How Gulf food producers are building more resilient supply chains

Dubai: Prolonged shipping times due to regional disruptions are compelling Gulf food and beverage producers to reconsider their processing, packaging, and distribution methods, as they confront reduced shelf life and escalating refrigerated supply chain expenses. According to Abdelghany Eladib, President and General Manager of SIG Group's India, Middle East, and Africa division, shipments that once took around 35 days to reach their destination now often take closer to 55 days, potentially consuming an additional 20 days of a product's commercial shelf life.

Food producers face a spectrum of consequences, including higher waste, discounts, freezing, or repurposing products before they can be sold. Eladib highlighted that while companies have adapted operationally, the recent period has exposed a significant vulnerability: the limited shelf life products have upon reaching the market.

A chilled product with a 120-day shelf life can lose a substantial portion of its commercial window when shipping time increases from about 35 to 55 days, leading to higher shrinkage, repurposing, freezing, and unanticipated margin pressures. Companies have responded by utilizing alternative ports and shipping routes, but rerouting alone does not resolve the core issue of diminishing shelf life.

Eladib explained that rerouting maintains continuity but does not necessarily grant additional time, as every extra day still diminishes the product's available shelf life. This has prompted manufacturers to focus on shelf-stable products and aseptic production and packaging, which minimize reliance on refrigeration before product opening.

By sterilizing food and beverages and their packaging separately before combining them in a sterile environment, aseptic processing enables products to remain shelf-stable for extended periods without refrigeration or additional preservatives. This approach provides Gulf manufacturers with greater flexibility amid unpredictable shipping schedules and opens up markets that are challenging or expensive to access via a continuous cold chain.

Reducing refrigeration requirements is especially significant in the Gulf, where cold storage and refrigerated transport are expensive and energy-intensive. Manufacturers are also reevaluating pack sizes, formats, and filling technologies to minimize product losses and swiftly adapt to evolving consumer demand. While aseptic cartons can range from single-serve packs to larger family-sized formats, filling systems allow different sizes to be produced on the same machine.

Although this shift entails higher upfront costs, Eladib emphasized that producers must now consider costs across the entire supply chain, not just within the factory. He noted that when accounting for extended shelf life, reduced write-offs, lower discounting pressure, no cold-chain requirements, and broader distribution reach, the business case becomes far more compelling.

The Gulf region is witnessing a surge in local food and beverage manufacturing, a trend Eladib expects to intensify in the next two to three years. Companies are not merely relocating entire operations to the region but are instead augmenting local production capacity as demand, regulation, and the business environment make local manufacturing increasingly feasible.

However, local manufacturing alone will not suffice; the region also requires robust local packaging supply chains, technical services, spare-parts availability, and skilled operators, alongside facilities that enable companies to develop and test new products locally. SIG, for instance, operates a Product Innovation and Application Hub in Dubai, where manufacturers can develop recipes, test processing and filling, and produce smaller batches before committing to commercial-scale production.

Eladib emphasized that innovation capability complements capacity, allowing manufacturers to create products tailored to specific markets. Addressing the challenge of waste, Eladib acknowledged that extended producer responsibility regulations could accelerate change, but rules alone are insufficient without effective collection systems, sorting facilities, recycling capacity, and heightened consumer involvement.

Packaging manufacturers are developing more environmentally friendly materials, such as increasing paper content and improving recyclability. However, recyclable packaging is only beneficial if the necessary infrastructure is in place for collection and processing. Looking forward, Eladib anticipates that local production, product innovation, extended shelf life technologies, and lower-impact packaging will increasingly intersect.

This transformation could also alter the export objectives of Gulf food producers, as products less reliant on continuous refrigeration may reach secondary cities, remote areas, and overseas destinations previously deemed unfeasible due to cold-chain distribution challenges.