GCC food sector is becoming increasingly attractive to Indian investors

04-Oct-2017 - Last updated on 04-Oct-2017 at 08:47 GMT

Gulf food processing is among the key sectors ripe for investment as India continues to strengthen its historic economic ties with the GCC, according to a new report by Alpen Capital.

The Dubai-based banking advisory firm has found that investment flows between the regions have been rising rapidly as Gulf governments continuously reform policies to attract foreign businesses.

“Sectors [including] food processing, healthcare and infrastructure seem to be the top picks for investors looking towards GCC as an investment destination,” said Sanjay Bhatia, managing director of Alpen Capital Middle East.

“We are likely to see an increase in the flow of investments between the regions the improving ties and regulatory environment,” he added.

Last year, nearly 85% of overall Indian investment in the GCC went to the UAE, where it is the third biggest corporate spender after Britain and America.

Due to the GCC’s strategic location bridging Asia with the West, the region is increasingly being seen by Indian companies as a gateway to markets of wider Middle East and the former Soviet bloc.

As a result, the UAE and Oman have developed themselves as re-export hubs and their potential has been increasing with growing cross-border trade, the report found.

And with an average GDP per capita of US$61,559 in terms of purchasing parity, most GCC nations rank in the world’s top-ten richest countries.

According to PWC, snacks, spreads, prepared meals, and ready-to-drink beverages make up the four most promising food and beverage categories for investment in the GCC.

The global professional services firm’s research department found that highly innovative companies are not present yet in large numbers in the GCC, and those that are should be seen as targets for acquisitions and joint ventures.

Their findings showed that 40% of the top 50 most innovative snack companies in the region, characterised by the number of new products they launch, had no presence in Saudi Arabia for example.

For RTD beverages, meals, and spreads, that number increases, to 74%, 80% and 84% respectively.

“The food and beverage industry in the GCC is at an inflection point,” wrote the report’s authors.

Companies that target their investments smartly “will be able to capitalise on this unique opportunity,” they added.