COFFEE IN U.A.E.

Attractiveness of Coffee Category in U.A.E. For Multinational Corporations

Table of Contents

Abstract1

Introduction2

Elements To Be Considered When Entering A Foreign Market2

Market Condition And Competitive Trends5

Competitive Landscape7

Prospects9

Opportunities for Multinationals10

Strategies for entering a new market10

Exporting11

Licensing11

Franchising11

Joint Ventures/Strategic Alliances/Partnership11

Strategic alliance11

Foreign Direct Investment12

Turnkey Projects12

Strategy appropriate for entering coffee market in U.K.12

Conclusion13

Attractiveness of Coffee Sector in U.A.E. For Multinational Corporations

Abstract

This report on coffee sector attractiveness in U.A.E. for multinational corporations assesses the marketing literature, academic articles, and commercial databases and media reports. United Arab Emirates (UAE) is the fastest growing coffee market by volume in the world, despite the fact that, the country was falling in a recession in the fourth quarter of 2008 and total sales volume of coffee is expected to grow by 80% from 2009-2014 with a CAGR of above 12% during that period (Euromonitor International, 2011 pp.4). The market of coffee in UAE, we find that coffee registered an 11% growth during 2010, despite the fact that a recession was going on in those days (Hotelier Middle East Staff, 2010). The sales of coffee in 2010 reached 7,156 tonnes, while the growth rate of coffee in 2009 was 10%; this growth rate should be evaluated keeping in mind the economic downturn during that period. This reflects the attractiveness and strength of this sector in UAE.

The fresh ground coffee contribution to sales volume in 2010 is 75%, and registered as fastest growing category with 13% growth in volume. However, growth in fresh coffee beans was 7%, which is slightly down as per expectation. The coffee sector is U.A.E. is a star segment. Multinational Corporations can enter the market and take advantage of their perceptions and brand image. The increasing trend of having coffee in coffee shops is a reflection of the need of people to socialize and also an indication of shifting taste preferences.

Company should make direct foreign investment to start business in U.A.E. to reap the maximum advantage of this growing segment.

Introduction

Coffee is considered as one of the most important commodities of world market, and is produced in 60 nations (Lewin et al, 2004, n.d.). United Arab Emirates (UAE) is the fastest growing coffee market by volume in the world, despite the fact that, the country was falling in a recession in the fourth quarter of 2008 and total sales volume of coffee is expected to grow by 80% from 2009-2014 with a CAGR of above 12% during that period (Euromonitor International, 2011 pp.4).

The coffee is counted in the hot drinks category, where tea is having a dominant place, and is still growing across U.A.E . This demand for tea is generated because more than 50% of the population in UAE is from subcontinent, which prefers tea (The Report Dubai, 2007, pp.2). Tea is considered to be an essential element of breakfast in subcontinent and is drunk many times a day, including evening and after meals. The question is how then coffee managed to make its way in such a market already dominated by a hot drink, ...