The fast-moving consumer goods (FMCG) sector is beginning to undergo a quiet revolution in Lebanon, as traditional retail gives up market share to the growing presence of supermarket chains across the country. The FMCG sector has traditionally been the preserve of family-owned trading companies, but some of the larger global players are beginning to make their presence felt. As Torben Terp Hansen, General Manager of dairy company Arla Kallassi Foods, puts it, “There are very few international companies here alone, and most companies use local family distributors.”
The FMCG market was estimated to be worth around $500 million in 2011, according to Executive magazine. Although Lebanon’s population of around 4 million may seem small by global terms, its overall sales numbers rank third in the MENA region after Iraq, while in terms of per capita spending it is only bettered by neighboring Cyprus. One of the driving forces behind this high spend is related to Lebanon’s connectivity to the region and the world. “The sector is very related to the diaspora as well as the tourism sector,” Tarek Fawaz, Partner/CEO of Fawaz Holding, explained to TBY. “However, the Lebanese themselves are big spenders.”
The local distribution and retail sales network has been slowly changing over the last decade, as larger supermarkets and hypermarkets have begun to increase their footprint. The two main groups in Lebanon include Spinneys, which has six retail locations across Lebanon, and ADMIC, which operates under the TSC Plus (formerly Monoprix) and Geant Casino brands, among others. Despite the increased presence of organized retail, the distribution network remains fragmented owing to the large number of smaller stores that FMCG brands need to reach.
For many of the FMCG players, whether local or foreign, Lebanon is often used as a base for regional operations. Proctor & Gamble (P&G), which claims a 10% market share in Lebanon, set up its Levant regional headquarters in Beirut to service operations from Cyprus through to Iraq. Other players have similar stories. Malia Group, which is active in FMCG manufacturing and distribution for major brands such as BAT and Mars, uses Beirut as its headquarters for the Levant region also, and produces a number of brands under license from larger FMCG global giants such as P&G, as well as having its own lines in pharmaceuticals and beauty products. Jacques Jean Sarraf, the company’s Chairman, explained about the geographic spread of his operations, “We are a part of the region, and that gives us the ability to create strong relations in the area.”
Other local FMCG players are beginning to see opportunities even further afield. Al Rifai Rostery, a locally owned and operated snack food company, has opened up production facilities in Sweden, the largest of its type in the country, complementing its three factories in Lebanon and large facility in Kuwait. “After Lebanon, the Middle East, and the Gulf, we [are] target[ing] Europe for exports.” And with innovation aplenty, the growth of FMCG companies based out of Lebanon seems to continue its upward path.
© The Business Year