Cold storage in hot demand across the Gulf

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• Shoppers want chilled and frozen foods
• Food security concerns play a role
• Saudi Arabia and UAE lead demand

Demand for chilled and frozen foods is rising across the Gulf, driving growth in the region’s cold chain infrastructure.

Maersk, the Danish logistics company, says this demand – along with food security concerns – motivated it to open its first UAE cold store at Dubai Industrial City last summer.

Population growth and concerns around climate change are also increasing the need for cold storage facilities. 

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Shereen Nassar, global director of logistics studies at Heriot-Watt University in Dubai, points to the “increasing demand for perishable goods, expansion of food retail and the rise of ecommerce” as Gulf populations increase.

Nearly 59 million people live in the six GCC nations, with growth rates of between 0.3 percent and 1.3 percent.

Two cities in particular – Dubai and Riyadh – have bold expansion plans. Dubai aims to add more than 2 million residents in the next 15 years. The Saudi authorities want Riyadh to have 15 million residents by 2030, up from 7 million, although this goal may be revised downwards.

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Gulf governments, particularly in the UAE, are also focusing on shoring up food security after major disruptions hit global supply chains during the Covid pandemic. 

“It is not just a national issue but a regional imperative that requires co-ordinated strategies and actions,” Sheikh Mohammed bin Rashid Al Maktoum, vice president of the UAE and ruler of Dubai, told a GCC meeting in early July. 

Around the same time, Sheikh Mohammed said Dubai Municipality in partnership with DP World, a major ports operator, would double the size of its “foodstuffs, fruits and vegetables” market.

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Cold storage is a necessary component of this effort, as it is in Riyadh. Grocery delivery companies are on the rise in Saudi Arabia and chilled facilities are driving logistics investments, according to Abhishek Mittal, head of industrial advisory for the Middle East and Africa at JLL. 

“Saudi Arabia is evolving in terms of consumer preferences. Cold storage players are not in older retrofitted structures, but rather in new purpose-built facilities which meet the requirements from the various authorities that are regulating these assets,” Mittal says.

In Oman the International Seafood Company, a subsidiary of Fisheries Development Oman, is developing the GCC’s largest seafood processing facility incorporating cold storage. 

In the past year the Kuwait Investment Authority has made substantial investments in two cold chain logistics firms – France’s Petit Forestier Group and New Jersey-based SeaCube – through Wren House, its London-based infrastructure-focused arm. 

“If you look at the GCC, there is no single player in these countries that has one brand, one delivery system that a food company or distributor can go to with a complete network across the region,” says Abhishek Shah, RSA global’s co-founder and group CEO.