The GCC comprises of the 6 natural power-resource nations of Bahrain, Kuwait, Qatar, Saudi Arabia, United Arab Emirates and Oman. While the economy of the GCC experienced a slow pace of growth due to the fall in the rates of oil prices, the GDP continues to grow every year.
The growth rate of GDP per capita in the GCC region is 3.5% a year- source
What is even more wonderful is that this figure is still much higher than the growth in emerging countries and developed countries. In strong economies, the consumer demands are poised to continue rising. Hence, consumer-packaged goods (CPG) manufacturing and trading is a viable option for business in the region. There are many factors that make CPG trading an attractive business proposition for investors and traders.
Let’s check them out.
- The government in CGG is open to new business prospects and there is economic and political stability.
- There are a whopping number of 60 economic zones in the CGG. These free zones have benefits like tax exemption, lesser regulations, modern facilities, and equipment.
- In some of the GCC countries, foreign direct investment is quite high.
2017 is the game-changing year with many international players setting their foot on the Middle Eastern lands for retail trade. Fast-moving consumer players like Procter & Gamble, Henkel, and Unilever are operating in the Middle East and have launched products especially suited for people of the region.
The retail market in the Middle East is expected to grow at a rate of 7% rate between 2013 and 2018 to reach over $280 billion in market- source
So does that mean that trading and manufacturing in Consumer Packaged goods in the CGG region is as easy and effortless? Not really.
Here are some challenges that consumer-goods traders have to face in the CGG region:
The core structure of retails markets in CGG still happens to function as Baqalas, the family-business shops that operate in the neighborhood. They still constitute the core system of retail trade and since this region has deep-rooted strong traditional values, and therefore is a still an uphill task for any major retail player to enter the CGG markets. So if are on a lookout for a consumer retail trade opportunity, do research this sector or better still, collaborate with consultancy agencies that have the experience and expertise in key areas of recruitment, accounting, management, and business reprocessing and re-engineering. When I say business reprocessing, I mean adapting to the particular region’s requirement and thereby catering to the population.
As per the GCC-specific findings of the 2014 Customer and Channel Management Survey, developed in collaboration with Nielsen, here are some key areas along which CPG companies excel in the GCC region.
- They concentrate on areas that show high growth and prospects. They have to design efficient strategies for channel conflicts.
- They must have strong data and analytics system to analyze and monitor the performance levels, and upgrade existing strategies.
- They have to measure costs and collaborate with all key areas of the retail bracket to improve the logistics efficiency.
- They should have dedicated centers of core activities like costs, investments, and concentrate more on areas like training and recruitments.
Consumer goods sector-The highest growing sector in 2017 in the UAE
There were major recruitments in the consumer goods sector in the UAE in the first quarter of 2017. The consumer goods that saw an increase in demand were home appliances, packaged goods, textiles, jewelry, FMCG, and smartphones. Luxury goods sector too, saw a rise in demand, in spite of the threat from online markets and Chinese commodities. Consumer goods industries are lagging in pace to fulfill consumer demands and have made huge recruitments for sectors like purchase, logistics, and supply chain jobs. There is a huge market for outside players to take a plunge in the GCC markets and expand trading in the retail sectors.
The rapid urbanization of flourishing economies like the UAE in GCC has led to an increase in the demand of the retail markets. There are huge players entering the retail segment of GCC, the scope and opportunities in the consumer good trading segment will continue to grow in the future.