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Wed 8 Jul 2009 04:00 AM

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Ordering in

High ingredient costs have become ‘the norm' in the Middle East, as numerous food stuffs unavailable in the region have to be air-freighted in; but is it worth paying through the nose for such products, or is there a compromise to be found? Lucy Taylor finds out.

Ordering in
A Coral Hotels and Resorts dessert.
Ordering in
Coral’s Michel Miraton.
Ordering in
A dish from Hotel JAL Fujairah.

High ingredient costs have become ‘the norm' in the Middle East, as numerous food stuffs unavailable in the region have to be air-freighted in; but is it worth paying through the nose for such products, or is there a compromise to be found? Lucy Taylor finds out.

For a long time now, there have been rumblings from the Middle East's F&B community about high ingredient prices in the region. But is this down to imports, suppliers or fluctuating exchange rates - and is there any way to avoid paying through the nose?

The limited availability of various ingredients on the local market plays a major role in sustaining high food costs. As Coral Hotels and Resorts corporate executive chef Michel Miraton points out: "Here you have to import 70% of your ingredients."

Joerg Wickihalder, general manager for the Il Villagio Restaurants and Lounges complex in Jeddah, Saudi Arabia, adds: "Certainly food costs for high quality products, imported from Europe in our case, can lead to higher expenses due to the freight costs and custom dues. But then we can only comment on operating in Saudi Arabia, where procedures are somewhat different to other Middle East countries."

Shangri-la Qaryat Al-Beri's new executive chef Gary Robinson points out: "If you look at the food globally, you've got great food trends going on, like the back-to-basics approach of sourcing ingredients from farmers' markets that you see a lot in Europe. Here that doesn't happen.

"Then again, how much you spend depends on how much you order in and how sustainable your supply chain management is," he reasons.

Holiday Inn Dubai - Al Barsha executive sous chef Sameh Youssef believes it is down to the individual outlet to adapt to high prices.

"It's not a major problem for the Middle East; food prices have risen everywhere," he claims.

"But we do try to be very controlled with our food expenses. I make sure I have balanced offerings on my menus."

But chefs are the first to admit that there are some products they would like to serve that are simply too expensive or difficult to obtain in the Middle East.

Shangri-La's Robinson adds that when it comes to importing foodstuffs, high prices do not necessarily guarantee you'll receive a top-quality product.

"The main limitations are customs blocking shipments or flights being delayed," he asserted.

"Everything coming in obviously has to go through customs clearance and because of the temperature and distance travelled, often the beautiful fresh fish I have imported from Scotland has to sit in customs for ages and will then spoil. So that can be frustrating," he admits.

Meet the supplierFive minutes with... Baqer Mohebi Est. general manager S H Siadat

What products do you supply to the Middle East F&B industry?

We distribute products in the UAE, Oman and Qatar, such as: raw material and ingredients for the bakery, pastry and confectionery industries and F&B items such as teas, coffees, condiments, olive oil, mineral water and biscuits, as well as hygiene and protective wares.

Have suppliers in this region overcharged clients for the past few years?

There are many players in this region offering a wide range of commodities and competing rigorously - naturally this keeps prices reasonably competitive, so overcharging is practically impossible.

How has the economic downturn affected your prices?

No one has been exempt from the recent downturn; it has forced everyone to reduce prices to remain competitive, some with the help of principal manufacturers and some independently.

We have lowered a good portion of our selling prices and are operating at lower margins in order to maintain our market share.

What's your top promotion this summer?

We have a number of special deals planned. A few have already begun, including great offers for the HORECA industry on bread and cake mixes, creams and margarines.

"If you're paying for a great product, it all comes down to putting a huge amount of faith in the suppliers you source and trusting them to get things to you in time."

Il Villagio assistant general manager Toni Riethmaier says finding regular, supplies of exotic fruits is a challenge.

"They are ideal for various tropical fruit cocktails," he explains. "But since supplies are limited, most restaurants in KSA serve a standard selection of fresh beverages, which is a shame in a country where there are not too many beverage options in general."

Imports from Europe are also proving pricey, thanks to exchange rate fluctuations; Coral's Miraton cites "European cheese, jam, chocolate and pastry items" as being too expensive to purchase on a regular basis, and Holiday Inn's Youssef adds fois gras to the list.

This exchange-rate change is of course a knock-on effect of this year's most talked-about event - the global economic downturn.

But overall, the slowdown has not effected many lasting or significant changes in food costs, according to Il Villagio's Wickihalder.

"So far, in the field of quality ingredients, we haven't seen much impact from the current global situation. Yes, for a short period of time the high freight costs came down a little, but since oil prices are on the rise again, it's pretty much the same as usual," he says.

"We use many high-priced items, which of course have big influence - 75% of our food items are imported from Italy; but after two years of operations our guests understand the superior quality of these products and there is still a real demand for them."

