Farah Thalji, Director, and Mohit Agrawal, Manager from the Dubai office of Simon-Kucher & Partners shares the three health-conscious consumer trends that are shaping the F&B landscape.
The COVID-19 pandemic has reached its second year and with it comes a renewed understanding of personal health and protecting the communities we live in. Consumers are hunting for healthy ways of life that don’t eat too much time out of their busy days nor jeopardize their ethical standards.
This growing expectation to live sustainable, fast, seamless, and personalized lifestyles is adding pressure to F&B value chain operators to adapt to meet such demands.
Rise in Demand for Alternative Food Services
There has been an increase in the demand for quality, speed, and affordability in the foodservice sector. In 2021, the Middle East and Africa (MEA) fast-food market stood at $30.88 billion in value and is predicted to swell to $59.16 billion by 2026. Whether this estimation is based on a demand for healthy meals remains to be seen for the MEA, considering the typically poor nutritional content of popular fast food items.
There is a way for traditional restaurants to make their quality healthy dishes more accessible to the time-conscious consumer, and that’s by implementing cloud kitchens (aka shadow kitchens, ghost kitchens, etc.). The several advantages of cloud kitchen models (low investment, increased efficiency, and housing multiple brands under one roof) are what’s making them stand out over competition within the current climate and are proving their staying power. In fact, over 70% of dine-in players in the UAE are already willing to invest and cross-market operations are on the way.
The global cloud kitchen market is expected to reach $71.4 billion USD by 2027. Kuwait’s first cloud-kitchen trader, KLC Virtual Restaurants, aims to increase its business by 50% within the next two years, adding 10 new kitchens in Saudi, Bahrain, and Qatar. In addition, UAE-based brands Kaykroo and Sweetheart Kitchen are planning to open 45 more stores in Saudi by the end of 2022.
Cloud kitchens and other lean foodservice models could be applied to traditional restaurants and kitchens both on a local and a global scale, taking rent/commissions structure into consideration. It’s the direct way industry players can keep on top of the fierce competition within the sector, further expand revenue opportunities, and match pace with a growing health food market.
Conscious Eating and Conscious Living
Organic, healthy, and environmentally friendly products are driving consumers to switch to conscious eating as they want to reduce eating habits associated with unethical practices. 60% of UAE consumers say that they would choose to buy products based on their sustainability and naturality, and around 90% of consumers in the Middle East have even expressed a willingness to pay more for healthier eating options.
Sustainable development and healthier food choices are driving innovation in the region. A new lab for F&B innovation in the UAE focuses on sustainability, health, and convenience. With Fit Farm, the Dubai-based Sarya Holdings, which created the vertical farming concept ‘Smart Acres’, is bringing health-conscious food to stores.
As high as 79.6 percent of restaurant operators in the Middle East stated that customers prefer healthier food choices, as found by the 2022 Posist Restaurant Industry & Market Evolution (PRIME) Report. The same report also highlighted that restaurant DIY kits were a prominent trend in 2021 from 38.8 percent of respondents. Having the option to prepare restaurant-quality meals from the comfort (and safety) of their own homes is something that consumers clearly valued throughout lockdown protocols. These features and benefits need to be communicated clearly by vendors when introducing new products (and updating existing ones) if wanting to fully leverage this trend.
Data-Driven Personalization
Consumer personalization (i.e. product recommendations, promotions, and direct communication) is expected to be in heightened demand as we see the digital frontier expand. We have seen close to an overwhelming 90% of the UAE consumer market inclined to buy from e-commerce platforms that personalize content. Most of which actively seek out the ones that specifically offer such dedicated content offerings online.
Carrefour is one of the leading companies leveraging cross-platform collected data to better target their existing and potential customer base. Employing their centralized database, real-time data, and numerous IoT device data to match customers with promoted products through their preferred channel. Another prime example is Tastewise, a startup from Israel that uses AI to help food brands make informed product decisions purely based on consumer trends. Such technology is a vital key when it comes to steering your business in a more sustainable and health-conscious direction.
F&B businesses will need to remain agile by investing in their personalization capabilities and communication to champion the art of customer-centricity. Integrating new smart technology within their business models is an easy way to improve lead generation and customer engagement.
The Unfolding F&B Landscape
In the highly challenging and competitive market, opportunities are rife with risk. Experimenting with new strategies is the only way to stop players from becoming irrelevant in light of changing consumer demand. Those who quickly adapt and make their commercial strategy flexible will be bound to reach their rewards.
