the franchising market, as eating out in a part of the region’s culture and tourism practices.  In addition, the liking for U.S. style casual dining has further helped drive the entry and growth of international fast food joints in the region. 

The popular international food franchises in GCC region include Burger King, Popeye, Hard Rock, McDonalds, Hardees, Pizza Hut, Pizza Inn, Fuddruckers, TGI, Chilies, and Wendy’s, while Just Falafel is the leading example of a Middle East-based fast food chain that has expanded rapidly in the region and worldwide over the past five to seven years.  Even in Egypt, nearly 75% of franchises opt to represent retail and food brands.  Industry experts and leading franchising consulting firms expect the region’s F&B franchises to grow by >25% in the coming years, and maintain their dominance over other sectors like education, maintenance and health services, which are underdeveloped and are growing slowly.  

Interestingly, while some leading hospitality brands like Sheraton, Holiday Inn, Meridian, and Ramada have adopted the franchise route in the region, others like Hilton, Marriott, & IFA remain apprehensive because of 1) lack of faith in local franchise’s ability to maintain the brand; and 2) question mark over the model’s profitability without economies of scale.  

While the MENA franchising opportunity (especially F&B) seemvery attractive, we recommend potential franchises and franchisors to follow the below guidelines to help build a successful franchise business in the region. MENA consumers have high disposable incomes, are perceived as luxury- and brand- conscious, and seem unrelenting in pursuit of the bestthereby encouraging domestic and international franchises to set-up shop in the region. However, the region’s market is idiosyncratic and a strategic entry into the region must also take into account the legal, regulatory, cultural, religious and social norms that define the preferences of the governments and citizens of the region. 

Choose the country to enter and ensure compliance with the laws of the landMENA nations have different varying laws and ownership caps for franchisees looking to set-up operations in the respective nation. The table below from a report by DLA Piper Middle East lists the percentage of GCC- and Foreign- franchisee ownership allowed by different GCC nations. 

Apart from the ownership structure, it also important to ensure that you comply with the various franchising related laws, namely, Agency laws, Commercial codes, Companies law, Civil Codes, Judicial Procedural Code, Trade Mark law, Trade secrets/unfair competition law, Employment law, and other laws which regulate import of goods, labelling. 

Maximum percentages of ownership in the share capital of a corporate franchisee by GCC nationals and foreigners in each country 

The MENA Franchising Opportunity-2

 Source: DLA Piper Middle East

Choose the right franchising format and partners:

International brands looking to expand rapidly into the MENA region usually prefer to opt for the master franchising (also called as sub-franchising or multi franchising) format. In this format, the master franchisee, or the locally present master licensee, has the rights to further market and sell franchises within a specific territory/country. These partners or ‘franchisees’ open an agreed number of brand stores or outlets in the assigned area.  This format is best suited for sectors like F&Bretail, education, beauty services, etc., and is usually adopted by franchisors looking to establish a wide footprint in a short period of time.  However, selection of the right master franchise is extremely critical under this model, as choosing the wrong master franchise can result in break-down of the complete franchising ecosystem. 

The product or single-unit franchising format allows franchisees to sells products and/or services on behalf of the franchisor and functions independently with limited assistance. It is best suited for businesses like retailing of jewellery, apparel, and footwear.

The license to manufacture format allows franchisors to grant a license to the franchisee to manufacture products under its brand name in accordance with its specifications and quality standards to be sold in a selective market segment. 

Adjust your product/menu for cultural preferences, tastes, guidelines (including religious observance) and customer expectations. This is applicable to all sectors and countries, but is especially true for the F&B sector where companies can gain or lose market share based on their ability to adapt to cultural preferences. The strategy to offer falafels which combined the authentic falafel with global flavors like Emirati, Lebanese, Indian, Greek, Italian, Japanese, Mexican and American is one of keys to the huge success of the Just Falafel food chain (discussed in case study below).  Further, Herfy’s strategy of upsizing their chicken pieces with extra batter and adding more fries at a value price helped it displace KFC as the dominant fast food chain in the Saudi Arabia. 

Choose culturally appropriate ambiance. For example, café’s in Saudi Arabia generally have a lounge feel with segregated retail space – families and single men. 

Location, location, location: with insufficient new properties, rising rentals and property cost, it is difficult to run a profitable franchising business and attract consumer footfalls at the same time.  Therefore, it is advisable to look for older properties that require innovative remodelling and renovation. 

Build brand and goodwill by participating in philanthropic and CSR activities. Franchises and franchisors should expand the brand by interacting with the local communities, considering geographic issues, political climate, linguistic and cultural nuances, and taking CSR initiatives. 

 

Case Study:  Just Falafel – From a Start-up to the Biggest Falafel Franchise in the World

Just Falafel started what it calls the “falafel revolution”, when it was founded as a single restaurant in Abu Dhabi in 2007.  The focus at that time was on creating a 100% vegetarian falafel (a traditional Middle Eastern sandwich), that would combine the authentic falafel with global flavors like Emirati, Lebanese, Indian, Greek, Italian, Japanese, Mexican, American, etc.

However, the turning point in the company’s growth story came in 2011 when the company hired Fadi Malas as its CEO and decided to adopt the franchising model to grow. The company pitched itself to franchises on the basis of 7 factors: clever positioning, brand equity, strong growth, great reputation, commitment to quality, robust franchise system and an innovative menu. The company pushed its franchising agenda aggressively through social media platforms like Facebook. During a 12-month campaign, the company received more than 2,300 requests for franchising from 73 different countries.

Ever since, Just Falafel has grown to be the biggest falafel franchise in the world, with agreements signed with commitment of developing more than 903 outlets in 18 different countries, including rolling out 100 stores in Egypt, 200 stores in the UK, 50 stores  in Turkey, 50 stores in New York, US, and 125 stores in Saudi Arabia.

As per Malas, adopting the franchising route helped Just Falafel increase its sales by 35 times and attract USD 200 million to reinvest its brand.

Just Falafel is headquartered in Dubai, UAE, and has regional offices in UK, Egypt, Lebanon, and Turkey. It currently employs more than 400 people worldwide, including 28 in the head office.

The MENA Franchising Opportunity-1

 

Source: Just Falafel

The article was originally published at: Arab Business Review

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