Supply Chain

Management in
the Food &
Beverage Industry
 Contents:
Executive Summary ................................................................................................................... 3
Key Opportunities ........................................................................................................................ 3
Leading Distribution Channels ................................................................................................. 3

Industry Overview ......................................................................................................................... 3

Market Size & Growth Opportunities in ..................................................................................... 4
Food & Beverage Sector
Beverages Market Size ............................................................................................................... 4
Market Segmentation of Beverages ...................................................................................... 4
Food Market Size ........................................................................................................................... 5

Key Players in the Industry 2022 ........................................................................................ 6

Middle East and North Africa Industry Overview ................................................... 7
GCC and Food and Beverage Industry ........................................................................... 7
United Arab Emirates (UAE) Industry Overview ........................................................ 7
UAE Retail Market 2023 ........................................................................................................... 8
Distribution Channels in Retail Market ........................................................................... 8

Food and Beverages Retail Market of the UAE .......................................................... 8

Consumer-Oriented Market ....................................................................................................... 8
Food Processing Industry ............................................................................................................. 9
Food Retail Market ........................................................................................................................ 9

Online Grocery Stores ................................................................................................................... 10

Competition In Retail Food Industry of the UAE ........................................................ 12
Leading Exporters of Consumer Oriented Products to the UAE ...................... 13
Key Issues in Food & Beverage Market in the UAE .................................................. 13

Global Price Analysis ..................................................................................................................... 14

Food and Agriculture Organization (FAO) Price Indices ................................................ 14

Trends Driving Food and Beverages in 2023 ................................................................. 17

Clean Label & Sustainable Package ...................................................................................... 17
Functional Beverages .............................................................................................................. 17
Plant-Based Food .................................................................................................................... 17
Socio-economic trends that impact food system ..................................................... 18
Scientific-technological trends that impact food system ................................................ 19

02
Executive Summary
The food and beverage industry will undergo a dramatic transformation in 2023. Technological
advancements, such as AI-driven automation, robotics, and the Internet of Things, will enable businesses to
operate more efficiently than ever before. Consumers will have access to a wider variety of products as well
as to more personalized food and beverage experiences. The industry will also have become more
sustainable, with initiatives such as food waste reduction, water conservation, and energy efficiency
becoming commonplace.
Overall, the food and beverage industry will have become an increasingly vibrant sector of the global
economy, providing a diverse range of employment opportunities and a wealth of innovative products and
services.
Based on the report of The Business Research Company (TBRC), the food and beverage industry by 2023 will
reach the level of $8.9 trillion, coming up to a compound annual growth rate of 8.7%.

Key Opportunities
This year will bring optimistic opportunities for the food and beverage industry. The distribution channel of
supermarkets/hypermarkets is expected to have a gain of $895.4 in annual sales globally. Furthermore,
health will be the main concern for the consumers, which will drive the trends among consumers.

Leading Distribution Channels

As mentioned above, supermarkets/hypermarkets are going to lead the industry; however, e-commerce will
also be an important part in 2023. The experts have predicted it to be the fastest growing food and
beverages sector, with the Compound Annual Growth Rate (CAGR) of 13.2% for the year 2021 through 2026.

03
Industry Overview
Market Size & Growth Opportunities in Food and Beverage
Sector
Beverages Market Size
The beverage industry has been growing over the years, and as predicted by the experts, industry has a
bright future globally. The market reached the value of US$ 1,5252,8670 million in 2022 and is expected to
grow with CAGR of 1.7% and reach the net worth of US$ 1,69,1470 million by 2024.

1.7 %

2022 2028

Market Segmentation of Beverages

The global beverage market is segmented into two major categories; alcoholic & non-alcoholic.

Alcoholic Beverages
The market segment of alcoholic beverages comprises the following products: Spirits, Wines, Whiskey,
Sake & Rice Wine. This market segment was valued at the value of US $1,559 billion in the year 2022 and
is expected to grow at a CAGR of 5.5%. The anticipation is that the industry will reach the value of USD
1209 billion in 2023 and USD 1622 in 2024.

1622

1559

1498

1440

2018 2020 2022 2024

Market Size of Alcoholic Beverages In Billion USD

04
 Non-Alcoholic Beverages
The non-alcoholic beverages include fruit juices, soft drinks, coffee & tea, and sports & energy drinks.
The market was valued at USD 1337 billion in 2022 and is anticipated to grow at the rate of CAGR 5.5%
with the projected value of USD 1885 billion in 2023 and USD 1489 in 2024.

