August 2010 – Issue 34

UAE Leads Regional Consumer Electronics Market

Demand boosted by excellent information technology infrastructure
The UAE is a leading global consumer electronics market
not merely on account of its strong growing domestic
demand but also because the emirate’s role as an
international business hub serving the GCC and the rest of
the world. Located at the crossroads of Asia, Africa and
Europe, the electronics distributors of the UAE serve a
potential market of almost 2 billion individuals.
In recent years, the domestic market in the UAE has
steadily become more significant in relation to re-export
trade. The UAE is the preferred testing ground for
multinational consumer electronics companies for new
product launches and marketing initiatives. According to a
report by Business Monitor International (BMI), the UAE
was ranked first in the regional consumer electronics market
business environment in 2009 (see table 1). Demand for
consumer electronics in the UAE has been boosted by a
strong telecommunications and information technology
infrastructure as well as the large expatriate community,
which have both assisted in driving market development
forward. From this, the BMI have forecast that the UAE’s
consumer electronics market is projected to increase to
USD2.77bn in 2010 from USD2.62bn in 2009 (see table 2).
The emirate of Dubai is at the heart of the UAE’s
electronics sector. It accounted for more than 80% of the
UAE’s total exports and around 85% of re-exports in 2009.
Dubai also imported more than two-thirds of the UAE’s
consumable electronic goods last year. In essence, Dubai’s
electronics sector is boosted by the annual shopping
festivals, which accounted for as much as 50% of annual
sales for some of the larger distributors in some product
categories. Festivals such as Summer Surprises, GITEX
Table 1. Regional Consumer Electronics Business
Environment Ratings
Cons. Limits
Market
Electro. to
Risks
Market Returns
Shopper, Consumer Electronics Expo and the Dubai
Shopping Festival, as well as a number of trade fairs, have
resulted in a significant increase in sales for electronics
firms.
That said, the UAE’s consumer electronics sector does face
some challenges. The country’s low trade barriers
contribute to a growing problem with counterfeit (or grey)
market goods. This illegal import trade is also exacerbated
by the proximity of free trade zone such as Jebel Ali, which
is the centre for the flourishing re-export trade. With low
margins due to the intense competition, parallel imports
present a particular challenge to firms.
Overall, several factors have contributed in making the
UAE electronics market a significant one for the region. In
part, it is on the back of the UAE’s central geographic
location, serviced daily by flights from the Middle East,
west Asia, East Africa and the Mediterranean. The country
has a well-organised chain of retailers and wholesalers, a
well-developed sourcing network, extensive logistical
facilities and an excellent general business environment. In
addition, growth has been driven by government policy, in
particular, low import duties which have helped make the
UAE an electronics trading destination for the region and a
shop window for the latest consumer goods.
Looking ahead, electronics firms are increasingly seeing the
UAE as a distribution hub of global rather than merely
regional significance. As more firms have established
facilities in the UAE, this in turn has brought more
expatriate workers and this trend acts as another stimulant
to the local consumer electronics market.
Table 2. Consumer Electronics Market Overview
Region
Rating
Ranking 2007 2008 2009 2010f 2011f

UAE 52 59 65 59.5 1
Consumer
Kuwait 43 49 65 54.8 2 electronics devices,
2,597 2,888 2,620 2,767 3,037
Total Demand
Qatar 35 45 70 53.2 3 (USD, mn)

South
52 50 50 50.5 4 Computers
Africa 1,501 1,732 1,492 1,573 1,765
(USD, mn)
Saudi
45 46 55 48.9 5
Arabia

Turkey 53 49 60 48.3 6 Audio, Video and

729 777 797 855 917
Gaming (USD, mn)
Bahrain 32 38 50 44.0 7

Oman 31 36 60 42.0 8
Communications
367 379 330 339 354
(USD, mn)
Egypt 33 30 50 38.6 9

Source: BMI; Note: Scores out of 100, with 100 highest. Source: BMI; Note: f is for forecast.

