Lean, Mean, and Measured

What is the current demand for your products, and how do you see this evolving in the coming years?

Demand comes from two areas. The first, which has been surprising, is for low-priced commodity products. There is large demand at the lower end of the segment and tremendous demand at the top end of the specialty market. Our job is to increase demand across the entire spectrum, especially at the top end, where added value, quality, and returns are higher. Our job is to move the bulk of people to this segment.

What strategy are you following to grow this middle segment?

The only strategy that works with consumers is to innovate, innovate, and then innovate some more. Different segments of consumers perceive value differently, so we have to find those niches and create products for them. Today, one of the fastest growing food areas is pizza, which is why we should innovate different toppings and ingredients.

How has your partnership with Unilever, among others, helped the company grow?

Unilever is a technology leader itself, so we follow it in this regard. However, Unilever respects our transparent and efficient manufacturing processes. Even a company that large is interested in reducing costs amongst its suppliers and rates each supplier based on the cost effectiveness of its technology implementation. This interests Unilever because cost-efficient suppliers translate into cost-efficient operations. In this context, we are performing well, and Unilever continues to utilize us. We receive a great deal of business from it because it has a strong presence in the Gulf and Pakistan, which allows us to open new markets there. This applies to other large multinationals like Kraft as well.

What are the main benefits of manufacturing locally compared to other countries?

Transport is a key factor, perhaps the most important one. This is why I am such a fan of the steps the government is taking in the infrastructure and logistics sector. This has been the key to our regional success. We are a regional player focused on the GCC and a bit beyond, and we feel that these government programs make our position stronger. We are in fact partnering with many logistics firms here. We have our own warehousing, and our automation system is one of only three in Oman. The DHL system is world-class, and we are using the same systems, though on a smaller scale, as them. With cloud technologies, we can integrate our operations into the systems of other logistics firms, allowing us to have seamless manufacturing and transport chains.

Does Areej have any short-term expansion plans?

The GCC remains our core area of operations, and we strive to increase our market share through niche markets here. There is great demand for ghee all across the globe, including Canada, but these exports are small compared to volumes in the GCC. Our biggest market is Saudi Arabia, which is three times larger than Oman, another strong market for us.

What are Areej’s main goals for 2017-2018?

Right now, product expansion is on hold because of various market factors. For 2017 and 2018, our main objective is to secure our bottom line. Costs are rising across the board, and this is particularly acute in Oman because the government has no money to spend. Prices, however, have been held constant because of concerns from the Consumer Protection Society; therefore, we are being squeezed. Thus our major job for 2017 and 2018 is how to keep our bottom line secure. We are trying to survive these tough times, which should end by the middle of 2018, and look forward to the future. So far 2017 is looking like it will be worse than 2016 for Oman, but we are still positive. We are making decent profits despite the fact that the bottom line appears to be shrinking again. Under these conditions, consolidation is in order.