1489

1337

1202

1080

2018 2020 2022 2024

Market Size of Non-Alcoholic Beverages In Billion USD

Functional Beverages
As the awareness of body nutrition has been increasing, the demand for functional beverage has been
increasing as well. The industry was projected at the value of USD 130.51 billion in 2021, and with the
CAGR of 7% is expected to reach USD 173.23 billion by 2025.

7%

2021 2025

Food Market Size

Revenue for the food market is expected to be USD 8.9trn for the year 2023 with the expected growth of
CAGR around 6% for the period of 2023-2027. The largest share on the market segment is of
confectionary and snacks, which will be worth USD 1.64trn in 2023.
In this digital age, 8.5% of the total food revenue will be generated through online sales. Whereas the
volume growth in the industry is expected to be consistent at 5.1% in 2024 with the average volume per
person to be accounted at 240.87 kgs for the current year.

Image: https://www.statista.com/outlook/cmo/food/worldwide#revenue

05
Key Players in the Industry 2022
Revenue for the food market is expected to be USD 8.9trn for the year 2023 with the expected growth of
CAGR around 6% for the period of 2023-2027. The largest share on the market segment is of
confectionary and snacks, which will be worth USD 1.64trn in 2023.
In this digital age, 8.5% of the total food revenue will be generated through online sales. Whereas the
volume growth in the industry is expected to be consistent at 5.1% in 2024 with the average volume per
person to be accounted at 240.87 kgs for the current year.

Revenue of food market worldwide in 2022

06
Based on the last year performance, China has generated the most revenue in the industry, which is at
USD80,370 million, followed by India with USD57,250 million, Japan at USD42,360 million, and so on.

Middle East and North Africa Industry Overview

On account of economic stress, political issues, and other instabilities, the Middle East and North Africa
will be impacted greatly in the year 2023. The Ukraine war will continue to impact the market, keeping
energy and food prices high throughout the year. While this will cause the energy importers to struggle, it
can create great opportunities for the exporters. Whereas the increase in the food prices is likely to
impact every stakeholder in the market; however, with financial resources, these stresses can easily be
cushioned.

GCC and Food and Beverage Industry

The GCC region faces unique agronomic challenges due to soil composition, water scarcity, high
temperatures, and rising groundwater salinity. In order to address these challenges, hydroponics and
vertical farms have emerged as key trends for the region. These systems are being used to produce a
variety of crops, such as tomatoes, cucumber, peppers, strawberries, papayas, oranges, and rice, while
reducing water consumption by up to 90%. To further encourage local food production, new
collaborations between the public and private sectors have been developed, and delivery services are
being adapted to promote hydroponically grown local produce.

The Economist Intelligence Unit’s (EIU) Food Sustainability Index shows that Saudi Arabia and the UAE,
two GCC countries, rank in the bottom quartile of the 34 countries featured in the index due to their low
scores for nutrition and food loss and waste. This provides a strong impetus for the transition to a circular
economy in the food industry in the region.

Governments in the region are taking steps to improve soil quality, recycle green waste, and reduce food
waste. Awareness of food waste, particularly during the month of Ramadan, is increasing. New
technologies such as blockchain, IoT, and digital platforms are being explored to help reduce food waste
and loss in the supply chain. Reducing food waste is important from both an economic and consumer-
facing perspective.

The GCC region heavily relies on imports to meet its food demands and has taken steps to improve its
food security position since the 2008 food price crisis. However, it needs to regularly update its strategy
to reflect evolving risks and opportunities. The GCC has the potential to become a leader in promoting
open and efficient food trade, given its ports and access to advanced technologies, as well as the recent
developments in global trade.

United Arab Emirates (UAE) Industry Overview

UAE has held up to its status of powerhouse in 2022 and became one of the hottest places to do business
due to its geographical significance. Luckily, the economic growth predicted for 2023 seems to be
promising as well.

Based on the reports of the International Monetary Fund (IMF), the non-oil economy of UAE will grow by
4% in 2023, maybe more once the ongoing reforms are implemented. This makes UAE a fastest-growing
economy in the region, followed by Saudi Arabia (3.7%), Bahrain (3%), Kuwait (2.6%), and Qatar (2.4%).

07
UAE Retail Market 2023
According to the study conducted in 2018 by
Euromonitor, the retail market of the Gulf
countries is predicted to grow more than USD 24
billion over the course of the next 5 years. UAE is
expected to lead this trend with 16% growth
rate, reaching the value of USD 63.8 billion in
2023 from the value of USD 55 billion in 2018.

