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

Step into green logistics

Step into green logistics

 

  • Defective supply chains are costing companies billions every year in lost revenue and create significant negative environmental impact.
  • Warehouses can play an important role in mitigating the environmental impacts of logistics activities through green initiatives.
  • Logistics centres being an integral part of manufacturing, the concept of green warehousing is going to be an operational norm, and should attract investment from both MNC’s and SME’s.
  • MNCs having aggressive targets of reducing carbon emissions from both mobile infrastructure and immobile infrastructure in the entire supply chain, are likely to be the prime investors in this segment.

A superior logistics system is a ‘proprietary asset’ of any organization that cannot be easily duplicated. Logistics have a pivotal role to play in making the whole supply chain experience seamless. Many organizations have begun to view business logistics as an effective competitive weapon. Although winds of change are sweeping across supply chain business the industry is becoming more complex with increased globalization and has become the centre stage of discussion.

Industry Challenge

Defective supply chains are costing companies billions every year in lost revenue. At this point there is a need for optimization, automation, risk mitigation and innovation. According to reports, around 75 per cent of a company’s carbon footprint comes from transportation and logistics alone. In such a scenario, warehouses can play an important role in mitigating the environmental impacts of logistics activities through green initiatives.

The demand for quality Logistics infrastructure is being strongly felt across all industries owing to growth in the emerging economies, the future of the warehousing sector seems bright. The driving force behind the green movement is the continuous rise in fuel costs. Moreover, growing demands from global players for green supply chain processes and the need to cut down on external and wasteful costs that leave carbon footprints in environment are other major factors driving companies to go green.

Potential investors

Logistics centres being an integral part of manufacturing, the concept of green warehousing is going to be an operational norm, as the concept will provide the much desired qualification to engage in business with the MNC’s and SMEs. MNCs in general are going to be the prime investors in this segment and have aggressive targets of reducing carbon emissions from both mobile infrastructure and immobile infrastructure in the entire supply chain. This situation demands companies to adopt green measures. This also helps in bringing long-term benefits to these companies

Where to Start?

To facilitate the Green supply chain process, a comprehensive review of operations across the supply chain and the value proposition for implementing an advanced supply chain planning and logistics solution is required. The scope of this effort includes all supply chain processes across the following functional areas:

  • Prioritize potential business capability improvements
  • Outlined technology solutions required to support these improvements
  • Implementation of a series of program and infrastructure upgrades
  • Optimization of resources,
  • Adaption of technology in different areas of warehousing,
  • Automation of order to cash processes, and outsourcing
  • Integration of warehousing with efficient transport & Distribution network systems.
  • Waste disposals & recycles

Create a Value proposition

The environmental initiative builds the value proposition of a logistics company and sets it apart from the competitors as it reflects its commitment to the environment. The benefits of undertaking green logistics and environmental initiatives include

  1. Brand building for being projected as an Eco-friendly company holding corporate social responsibility
  2. Cost management from energy savings by reducing fuel consumption and CO2 emissions resulting in efficient and sustainable supply chain infrastructure, which creates an opportunity to earn carbon credits.
  3. Human well-being index results in increased productivity of employees.

Material compliance & Automation

Implementation of Green supply chain is a challenge as it involves both automation and material compliance meeting the carbon reduction. Logistics automation has virtually made inventory paperless and the use of information technology is bringing warehouse operation towards the greener side. In addition, using construction materials that possess good strength and durability proves to be of utmost importance like the precast as it reduce the CO2 emissions. It plays an important role as the warehouse structures are expected to exist and perform over long periods of time, and hence the construction materials used should be compliant to sustainable standards to bear the long-term wear & tear and reduce the cost of replacement to a large extent. For e.g the roof structures facilitating use of solar PV, usage of skylight concepts will drive reduction in costs of alternative fuels on a year-on-year basis, insulated steel panels will ensure lower consumption through the grid and eventually play a crucial role in the green technology.

Seven steps to Green implementation

  1. Building a road map based on corporate social responsibility
  2. customer acceptance and good business sense
  3. Looking for customer competitive advantage and USP s
  4. Evaluating green initiatives in terms of cost, timescale and business case
  5. Measuring and bench marking
  6. Adopting the right green practices for Eco-friendly
  7. Design energy-efficient construction and operations in warehouses

Operational Excellence

Today, the manufacturing industry is facing a volatile economy, intense competition and rising energy / material costs. Improving operational efficiency has become an imperative not just for margin purposes, but also for long term success. Cost reduction, quality and productivity improvement have now become key levers for gaining competitive advantage. Operational Excellence is the pursuit of conducting business in a manner that continuously improves the quality of goods and services, reduces cost, and enhances speed and flexibility to achieve competitive superiority. Green Optimization of the supply chain can significantly improve company profitability and support in achieving Operational Excellence.

