REFRESHING OVERVIEW

Dubai 2016 | ENERGY & INDUSTRY | INTERVIEW

TBY talks to Tarek El Sakka, CEO of Dubai Refreshment, on Dubai's potential as a hub for food and beverages, initiatives to push the sector forward, and expanding the company's capabilities.

 Tarek El Sakka
BIOGRAPHY
Tarek El Sakka has over 27 years of experience in the FMCG field and spent 20 years working for Pepsi across the Middle East. He is currently the CEO of Dubai Refreshment and has been with the company since 2008. Previously, he was the General Manager of PepsiCo bottling business Jordan Ice and Aerated Water Co. in Jordan from 2004 until 2008. He earned an MBA with a concentration in accounting and finance from Rice University and graduated magna cum laude from the University of Southwestern Louisiana with a bachelor’s in business administration as a member of the Dean’s List.

What does Dubai need to do to become an F&B manufacturing hub?

There are a lot of positives for Dubai to become a hub. It already is a hub for trading because it has great ports, great infrastructure, great communication, a business-friendly environment, places for conferences and meetings, and is a great place for people to visit. It boasts great entertainment and solid services. All of these things have helped to turn Dubai into a hub for the Middle East and now it is expanding beyond. All of these are positives. As far as manufacturing, it is a little bit more challenging because the competitive advantages of Dubai are less visible. Normally people look for the lowest cost of production to set up a manufacturing facility. That would be difficult in Dubai because of energy costs and limited land space. However, there is an opportunity for Dubai to become a strong hub for high-quality manufacturing with value added versus commodities. Brands and products that have a certain premium image can be manufactured in Dubai. I do not foresee Dubai ever becoming a low-cost producer, although the costs can be lower than they are today. There has been a lot of research done to see how manufacturers can reduce their costs and become more competitive. I foresee Dubai as potentially becoming a high-quality producer with great service and a great place to do business overall.

What initiatives has Dubai Refreshment put forth to push the food and beverage industry here in Dubai?

Established in 1959, Dubai Refreshment is one of the oldest manufacturing companies in the UAE. Certainly, we played a big role in establishing the beverage industry in general, being one of the first. The way we drink a beverage is different today than it was before in terms of the type of package, size of package, and range of flavors. Therefore, we developed our business accordingly. We have also introduced new beverages, such as Lipton iced tea and Frutz juice. We are constantly expanding our product portfolio to meet consumer needs. As consumers become more sophisticated, they want more variety. They want a beverage that addresses different occasions. There are functional drinks, drinks for treats, drinks for quenching thirst, and so on. People drink for different reasons and we are trying to address different consumer needs through our beverage portfolio. Our revenue has generally been growing in the mid-single digits. The export part of the business is volatile and at times impacts the topline. We try to balance that out by having a very consistent local business. This has helped us maintain steady growth in profitability despite some sales volatility. We are trying to reduce that volatility by expanding the countries we export to. Rather than relying on one or two countries with big volumes, we want to have 40 countries consistently buying from the US. We are also trying to expand the range of products and packages that we sell.

How are you expanding your capabilities?

The new facilities will open at the beginning of 2016. There is a lot of technology that goes into beverage production. There is a new product range we can produce that we could not do before. The speed of production is also increasing. Now we can have lines that require less labor because of the technology. We can have lines that have much better quality control because of technology. We can also use lines that require a lot less energy and have much lower carbon footprints. Overall, we have invested in equipment that is more efficient, more environmentally friendly, and uses less energy. Our new factory can produce up to 120 million cases per year. In the initial stages it will be around 70 million cases, and then over the next 30 years we will gradually increase production to full capacity.