The favorable demographic of the region and a

strong economic growth projection will drive the
growth for Kuwait, Saudi Arabia, Oman, and the
UAE.

Distribution Channels in Retail

Market
From the period 2018-2023, store-based retailing
will lead the market, comprising of USD 52.7
billion. However, the other channels (non-stored
based) are expected to grow by 78% during
2018-2023. The main distribution channels for
non-store-based retailing includes mobile
internet, direct selling, social media, home
shopping, and online shopping.

The non-store retail will grow in the entire region,

with Saudi Arabia will have the biggest share
(93.5%), followed by Oman (68%), and Kuwait
(48%).

Food and Beverages Retail

Market of the UAE
UAE is a developed nation with a diverse
audience, comprising 90% of foreign nationals.
Due to the diversity, 80% of the agricultural
products of the UAE are imported; the United
States have sent about USD 1.13 billion for
agriculture and related products in 2021.

Consumer-Oriented Market
Breaking down the imports from 2021, the UAE
imported consumer-oriented products worth
USD 6.4 billion, accounting for a total of 39%
agricultural imports. Despite the market being
competitive, it is expected that the US exports in
this sector will increase.

08
Food Processing Industry
There are 568 food and beverage processors in the UAE, as recorded by the government statistics.
Combined, there is a production of 5.96 million metric tons (MT) of food products annually, with 2.3 MT of
staple food items. In 2021, USD 4.3 billion worth of bulk and intermediate products were imported, and
5% of these were from the USA.

Food Retail Market

The sales in the grocery retail industry exceeded the amount of USD 24 billion in 2021. This sector is
dominated by several retailers that hold the maximum share in the UAE market. Additionally, E-
commerce sales are increasing swiftly, reaching USD 4.8 billion in 2021.

Food retail holds the largest share in the UAE retail market and is forecasted to remain dominant in the
coming years. The food retailers are divided into two categories; modern and traditional. The modern
category comprises of regional grocery chains, express markets, hypermarkets, convenience stores,
specialty grocers, and online grocers. Currently in Dubai and Abu Dhabi, modern trade is leading the
market.

09
On the other hand, the traditional trade includes small standalone grocery stores and direct trading
services. These channels cater to the immediate household needs, accept phone-in orders with no
delivery charges. This type of trade is more common in the areas of Dubai and Nothern Emirates. The
grocery sales in this sector in the UAE make up 44.4% of the total retail market.

Online Grocery Stores

As mentioned earlier, E-commerce sales in the UAE has reached USD 4.8 billion in 2021. The products in
the food and drinks categories had the third-highest share with 10.8%, which is valued at USD 515 million.
This is mainly due to high income, increased internet penetration, better logistic networks, and an
increasingly tech-savvy population. The major online stores in the UAE include Farzana, NRTCfresh,
Good Basket, Farmbox, and Kibsons.

In addition to these, some of the conventional retail stores are also offering online shopping options, like
Carrefour, Spinneys, Choithrams, and Lulu. Some retailers are also selling using third party websites, such
as Amazon, El Grocer, and Instashop.

Here are some of the leading major retail channels in the food sector:

10
11
Competition In Retail Food Industry of the UAE
The retail market of the UAE is highly competitive and is saturated with local, regional, and imported
products. In short, there are diverse products in the UAE market; however, there is more potential for
dairy products like cheese, animal proteins, and fresh fruits. Based on the predictions by the regional
retailers, the demand for products like fresh food, meat, milk, plant-based foods, natural and organic,
kosher, and free form will increase in the coming years. This trend is fueled by global food trends,
increased incomes, and consumer awareness.

12
Leading Exporters of Consumer Oriented Products to the UAE
The total exports of consumer-oriented products to the UAE have reached the value of USD 10.8 billion.
The top 10 countries that are exporting the consumer-oriented products to the UAE includes:

Key Issues in Food & Beverage Market in the UAE

Despite the predicted growth opportunities in the region, there are some market access issues that might
cause trouble for the retailers. The main ones that the retailers should be ready for include the rise in the
input cost, monopolistic environment by big retailing companies, and unregulated imports creating
issues for local businesses.

13
Since 2017, we have seen a growing trend in F&B grocery market in the UAE; however, still the
manufacturers and the suppliers in the Food & Beverage sector have been running in loss. This has led to
a decrease in investment and innovation in the sector, causing hinderances in industry growth.

