GCC functional food market is projected to have a CAGR of 10.9% through 2032

 GCC Functional Food Market: The revenue generated from the sales of functional foods in GCC countries is estimated to be around US$ 4,895 Mn in 2014, and is projected to expand at a CAGR of 10.9% during the forecast period 2015-2020.

Considering the trends in a span of the past few years, the Middle East nutraceuticals industry is expected to grow at a significant rate. The market for dietary supplements is attaining relative maturity as compared to the market for functional food, thus there is a high potential for the growth of functional food products, which can be attributed to healthcare spending and self-medication.

These factors have resulted in a shift in consumer preference towards the consumption of essential nutrients to remain healthy and avoid medical expenses. The market for GCC functional food is expected to witness high demand in specific countries, such as the UAE and Saudi Arabia, whereas, other countries of GCC are likely to witness low demand.

Functional foods are nutritive foods that deliver additional benefits over and above their basic nutritional value. Functional food encompasses a large variety of food items, such as omega 3 fatty acid-fortified eggs, stanol/sterol-enriched low-fat spreads, probiotic yogurt and protein breads, which can be consumed daily.

GCC functional food market demand is directly related to the awareness and the disposable income of the population. The rising disposable income of the Middle East population due to increased employment rates and the economic independence of women has led to an overall development in the lives of the people, which is supporting the growth of the GCC functional food market.

Moreover, government spending on healthcare for the prevention of diseases arising from obesity and cholesterol has increased, and governments are heavily promoting the consumption of fortified or functional food. Governments of Saudi Arabia, Kuwait and the UAE conduct various awareness programs and exhibitions to promote the consumption of healthy foods among consumers in the region, which is adding to the growth of GCC functional food market.GCC functional food market: Hypermarkets & A-class stores are currently gaining traction in the GCC functional food market followed by other modern retail formats

Currently, the sales of functional foods through hypermarkets & A-class stores is estimated to account for the highest value share, and they are expected to remain dominant during the forecast period. The retail industry is growing at a significant rate in the GCC countries, which has enabled manufacturers to increase the availability of functional food products in hypermarkets & A-class chains, and this is promoting the growth of this segment of the GCC functional food market.

On the other hand, consumer co-operatives and grocery stores are losing their popularity in the GCC functional food market across the region. Overall, these distribution channels are contributed a 28.3% share of the GCC functional food market in 2012, however they are expected to lose their share in 2020 due to higher consumer preference towards hypermarkets & A-class stores.

In-store promotions of functional food products, which include allocating budgets for generating awareness through branding, sampling or other means, tie-ups with school canteens and creating a whole new category of health foods in retail stores in co-operation with manufacturers & retailers, are among the key differentiating strategies adopted by manufacturers in the GCC functional food market. This is generating awareness and driving the overall demand for functional food in the GCC countries.

For instance, modern food retailers, such as Lulu Hypermarket, Al Maya Group, Al-Othaim Supermarket, Carrefour, Spinneys and Choithrams, are expanding in Saudi Arabia and promoting functional food.

With a rise in per-capita GDP in the Middle East region, there has been a significant increase in the purchasing power of the people. The middle-class population in the region is experiencing rapid growth, which has helped transform the country's consumer market.

Healthcare spending in GCC is expected to increase at a double-digit growth rate between 2015 and 2020 due to the rising concerns about health and wellness. Thus, rising purchasing power, coupled with increasing awareness about the consumption of fortified food products among consumers, is expected to support the growth of GCC functional food market.

For instance, the demand for yogurt/frozen yogurt in convenient packs and fresh fruity frozen yogurt has witnessed double-digit growth since 2011.

Beautiful Brands Internationals (BBI) FreshBerry Frozen Yogurt Cafe in Makkah, Saudi Arabia, recorded sales of US$ 11,000 on its opening day.

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