Published by: Dubai Chamber Economic Research Department

For information please contact: Ehsan Khoman, Email: ehsan.khoman@dubaichamber.ae Tel: +971 4 2028 278
 Dubai Chamber Economist
August 2010 – Issue 34

UAE Food and Drinks Industry Remains Strong and Upbeat

Higher consumption is expected to boost growth in the short-term
The UAE’s food and drink sectors have been undergoing a
period of significant expansion over the past several years.
This has been primarily due to considerable foreign direct
investment as well as government attempts to increase
domestic food production and self-sufficiency, production
facilities have started to arise rapidly. However, having said
that, the country is still highly dependent on food and drink
imports to fill the gap between domestic production and the
demands of a growing and wealthy population. Demand for
imports continues to be propped up by significant demand
from expatriates for food and drink goods from their home
countries.
Going forward, despite short-term weaknesses, food
consumption is expected to increase by a modest 2.3% in
2010 (see table 4) with a promising 4.8% forecasted in
2011. Taking into consideration the ongoing development
of the UAE’s mass grocery retail industry, food
consumption growth will be essentially led by continued
investment into the industry as well as expected population
growth. In the context of the wider GCC, the UAE’s food
industry is the most dynamic. For example, on a per capita
basis, some estimates suggest that food consumption in
2009 was USD1,452.8 which is comparable to most OECD
countries.

According to a BMI report, the UAE places second behind In terms of drink consumption, some observers suggest that
Bahrain in the region food and drink business environment the UAE’s drinks industry is to register modest growth this
ratings (see table 3). Premiumisation (i.e. the process of year and in 2011 (see table 5). In particular, bottled water
meeting customers’ needs with strong branding) (note that the UAE is the world’s highest annual per capita
opportunities have yet to be exhausted despite ongoing real consumer of bottled water with more than 100 litres per
economy challenges inflicted since the onset of the month) and fruit juice segments are expected to lead the
economic downturn. way forward. An annual average value sales growth rate of
3.5% is forecast in 2010 with premiumisation remaining a
Table 3. Regional Food and Drink Business
Environment Ratings
key driver of growth in the UAE market. This is on the back
Food
Limits
of investments into product strengthening by leading
and Market Region
Drinks
to
Risks
Rating
Ranking
players with a particular emphasis on the size and quantities
Returns
Market of bottles.
Bahrain 54 53 70 57.6 1
In addition, an important factor sustaining and driving the
UAE 41 51 70 56.5 2
growth of the drinks market (in particular tea and coffee) in
Qatar 44 49 65 54.0 3
the UAE is the traditional role that these drinks play in
family and social occasions, which are of the utmost
Kuwait 34 46 65 52.6 4 importance in the social structure of the UAE. Given the
Saudi integral role that tea and coffee plays therefore in social
31 45 60 50.8 5
Arabia traditions, it will continue to be an important part of
Egypt 42 48 50 50.5 6 everyday life, sustaining high levels of consumption.

Oman 29 39 60 47.7 7 Overall, the UAE’s food and drinks industry is expected to
grow and expand further in the short-term. Most observers
Lebanon 32 38 45 40.8 8
are of the view that UAE based food and drink companies
Source: Dubai Chamber based on data from BMI; Note: Scores out of 100, with 100 will step up their investment drive in order to cater for the
highest.
growing population.

Table 4. UAE Food Industry Indicators Table 5. UAE Drinks Industry Indicators

2007 2008 2009 2010f 2011f

2007 2008 2009 2010f 2011f

Food
consumption 6.1 6.7 6.8 6.9 7.3
(USD, bn)
Soft drink sales
Per capita food 588.7 626.3 658.0 681.1 704.1
(USD, mn)
consumption 1354.7 1441.3 1452.8 1457.3 1467.9
(USD)

Total food
consumption 9.4 9.4 1.9 2.3 4.8 Soft drink sales
growth (%) 6.2 6.4 5.1 3.5 3.4
growth (%)

Per capita food

consumption 3.1 6.4 0.8 0.3 0.7
growth (%)
Per capita soft
Food drink spending 131.1 132.8 141.0 143.1 142.2
consumption as 3.1 2.7 2.9 2.6 2.5 (USD)
a % of GDP

Source: BMI; Note: f is for forecast. Source: BMI; Note: f is for forecast.