Global Price Analysis

Food and Agriculture Organization (FAO) Price Indices
The FAO Global Food Consumption Price Indices (FGFCPIs) is used to track changes in the price of basket
of food commodities on a monthly basis. The calculation is based on several measures; Food Price Index
(FPI), Calorie-based FGFCPI, protein-based FGFCPI, FAO Cereal Price Index, FAO Vegetable Oil Price
Index, FAO Dairy Price Index, FAO Meat Price Index, and FAO Sugar Price Index.

14
Calorie-based Index
In September of last year, the Calorie-based FGFCPI reached 135.2 points on the index, which was a
slight fall from its value at the beginning of the year. This decline was due to the increase in the prices of
wheat and vegetable oils. However, despite the decline, the number is still higher than in comparison to
previous years because of high prices of grain and vegetable oil.

The Protein-based FGFCPI followed the footsteps of calorie-based value and dropped down to 135.5,
which happened as a result of large decline in grain, oilseed, and fish prices.

Food Price Index (FFPI)

In October 2022, the FAO Food Price Index (FFPI) remained virtually unchanged from the previous month.
The Cereal Price Index was the only group to have an increase, while the indices for vegetable oils, dairy,
meat and sugar decreased. Since March of the same year, the FFPI decreased by 14.9%, but was still
2.7% higher than in October 2021.

Cereal Price Index

In October, the FAO Cereal Price Index increased 4.4 points (3.0%) compared to September, and 15.2
points (11.1%) higher than a year ago. Prices of all major cereals rose, with wheat prices increasing 3.2%
due to uncertainties of the Black Sea Grain Initiative and lower production prospects in the US and EU.

Coarse grain prices increased 3.5%, led by a 4.3% increase in maize prices due to reduced production in
the US and EU. Sorghum prices increased 3.0% due to the strength in maize prices, while barley prices
rose 0.3% due to higher global supplies. Rice prices remained on an uptrend, but the monthly price
increase was limited to 1.0%.

15
Vegetable Oil Price Index
In October, the FAO Vegetable Oil Price Index
decreased by 1.6%, standing nearly 20% lower
than its year-earlier level. The decline was caused
by lower palm, soy, and rapeseed oil prices, which
more than offset rising sunflower oil prices. Palm
oil prices were lowered due to high stock levels in
Southeast Asia, while soy and rapeseed prices
dropped due to expectations of ample supplies.
Conversely, sunflower oil prices rose due to
uncertainty over the future of the export corridor
in Ukraine.

Dairy Price Index

In October, international prices of all dairy
products covered by the FAO Dairy Price Index fell
by 1.7%, marking the fourth consecutive monthly
decline. The main contributors to this drop were
lower-than-expected purchases by China and
lackluster demand for spot supplies, as well as the
weakening Euro against the US dollar. Despite this,
demand for some dairy products in other countries
in Asia increased and avoided further declines in
dairy prices. Nevertheless, the index remained
15.4% higher than a year ago.

Meat Price Index

The FAO Meat Price Index decreased for the
fourth consecutive month in October, with all
types of meat registering drops, mainly due to
currency movements, seasonally increasing
supplies, weak global import purchases, and high
current supplies. Ovine meat prices dropped the
most, while bovine, pig, and poultry meat prices
also fell, due to reduced demand and production
expansions hindered by high feed costs and avian
flu outbreaks. However, the index was still 5.8
percent higher than the previous year.

Sugar Price Index

In October, the FAO Sugar Price Index decreased
by 0.7 points (0.6 percent) from September, and
10.1 points (8.5 percent) from the same month in the
previous year. The positive global supply outlook,
along with improved production prospects in
India, were the main causes of the decrease in
sugar prices. Despite this, the sugar prices were
kept from dropping further due to increased
import demand from Indonesia and China, as well
as higher ethanol price quotes in Brazil, which led
to a greater use of sugarcane for ethanol
production.
16
Trends Driving Food & Beverages in 2023

Clean Label & Sustainable Package

Clean label products are one of the most expected
influential trends in the industry since people are
now becoming more aware of eating clean and
healthily. Food products with no additives,
preservatives, enhanced flavors, or dyed food will
not be a trend that the industry will be focusing on,
in response to the changing consumer pattern.

Functional Beverages
Functional beverages are another trend that can
take over the industry in the coming years, as
people are looking for more specialized formulas
to keep their bodies hydrated and maintain
nutritional balance. As a result, many food
companies are introducing functional drinks, like
juices that offer water balance, weight
management, and other health benefits.

Plant-Based Food
As people are becoming more health conscience,
plant-based food and beverages are also becoming
a vital trend in the industry. This market is expected
to grow at a CAGR of 9.28% in the next few years.
The growing market for this trend includes Europe,
North America, South America, Asia Pacific, and
East and Middle Africa.

