Market Trends of Packaging Industry in the UAE
This section covers the major market trends shaping the UAE Packaging Market according to our research experts:
Food Segment is Expected to Witness Significant Growth
- The adoption of sustainable packaging is one of the vital food packaging trends in the United Arab Emirates that may positively impact the growth of the packaging market in the country. Other factors contributing to the growth in the country are the increasing demand for convenience by consumers, an increase in disposable income, and changing consumer behavior. Disposable income and improved global flight connectivity have further augmented the regional market demand.
- The growth of the food service industry across the country would drive opportunities in the market. The food services sector has emerged as one of the most promising sectors in the UAE. It has been rapidly growing over the past decade owing to a flourishing economy, rising urbanization, booming tourism, favorable demographics, and a significant rise in per capita income.
- According to the managing director of HotpackGlobal, the food packaging industry in the UAE is expected to grow to AED 14 billion (USD 3.81 billion) by 2025. The presence of more international food brands in the MENA markets has also contributed significantly to the growth of the sector.
- With the rising environmental and health concerns, due to the accumulation of non-biodegradable waste, companies are focusing on adopting sustainable packaging options. For instance, Bemis, a leading food packaging company introduced BMET metalized sealant films, having 30% less material weight than usual three-ply films that replace materials, such as metalized OPET, OPP, or foil.
- The private sector is taking initiatives to tackle such a problem. In Abu Dhabi, the Urban Retreat food hub in Yas Mall is providing customers who bring their own plates, cups, and other containers a 20% discount on their bills. Further, a ban on single-use plastic products in Abu Dhabi came into effect on June 1, 2022, under the emirate's integrated Single-Use Plastic Policy. The initiative prevents the sale of single-use plastic bags across all retailers.
- Online food delivery services are burgeoning in the country with the entry of CareemNOW, Deliveroo, Talabat, and others. Foodonclick.com was the first company to come up with the concept of online food delivery in the United Arab Emirates. For instance, Carrefour, a retail stores chain, witnessed its online marketplace demand by 6-fold.
- Further, new limited-service restaurants have been finding success in establishing cloud or ghost kitchens. The trend of third-party online food ordering services is expected to rise in the future as these enable many small and independent restaurants to reach out to the wider population. Moreover, the rise of quick service restaurants (QDR), such as food trucks and online deliveries, would further contribute to the demand for food service disposables.
Growing E-Commerce Sector to Significantly Boost Market Growth Rate
- UAE consumers are increasingly making purchases online, with e-commerce sales nearly doubling in 2021 compared to a year ago. The country's total e-commerce sales reached USD 4.8 billion in 2021, up by 84% from USD 2.6 billion in 2019, according to a new report by the Dubai Chamber of Commerce. In 2021, e-commerce websites accounted for the majority (73%) of retail sales.
- One of the major factors boosting the rapid expansion of mobile e-commerce transactions is the accessibility of apps, which has increased pricing transparency. Also, the rising popularity of loyalty reward programs provided by online retailers in the UAE has increased demand for online shopping.
- Moreover, the Middle East and North Africa (MENA) region's Dubai CommerCity is a free zone established to encourage the expansion of the eCommerce market in the region. Global and local brands can start up and run their eCommerce businesses in the MENA area with the support of its special eCommerce ecosystem. The Dubai Airport Free Zone Authority (DAFZA) and Wasl Asset Management Group are partners in the endeavor. It is situated on over 2.1 million square feet of land and was built with an investment of AED 3.2 billion (USD 870 million).