São Paulo – Saudi Arabia buys around US$ 10 billion in food and beverages abroad. Due to its desert climate, the country produces less than half of what it consumes. As the population is growing fast and the government does not stimulate local agricultural production, to save water for human consumption, the market tendency is for imports to rise.
"Saudi Arabia is not only a great market, but is also our main client," said the director of the market nucleus at the Brazilian Poultry Union (Ubabef), Ricardo Santin. "Consumption there is very high," he added.
Just to give an idea, Brazil exported 550,000 tonnes of chicken to the Saudis in 2010, whereas the second main market, Japan, imported 385,000 tonnes, according to figures disclosed by the Ministry of Agriculture.
Chicken is the Brazilian product with most success stories in the Saudi market. Brands like Sadia and Perdix, as Perdigão is known in the country, have been market leaders for years and it is possible to find “made in Brazil” brands in any supermarket.
In this sector, Brazil is much ahead of other exporters, as, according to Santin, the country’s market share is 90% of the Saudi imported chicken sector. "[In Saudi Arabia] we have a strong market, consistent and free of problems," said the executive.
Apart from chicken, other food products that Saudi Arabia imports in great volumes from Brazil are sugar, beef, maize and soy. Brazilian exporters know that the market demands much in agricultural products in bulk.
Challenge
The challenge is to expand sales of food and industrialized beverages. "We must seek new challenges," said the secretary general at the Arab Brazilian Chamber of Commerce, Michel Alaby.
In this respect, the Arab Brazilian Chamber, in partnership with the Brazilian Foreign Office (Itamaraty), should participate in a fair in the food sector in Saudi Arabia for the first time. "The objective is to seek diversification [of Brazilian exports] in the area of food," pointed out Alaby.
Food Arabia should take place from May 29 to June 1 in Jeddah, on the Red Sea. “Jeddah is the main distribution centre in the country and, in fact, has a port," said Alaby. The Brazilian stand will cover an area of 54 square meters and the idea is to take at least six companies to exhibit. According to him, it will be an opportunity for Brazilian companies to show greater value added products.
To trader Fábio Chalita, who works on exports of industrialized food to the Middle East, the Saudi market is "very good and very large", but introducing finished products is not as simple as selling basic items.
In the first place, according to him, there is great competition, mainly with European suppliers. There is also bureaucracy for customs clearance of products in the country, as well as the need for products for spot delivery.
"Supermarkets prefer to operate with local distributors for immediate replacement of products," he said. Working with a distributor, according to the businessman, may also simplify bureaucracy.
His company, Unitrading, represents, among other sectors, Brazilian producers of tomato products and canned vegetables. Chalita said he has already managed to place some sector products in the market, through distributors, and that he had positive results, but the volumes exported are small. In the area, competition with other suppliers may be felt clearly. "It is necessary to work to sell even more," he said.
Another company that sells there, but also in small volumes, is Ruette Spices, which sells pepper and cloves. According to Fernanda Tavares, the company export manager, the import of small volumes is a characteristic there, different from the importers with whom she works in the United Arab Emirates, who usually place larger orders.
"We sell directly to [Saudi Arabia], but the volumes are normally not so great," said Fernanda. Spices are generally distributed in the local retail market by the importers themselves.
Adaptation
Alaby pointed out that it is necessary to invest in certain differentials to win the Saudi market, including Halal certification, which shows that the food was produced according to Muslim requirements. Religion is very important in Saudi Arabia.
Santin, from Ubabef, recalls, for example, that all chicken exported by Brazil to the Arab country is halal and, apart from that, adapted to the taste of local consumers. Different from the poultry most traded in the Brazilian market, in Saudi Arabia and in the Arab world as a whole, smaller chickens are the most sold, weighing between 800 and 900 grams, almost in individual portions.
"We tried to sell some higher value-added products, like cooked products and special cuts, but the demand is [mainly] this (for small and whole chickens)," said Santin. Certain companies, like Sadia, sell to the region processed items developed especially for the Arab taste, among them shawarma.
Chalita added that there are "shares" of the Saudi market that have not yet been tapped and offer business opportunities. He mentioned products that are very well known in Brazil, like milk and guava sweets, which are unknown in Saudi Arabia, but may appeal to consumers.
"They are products that may be explored because there is no market there. It is necessary to start taking them and making them known to the public to create the consumer taste. There is very great potential," he said. It is worth recalling that sweets as a whole are well accepted by Arab consumers.
Further information about Food Arabia
Arab Brazilian Chamber of Commerce
Hans Lazarte Lima
Tel.: (+55 11) 3147-4067
E-mail: Hans@ccab.org.br
Filipe Gouveia Ferraz
Tel.: (+55 11) 3147-4073
E-mail: Filipe@ccab.org.br
*Translated by Mark Ament
