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Trends > Emerging Markets

Eyeing new horizons in North Africa and the Middle East

By Caroline Scott-Thomas , 03-Jan-2013
Last updated on 03-Jan-2013 at 13:07 GMT

Companies are looking for growth in new markets
Companies are looking for growth in new markets

Young, self-confident and increasingly wealthy populations in North Africa and the Middle East offer big opportunities for food and beverage firms – but there are risks too, according to ingredient company Wild GmbH.

Wild has manufacturing, storage and distribution facilities all over the world, and completed construction of a plant in Dubai back in 2006, with the aim of shortening product development times and providing a one-stop solution for local customers. Since then, it has seen increased interest in introducing new products in Middle Eastern and North African markets.

Wild GmbH managing director Mark Lotsch told FoodNavigator: “It is a very interesting market for us. There are many young people in these countries compared to the average age in the Western world. In some countries, 50 or even 60% are under 25 years old.”

Incomes are rising, and greater access to money, along with greater national self-confidence across the region, has brought market opportunities for local companies and multinationals alike. While consumers are interested in many of the same products that are available in Western countries, they are also looking for their own brands – brands that reflect their own national character and tastes.

Parallels can be drawn with what has happened in South America, Lotsch says, where Big Cola is a major cola brand designed to rival multinational products. Similarly in Africa and the Middle East, shops stock a plethora of fizzy soft drinks in flavours that would be familiar in Europe, such as orange or lemon, but many are under local brand names.

Alcohol-free opportunities

Alcohol-free beer-style malted beverages are another area of particular interest, he says.

Although alcohol-free beers in Europe may contain 0.5% alcohol, this is not possible in markets with largely Muslim populations, so manufacturers need to create true alcohol-free malted beverages with 0.0% alcohol.

“This is quite a huge market,” Lotsch said.

Tastes are varied, and such drinks range from mild to dark beer flavours, to carbonated soft drinks that contain a relatively small amount of malt flavour, perhaps with fruit flavours like pineapple.

Preferences are different from one country to another, but generally products tend to be sweeter across the region, compared with European or North American foods and beverages, and mouthfeel may also be different for some foods, often thicker.

‘With opportunity comes risk’

However, while international supermarket chains are pushing into the region and international brands are becoming accepted within local diets, political instability continues in many areas.

“Opportunities lie in all these markets, but with opportunity comes risk,” said Lotsch.

“If you go back 20-25 years in Eastern Europe it was exactly the same…What we are doing is to find solutions and work together with local customers because they also want to have a successful business and they understand the local people.”

For food and beverage manufacturers looking to launch products in North Africa and the Middle East, Lotsch advises finding and using local partners, carrying out careful research of the market, and being aware that there will be setbacks along the way.

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