TBY talks to Tarek El Sakka, CEO of Dubai Refreshment, on its new facility, competition in the region, and Dubai's strengths as a hub for the food and beverage industry.

 Tarek El Sakka
Tarek El Sakka joined Dubai Refreshment in 2008 and has since transformed the company, increasing its market cap by over five-fold. Prior to Dubair Refreshment, he was the General Manager of Jordan Ice and Aerated Water Company, leading the company during one of the most successful periods in its history. His other positions include Colas Marketing Director for Pepsi Middle East as well as finance and marketing roles with Procter & Gamble in Switzerland and Saudi Arabia.

How would you assess the operations and innovative technologies of the new facility?

The new facility has been split into phases due to the size of the project. We have opened Phase I, which is the buildings, new equipment, and two new production lines. Phase II will entail moving some of the equipment from the old facility to the new one. This way, there will be three more production lines, making a total of five. We hope to finish Phase II by 1Q2017. By the second half of 2017, the operation will be working at full capacity. We have incorporated a lot of technology into our production processes and operations. The equipment is highly automated, requiring less people and saving on water, electricity, and waste. We also have state-of-the-art water treatment incorporated into our plant to reduce water waste, recycling the water for landscaping and car-washing purposes. We have plans to install 65,000sqm of solar panels, generating around one-third of our energy needs. Finally, the factory itself is going to be LEED certified and awarded a silver certificate.

How would you assess the competition?

Competition in the GCC's F&B industry is quite intense because there are many players, although in carbonated soft drinks it is primarily two players. At the same time, the carbonated soft drinks sector is becoming a small part of the beverage industry. Around 20 years ago, it had the biggest share in the beverage industry, but today it is competing against juices, non-alcoholic beer, energy drinks, dairy-based products, and others like coconut water. The range of competition now has expanded far beyond just carbonated soft drinks. There are hundreds of different brands with regional brands competing very effectively and aggressively against global multinationals.

What is needed to strengthen Dubai's position as a manufacturing hub for the F&B industry?

The business environment in general is positive, and government services are accessible. The processes are transparent and efficient, and moreover the infrastructure that exists—whether it is telecommunications, transport, or banking—is very supportive. For example, there is easy conversion of currency with no taxation and easy transfer of currencies, which is great for trading and manufacturing. The greatest challenge in Dubai is competing in an environment in which many countries subsidize their industries through land grants, cheap financing, or energy subsidies on electricity, water, and fuel. Industrial land here is still expensive compared to other places, and prices are also subject to real estate speculation. Somehow, we need to shield the industry from speculation to encourage investment in industry. Also, the setup costs, such as connecting to the grid, can be very expensive for small business. Generally, we have been very successful and have found the services provide a big benefit to our business.

What are your prospects for the year ahead?

2016 has been a challenging year for the region, but if we look at Dubai in the context of the region then we are doing very well. Dubai Refreshment is a significant player in the market, and we have an opportunity to strengthen our position. We have to be careful over the next several years because we have to control costs amid a difficult environment. The UAE will always have a bright future because the high-quality infrastructure, good standards of living, laws that encourage business, and established networks as a result of so many companies congregated in Dubai in particular. These factors created this incredible business environment that is difficult to replicate. So whenever there is an uptake, it will happen faster in Dubai and business will respond faster. With regards to our new facility, we have also set up the factory in a way that allows us to expand in adjacent categories easily. Once we get the base business running smoothly we intend to expand into other businesses. We have many different ideas on how we can expand.