THIRSTY BUSINESS

Dubai 2016 | INDUSTRY | VIP INTERVIEW

TBY talks to Tarek El Sakka, CEO of Dubai Refreshments, on the evolution of the beverage industry in the UAE, new technologies, and the export market.

What initiatives has Dubai Refreshments put forth to push the F&B industry here in Dubai?

Dubai Refreshments is one of the oldest manufacturing companies in the UAE, established in 1959. 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've also introduced new beverages, such as Lipton Iced Tea and Frutz . 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.

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 is already a hub for trading because it has great ports, great infrastructure, great communication, a business-friendly environment, places for conferences and meetings, and it 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's expanding beyond. All of these are positives. As far as manufacturing, it's 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. In Dubai that would be difficult 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 vs. commodities. Brands and products that have a certain premium image can be manufactured in Dubai. I don't see 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 see Dubai potentially becoming a high-quality producer with great service and a great place to do business overall.

What new technologies will you implement in your new manufacturing facilities?

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 couldn't 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 a much lower carbon footprint. Overall, we have invested in equipment that is more efficient, more environmentally friendly, and uses less energy.

How much will you increase your capacity?

The new factory can produce up to 120 million cases per year. In the initial stages it will be around 70 million, and then over the next 30 years we will gradually increase production to full capacity.

What are the main markets that you export to?

We export to over 25 countries. Most exports are to neighboring countries, like Qatar, Oman, and Saudi Arabia. We also export to many countries in Africa. I would say the biggest opportunity in general is in different countries in Africa. It is a big opportunity.

What percentage of growth have you had YoY?

We've been growing our revenue in general in the mid single digits. The export part of the business is very volatile and impacts the topline sometimes. We try to balance that out by having a very consistent local business. This has helped us maintain very 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.

What are your goals for 2016?

For 2016, our biggest goal is to make the transition from this factory to the new factory smoothly, without interruption, leveraging the resources we have on hand to expand the business into new categories, as well as having more flexibility and capacity to satisfy both the local consumer needs, as well as our export needs.