Export Opportunities to the GCC from Mauritius

Agenda

• The Socio-Economic Overview of the GCC

• Drivers of Opportunity

• Future Developments

• The UAE as a Hub for Regional Expansion

• Key Sectors for the UAE

• Market Entry Strategies

The Socio-Economic Overview of the GCC

How has the GCC Performed ?

2007 2008 2009 2010 2011 2012 2013

Non-Oil Growth 9.7 7 3.3 5.1 8.7 6 7.9

Oil & Gas Sector -2.9 3.8 -4.2 4.3 6.8 0.7 0.5

GCC Economic Growth 4.2 5.7 0.3 4.8 8 4 5.2

-10

-5

0

5

10

15

20

25

Per

cen

tage

Budget Surplus

-15

-10

-5

0

5

10

15

20

25

30

Bahrain Qatar Oman UAE Kuwait KSA

200920102011201220132014

Inflation Rates in the GCC

-10 -5 0 5 10 15 20

Bahrain

Qatar

Oman

UAE

Kuwait

KSA

2014

2013

2012

2011

2010

2009

2008

Per Capita Income

A Young Population

The GCC a Mix of Cultures Consumer Segment Dining and Shopping Preferences

GCC Nationals • Spend time with family at hotels and malls • Eat traditional foods • Increasingly attracted to Western fashion

Western Expatriates • Eat out at malls and hotels • Open to new concepts and experimentation

Asian Expatriates • Spend time in malls with family and friends • Eat healthy and light • Attracted to items from country of origin

Arab Expatriates • Buy mostly Middle Eastern products • Eat healthy and light

Business Travelers • Dine in upscale environments, such as hotels

Leisure Travelers • Arab leisure travelers look for moderate novelty in upscale environments • European leisure travelers are open to diverse products

Consumer Spending and the Internet • Internet users in GCC grew by more than 2000% from Dec 2000 to Jun

2012. • Arabic is the fastest growing language on the Web with a penetration rate

of 18% worldwide. • Saudi has the highest number of YouTube views in the world per Internet

user. • Facebook users in the Region increased by 50% between Jun 2011 and Jun

2012 • 27% of marketing budgets were allocated to digital in 2012, up from 22% in

2011, with potential to increase by at least 20%. • By 2015, Ecommerce in the GCC will have grown to USD 15 billion up from

USD 3.3 billion in 2010. • Saudi and UAE are the World’s leaders in smartphone penetration at 60%

and 61% respectively

Factors Affecting Purchases

The Drivers of Growth

GDP Growth Expectations in the GCC

Population Growth Expectations in the GCC

Highly Technology Sophisticated Consumers

Agricultural Imports

Food Security

The Future Developments

Expo 2020 • Legacy – Dubai will have a museum, extension of the metro, infrastructure etc.

• 33 million visitors over the 6 month period of which 25 million will be overseas visitors

• Natural beneficiary is the hospitality sector also allied sectors such as public transport services, restaurants, retail trade, transport and telecommunications stand to gain from the Expo.

• Revenues from hosting World Expo 2020 could reach Dh130-140 billion transforming the composition of the emirate’s GDP.

Increased Construction to 2020

MOHAMMED BIN RASHID AL MAKTOUM CITY

The Palm Gateway

The Opera District

Halal Economy • The Ruler of Dubai announced that the emirate will be the center of

the global halal trade.

• The global halal food business is probably the next best developed after the financial sector, with a value of $685 billion (Dh2.5 trillion), of which $83 billion is attributable to the GCC countries.

• The Organisation of Islamic Cooperation (OIC) is to formulate new halal regulations and codes for cosmetics and perfumes to be implemented in all Islamic countries, and it is working for these standards to also be adopted by other countries.

Leisure and Hospitality Industry • Dubai Parks and Resorts, a Meraas Holding company, has

announced plans to develop a zone themed to DreamWorks Animation characters within motiongate Dubai, a Hollywood inspired theme park taking shape in Dubai.

The UAE as a Hub for Regional Expansion

Economic Performance in Surrounding Areas

Dubai - Road Based Logistics

Dubai - Air Based Logistics

Dubai - Sea Based Logistics

Dubai – Multi-Modal Logistics

Dubai - Rail Based Logistics

Rail Connecting the GCC to Europe, Africa and Central Asia

The Sectors of Opportunity

Fresh Food(Agro) • Dubai is the world’s largest center for the re-export of fruit and

vegetables with trade of over AED 12 billion in 2013. • Key export markets are regional as well as to central Asia • Chilled processed food packaging unit volume sales increased by 5%

in 2012, as consumers increasingly shift to convenient and easy to prepare food. Population growth is likely to push sales.

• Grocery retailers saw a number of trends during the second half of the review period, with these fuelled by the country's economic and population growth. Overall outlet volume increased by a steady 1% per annum over 2010-2012

• Demographic trends driven by the influx of Western expatriates are expected to slowly shift consumers’ preferences towards industrially packaged processed and away from loose products sold over-the-counter.

Sea food • There is a strong seafood processing industry that imports white fish from

Vietnam, prawns from regional markets for exports to high value countries such as EU; USA etc.

• The seafood industry also adds value by cleaning and freezing the seafood so that it can be readily be used by the food service sector. Typical examples include breading fish for use by restaurants.

• Basamh Marketing Co with its brand Al Alali led sales in Saudi Arabia with a 20% retail value share in 2012. The brand is the leader in the biggest subcategories such as canned or preserved fish as it benefits from the big brand equity built over the years. The reason for the popularity of the brand relies on the fact that it offers a good price-to-quality ratio as this is a price-sensitive market, and it is more affordable than international brands such as those from John West Foods Ltd and Bolton Alimentari Spa.

