OMAN - Industry
Executive Director, Areej Vegetable Oils & Derivatives Company
Prem Maker graduated in Chemical Engineering and joined Unilever India as a Management Trainee. During his 18-year stint with Unilever, he worked at Port Sunlight in R&D and production in Mumbai, and managed factories in Bengal, Kashmir, and Mumbai. Since relocating to Muscat in 1984, Maker has been heading Areej Vegetable Oils & Derivatives Company.
Areej was the first factory, and also one of the first major businesses, established in Oman in 1980. Originally, we were an import substitution unit, with production of about 2,000 tons per year. Today, we are perhaps the third largest player in the GCC—we are number one in Oman, number two in the UAE, and number three in Saudi Arabia. We have grown from producing 2,000 tons to 180,000 tons, marking a 90 fold increase in capacity over these 30 years. Our range has improved from originally just one or two oils to a range of products. Now that the market is moving into consumer foods, we are selling more than just oils and fats. We expanded into producing blended butter and margarine, and we also entered the mayonnaise and salad dressing markets for Heinz. We have grown in our scope and size tremendously. The beauty of Oman is that it is truly a market-driven economy, which is unusual in the Middle East. Oman is a free economy and that is why we can trace the growth of our company parallel to the growth of many companies in the West in terms of size, technology, and management.
Fortunately, our technology is brought in from all over the world and put together by us. We buy technology from anywhere in the world. For example, we bought our last processing plant from Italy and our support plants from Malaysia. We have four fully automated plants, where the operators control the plant with a computer and keyboard.
We have a total of over 600 employees, 60% of whom are Omani, with expatriates mainly working in technical fields. Our fully automated machinery incorporates a high level of electronics. Our SAP system for business management is one of the world’s best, and this is part of what makes our plants integrated across the supply chain.
We have just one factory that imports raw oils from around the world and refines it. We get palm oil from Malaysia, corn oil from the US, and sunflower and soybean oil from Argentina or Ukraine, depending on the season. We carry out the whole process from start to finish. We make the caps, bottles, and handles, as well as assemble the various parts. We purchase plastic pellets and raw oil. The company also buys the paper labels and packaging.
We are 25% local, but the Omani market is so small that our activity accounts for about 65% of Oman’s market. We have three brands in the local market, and everything we sell is designed for household consumption. Most of our products are consumer packed, both for the local and GCC markets. In total, 75% of our products are exported—Areej has a 30% share of the Saudi Arabian market, with a slightly higher share in the UAE. We export to the entire GCC, but our basic markets are from Syria on the West to Iraq in the East, Russia in the North to Egypt in the South. We also export specialized products to North America.
We manufacture for some of the top food companies in the world. We produce fats for Kraft, oils for Unilever, and mayonnaise for Heinz. These brands are marketed throughout the MENA region by the multinationals themselves.
There are two major trends in the food business: low-fat diet products and convenience foods. However, eating low-fat foods in the West is much more popular than in the Middle East. That is why we see convenience foods growing faster in the Middle East. Areej first moved into the low-fat segment about 10 or 15 years ago, but the low-fat products simply didn’t work that well in the Omani market.
Our future vision is to continue developing the convenience foods segment. Business-wise it makes more sense, because being a commodity business does not allow us to increase margins. Convenience food is an area that has experienced rapid expansion—we get the best returns and employ our management and technical prowess to the maximum advantage in the segment. Our processes are all internationally approved, and we are at the high end of the market, aiming to integrate our work with other world markets.