Gulf Foods 2022: UAE consumers expect 10-20% drop in food costs, but keep an eye out for chocolate from Europe

Prices of processed food and sweets from Europe and Turkey remain high and are expected to rise further due to the ongoing energy crisis in Europe. “Prices have gone up by 20 percent,” said Kreol Group CEO Lal Arakulath. (This could mean Emirati consumers will have to spend more on chocolate and any other sweet treats they might be planning ahead of Christmas…)

Higher gas and electricity costs paid by European farmers are gradually being reflected in cocoa and other key imports from the EU. “Unless the EU provides agricultural subsidies, we expect it to go further in 2023,” Arakuras said.

But Emirati food importers looking east can only see prices fall back, especially after a surge in container freight rates in 2020-21 and more recently after the Russian-Ukrainian conflict erupted for staples such as wheat and corn.

Freight rates soared to $1,150 per TEU due to a global shortage of containers, causing severe disruptions to food supplies. Dhananjay Datar, Chairman and Managing Director of Al Adil Group, said: “Freight rates have returned to US$475 per 20ft container, reducing transportation costs. Fuel prices have also stabilized. In addition, the Indian rupee is also depreciating against the US dollar. These factors have led to Imported food prices have fallen in major hubs.”

Datar expects food import prices to fall further as freight rates are likely to fall further and more suppliers enter the market.

To avoid supply chain disruptions, Lulu Group has established purchasing offices in the US, UK, Turkey and other countries.This ensures uninterrupted supply, avoids the hassle of dealing with middlemen and, most importantly, keeps prices low and competitive in UAE stores

– V. Nandakumar, CCO and LuLu Group

In addition, the Black Sea Initiative — the shipping security corridor agreement signed by Ukraine and Russia — has also eased the scarcity of products such as sunflower oil, corn, barley and wheat. (As of October 28, more than 9.3 million tons of food were exported through the Black Sea.)

The UAE retailers’ analysis is in line with the UN’s Food and Agriculture Organization’s (FAO) monthly price index, which edged lower in October for the seventh straight month of declines and is down about 14.9% from the all-time high set in March/April .