Gulfood 2011 Briefing Prepared by OAA February 2011

Gulfood 2011 Briefing Prepared by OAA February 2011 atodubai@state. gov 1

GCC -- 40 Million People, Diverse Populations, High Incomes, Low Agricultural Production Population (millions) Estimated Foreign Population Per Capita GDP in $ Livestock and Crop Production % in GDP UAE 5. 5 85% 41, 200 1% Kuwait 3. 0 65% 51, 700 0. 3 % Oman 2. 5 25% 25, 100 2% Qatar 1. 5 75% 145, 300 0. 1 % Bahrain 1. 2 35% 40, 400 0. 5 % Saudi Arabia 26. 4 24, 200 2. 7% 2

The UAE is a Major Regional Agricultural Trade Hub (transit not included in import figures) 3

The UAE Imports Food from Over 130 Countries 4

UAE Top Agricultural Imports 5

U. S. Exports to the GCC-5 Have Increased Dramatically in Recent Years 6

Consumer Oriented Food Products Account for About 60 Percent of U. S. Exports to GCC-5 7

Major Market Segments 1. Retail § Business starting to recover after weak 2009, more consumers eating at home. § Hypermarkets important, but a number of smaller stores planned for the next few years, especially in the UAE. Major retail chains are focusing more on convenient stores. 2. Hotels § Overall occupancy down from two years ago as more hotels open and travel slows, but Abu Dhabi grew 2 percent. 3. Restaurants § High end under stress, casual dining and fast food still strong. 8

More on Major Market Segments 4. Catering § Sector feeds thousands of construction workers per day for very low cost. § Flight catering also significant with three major international airports and 57 million passengers in 2009. § 9 million tourists in UAE during 2009. 5. Food Processing § There an estimated 300 food processors in the UAE-meat processing, grain milling, canning, bottling, bakery ingredients, sugar refining, oilseed crushing, packaging. 9

Market Trends and Tendencies • Affected by declining oil prices, GDP growth generally slowed in 2010. • Organics slow to take hold. One dedicated retailer. • Obesity and diabetes on the rise, emphasis on healthier eating in schools. • Low fat and low calorie foods available, but not as prevalent as in the Unites States. • Eating out is very popular across the region. Chains and lower cost restaurants may do better in current environment. 10

More on Market Trends and Tendencies • Price conscious market at all levels, even luxury hotels. • Very diverse population, people from 180 countries in the UAE. Other Gulf countries not as diverse, but still have large expatriate populations. • UAE is not the Middle East, consider regional distribution for your products. • Many firms are based in free trade zones, improves flexibility for trading around the region. 11

Doing Business • Distributors dominate, surprisingly large number given the size of the market. Often looking for new brands. • Some of the larger retailers are sourcing directly. • Be prepared to help offset the cost of promoting the brand. • Listing fees are now common and expensive. • Most importers prefer to avoid the cost of letters of credit. Relationships are key. • Typical distributor mark-up is 25 percent, typical retail is 15 percent. Warehousing and real estate major cost factors. • Consolidation of products is often key to success, need to be flexible, many U. S. exporters turned off by small orders. • For new-to-market products, you are strongly encouraged to have your labels and products pre-cleared and registered with local authorities. 12

More on Doing Business • Exclusive agency agreements no longer legally enforced for nearly all food products, but distributors tend to expect a degree of exclusivity, may seek contract. • Culturally, the food import business community is dominated by South Asians and Lebanese. • For men, wait for a woman to extend her hand. If not, touch your hand to your heart and bow slightly. • Gulfood is a regional show, you will likely be meeting people from a wide swath of countries. Kazakhstan to Morocco and everywhere in between. • You can export food to Iran, provided you comply with Treasury Department requirements. 13

What you need to know about Halal • Halal is the ritual slaughter of animals in accordance with Sharia law. Seafood and dairy products don’t need Halal certification. • All meat and animal products should come from animals slaughtered in this fashion. This includes products such as rennet, gelatins, fat and other animal-based ingredients. Consider plant-based ingredients. • UAE has approved five U. S. Halal certifiers. Others currently accept any certifier, but that may change. • Halal certificates must be legalized by the embassy in the United States. • Be prepared to talk about the Halal certification of your products. 14

Policy Environment • A generally facilitative approach to trade – – Tariffs are unified and zero or five percent, higher for alcohol and pork in some countries. – Bahrain and Oman have U. S. free trade agreements and nearly all food tariffs are zero. – Alcohol and pork are banned in some countries. – UAE and Bahrain officials are perhaps the most flexible when it comes to entering products. – All currencies pegged to the dollar except for Kuwait. – Food security concerns could increase importance of UAE as regional food hub, investment abroad could generate new competition. 15

Unique Requirements • Arabic labeling required in all Gulf countries. Stickers are okay. Label/sticker contents vary slightly by country. • Production and expiry dates must be ink jetted directly on the packaging or printed as part of the original label in day/month/year format. • Product claims, i. e. lowers cholesterol, must be supported by evidence from a recognized laboratory or authority. First stop for approval is the Ministry of Health. • Certificate of health required for all products. Can be problematic for grocery items. Some countries will accept certificate of free sale, but be sure to clear with your importer. • Shelf-life issues have eased considerably in the past year as new standards allow for the manufacturer’s shelf life for most products. 16

Ongoing Policy Issues • GCC countries have been working to unify food import procedures since 2007. That process is ongoing, not clear when it will be implemented. • Gulf countries are developing a biotechnology framework. • Abu Dhabi has implemented new risk-based inspection procedures. • In UAE, beef must come from cattle that were under 30 months of age at the time of slaughter. • GCC may implement UAE Halal certifier approval process in all countries. • Many food standards under review. 17

Questions? OAA Dubai Staff will be available all week in and around the business lounge to answer questions. Mohamed Taha Simon Manoukian Rosemary Shenouda 18