17
Socio-economic trends that impact food
system
It’s no surprise that 2023 will come with various challenges; and even the food and beverage industry is
not immune to it. The climate stress, social, and health problems are causing national populations to be
more concerned about the food origin, its production method, and the environmental impact.

The popularity of circular economy

The circular economy is a way of thinking about the food industry that takes into account the
environmental impacts of production, repurposing of products and packaging, and recycling. This
involves a broad set of stakeholders, from producers to retailers, and encourages them to consider the
entire food system.

Focus on National Food Security Strategies

Government-led food security strategies are influencing trends in food production and supply chains by
determining the size of strategic reserves and land acquisition strategies. These strategies set the
amount of food produced locally and the amount of food that needs to be imported, as well as the
composition of food produced locally.

Trade War Warnings

As trade tensions rise between the US, China, Canada, and the EU, the importance of alliances and
regional-based trade agreements is growing. Tariff wars are having a disruptive effect on the food
sector, which is heavily dependent on trade. China has found alternate suppliers for soybeans, beef, and
cotton, previously imported from the US.

Trend of sustainability targets on national and corporate level

Companies, governments, and NGOs are setting ambitious performance targets to promote
sustainability. Food companies will be held accountable for their actions, which will impact how food is
produced and distributed. Agriculture is a major contributor to global greenhouse gas emissions, making
it an integral part of sustainability efforts.

Developing sustainable capital

The UN Environment Program is working on a framework to account for externalities in food production
in order to create a more accurate pricing system. This includes valuing natural capital such as water
and biodiversity in order to measure and disclose environmental impact and climate risk.

Increasing corporate involvement in food sector

In the early 2000s, two companies had a large control over the global banana trade, but recently, seed,
fertilizer, and chemical companies have been merging and creating a monopoly in the grocery sector.
These actions are driven by economic reasons, as the food system needs capital and research and
development. However, the implications of this trend have led to questions of who owns the intellectual
property created and if consumer health and safety is being prioritized over profits. New competition
from discounters and online retailers could disrupt this trend.

18
Scientific-technological trends that
impact food system
These concerns are shaping the food industry trends along with the current economic condition. In the
section below, we’ll be covering some of the major scientific and technological factors that are most
likely to rule the industry in coming years.
The farmers and food companies continue to strive and look for better ways for food production. After
the 4th industrial revolution, these are some of the emerging trends related to technological
advancement that will lead the agri-food economy in the coming years.

Technology-enabled food production

AI, robotics, and data management are some of the most significant developments in food production.
These technologies allow for precision agriculture, enabling better management of plant and animal
health, water and nutrient needs, soil health, and weeds. Research from Cornell University has shown
how AI can detect certain diseases with 98% accuracy.

Use of Climate-Resilient Crops

The International Center for Tropical Agriculture (CIAT) projects that climate change will cause crop
yields to decrease by more than 10% by 2030, and more than half of crops will experience a similar
decline beyond 2050. Additionally, research suggests that rising CO2 levels are leading to a decrease in
important nutrients like iron, zinc and protein in staple crops like rice and wheat.

Controlled Systems for Food Production

Controlled systems such as hydroponics, aquaponics, and aquaculture farming are becoming
increasingly popular due to the potential for higher yields with fewer resources, including labor, land,
chemicals, and water.

Regenerative Agriculture to Control Carbon

Regenerative agriculture is an approach to farming that focuses on using natural processes to increase
soil health and carbon content. This is achieved by reducing or eliminating the use of industrial
chemicals and fertilizers, and by employing practices such as crop rotation, composting and animal
manure. These practices help to increase soil biota diversity, build deeper plant root systems, and retain
water. Ultimately, this helps to ensure that carbon is essential to agriculture.

Minimizing the use of antimicrobials for food-producing animals

Anti-Microbial Resistance (AMR) is a major global public health threat, increasing the difficulty of
treating diseases like HIV, malaria, and tuberculosis. To combat this, there is a need for better
stewardship of antibiotics in livestock and aquaculture, as misuse is a major factor in the emergence of
AMR. The WHO has called for increased scrutiny of food system practices to address this issue.

Supply Chain Transparency with IoT and clean labels

Food producers, processors, and distributors are responding to consumer demand for greater
transparency by introducing new product labeling initiatives such as smart labels, microscopic electronic
devices, and genetic markers. Barilla, an Italian food company, is using smart labels to allow consumers
to track an item's journey from farm to store shelf by scanning its QR code with a mobile phone.

19