UAE residents' 2011 food bill to be Dh28bn

The UN describes 73 per cent of the UAE population in 2005 as economically active, forecast to rise to 78.6 per cent by 2015. (FILE)

The UAE residents will spend Dh28.3 billion ($7.71bn) on food items this year. But growing population and increasing per capital income is expected to push spending on food-related items by a nearly a quarter to Dh35.2 billion ($9.59bn) by 2014, according to a study.
 
Research firm Business Monitor International said in a report that fhe UAE’s mass grocery retail (MGR) sector is one of the Gulf region’s largest by value, with sales forecast at $5.38bn in 2011 and accounting for 69.8 per cent of the total food and drink market. The value of the UAE’s MGR sector is forecast to rise to $6.92bn by 2014, when it should account for 72.7per cent of the overall food and drink market. 

Strong underlying economic growth, increasing household consumption, growing acceptance of modern retailing concepts and expatriate wealth will boost UAE retail sales from an estimated Dh79.19bn ($21.56bn) in 2011 to Dh103.40bn ($28.16bn) by 2015 – an increase of 30.5 per cent, it said.
 
The UAE’s nominal GDP in 2011 is predicted to be $299.1bn (approximately Dh1.1 trillion), with growth of 3.9per cent predicted for the year. BMI predicts average annual GDP growth of 3.9 per cent between 2011 and 2015. With the population  increasing from an expected 4.8m in 2011 to an estimated 5.2m by 2015, GDP per capita is forecast to rise by the end of the forecast period to $74,391.

Average household spending power in the UAE stands at $14,400 per annum, according to property consultants Colliers International. Emirati households account for the lion’s share of this spending, with an average of $23,000, while Western, other Arab and Asian households have annual spending power of $19,500, $13,500 and $10,000 respectively.

While Emiratis contribute to retail sales, the buying power of the country’s expatriate residents is the major source of success, according to a study by Indian research firm RNCOS. Tourism is also a massive factor in stimulating retail growth, with the UAE expecting the number of tourists to have totalled more than 11mn in 2010.

Growing urbanisation is another factor in the buoyancy of the retail sector. Abu Dhabi in particular is highly urbanised, with the Urban Planning Council (UPC) projecting that Abu Dhabi City’s population will rise to 1.3m by 2013. In 2005, 85.5 per cent of the UAE’s population was classified by the UN as urban and this is forecast to have increased to 86.3per cent in 2010.

The UN describes 73 per cent of the UAE population in 2005 as economically active, forecast to rise to 78.6 per cent by 2015. In 2005, just over 30 per cent of the population was in the 20-44 age range crucial for retail sales, and this is expected to hit 56 per cent by 2015. 

Retail sub-sectors predicted by BMI to show strong growth over the forecast period include over-thecounter (OTC) pharmaceuticals, with sales expected to increase by more than 30 per cent, from a forecast $0.32bn in 2011 to $0.42bn by 2014.

With the luxury car market in the UAE growing on the back of rising levels of disposable income, automotive sales are forecast to rise by more than 20 per cent, from an expected $12.84bn in 2011 to $15.45bn by 2014.

Sales of consumer electronics are expected to increase from a forecast $3.28bn in 2011 to $3.91bn by 2014, a rise of more than 19 per cent. The UAE’s consumer electronics market is one of the largest in the Gulf, accounting for close to 40 per cent of regional spending and serving a potential market of almost 2bn people across Asia and the Middle East.

Food sales, forecast to be worth $7.71bn in 2011, are expected to increase by 24.4 per cent to $9.59bn by 2014. The UAE’s mass grocery retail (MGR) sector is one of the Gulf region’s largest by value, with sales forecast at $5.38bn in 2011 and accounting for 69.8 per cent of the total food and drink market. The value of the UAE’s MGR sector is forecast to rise to $6.92bn by 2014, when it should account for 72.7per cent of the overall food and drink market.

Retail sales for our set of Middle East and Africa (MEA) countries in 2011 are predicted to amount to $196.69bn, based on the varying national definitions. Total consumer spending for the region based on BMI’s macroeconomic database is forecast at $722.41bn. In 2011, BMI predicts that South Africa and Israel will together account for an estimated 56.8 per cent of regional retail sales, and their combined share is expected to rise to 57.2 per cent by 2014. For the UAE, the estimated 2010 market share of 10.3 per cent is expected to reduce to 10.1 per cent by 2014.


 

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