What has made Iran so attractive to your company?
VINCENT LARNAUD When the Danone Group decided to take a majority stake in Damavand, the bottled-water market was underdeveloped and growing fast. Three years later it is still underdeveloped, but it is still growing fast. If we look at the past three years we experienced a volume growth rate of 10% to 15%, which is quite attractive for an FMCG company. When I say the market was and still is underdeveloped, I mean that the average per capita consumption of water is roughly 13 liters per capita, so it's a market of roughly 1 billion liters a year for 75 million Iranians. Turkey has a similar population and a market of 7 billion liters, seven times the market of Iran. Therefore, we know that this market is going to continue growing; the economy is a medium-large one and purchasing power is in the middle range. People will consume more bottled water, and we expect this market to keep on expanding the way it has been growing recently.
MEHDI JEDDI As a brand, we are a household name, and nobody can deny that. The reason we've been very successful in Iran is because we filled a void at the right time. It's been close to 10 years since our product first entered the Iranian market, and when we entered the market, the fruit juice and drinks supply options were limited. Therefore, we were in the right place at the right time, and we continue to provide an excellent offering to the consumer. We offer the consumer actual fruit as part of the beverage experience, which is rare.
What level of brand awareness have you developed?
VL The awareness of the brand is very high. When you go to a consumer and ask for a mineral water brand, 92% or 93% of them will say Damavand. We also aim to foster awareness of our specific formats, so whenever we launch a new format we advertise. The awareness of the brand is fairly high, which is exceptional. If a consumer asks for our product, it will be much easier for our sales team to put it on the shelves. The sports cap format experienced major success in the north of Tehran, the wealthiest part of the city. Stores actively ask for our product, and if I visit any shop in the area, the shopkeepers complain that they need more supply. Our company's main focus is on Tehran and the Caspian region.
MJ I'm pleasantly surprised about the amount of awareness that we have achieved as a brand in Iran. Upon joining Aujan and heading the business unit, I realized that the brand has developed a very solid and admirable reputation. However, it is early to say what we have accomplished, and we have to remain focused on the major challenge at hand, which is the currency devaluation. Obviously, since we have to import most of our raw materials, the devaluation of the currency has directly impacted our bottom line. Hence, managing the devaluation has been our biggest focus area. Fortunately, we have a very good team and we are analyzing the bottom line consistently.
What are your upcoming strategies?
VL In this market, competition is not a serious concern. I'm not saying that we are not looking at the competition or that it doesn't interest us. But, unlike what happens in Western Europe, we are not constantly comparing and benchmarking. We have so many operational challenges to overcome that we really focus on our own production, and we know that if we execute things well our business is going to grow. We aim to maintain our position at the top in terms of quality, packaging, customer relationships, and delivery. We would welcome the competition to do what we do—invest and develop the market. Everybody can benefit from overall market growth.
MJ As previously mentioned, Iran is now an independent unit with a sovereign shareholding from the Aujan family. Therefore, global strategies come into play in terms of trademark registrations and copyright protection. Apart from that, the business has to be managed independently. There is no doubt in anyone's mind that Aujan is going through a very fast-paced and effective makeover. But the company has already envisaged its organizational transformation path, and is now fully on the international radar.