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 Dubai Chamber Economist
August 2010 – Issue 34

Market Movement Indicators

Dubai Property Transactions, July 2010 Dubai Property Transactions by Land Sales and
Worth (AED, bn), January 2008 – July 2010
% Value
Change
Type of Number Average Total Worth,
Over
Property of Sales Price, AED AED
Previous
Month

Land
143 1,409,834 2,606,337,930 +9.59
Sales

Flat Sales 1,054 1,159,638 1,223,418,396 -42.39

Villa
123 1,980,673 243,622,762 -56.23
Sales

Source: Dubai Chamber based on data from the Dubai Land Department Source: Dubai Chamber based on data from the Dubai Land Department

Dubai and Abu Dhabi Stock Exchange Indices, July Dubai and Abu Dhabi Stock Exchange Indices, July
2010 2010
Average % Change
Stock Monthly High/ Over
Exchange Market Low Previous
Index Month

1,531.36
(High)
Dubai 1,503.17 -1.20
1,468.45
(Low)

2,560.75
(High)
Abu Dhabi 2,533.27 -0.16
2,509.56
(Low)

Source: Dubai Chamber based on data from the Dubai and Abu Dhabi Financial Markets Source: Dubai Chamber based on data from the Dubai and Abu Dhabi Financial Markets

Dubai Certificates of Origin issued by Dubai Dubai Certificates of Origin and Value in (AED, bn)
Chamber, March 2010 – July 2010 issued by Dubai Chamber, January 2008 – July 2010

Mar Apr May Jun Jul

Date
2010 2010 2010 2010 2010

No. of
57,144 52,143 55,777 57,306 54,567
Certificates
% Change Over
+18.68 -8.75 +6.97 +2.74 -4.78
Previous Month
Value
18.741 16.844 17.515 18.010 17.242
(AED, bn)
% Change Over
+15.47 -10.12 +3.98 +2.83 -4.26
Previous Month

No. of Markets 168 161 156 160 165

No. of Exporters 4,802 4,645 4,814 4,863 4,671

Source: Dubai Chamber Source: Dubai Chamber

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 Dubai Chamber Economist
August 2010 – Issue 34

Average Commodity Prices and Foreign Exchange WTI Crude Oil Price (USD per barrel) and Gold Price
Rates, March 2010 – July 2010 Per Ounce (USD), January 2008 – July 2010
WTI Crude
Gold Price Euro/UAE
Date Oil Price
(USD/Ounce) Dirham
(USD/pb)

Mar 2010 81.10 1,113.24 4.99

Apr 2010 84.21 1,145.99 4.94

May 2010 72.46 1,205.43 4.64

Jun 2010 68.52 1,232.93 4.49

Jul 2010 76.32 1,194.11 4.69

Source: Dubai Chamber based on data from Bloomberg Source: Dubai Chamber based on data from Bloomberg

USA, Japan and EU-27 Monthly Trade with the UAE USA Monthly Trade with the UAE (in AED mn),
(AED mn), December 2009 – April 2010 January 2008 – May 2010
Dec Jan Feb Mar Apr
2009 2010 2010 2010 2010

Imports 213.5 234.9 243.2 270.6 222.7

USA
Exports 2,980.3 2,246.7 2,619.3 2,575.4 2,734.4

Imports 9,996.4 9,174.5 7,513.7 10,027 9,513.6

Japan
Exports 2,396.8 1,922.0 2,119.0 2,932.9 1,991.9

Imports 595.2 619.3 695.0 887.7 979.3

EU-
27
Exports 4,849.9 3,610.7 4,030.8 4,822.0 3,981.4

Source: Dubai Chamber based on data from the US Census Bureau, Eurostat and Jetro Source: Dubai Chamber based on data from the US Census Bureau

Monthly Consumer Price Percentage Changes in Dubai Quarterly Consumer Price Indices for Selected
Fresh Foods in Dubai for Selected Commodities Goods and Services, % Averages
Fresh
Date Fresh Meat Fresh Fish
Chicken

Mar 2010 -1.77 -1.79 -6.80

Apr 2010 +3.63 -1.78 -6.39

May 2010 -0.65 -0.11 +7.64

Jun 2010 -7.09 -1.31 -2.66

Jul 2010 +0.59 -0.56 +1.27

Source: Dubai Chamber Source: Dubai Chamber

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