• The local seafood sector is very fragmented and is highly informal.

Furniture • Furniture and homewares are naturally expected

to be the beneficiaries of the Dubai real estate market. However, they need to be tailor made for the needs of the hospitality and leisure sector. Market entry requires working with interior designers in this sector.

• For consumer segment market entry requires working with the key furniture stores.

• there is an increased demand for garden furniture and accessories in both countries

Textiles • The UAE is major re-export center for textiles in

the regional markets as well as to Central Asia.

• The market for non-branded products is highly price elastic.

• Fashion styles and tastes in the GCC, the regional market and central Asia are very different to those in the west.

• Firms need to work very closely with importers and distributors

Tea

• 60% of the global tea trade is through the Dubai Multi-Commodities Center.

• The UAE is a major tea re-exporter to Central Asia

• There is a huge market for specialty and high quality tea in the GCC. This will require sophisticated packaging and branding.

• The hospitality and leisure segment is a potential market for high class tea.

Import Restrictions • Gulf standard GSO 9/2007 and GSO 150/2007 for labeling

and shelf life as its domestic standards. • Labeling regulations: Gulf Standard GSO 9/2007 is the

current GCC adopted labeling standard. While the UAE has accepted English-only labels in the past, bi-lingual labels are now required. Arabic stickers and labels should be legible and show, at least, the following information: – 1. Product description; – 2. Ingredients; – 3. Country of origin; and – 4. Net weight – 5. Expiry date

Import Process • Pre-shipment approval of:

– Food Labels - Copies of labels need to be sent. When approved, the products bar code will be added to the municipality’s list of approved products. Product registration is also required.

– Products - Officials will analyze a product to determine compliance with food ingredient standards. Costs involved vary, depending on the type of product and ingredients. Laboratory testing is required on first consignments.

Packaging and Container Regulations

• GS 839/1999, adopted as UAE Standard #839/2000, addresses “General Requirements for Food

• Packages – Part I. The standard stresses the need to use suitable materials that protect the integrity of

• the food, its wholesomeness and characteristics. GSO 1683/2008 Food Packages Part II was issued to address general requirements for plastic packaging.

Food Additives Regulations

• 1. GSO 23/1998: Regulates the use of food coloring additives.

• 2. GSO 356/94: Regulates the use of food • preservatives. • 3. GSO 357/94: Regulates the use of antioxidants. • 4. GSO 381/94: Regulates the use of emulsifiers,

stabilizers and thickeners. • 5. GSO 707/96: Regulates the use of flavors. • 6. GSO 995/1999 Sweeteners permitted for use in food

products

Other Regulations

• All imported food products must be accompanied by: – An original health certificate issued by the appropriate

government agency in the exporter country attesting to the product’s fitness for human consumption.

– For meat and animal products, an original Halal slaughter certificate issued by a GCC-approved Islamic Center is required. Attestation by either the UAE Embassy is not required.

– Commercial Invoice – Bill of Entry or Airway Bill – Packing list – Country of Origin Certificate

Market Entry Strategies

SWOT Analysis Strengths • Huge markets with high personal disposable incomes. • Competitive prices in the market place for all target

products. • Transport costs are low especially for sea bound freight

and with increased number of flights between the countries will reduce future rates.

SWOT Analysis Weaknesses • High level of delays due to geographical distance hence an inventory needs to

be maintained in the UAE for the country itself as well as for Bahrain. • Poor operational inefficiency in small scale operations as there is a minimum

scale of production. This is one of the reasons that many of the smaller firms may find this market difficult. As a result we actually believe that the initial focus should be on promoting the output of larger firms that are ready for exports. In time these large firms can act as agents for smaller firms and export on their behalf.

• The products from Mauritius are starting on a very low base and a number of consumer awareness raising events need to be carried out to educate UAE and Bahraini firms and households of the quality of products from Mauritius.

• Exports from Mauritius require a long term marketing strategy and commitment from the companies.

SWOT Analysis Opportunities • Growing demand for alternative products especially in the case of fruit

and vegetables, furniture etc. • Large hospitality sector that can support the fruit, vegetables and

wooden products sectors. • A high level of tourist flow into KSA (for haj) and UAE and hence

marketing activities will have wider benefits. • Expanding activities of Emirates, Etihad and Saudi Arabian Airlines.

Working with the inflight catering divisions of these companies can lead to increased regional awareness of products from Mauritius.

• Fresher and more convenient than importing if the fruit and vegetables are frozen with shelf life of over 6 months.

SWOT Analysis Threats • The ability of other countries to imitate Mauritius’ strategy and hence

branding is very important so as to differentiate the products. • Inflationary factors which may drive up the operational costs

(especially the cost of freight which is based on current oil rates). • Subsidised output from certain countries lowers their cost • The geographical distance implies that suppliers will need to keep

stocks in the UAE • Initial entry is only viable for large scale producers from Mauritius so

as to ensure supply chain efficiencies which means that smaller scale producers may not benefit from the initiative.

• The risk of not being able to find an appropriate distributor / JV partner

Market Entry Strategies

• Exporting • Licensing • Franchising • Joint Ventures • Partnerships • Strategic Alliances • Foreign Direct Investment

Market Entry Pathway

Market Entry Matrix

Market Entry in a Digital World

Ease of Doing Business Rankings

Thank You

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