TBY talks to Jamal Al Ghurair, Managing Director of Al Khaleej Sugar, on Dubai as a regional hub, the sugar market, and the export game.
TBY What is the history of Al Khaleej Sugar, and what is the benefit of using Dubai as a regional hub?
JAMAL AL GHURAIR We are proud to be the first refinery in the Gulf region. Currently, our production capacity is approximately 1.5 million tons, and we export our products to nearly 40 countries. Our primary markets are GCC countries with an additional focus on Iraq and the MENA region. For centuries, Dubai has been a strategic hub and trading point; it offered us an ideal location to build our refinery. Dubai also offers world-class infrastructure and gives us a unique advantage to interact and conduct business with various organizations and business interests from around the world.
Have there been any recent changes to the source markets for importing sugar to the region?
We are a value-added business. We import raw sugar predominantly from Brazil, and then use our facility here to produce a refined product that we export to the manufacturers of consumer products. We serve as a bridge between the raw producer and the consumer. We occasionally use suppliers from India when they produce a surplus. Our relationship is reciprocal. When Indian suppliers are short we sell back to them too. However, 60% of the world’s raw sugar originates from Brazil, so it remains our primary supplier.
What are your plans to expand the company?
Our expansion plans are currently on hold as we are now in a market saturation stage. In basic terms, you can only produce as much as the market can consume. Therefore, our current focus is on optimizing production costs and improving our value-added services. We are additionally seeking to further develop our relationships with producers and consumers. In terms of new construction, we have built a new warehouse in Dubai with a storage capacity of 1.5 million tons in order to cope with fluctuations in the market and to increase our white sugar storage capacity to increase supply efficiency.
What have been the major recent trends in the market?
Sugar is not on the front line of food production. Sugar generally plays a supporting role based largely on consumer preferences. Lately, we have been producing various types of sugar to cater to different product line needs. Our clients range from food and beverage producers to cooked food to direct consumers. When we first commenced operations, our clients were 20% industrial and 80% consumers. Now, we have reached a stage where these figures are 40% and 60%, respectively. The industrial side of the business is growing rapidly, much faster than the direct consumers.
What challenges is the industry currently facing?
Sugar does not carry any duty or protection tariffs in this region, so whenever a manufacturer has excess sugar, this region is the place to dump it. Our business suffers from this trend, and our key strategy is to reduce our production costs. Currently, the major short-term challenge we face is an oversupply from India in the market. In the long-term, the challenge is to be more efficient and closer to our customers. It’s absolutely crucial for us to identify trends and respond quickly. Anticipating consumer demand is vital.
You have made some significant steps in implementing sustainable business practices. Why is this important to you?
We desire to be as environmentally conscious as possible. The added benefit to us in implementing energy conserving measures is a continued reduction in our energy expenditures. This is a source of pride for us, as we currently consume only half the energy of similar manufacturers. Reducing energy costs is one effective technique for companies looking to reduce costs and maximize revenue potential.
What is your outlook for the industry in 2012?
Currently, we are assisting companies entering the market, and persuading them to use Dubai as a hub to implement value-added services in the food supply chain. Companies can efficiently import raw products, add value, and then re-export. We benefit by supplying sugar. Personally, I don’t foresee any major trends in the sugar market in 2012. I think the trend will continue to be steady growth as food and beverage demand increases.
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