Holiday Inn's Youssef agrees that food prices have been "up and down" during the downturn, but says these fluctuations appear to have "little effect" in the long run.

However Hotel JAL Fujairah Resort and Spa executive chef Arturo Cristiane says there are still deals to be found.

"Some food products coming from different countries are priced high, but others remain the same or can even be a great bargain," he insists.

Coral's Miraton agrees that certain products have been impacted, noting that prices have come down "for dry items in particular, such as vegetables, rice and pasta".

"Meat is one ingredient that has remained expensive, but at least the price is stable," he added.

Of course for any outlet, the key to maintaining consistent and manageable food costs is to build solid supplier relationships.

Holiday Inn's Youssef notes: "I have worked very hard during my eight years in the UAE; nowadays I know and have good relationships with the right people who can give me special deals if something good comes up."

But Shangri-La's Robinson points out hotel chains have a major advantage when it comes to sway with suppliers.

"Shangri-La buys for three or four hotels so we are buying in bigger quantities than some other venues, meaning we have some purchasing power," he says.

Meet the supplierFive minutes with... La Marquise International business development representative Ali Shafqat

What products do you supply to the Middle East F&B industry?

Numerous products, including Carpigiani ice-cream making machines and La Cimbali coffee solutions in our equipment range; Dilmah teas and Barnier sweets in our F&B line; and Caullet pastry ingredients in our production range.

Have suppliers in this region overcharged clients for the past few years?

Yes; our experience suggests that suppliers from around the world have charged high prices to the distributors in this region. An indication that prices were too high in the past is that today, the suppliers are ready to reduce their prices for the same products!

How has the economic downturn affected your prices?

Like many other distributors in the market, we were forced to reduce our prices in order to compete.

What's your top promotion this summer?

We are focusing on promoting our best-selling ‘Italian Gelato' and new flavors of Slush and Granita products to help in the heat-wave!

Robinson adds that buyers should remember "the pinch is being felt in the supply chain as much as with outlets".

"Now we are challenging them to give us a better price - and we are actually paying less for our stuff than last year," he reveals. "At the end of the day, they need business as well.

"But ultimately it's all about buying sensibly and carefully."

Al Fujairah's Cristiane points out that buying seasonal items is a good way to find quality produce at affordable prices.

"I always look for quality, but to minimise the cost or keep on line I try to buy the right product at the right price and at the right time," he notes.

"So it's important to have good relations with food suppliers so we can work together to find the best-priced ingredients without compromising on quality."

Il Villagio executive chef Emanuele Esposito adds that a common problem, for both operators and customers, is assuming a high price means high quality.

"In our restaurants, our target is to use products of a high standard and at the same time provide guests with authentic, Italian cuisine," he comments.

But at the end of the day an outlet must turn a profit in order to survive, as Coral's Miraton points out.

"High costs result in us having to reduce our margin in order to offer the best value to our guest, which means we take the hit," he says.

So how can a balance be struck in the on-going tug-of-war between food quality and food costs?

JAL Fujairah's Cristiane notes: "Any business runs to make a profit, especially nowadays. But the perspective that was perhaps lost over the past couple of years due to operator greediness should teach us a valuable lesson.

"I believe that a strong model will always be one where customers come back again and again; if a customer is not satisfied, they will not come back and over the long run that will affect the business more than it saved buying cheap products," he points out.

"To have happy customers you need to put in the effort and find quality products at a competitive price; that way, you are offering the best product you can."

Meet the supplierFive minutes with... EMF Emirates general manager Pierre Feghali

What products do you supply to the Middle East F&B industry?

We are the exclusive agent in the Middle East for Barry-Callebaut, the leading chocolate and cocoa-related products supplier to trade professionals.

We also distribute some very well-known European brands related to the confectionery, bakery and pastry industries.

Have suppliers in this region overcharged clients for the past few years?

Perhaps - until five to six years ago, when almost all known brands started to arrive in the region because of the boom here. That influx increased the level of competition, putting an end to decades of monopoly from leader brands that arrived in the 1970s and were able to overcharge.

How has the downturn affected your prices?

The problem with prices after the downturn is that some suppliers really panicked, so we are seeing a series of ‘price-dumping', mainly from desperate suppliers who were overstocked and had to react before their goods expired.

For us, we have a steady policy of never price-dumping. We monitor our stock closely and our sales have still seen some growth from last year. We lost some sales, through customers who grabbed at the lower prices (even if that meant lower quality, unfortunately) but our own prices stayed fixed.

What's your top promotion this summer?

We do not have anything specific during summer, but we are preparing for an event in November, like the ones we used to have with celebrity chefs coming from Europe to show the latest trends to UAE chefs, in what we call the ‘Rendez-Vous Gastronomique'.

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