The strong dollar may be clobbering parts of the food industry, but for others it is driving business.
With much of the technology and food-packaging products made in the UK and Europe, there has never been a better time for businesses to buy equipment and leverage the strengths and weaknesses of the diverging currencies.
The rapid expansion of the hospitality and food and beverage sector across the Emirates has been a boost for business among food production companies based in the country, many of which were gathered at the Gulfood Manufacturing event in Dubai yesterday.
“We buy most of our machinery in euros or pounds,” said Tim Ansell, the sales director for Al Thika Packaging, a Dubai-based company that sells packaging machinery and materials across the GCC. “In the past 18 months the equipment we have been buying has fallen in price 15 per cent to 20 per cent. That is a saving which we have passed on to the customer. That saving has made customers, who may have been waiting to buy a piece of equipment, decide to buy now and we have seen our sales jump as a result.”
The fall in the price of machinery bought from Europe means it has become more competitive against machinery made in Asia, but it has also offered a chance for UAE manufacturers to upscale on the machinery.
“We have a 10-year horizon when buying machinery,” said Robert Chandler, the manufacturing director for Khazan Meat Factory. “We may spend €400,000 [Dh 1.62 million] on our technology and normally hedge on currencies to avoid any downside, but now we are able to enhance the machines we buy because they have become that much more affordable.”
It is not just the strength of the dollar and weakness of European currencies that has affected regional food groups.
Saudi Arabia’s Savola Group, the country’s largest food products company, said yesterday that the move to allow the Egyptian pound to trade freely would hit its fourth-quarter results by US$45.6m.
However, some Egyptian food exporters are already seeing a boost.
“Many food buyers that normally buy from Europe are now knocking on our door,” said Ashraf Hassan, the chief executive of Nile Fruits, a Cairo-based company that deals in fresh fruit and fruit concentrate. “We have already planned for an expansion of 50 per cent because we see the demand. Our currency now makes Egypt incredibly competitive.”
ascott@thenational.ae