While war is a phenomenon the GCC retail sector is not used to dealing with, harsh economic environments are not unprecedented in the region.
John Speers, CMO, growth marketing leader and founder of The Marketing Lab, said: “As we saw in COVID-19, brands that go dark risk losing years of equity and mental availability. Winners will defend margin while continuing to invest in distinctiveness, salience and long-term demand creation.”
The FMCG/CPG sectors can take comfort in MENA sales surpassing $450 billion in 2025 and being expected to reach $650 billion by 2030, according to GrandView Research. These were pre-Iran war estimations.
Since May 2026, MENA FMCG and CPG sector leaders have witnessed continued volatility but also a scaling down of geopolitical disruptions, springing hope towards a potential final Iran war resolution.
Hoping for this eventuality, brands have shifted attention towards a marketing rewiring that prioritizes supply chain resilience, and hyper-local consumer resonance, compared to traditional brand differentiation and recognition tactics.
Aparnaa Sharrma, Founder, Sprout Media, said consumers today are highly aware of global disruptions, so brands that openly explain value, sourcing, quality, and long-term commitment are earning more trust than those hiding behind generic price narratives. “The focus has shifted from ‘justifying increases’ to reinforcing credibility, empathy, and customer partnership.”
Yet, even if the war ended today, commercial disruption typically will take several weeks to unwind, as insurers, carriers, traders, and industrial buyers re-open flows at their own pace, and that’s besides the costly consequences the crisis has caused so far.
Issues prolonged, unresolved
It all started with the 2025 U.S.-imposed tariffs that created structurally lagging repercussions. It typically takes 12-18 months for tariff increases to fully flow through to shelf prices, making 2026 a margin inflection year for brands.
Leading global CPG companies have already disclosed major tariff-related cost aftermaths. Procter & Gamble (P&G), for example, disclosed around $400 million in tariff cost impact. KPMG reports that 43 percent of CPG executives reported a 1 to 5 percent decline in gross margins directly due to the 2025-2026 tariff waves.
A product cost increase may backfire
“MENA consumers are sophisticated and well-informed. They do not punish brands for raising prices. They do not take kindly to brands that raise prices without being honest about why,” Zaid Aboobaker, Founder & CEO of CompassPoint Consulting, said.
According to GrandView Research, over half of consumers also report boycotting brands due to value misalignment, making trust, cultural sensitivity, transparency, and ethical positioning at par with price and quality in purchase decisions.
“Brands must clearly explain cost pressures, demonstrate restraint, and deliver noticeable value through bundles, loyalty programs, flexible payments, or service upgrades,” Nasir Jamal, CEO, Marketify Dubai, said.
If that wasn’t enough, according to a 2026 Oliver Wyman Report, the Middle East conflict has created significant disruptions for global supply chains, leading to higher energy prices, greater input costs, longer lead times, and shortages in cash flow.
A major culprit is the closure of the Strait of Hormuz, a transit route where about 20 percent of global petroleum liquids consumption, 25 percent of global seaborne oil trade, and 20 percent of global trade in liquefied natural gas (LNG) happens.
Polymers, essential for packaging and consumer goods, witnessed severe tightening. Saudi Arabia and the UAE, which account for 20 percent of the global polyethylene trade, increased their prices by 15 percent on March 11.
Shipping giant Maersk suspended all passages through the Strait, adding eight to 15 days to Asia–Europe container transit times via other routes.
Major shipping company CMA CGM introduced emergency conflict surcharges, including $2,000 on a 20-foot equivalent unit (TEU), for specified Middle East cargo as of February 28.
It also levied emergency fuel surcharges effective March 16, including $150 per TEU.
