The region continues to face inflationary pressures, especially in input costs (raw materials, energy, water) and logistics. Consumer concern over cost of living remains high.
Economic growth forecasts are moderate; many markets are trying to balance rising costs, geopolitical risk, and supply chain disruptions.
Food security and self-sufficiency remain strategic priorities for governments, especially in the Gulf. Encouraged by rising import costs and vulnerabilities from supply chain disruptions.
2. Key Trends & Developments
Halal Food Manufacturing
The Middle East is accelerating its role in global halal food manufacturing and processing. Several investments and projects are underway to localize halal food production in Saudi Arabia, UAE, and other Gulf states.
For example:• A USD 50 million facility by Brazilian firm JBS in Saudi Arabia. • Nestlé’s first manufacturing plant in Saudi Arabia. • Initiatives like Saudi’s Halal Product Development Company’s accelerator programme and large sovereign wealth fund involvement.
Consumer Behavior & Preferences
Health, sustainability, and authenticity continue to gain importance. Consumers are more concerned about ultra-processed foods, use of pesticides, climate change.
Taste and flavour remain prime drivers for brand switching.
Price sensitivity is high; when faced with cost pressures consumers are trading down, switching brands, or favouring promotions/discounts. Local brands are also getting more support.
Digital convenience continues growing: Online grocery, on-demand food delivery, and other digital channels are being used more frequently.
Infrastructure, Logistics & Production
Free trade zones and logistics hubs are being leveraged to facilitate F&B import/export, processing, and distribution. The Salalah Free Zone in Oman is a case in point, as a gateway for U.S. F&B companies to access Middle East & Africa markets.
Vertical farming / agritech / sustainable farming methods are being adopted to reduce water usage, increase yields, and improve resiliency.
Hospitality, Catering & Service Sector
Catering services in markets like the UAE are growing steadily, with rising demand from institutional, corporate, events, tourism sectors.
Food & beverage real estate (restaurants, retail food outlets) is resilient in many GCC cities, driven by tourism and domestic demand, despite high costs (rent, labour).
3. Challenges & Risks
Input cost inflation: Raw materials including agricultural inputs, energy, packaging, water, transportation are rising, squeezing margins.
Supply chain volatility: Weather events (floods, droughts globally), import/export disruptions, transport costs, and trade policy issues affect availability and prices.
Currency / macro instability in non-GCC markets: In countries with weaker currencies or more volatile macroeconomic conditions, import dependency, especially for food staples, is a risk.
Regulatory / compliance challenges: For halal certification, food safety, etc. Meeting export standards can be costly.
Labour / operating costs: Especially in the service / catering / hospitality side, finding and retaining skilled labour remains a challenge, along with rising utility bills etc.
4. Market Opportunities
Halal export growth: As local production scales, there’s opportunity not just to serve local demand but to export.
Private label & value brands: With cost pressures and rising price sensitivity, private label (store-brands) and value offerings might see increasing market share.
Innovation in product formats: Healthier versions, natural / less processed foods, sustainable packaging, plant-based alternatives, smaller packaging sizes for affordability.
Digital / e-commerce expansion: Both for B2C (online groceries, delivery) and B2B (supply-chain digitization, logistics).
5. Key Moves / Examples from August 2025
Continued investment into halal food manufacturing (JBS, Nestlé, etc.) aiming to localize production in Saudi Arabia, UAE and others.
Free zones like Salalah in Oman are positioning themselves as strategic nodes for F&B trade.
Spinneys (UAE supermarket retailer) planning expansion into Kuwait via a joint venture.
UAE catering market shows growing momentum, supported by tourism & events and interest in scale-efficient models like cloud kitchens.
6. Outlook & What to Watch
Whether input cost pressures ease or worsen, especially imported agricultural commodities, energy, transport, will heavily dictate margins and pricing.
How regulatory & trade policies evolve: supporting local production, easing import bottlenecks, halal / food-safety standards for export.
The pace and scale of consumer shift toward health, sustainability, and local sourcing: will be key determinants of which brands survive and grow.
The role of innovation (product, process) and tech to reduce costs (water-saving, yield improvement, packaging waste) will increasingly determine competitiveness.
