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United Arab Emirates Food and Drink Report Q4 2008 (Business Monitor International) Market: Food and Drink Published Date: 10/11/2008 Market Research Report Title: United Arab Emirates Food and Drink Report Q4 2008 Table of Contents: View Table of Contents Report Type: Market Report Country: United Arab Emirates Number of Pages: 58 
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Summary: Both international and local chains have continued with their investments into the UAE’s food and drink sector, despite the global economic downturn. In June, American coffee and baked goods chain Dunkin’ Donuts opened its largest commercial kitchen in the Middle Eastern region, located in the UAE emirate of Sharjah. This new facility will allow Dunkin’ Donuts to supply its kitchens with fresh deliveries twice daily and will facilitate the company’s plans for rapid regional expansion. Dunkin’ Donuts is currently the largest coffee and baked goods chain in the world, and has been present in the Middle East for over 10 years. Following a series of expansions, it has established a network of over 50 outlets in the UAE alone.
In late 2007 it announced that it will invest AED10mn (US$2.72mn) in its Middle Eastern operations over the next three years. With this latest investment the company is making clear its commitment to the regional market, as it faces growing competition from both international and local players.
One such competitor is Dubai-based Blends and Brews which announced in August 2008 its plans for rapid expansions, both regionally and internationally, on the back of local success. The company plans on launching outlets in all key locations in the UAE, with 20 new coffee shops planned by the end of 2009.
Blends and Brews, which is a part of the Thumbay Group, has said that its first wave of expansions will concentrate on the Middle East and Far East, but that it eventually hopes to expand to Europe as well.
As incomes have been rising and the region has become increasingly Western influenced, the popularity of Western-style coffee shops has grown. With the oil-driven economic boom of recent years, consumers are increasingly finding themselves able to spend more on non-essential food and drink items, thus driving the growth of premium coffee drinks. An increasing number of expatriate workers and tourists are also driving a shift towards more Westernised consumption methods and a rise in premiumisation and health consciousness that will be the main avenues of growth for coffee sales. Both Dunkin’ Donuts and Brews and Blends are pursuing these expansions on the back of the popularity of Western-style coffee shops.
However, it is not all smooth sailing ahead, as in August it was revealed that dairy firms in the UAE are struggling with a shortage or fresh milk and are turning instead to skimmed milk powder as an alternative.
This problem has been exacerbated by the heat of the summer months, during which time cows produce less milk. With prices driven up by this shortage, coffee chains will be seeing the effects on their profit margins.
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