 

The article is written by Raghu Menon for Arab Business Review

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

Why Cash on Delivery is Good for your Business (if handled properly)

CAsh on delivery

  • Despite having one of the highest broadband penetration rates in the world, eCommerce in the UAE has not met its potential, as it merely represents just over 2% of overall retail sales.
  • Widespread use of cash on delivery and customer’s changing their mind and cancelling orders if they haven’t paid in advance, are the most cited reasons behind lower than average successful delivery rates in the region. 
  • However, a close analysis of eCommerce data gives useful insights into customer mindset, which can help eCommerce companies handle cash on delivery more effectively.

eCommerce in the UAE is not as big as it should be when you take into account the fact that we have one of the highest broadband penetration rates in the world, coupled with a population that loves to shop. Combining these two factors should make online sales as a percentage of retail relatively high, on par with standards in Western Europe and the US. However, the UAE lags behind and e-commerce still represents a very small percentage of retail sales (>2%).

One of the many reasons that commentators cite as to why eCommerce is in its infancy in the region is the popularity of cash on delivery as a payment method and the very nature of its unreliability.  Lower than average “successful” delivery rates in the region, are usually blamed on the widespread use of cash on delivery as a payment option.   This is based on the belief that people are more likely to change their mind if they haven’t already paid for it.

Courier services usually charge the seller once a delivery attempt is made, whether or not it is successful.  When the seller is reliant on cash on delivery for these items, their costs can mount before their sale has even been finalized (and cash has been received). There also remains a risk of the customer changing their mind and cancelling the order.

But does the data support these views?

Hassan Al Sayegh analyzed all the shipments we carried out in the past few months analyzing more than 15,000 eCommerce deliveries. An analysis of these transactions shows that 77% of all orders were cash on delivery. This gives us a clear insight into the market here, and its appetite for COD. Although the use of credit cards is increasing, the uptake is quite slow.

Another valuable insight is that the average basket size for a cash on delivery order is almost 2.5 times that of a credit card order (a whopping AED 439 compared to AED 176). A possible explanation for this might be that people are less inhibited, more impulsive and tend to opt for more expensive items if they don’t have to pay for them upon check-out. The check-out experience is also significantly simpler for a cash on delivery order, with no credit card details needing to be inputted, increasing the successful conversion rate of a website visitor to a buyer.

Both these elements show the criticality of introducing COD solutions to your customers to truly leverage the e-commerce scene.

Successful delivery rate

The successful delivery rate for a cash on delivery order is significantly lower than that of a credit card order. On average, 99.5% of all credit card orders received by MENAVIP are delivered to the end customer, compared to 92.5% for a cash on delivery order. Our goal is to always try to increase successful delivery rate and have introduced multiple thread of actions including the following ones.

One way that has been trialed by a number of clients is to qualify all cash on delivery orders with a phone call to the customer. Only after this confirmation is obtained is the order dispatched to the courier. A further phone call from the courier (standard practice at MENAVIP) is then made to schedule the delivery and more importantly, confirm the cash on delivery amount. Combining these two best practices increase the chances of a successful delivery substantially. One client trialed this approach and found that it increased the chance of a successful delivery from 92.5% to 96%.

In order to succeed, an eCommerce player in the region must cater to the local market, and it’s very clear that the market prefers cash on delivery. If a supplier wants to sell online in the UAE and take full advantage of a world leading basket size, cash on delivery is a must. Although the risk of unsuccessful deliveries is higher, there are ways to mitigate this: by taking a proactive hands-on approach to securing your orders by interacting with the customer prior to dispatch. Also the gains pertaining to being able to reach out to 4x the potential customer database should largely outweigh the increment of the return rate, especially if the delivery (and return operations) are being performed transparently and with a fast turn over (quick pick up, bringing products back into inventory, tracking system…).

Imagining delivery operations with the same return rate for credit card as COD along with a fast turn-around on operations and cash collection is – I believe – the true enabler of e-commerce in the region for the years to come.

The article was is written by Idriss Al Rifai for Arab Business Review

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