Beneath the radar: Essentially squeezing growth from the Emirates economic miracle

As the balance of economic power migrates from West to East, one perfectly located country is emerging as the new gateway for the world’s business: the United Arab Emirates, a $590bn trade titan and one of the world’s busiest international travel hubs. 

Meanwhile, one newly listed London company, Essentially (ESSN)Follow | ESSN, is riding this economic miracle to target a valuable niche within the region: the manufacture of nutritious juices and snacks to supply the country’s rapidly growing retail and food service industry supporting the millions of people passing through the UAE each year. 

The miracle in the desert

The UAE’s growth over the past two decades has been nothing short of spectacular reflected most noticeably in the advanced cityscapes that have emerged from the country’s deserts. 

Dubai, in particular, is unrecognisable from the small fishing and pearl diving town it was before the discovery of oil in the 1960s began its transformation into a global economic powerhouse, as oil revenues were invested in infrastructure, diversification efforts, and the establishment of free zones, tourism, finance, and aviation hubs.

To put some numbers on that, the UAE’s GDP has grown at more than 5% a year since the start of the millennium to hit $383bn, astounding for a country with fewer than 10m inhabitants, whose GDP per capita now stands at over $40,000 a year – higher than France, the UK and Japan.    

Perhaps most impressively is the country’s diversification away from oil, from 32% of GDP in 2000 to just 10% today, while total trade has expanded eight-fold to $590m. Travel and tourism, in particular, have played a major role in the transformation, not least its burgeoning air travel industry. 

Indeed, while Western-owned airlines have struggled in recent years, its carriers have thrived. Its two largest airlines alone – Emirates in Dubai and Etihad in Abu Dhabi - carry more than 30m passengers a year between them, many through the UAE’s airports including Dubai (DXB) and Abu Dabhi (AUH). Before the pandemic arrived, they’d grown to serve 86m passengers a year between them, from just 5m two decades earlier.  

Increasingly, tourists do not just pass through what has become one of the world’s largest international travel hubs, instead choosing to spend their vacations in the many luxurious high-rise hotels that have sprung up as part of the steel and glass skyline. The country saw more than 20m international arrivals in 2019, a five-fold rise in 20 years contributing around 5% of the country’s GDP, a figure expected to double over the next decade. 

An appetising opportunity

That’s great news for Essentially, which like the UAE’s economy is growing quickly but still very far from reaching its financial zenith as the country premier cold-press juice company. Big-spending tourists and the increasingly wealthy local population are creating huge opportunities for companies targeting the country’s consumer economy, and Essentially has been busily developing products and signing deals with hotels and retailers to make sure it’s one of the winners.

Among the luxury hotels now stocking its products are the 394-room Emirates Palace Mandarin Oriental in Abu Dhabi, and the 608-room Resort Palm Jumeirah in Dubai, part of the Marriot Hotel group which is rapidly expanding in the country. Both are selling its protein snacks, while The St. Regis Downtown Dubai – one of four hotels in the St Regis group boasting 289 rooms – is selling its wellness shots, tapping into the wellness trend the modern tourist brings.

Essentially also looks set to benefit from the expanding presence of Western companies in the region, and the expansion of the UAE’s own retail and food service industry, the latter of which is set to grow at a compound annual growth rate of 6.8% until 2027. 

It’s working with Pret a Manger as it expands its footprint in the country to 20 stores, convenience store chain Zoom, Autogrill - one of the largest global travel retailers operating out of DXB and AUH – and a range of fuel stations across the country, including Emarat and ADNOC, which stocks six of its products across 120 stores and growing. Overall, Essentially has grown its retail footprint by 73% to 575 outlets over the past year, and nearly 1000% since 2018, shortly before new management came on board to drive the business forward. 

They’ve focused investment on new product development and bringing manufacturing in-house using sate of the art processing and preservation technology. That’s expected to deliver sales of $7.9m this year, but there will undoubtedly be more innovations to come to help it hit its target of quadrupling revenues over the next three years. 

For investors looking to tap into the UAE’s economic miracle, Essentially could offer a fruitful opportunity.