Functional foods are gaining traction in the Middle East and North Africa (MENA) food market, as rising disposable incomes and increasing awareness allows consumers to make more health conscious decisions.
Functional foods have been around for a long time, with their perceived benefits being highlighted in numerous magazines dedicated to the cause, however, dissemination of information through internet-enabled smartphones seems to have made more consumers aware about their benefits.
Part of the popularity of functional foods is on account of changing demographics in MENA. As is the case in the west, Middle East and Africa is also witnessing the rise of a young, working population, who doesn’t mind to spend more on products pertaining to health and well-being.
The Middle East and North Africa (MENA) functional food market is projected to expand at a CAGR of nearly 7% during the period 2015-2020. Some of the key functional foods that are expected to witness robust demand include protein bars and biscuits made from wholegrain.
The adoption of functional foods in MENA has also got to do with the larger trend towards clean label and natural products. Awareness about why natural and clean label products are better than those containing artificial additives is strong among white-collar workers, foreign returnees, and expatriates working in the region.
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Another key trend is that functional foods have ceased to remain limited to tablets and capsules, and currently, they are being used in a wide variety of day-to-day products, such as biscuits and chocolate bars. This has increased the demand for functional foods, as most of these products are popular among kids and young population.
Globalisation has brought about a plethora of changes in the world, and food and beverage industry has also been impacted by it. Multinational food companies are now marking their presence in new markets, owing to which a wide range of products are available to the local population.
MENA region too has witnessed the entry of global food giants, owing to which the product range available in the function food sector has seen an increase. Opening of retail chains and shopping malls has also contributed to product visibility and branding activities.
As discussed previously, increasing disposable income has had a marked impact on functional food market in MENA. MENA region comprises GCC, an association of some of the world’s richest nations and high disposable incomes. For example, the disposable income of UAE was around US$ 26,000, comparable to the disposable income of U.K. population.
The functional food market in Middle East and North Africa is expected to expand at 7% CAGR through 2020, and reach a valuation of US$ 4.5 Bn. The absolute $ value opportunity of functional food is likely to represent 34.62% of the overall incremental opportunity in the MENA nutraceutical market between 2014 to 2020.
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There are a slew of opportunities in the MENA nutraceuticals market, and both multinational- and local- players are working on consolidating their position in the market. Some of the key players in the MENA nutraceuticals market include BASF, Danone, Nestle, IFFCO, Kellogg’s, Al Rawabi, NTDE, and Alyasra Foods.
Most of these companies are focusing on raising awareness among consumers on why functional foods are more beneficial than traditional food products available in the market.
Multinational players are also tying up with niche players in a bid to gain a foothold in the complex market. Niche players have a slight upper hand over global players in terms of taste and flavour preferences.