Hive of activity

Honey is big business in the Middle East, but fierce competition and high prices have created a fractured market.

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By  Roger Field Published  March 7, 2006

|~||~||~|For many honey producers, it is no surprise that the Middle East has the highest per capita consumption of the foodstuff in the world. With allusions to honey in Sumerian and Babylonian cuneiform writings, and references to its health giving properties in the Koran, the Middle East has some strong associations with the product. But despite its historic and religious connections with the Middle East, honey sales in the region have declined in the past couple of years, mainly owing to price increases caused by problems with honey from China, the world’s biggest honey supplier, in recent years. Indeed, some Chinese honey was found to contain traces of chloramphenicol, a residue that can be harmful to humans, causing Europe, the US and other countries to block imports of Chinese honey. Saeed Ahmed, brand manager at Dubai-based Modern General Trading, a food company that distributes Langnese honey, experienced the trend first-hand. Ahmed estimates that sales of Langnese honey, which is one of the best selling brands in the Middle East, have fallen by about 20% in the past year as a result of honey prices increasing three-fold. While he is unable to assess the effect of these price hikes on honey sales across the entire Middle East, Ahmed knows sales in the UAE were badly hit. “The UAE market is very price sensitive and it was difficult to pass this on,” he told RNME. Despite this, the decline in sales was not as severe as Ahmed had expected, and he remains optimistic that the sector will perform well in the next few years. “We were expecting a big drop in the sale, but it was 70% less than we thought. We see that the UAE population is growing rapidly and a high-income population is coming in from Europe, the US and other richer parts of the world. They like using honey as a replacement for sugar wherever possible.” But price increases have not been the only threat to the Middle Eastern honey sector, which is also facing fierce competition from other products such as jam, marmalade, cheese spreads and chocolate spreads. Mohamed Somji, a marketing director at Global Export Marketing Co, which distributes the Sue Bee brand of honey in the Middle East, also said the sector is facing some problems. “We’re the market leading brand in Kuwait and consumption on a per capita basis in the Middle East is very high and especially in the GCC countries,” he said. “But we’ve noticed that the category has been declining.” Somji thinks this decline is partly due to the way honey is often viewed as a spread to be eaten with bread for breakfast - a trend that places honey in a similar category to products such as jam, chocolate spread and cream cheese, many of which are being marketed aggressively. “There are so many categories fighting for a share of the breakfast category whether it’s Nutella chocolate, which is advertising aggressively, or the cheese players, such as Al Marai and Kraft,” Somje said. “Everyone is trying to fight for that one small breakfast occasion. I’m convinced that the likes of jams and cheese spread have taken some share of that breakfast market.” He add that about 75% of Sue Bee’s honey market in the Middle East is in Kuwait, Saudi, and the UAE, although competition in the UAE has not been as acute as other countries because there are fewer local Arabs as a percentage of the population. “Markets in UAE have been growing organically because of population growth,” he said. “Kuwait and Saudi is where we’ve dropped.” Furthermore, honey might also be suffering from an image problem, with a large population of young people lacking any interest in the product. “The Middle East has a very heavy young population and honey is not seen as a glamorous or sexy product,” Somji said. “As young kids grow up they seem to be eating less honey and sticking more to the cheeses or the chocolate spreads.” But it is not just products such as cheese and jam could be damaging overall honey sales. Niche and speciality honey products, which only sell in small quantities, might also be giving a negative impression of more mainstream honey products, according to Somji. “Some of the local players who are blending honey from different sources have clever marketing campaigns and this has created a false perception that pre-packaged honey is not pure,” he said. To reverse this trend, Somji thinks honey brand owners need to be more combative and educate the consumer about honey’s benefits compared with other sweet foods such as jam. “It is up to honey companies to reverse the trend. Honey manufacturers or brands are going to have to do activities, whether above the line or below the line to help grow the category, such as in-store sampling to the younger kids or to promote the healthy aspects of honey,” he said. “With diabetes and obesity rates increasing, brands can also capitalise on the health benefits of honey. It’s a better option than sugar and products such as aspartame.” Global Export Marketing Co has already launched a campaign to highlight the purity of its honey, and hopes to increase sales in the next couple of years. “We’ve launched our 100% pure honey campaign and this was mainly in response to an issue that we faced in Kuwait, where these [speciality] brands come in and [implied] that the packaged stuff on the shelves isn’t pure,” Somji said. He added that honey producers could also look at tapping different markets, such as the growing expatriate community in Dubai, who traditionally eat less honey than local people. Niche players While some of the bigger honey producers such as Langese and Sue Bee are finding the market a challenge at the moment, there appears to be significant rewards for companies prepared to look at tapping a burgeoning market for speciality honey, such as honeycomb in a jar, and honey mixed with lemon or ginger. This is an area that Dubai-based Food Specialities, owner of Diamond-branded honey, is considering moving into. “Value-added honey is something we have been looking at,” Vipul Bahl, a marketing manager at Food Specialities told RNME. “Products such as honey mixed with lemon, ginger or saffron. These types of products will really take the category forward in terms of innovation. This is the future trend in terms of this particular category.” Food Specialities has already experienced the benefits of experimenting with its honey brand, by updating its packaging. Indeed, the company was the first to introduce a squeezable honey bottle with a non-drip nozzle to the region, and the development has paid dividends, increasing the company’s honey sales across the GCC. “The non-drip bottle really picked up fast in the past year,” Bahl said. “Our increase in market share has been a result of the packaging.” Furthermore, Bahl is optimistic about the honey sector in the next couple of years. “If it is promoted properly with the value added products, we’ll definitely see a lot of growth in the coming years,” he said. “It’s one of our core categories and we bank heavily on it. Every year we expect at least 15% growth on this category.” One company that has based its strategy on speciality honey is Honey King International FZE, a UAE and India-based refiner and marketer honey. Honey King is using the fickle taste of Middle Eastern honey consumers to its advantage, and catering for each market individually. The company packs various blends of honey in specialist packaging, such as cups and mugs, to cater for different markets. “In Yemen, they want dark honey. If you go to Saudi Arabia, they want something not too light, not too dark, while here in Dubai they like a lighter colour. It’s different again in Kuwait,” said Rudi Hertogs, Honey King FZE’s managing director. “The Mini Mug is our top selling product in Saudi Arabia, but in Dubai I do not sell one single container.” Furthermore, Honey King’s size gives it an advantage over larger players such as Langnese, which are unable to respond to differences in regional tastes. “Automation made it impossible for big suppliers like Lagnese to entertain these demands,” Hertogs said. “The economy of scale just did not make sense for the big players, so a niche market was created which we successfully filled in.” And the market for speciality honey and packaging is showing few signs of abating, according to Hertogs. The company, which blends and packs honey for own-label brands including Al Maya Group’s Golden Glory brand and Lals Group’s Classic brand, is planning to open a new production plant in Ras Al Kama, Dubai, to help grow its Middle Eastern sales by about 30%. The new plant, which will cover 10,000 sq ft and have a workforce of about 75 people, will be capable of refining some 3000 metric tons of honey in its first year. Honey King already has a sales and marketing team of 12 people in Dubai’s Jebel Ali Free Zone, and has its main production plant in India. “In the last year we had a US $6 million turnover in the Middle East,” Hertogs said. “We want to increase that to at least $8 million or $9 million, which we hope to achieve through new innovations. “This will make us more flexible to import more types of honey and do different types of blendings, which will also help us to further expand our business in the region.” ||**||

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