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02/08/2017 - 07:00hs
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UAE hot drinks market on the rise

An Apex-Brasil study shows revenue from sales of items such as teas and coffee going from USD 774 million to USD 1 billion. The leading supplier of green coffee to the UAE, Brazil is looking to increase specialty coffee sales.



Ludovic Maisant/Hemis Fr./AFP

New cafes are opening across the UAE

 

São Paulo – The hot drinks market in the United Arab Emirates will go from selling USD 774.5 million in 2015 to USD 1.01 billion in 2019. The information is from a study released by the Brazilian Export and Investment Promotion Agency (Apex-Brasil), which shows that demand for specialty coffees, including organic ones, and health- and well-being-promoting teas will increase.

The study “United Arab Emirates Coffee and Tea Market” shows that the UAE imported USD 302.4 million worth of coffee and tea in 2015, and that Brazil was the third biggest supplier, with a 6.91% market share. Sri Lanka was the top exporter with a 31.9% share, and India ranked second at 21%.

“We rank third in hot drinks, but when it comes to raw (green) coffee we are the market leader,” Apex Market Intelligence coordinator Igor Celeste told ANBA.

Brazil is a key player in the UAE hot drinks market especially as a supplier of raw, roast and instant coffee. The intention, however, is to cater to growing demand for other items, such as specialty and higher value-added coffees. The study points out some ways to achieving that, and Apex is working towards it.

Celeste explains that the agency has an agreement with the Brazilian Specialty Coffee Association (Associação Brasileira de Cafés Especiais - BSCA) for overseas promotion in countries including the UAE. Specialty coffee exports to the UAE by Apex-Brasil-backed companies went from USD 396,000 in H1 2016 to USD 1.4 million in H1 2017.

“We have quality product, all we need is better insertion in that region,” said Apex Market Intelligence analyst Ulisses Pimenta regarding specialty coffees.

Another strategy mentioned by Apex specialists for increasing Brazilian market share in the UAE coffee market would be to have companies active there do the roasting, or else to have the exporting company to do it there. The study shows that although the local roasting industry is small, it expanded in the ten years through 2015 as nine new players entered the market.

According to Celeste, roasting the product locally helps cut down distribution times – which means Brazilian coffee would reach the stores fresher. The study explains that local roasting is primarily an initiative from baristas striving to keep the coffee fresh, since consumers are more demanding and knowledgeable about coffee.

Alexandre Rocha/ANBA

A Dubai shop window with Brazilian coffee on offer

Outlets specializing in coffee and tea are growing in number in the UAE, as are minimarkets and convenience stores in gas stations. But hypermarkets still handle the bulk of distribution – they accounted for 46.2% of sales in 2015. Supermarkets answer to a relevant 36.1% share, and small retailers handle 14.9% of product sales.

Celeste reveals that Brazil already supplies cafés in the UAE, and that there’s room for Brazilian enterprises to open their own points of sale there. Ulisses Pimenta remarks that the UAE are a country that’s open to foreign companies, with goods from all over the world available, streamlined registration systems, VAT exemption etc.

Besides its relevant domestic consumption numbers, the UAE are a reexport hub for hot drinks and other items. In 2015, it exported USD 368.7 million worth of coffee and tea, 42.7% of which was sold to Saudi Arabia. Russia, Kuwait, Oman and Qatar were other major buyers.

Teas

The study points out that although coffee takes the lion’s share of hot drink sales in the UAE, it is slowly losing ground to tea and other powder-based hot drinks. Coffee is a traditional drink in Arab countries, but expatriates are bringing in their own habits, such as drinking tea.

Celeste claims the UAE market is largely influenced by expatriates’ consumption habits. In 2015, expats made up 88% of the population, and therefore tea-drinking is on the rise. Brazil is not traditionally a supplier of tea, but it does sell the product. Yerba matte, for instance, is currently sold to China, according to Pimenta.

The Apex-Brasil survey also shows that young, high-income consumers are responsible for the expansion of the hot drinks market and the introduction of new product varieties. Manufacturers are offering different flavors, ingredients and packaging. New products include fruit tea, italian coffee and hot drinks with added vitamins and minerals, according to the study.

*Translated by Gabriel Pomerancblum

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