For CPG companies, the past six months’ disruption has created a more complicated challenge than selling to a cautious consumer.
The shift is visible in the Gulf. The Gulf shopper is not necessarily abandoning brands. The basket is becoming more selective. In Saudi Arabia, NielsenIQ’s April 2026 data shows value and premium tiers within branded FMCG expanding by 22.1% and 18.2% respectively.
NielsenIQ’s Full Year 2025 State of the Nation report shows the UAE FMCG market grew 6.8% in value in 2025, with volumes up 4.9%, while Saudi Arabia declined 1% in value, with volumes essentially flat. Both markets showed increasing polarization between value and premium rather than a simple move towards cheaper products. That polarisation is reshaping the competitive landscape, focusing attention on where private label fits into the Gulf’s value equation.
The private-label threat is real — but not quite the way it looks
Private label is an obvious beneficiary of the value conversation, but the Gulf remains unusual because store brands have considerable room to grow. NielsenIQ’s RMS data (Q2 2024) shows Middle East/Africa was the fastest-growing private-label region globally, with value sales up 34.3% year-over-year — more than double Latin America’s 14.2% and far ahead of the low-single-digit growth typical of mature Western markets.
That growth is coming off a low base: as of the most recent published market-level figures available, UAE private-label penetration sat at roughly 2% of retail value, against a global average in the mid-teens — among the lowest starting points of any major consumer market NielsenIQ tracks.
NielsenIQ’s “A Tale of Two Consumers” report (with World Data Lab, released 19–21 August 2026) — a global study with no published Gulf- or MENA-specific breakout on this question — found 58% of consumers say they do not care whether a product is a national brand or private label and simply buy what they need. That shift is consistent with the polarized, value-driven behavior NielsenIQ’s own Gulf-specific data shows above. Private label is increasingly competing across mainstream and premium segments.
For Gulf CPG companies, the answer isn’t to beat private label on price. A brand needs to give consumers a reason to choose it when functional differences appear smaller. That reason could be quality, efficacy, familiarity, innovation, provenance or emotional connection.
The retailer has become more than a customer
For decades, the CPG-retailer relationship centered on distribution, shelf space and trade terms. Digital commerce has added behavioral data on what shoppers search for, buy, abandon and respond to.
Retail media turns that information into an advertising proposition. IAB MENA’s 2025 digital advertising data shows retail media among the region’s fastest-growing channels, with spending increasing 40.5% year-over-year to $323 million.
The answer isn’t to abandon brand marketing. Retail media can convert existing demand, defend the digital shelf and influence purchase. Brand marketing creates memory, meaning and demand. The danger is letting the ease of measuring make the second appear less valuable. Eleni Kitra, CEO of the Advertising Business Group, observes, “What we are seeing is more selective: budget moving toward whichever channels and partners can demonstrate measurable outcomes, while marketing continues to defend the case for brand investment internally.”
The new battleground is the basket
The basket itself is becoming the strategic unit. NielsenIQ’s Gulf data shows why. In the twelve months to mid-2025 — an earlier reading than the FY2025 figures cited above — combined FMCG sales in Saudi Arabia and the UAE reached $36.3 billion, with Saudi Arabia growing 3.3% and the UAE 7.1%, per NielsenIQ’s “Breakthrough Promotions” commentary, published 12 August 2025. NielsenIQ says growth was driven by consumption as well as pricing, while shoppers increasingly evaluated promotions through a broader definition of value.
This is where AI enters — not as a content tool, but as infrastructure for making thousands of decisions faster.
AI at the shelf is still a work in progress
BCG’s “The AI-Forward CPG Marketing Organization” found 7 in 10 CPG marketing leaders expect GenAI to make their functions faster and more efficient. Yet only 13% said GenAI was already in widespread use or fully integrated into marketing workflows. Nearly 60% said their organizations were centralizing marketing functions, while almost 50% were simultaneously becoming more localized.
That contradiction matters here. A regional campaign cannot simply be translated into Arabic and rolled out unchanged across the Gulf. Language, cultural cues and shopping occasions vary.
AI could help central teams build common assets and guardrails while local teams adapt execution. BCG found nearly 60% of surveyed CPG leaders expect to bring GenAI-related creative content generation and retail-media planning and optimization in-house.
But practice lags the promise. BCG and the Consumer Goods Forum’s “AI in CPG and Retail: How Winners Are Pulling Ahead” (24 June 2026) found roughly 75% of CPG companies remain in pilot or exploration mode with AI, while only 18% are scaling impact. Nearly half of executives identified idea-to-market as their most strategic AI opportunity, but only 11% said they had significantly scaled AI there. More than half did not formally measure AI ROI.
The real prize is not generating a different ad for every consumer. It is connecting demand signals: what people buy and search for, which promotions work, which products gain or lose share, and where brands acquire or lose customers. Linda Kender, Regional Director MMA MENA, puts it, “AI creates value when it turns data into action and is connected to a specific business objective.”
BCG’s earlier “Uniting CPG Marketing and Sales for Collaboration and Growth” found 75% of marketing leaders considered omnichannel investment allocation and activation a major challenge, while 68% identified organizational silos and poor internal collaboration as the biggest hurdle.
So is the brand manager becoming obsolete?
Not quite, but it is changing.
That doesn’t make brand equity less important. It makes defending it harder. If every decision is evaluated against immediate return on ad spend, channels closest to conversion will gain favor. Yet CPG brands are built through repeated exposure and experience, not necessarily through one attributable transaction.
The emerging model is one where manufacturers and retailers exchange data, media and commercial value while negotiating who controls the consumer relationship. That negotiation will matter more as private label grows and AI makes targeting cheaper.
For CPG companies, the post-storm environment isn’t just about spending less. It is about spending differently and knowing what each layer of the system is meant to accomplish.
Brand builds memory. Retail media captures intent. Promotions change behaviour. First-party data reveals the shopper. AI connects and accelerates the system. Private label tests how much consumer loyalty belongs to the brand.
The companies that navigate the next phase successfully will not necessarily be those spending most on retail media, AI or performance marketing. They will be those that understand where each investment belongs, not just what is easiest to measure.
As Eleni Kitra says, “The next phase asks for accountability further downstream: retention, repeat purchase, and lifetime value.” The storm has changed the CPG landscape. The next battle is over who gets to define the shopper when the shopper reaches the shelf.
(This article appeared in the October 2026 print issue of Communicate. Read more insights from industry leaders and experts in the full issue here )
