Beverage suppliers quenching thirst for variety

As the region’s F&B market evolves in tune with a changing economic climate, beverage suppliers appear to be going against trends witnessed in other industries and actually increasing the variety of their products.

The large number of non-Muslim ex-pats living across the Middle East has seen alcoholic beverage suppliers widen their range over the past decade — but those who abstain from alcohol consumption are now seeing the variety of non-alcoholic drinks expand, as F&B managers strive to meet the needs of their diverse clientele.

Kempinski Hotel Mall of the Emirates beverage manager Sasha Aleksandar Milovanovic noted: “The number of non-alcoholic suppliers is growing; there are quite a few new companies selling new products.

“The quality is definitely there, but bear in mind you are in the middle of the desert where nothing is grown, so all premium things need to come from outside; this is usually reflected in price.

“And once perishable ingredients actually reach the market, they are usually not as fresh [as they should be],” he claimed.

However Milovanovic said there was nevertheless significant evidence of market progress.

“When I came to this region in 2003, certain things were simply not available — for example, wheat grass was out of our reach,” he asserted.

“But luckily, somebody realised that there was a demand for it; things are constantly improving.”

Wider variety

According to flavourings provider Monin’s MEI managing director, Sylvain Dronet, the evolution of the beverage industry is down to changing customer demand.

“Customers are looking for more choice and more variety than ever before, especially when it comes to drinking,” he explained.

As a result, beverage offerings are becoming more diverse, despite the economic slowdown discouraging other industries from expanding, noted Dronet.

“Look at the number of drinks Arabic consumers can now enjoy in a coffee shop — smoothies, mocktails, flavoured teas and coffees; this was far from being the case three or four years ago,” he said.

“If you compare the beverage industry to other economic sectors, it is easily noticeable that beverage companies have not been as affected as the rest.”

Nestlé Professional — Middle East beverages business manager Joe Aouad agreed that consumer demand for beverage products had remained high throughout the region.

“We are witnessing an increase in demand for new and healthier beverage options,” asserted Aouad.

“Due to global health issues and obesity problems, we can see a rising demand for healthier beverages that still offer a premium treat, indulgence and refreshment — especially when eating out; these are strong drivers in purchase decisions.”

But according to Aouad, fulfilling consumer demand remained a double-edged sword for F&B establishments: while speciality beverages are in demand, the price of these products does not tally with customer expectations.

“Consumers are requesting speciality beverages, moving away from traditional offering — they look for indulgence and want to treat themselves,” Aoud noted.

“And yet at the same time they are also becoming more price conscious and demanding value-for-money.”

However Aouad said he was confident that while consumers refrained from spending their hard-earned cash on luxury items such as new cars or luxury clothing, they would continue to “reward themselves with a beverage that meets with their expectations”.

“For foodservice operators, beverages help drive more foot-fall to an outlet and have a very high profit margin,” he observed.

“The Middle East is riding a faster growth trend, which in turn has attracted many entrepreneurs and multinational companies to explore business opportunities.”

While the region’s non-alcoholic beverage industry has witnessed many improvements and growth over the last few years, some markets remain stagnated by slow business practices and a lack of imagination — as noted by The Diplomat Radisson Blu Hotel Residence and Spa, Bahrain’s director of food and beverage, Igor Ruge.

“In Bahrain, we have a few suppliers and each supplier has its own brands; in this respect they are holding a monopoly over their brands,” he commented.

“Take mineral water for example; each brand is linked to a certain supplier, so it becomes a ‘take it or leave it’ situation ― the point is that the supplier dictates the price you have to sell drinks at.”

According to Ruge, another challenge stems from competing with individual outlets.

“As a hotel, we calculate our prices differently to stand-alone restaurants and as a result we can lose potential clients, as we are calculating completely different margins,” he said.

“Stand-alone restaurants can serve beverages cheaper than us, and this is where we face a major challenge.”

Ruge added that while the beverage market had grown dramatically for both suppliers and outlets, a conservative approach to business was hurting its development.

“Here in the Middle East you don’t have freedom of choice,” he asserted. “In Bahrain you face monopolies over brands and also a conservative approach.

“In order to resolve this we need to break the monopolies — we need more than one supplier for certain beverages.”

Despite this “conservative approach”, Ruge added that the industry was moving in the right direction, with a greater selection of products such as mineral waters thanks to customers no longer sticking with classic brands.

Fruitful opportunities

Monin’s Dronet noted that the non-alcoholic beverage industry was being led through the economic downturn by specialised products such as smoothies and luxury juices.

“Smoothies are currently a high driver of sales,” said Dronet. “The consumer loves them because they are perceived as healthy and as a great complement to fruits.”

Kempinski’s Milovanovic agreed that smoothies have a bright future in the region, but added that the trend had taken its time reaching Middle Eastern outlets.

“Dubai and the wider region is still catching up with other markets; look at the US beverage market five years ago when smoothies were popular for instance.

“Now, unfortunately, other markets are now looking and learning from Dubai,” he continued. “If we had learnt from other people’s experiences, we could have avoided some of the mistakes we made in the past,” he said.

But Nestlé’s Aouad maintained that the region’s beverage industry was performing strongly even before the economic downturn and that it remained full of opportunities.

“The beverage industry is by nature very competitive,” said Aouad.

“Providing we do our homework properly and understand the shift in consumption that happened across channels due to the downturn, there are always growth opportunities across all markets in the Middle East.”