It gets worse. In its 2026 annual Global Disputes Forecast, law firm Baker McKenzie said some 82 percent of organizations are concerned about being subject to a cross-border or multiagency investigation in 2026 as a result of various risks, including supply chain disruption, geopolitics, and trade policy. Around 80 percent of respondents identified tariffs and supply chains crossing contested borders as major external market factors increasing exposure to disputes. The types of disputes presenting the greatest risk to their organization in 2026 include:
- Data privacy/cybersecurity: 18%
- Tax: 12%
- Trade sanctions/export controls: 11%
- ESG: 9%
- Product liability and consumer disputes: 7%
- AI-related (e.g., bias, liability, misuse): 6%
- Brand/reputation: 6%
Preparation for recovery
A 2026 McKinsey report states that AI, economic uncertainty, and geopolitical fragmentation, together with evolving workforce expectations and increasing consumer demands, are redefining how brand leaders create value and sustain performance.
“If you are so busy funding AI efficiency tools to protect the back end that your brand goes quiet, you are solving the wrong problem. History is clear: brands that keep building during uncertainty recover faster,” Vaishali Shah, Creative Director at Creative ID, said.
According to Sharma, “We’re seeing stronger investments in community-led engagement, creator collaborations, experiential retail, hyper-personalized communication, and trust-building content.”
“Growth-focused leaders are already shifting investments back into brand building, creator ecosystems, and customer trust. In uncertain markets, efficiency protects the business, but emotional brand equity drives long-term market share. The brands that balance both will dominate the next decade.”
A challenge might lie in a Deloitte 2026 report that said media consumption has trended downward for three consecutive years (averaging 42 hours/week in 2026 compared to 44 in 2024 and 48 in 2023). Social media, in particular, took a massive hit, declining by 17 percent. The amount of content that consumers are faced with is all blurring together and leaving a complete sense of overwhelm.
This might require restraint, but according to Bhavneet Kaur Sahni, Founder & CEO, Belvedere Marketing & Belvedere PR, “The brands I watch closely are already quietly building the offensive: sharpening identity, deepening cultural relevance, planting flags in categories that will matter (in the years ahead).”
“The ones doing it right are not explaining their price; they are reframing the value. In the GCC, a consumer who feels respected will absorb a price increase. A consumer who feels managed will leave and never tell you why.”
And there is something to say about empathy. “The most successful brands lead with empathy, transparency and value reinforcement before economics,” Speers said. The caveat is that “Demand-side empathy sometimes conflicts with supply-side reality, perception protection, localization and continuity of service, so it’s a high wire balancing act.”
State of play with AI
AI is no panacea for the ills of the retail sector.
“Brand leaders recognize the need for efficient AI-driven procurement to ease margin pressures. At the same time, they realize that efficiency alone won’t boost growth. They must combine smarter purchasing with exclusive storytelling, customer loyalty, and relevant distribution to remain competitive,” Jamal said.
A recent PwC statistic suggests fewer than 10 percent of CPG leaders have clear AI deployment roadmaps, citing capability gaps, unclear use cases, layering onto legacy infrastructure, and integration costs.
“Brand leaders who treat this as a binary will struggle. The strongest CMOs I work with use an AI-driven procurement discipline to fund offensive brand investment. That is the play that yields the best outcome. You do not pivot from defense to offense. You earn the right to spend on growth by being relentless on cost,” Aboobaker said.
Most organizations struggle to translate AI investment into ROI due to fragmented data, siloed systems, and a lack of operational alignment, not immature AI tools.
Still, AI is delivering measurable value in demand forecasting (20–40 percent accuracy gains), procurement optimization, and real-time disruption response.
McKinsey estimated in April 2026 that agentic AI will power as much as two-thirds of current marketing activities, including automated content generation, synthetic audience testing, and audience-based media planning.
Organizations that are implementing agentic workflows in marketing can expect to see 10 to 30 percent revenue growth, and a 10-15-times acceleration in the creation and execution of marketing campaigns, according to McKinsey research.
The war fog may not have yet lifted, but the message for better times ahead is none clearer than what Shah said: “Undecided audiences are not waiting for a better campaign. They are waiting to see if brand values match theirs. In-store messaging shows purpose, not just product. Packaging reflects what you stand for. Community presence is about showing up, not broadcasting.”
