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Spring into the Middle East

By: Greg Seminara, Export Solutions
Topics: Saudi Arabia Kuwait UAE Dubai Bahrain Oman

The Arab Spring commanded the world's attention. Populist uprisings  forced regime changes and fundamental shifts in political and economic policy. The future looks bright for this region of almost 300 million people.  These markets are attractive targets for our industry due to large and growing populations, strong gdp per capita in many countries, and high acceptance of international brands. Gulf Cooperation Council (GCC) countries including Saudi Arabia, United Arab Emirates, and Qatar offer compelling opportunities.

All about the Oil !
Evaluating  the Middle East requires you to segment countries into two groups: Countries with oil reserves and countries with no oil. Consumers in countries with oil possess the purchasing power to buy international brands. Local industry concentrates  on oil and related services.
Most food and consumer products are imported, generating an enormous market for foreign brands. This creates a more positive environment versus China and Brazil where exporters compete with cost efficient local producers. Savvy , well travelled, Arabs demand international brands with the highest standards. Oil rich countries like Saudi Arabia and Kuwait feature significant expatriate populations hungry for their favorite brands. Citizens of countries like Egypt and Jordan which do not have oil find it tougher to afford imported products.

Pricing & Profits
Three factors contribute to solid levels of profitability for industry players. Most manufacturers partner with strong distributors, eliminating most fixed costs associated with running a subsidiary. A level playing field exists as most brands use distributors and the distributor margin becomes part of the pricing calculation for everyone. The  trade remains fragmented, with an emerging supermarket channel competing with the traditional bagala ( small shop) outlets.  This facilitates rational pricing and avoidance of bloody annual negotiation rituals that are common in Europe. Wealthy locals and western expatriates on lucrative work contracts are more concerned with international brand availability versus paying a modest premium for their favorite products.

Saudi Arabia- Big Prize
Saudi Arabia's 28 million population plus ownership of 25 % of worlds discovered oil reserves places it as the strategic centerpiece of any Middle East development plan. I was fortunate enough to live and work in Saudi Arabia, managing the Gulf region for Clorox. Saudi Arabia represented 70 % of our total Middle East business, more than all the other countries combined. Successful brands still source around 50 % of their Middle East business from Saudi Arabia. An appropriate strategy is to dedicate focus on "winning in Saudi Arabia" versus collecting a series of smaller businesses in adjacent countries. Saudi Arabia is blessed with strong distributors and high acceptance levels of "Made in The USA and Europe" brands.

Global Retailer Footprints
Carrefour enjoys first mover advantage, with hypermarkets and supermarkets in key countries including Saudi Arabia , Eqypt, and U.A.E. The Majid Al Futtaim group can be credited as Carrefour's partner in operating more than 40 stores. France's Casino group has also been active in the region with existing or planned stores throughout the GCC . Casino recently signed a strategic partnership with Qatar based Al Meera to ramp up presence. Uk's Waitrose Group operates a single showcase store in Dubai and Bahrain, but promises another 25 stores through a rebranding project. Global retailers will commit to accelerate store openings in this high growth region. However, they still account for a small part of the business.

Priority Countries


( millions)

GDP Per Capita

Saudi Arabia






United Arab Emirates



















735 Distributors - 13 Middle East Countries
Export Solutions database features excellent coverage of the regions powerful distributor community.
This includes 735 companies across 13 countries, an average of more than 56 per country. This includes specialists in handling big brands, personal care, confectionery, international food, and beverage products. Distributors are dominant players in each country, with even global leaders such as Procter & Gamble, Nestle, and Kraft partnering with distributors.  The Middle East is complex and distributors serve as local experts to navigate you through the commercialization process.

Watchout # 1 - No Gulf Wide Distributors
I am alarmed at the brands and distributors pursuing region wide agreements.
My 20 year experience is that there are not any distributors who have critical mass, compete effectively, and maintain a physical presence across the entire region. Some Dubai based distributors may maintain satellite offices in Oman or Qatar. The big risk is aligning with a Dubai based distributor claiming coverage of Saudi Arabia, the big prize. Always question a distributor candidate on his physical presence and brands represented for each Gulf Country. Regional agreements offer simplicity, logistics efficiencies, and fewer points of contact. However, these benefits disappear when you assign a distributor in a small area like Dubai responsibility for a larger country where he works through an "alliance" or maintains a skeletal, 1 person staff.

Israel- Good Acceptance of Made in the USA Products
Israel represents a good opportunity for iconic American brands. Many Israeli's have travelled to the USA and maintain strong awareness of leading USA brands. Israel features a strong distributor community offering local expertise. Export Solutions database tracks 45 distributors based in Israel.

What about Iran & Iraq ?
I receive countless inquiries and a periodic project for Iran and Iraq. Both represent attractive "future" markets due to oil reserves and large populations Iran ( 74 million)- Iraq ( 30 million). However, my guidance is to optimize your business in other markets prior to tackling these highly complex countries.
If you have a global brand, extensive financial and "on the ground" resources, perhaps you qualify as a company that should attack these markets. Otherwise, wait !

Strategic Next Steps:
Analyze your current business in the Middle East. What are the white spaces in your Middle East coverage map ? How well are you doing in Saudi Arabia in terms of market share and shipments ?Are you aligned with the right distributors ? Consider attending or exhibiting at Gulfood, held each February in Dubai. Export Solutions maintains 20 years of experience in the region, including 3 years "on the ground" in Saudi Arabia managing the entire region. Looking for new growth in 2016 ? Export Solutions can help !