Increasing costs are a challenging factor for importers from the United Arab Emirates

“We are in the process of diversifying the origins of our berries”

Kenneth D'Costa, managing director for United Arab Emirates' importer, Barakat Group, explains that soft fruit is actually the second biggest sector when it comes to their imports: "The most important product for our company is leafy greens, but our second largest category is from berries. We procure our berries and sell them at the local markets. We do not grow ourselves as we would simply be competing with our partners, which doesn't make a lot of sense. We service all the channels, from retail to the hospitality sector, as well as our own shops. Next to selling the produce fresh, we also process them into smoothies, juices, and ice cream."

It's not just global exporters that are dealing with challenging logistical situations. For Barakat Group, two of their largest challenges have to do with logistics. "Currently, we're dealing with quite a few challenges when it comes to the procurement of berries. First of all, there's ensuring the right quality. Due to weather conditions in the markets we get our berries from, due to climate change, we're seeing quality issues both at the stage of their origin as well as after arriving in our ports. At the same time, the shipments aren't always arriving reliably at the date we expect. So shipments can arrive a day early or a day later than scheduled. Finally, the current freight rates are a great concern. Berries are shipped to us mostly via airfreight, although blueberries can also be transported to us via sea."

As costs have gone up, the importer has decided to work with Driscolls to try and diversify the origins of their procured berries. D'Costa explains: "We get most of our berries from the United States, as Driscoll's is one of our major suppliers. However, due to the challenges I've just mentioned, we will be working with Driscolls to diversify the origins of our berries which could include Morocco, Europe, and Egypt. The latter mostly supplies us with strawberries, for instance. For blueberries, we've been importing them from Poland, Ukraine, as well as local growers in the Emirates. The fact that the freight rates are so high is effectively losing the US some of our business and hence the reason for diversifying the origins."

Overall, Barakat Group is looking at a 20% increase in their costs, which simply can't be absorbed by the clients in the United Arab Emirates. "The increase of freight rates aren't the only thing getting more expensive. Our cost, in general, has gone up. Freight alone has increased costs by 14%, while gas or fuel has caused an increase of another 3%. Waste has also gone up by about 3%, leading to an overall increase of about 20% in costs. Meanwhile, our clients are not in a position to absorb these costs. Most have still recovering from the losses during the pandemic, and it's a very competitive market. This means most of the blows will be absorbed by our company. But we're reaching a point where doing business this way isn't sustainable. Our company is resilient, and we're positive about the future. But the market will have to correct itself, and we trust that's exactly what will happen in 2023."

D'Costa is looking forward to attending the exhibition in Madrid in two weeks, as it's an important opportunity to learn more about current market developments: "We'll be attending Fruit Attraction in Madrid, as we attend as many exhibitions as we can. It's important for us, as we're one of the largest importers in the United Arab Emirates. We need to see the developments in the market as well as obtain new contacts during these events. It's also a great opportunity to see which markets are emerging, whether there are new varieties in the fruits we import that in turn give us better quality for our clients, and if there's a chance to lower our costs, either via freight or growers in the region. Overall, exhibitions are a great way to see if we can cut our costs down, which is very much needed in the current economy," he concludes.

For more information:
Siddharth Gupta
Bakarat Group
Email: Siddharth.g@barakatgroup.ae 
Mob: +971 50 4573248
https://barakatgroup.ae/ 


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