The Business Year

Youssef Ezzikhe

OMAN - Industry

Tasty Treats

GM, Oman Refreshment Company

Bio

Youssef Ezzikhe has been involved in executive roles within the consumer packaged goods and industrial sector for the last 20 years. He has a degree in marketing and an Executive MBA. In his career, he has been associated with companies such as Procter & Gamble, The Coca-Cola Company, and PepsiCo in the GCC and North Africa regions both as a principal and as a franchisee.

"In 2012, we started building a huge warehouse in Sohar, which was completed in early 2013."

Can you provide us a quick overview of the food and beverage market here in Oman?

Oman Refreshment Company (ORC) operates in different categories of the food and beverage market in Oman. Carbonated soft drinks is our main forte, which includes Pepsi, Mountain Dew, 7UP, and other world famous PepsiCo products. In that category, we have an 89% market share. We are amongst the top-10 countries in the world with the highest market share in that category. Then we have the water category, in which we are also among the top-three players in the market with an 11% market share and are growing fast, at around 20%-25% annually. Aquafina is our core brand in that area. The third category is non-carbonated beverages (NCB), like Tropicana, Lipton Ice Tea, Gatorade, and the like. We are the market leader in non-carbonated beverages. The fourth category is juice, in which we have our own brand, Top Fruit, and we are among the top-three players here also. The final category is snacks, including the Lays and Doritos brands. In this category as well, we are among the top-three players in Oman. We are currently a distributor of the Lays range of snacks in Oman, and not a manufacturer, but in the future we plan to be a manufacturer as well.

Are the tastes of the local population changing?

They are changing for a few reasons. Firstly, people are becoming more conscious of their health and wellness. This is why we are focusing on three categories. “The fun for you” range includes brands that are preferred by our loyal consumers, such as Mountain Dew, Pepsi, Lays, and Cheetos. “The Better for you” range includes brands such as Diet Pepsi, Diet 7UP, Lays Forno, and Sunbites. And “the good for you” range includes brands such as Aquafina, Gatorade, Lipton Ice Tea, Top Fruit, and other products. In our portfolio, we have products that fit each consumer segment based on these three categories. As an example, Mountain Dew is a brand that commands a lone share of over 40% in the total carbonated beverages in Oman. Mountain Dew is the preferential brand for Omani consumers. Worldwide, Oman ranks as the number one for consumer preference of the brand. We try to provide the right product for each occasion, each consumer taste, and each age group. We have products for people that like light products that also taste good. We have Diet Pepsi and Diet 7UP, and we offer water for people that don’t want sugar or artificial sweeteners. When it comes to our revenue as a company, we are a listed entity, so those numbers are public; during 2013, our revenue was OMR69 million, compared to OMR66.7 million in 2012. We have grown significantly over the past five years; in 2009, we were at OMR42.7 million in terms of revenue. In terms of coverage, we have nine distribution centers across Oman and cover more than 12,000 retail outlets through direct distribution. In terms of customer reach, we are among the largest companies here in Oman.

What role does logistics play in your business?

We have a quite robust logistics network. Our strategy is to expand the capacity of our nine distribution centers, or depots, as we commonly refer to them. In 2012, we started building a huge warehouse in Sohar, which was completed in early 2013. Similarly, a new separate central warehouse has been built in our Muscat headquarters to cater to the growing snacks segment. Our plan in each location, from a warehouse standpoint, is to have enough capacity to cater for the next 15 years. We are currently building two warehouses, which will be completed before the end of 2014, and then we will follow that every year with other warehouses. We have also invested in renovating and expanding our existing warehouse in Muscat, where we have moved all our warehousing to a racking system with different racking tools employing new technologies, like gravity racks. What we have in Muscat in 2014 is 2.5 times the warehousing capacity of 2013. That is just one side of the business. The other side is that, from a logistics standpoint, we used to operate with many logistics providers for the intra-depot transfer of our products, but now we have reduced that down to few major service providers and we have increased the capacity of the trucks, which really provided some added value to our organization. They are more cost efficient, better maintained, and also keep the goods at the right temperature.

“In 2012, we started building a huge warehouse in Sohar, which was completed in early 2013.”

What is the relevance of the agreement that you have recently signed with CHEP?

We used to buy pallets, and then we developed a workshop that would repair them. I had agreed with the board that we needed to focus on the core business, whereby we could add value to things that were critical to our consumer. We focus on the consumer delight. That is our job. Any task or duties outside that are not core duties can either be outsourced or made into secondary services. One of these was the pallets. We are not experts in that business. We used to spend a lot of money repairing them, and we didn’t have the right monitoring for those pallets in the system. Now CHEP takes care of that and we have software that monitors all the pallet movements, thanks to which we have seen a remarkable improvement.

What factors and trends will lead your growth in Oman in the future?

First, the population growth is leading to a general widening of the economy. Continued government spending on the infrastructure projects and the oil recovery enhancement initiatives, besides the major investments committed in oil and gas sector, would drive the employment opportunities, thereby widening the customer base for any retail business in Oman. On top of that, a lot of market-driven initiatives focusing on consumers are pushing more people toward our products. In the case of water, for example, more and more people are becoming conscious of the quality of water they drink and are opting for our Aquafina. People becoming more conscious of quality will grow and drive our business. Consumers like our products, so we’ve launched a lot of initiatives, including partnering with the best football player in the world Lionel Messi, for which we had some unique flavors of Lays made. We are focusing on customer preferences and responding to that demand.

What segment of the population are you focusing on?

Our main focus is probably the 20-30 year age group. However, our products cater to all ages. And for kids, although we do not target them directly, we do have two varieties of Top Fruit, namely juice nectar and juice drink. We offer 30% nectar and we cover around 30% of the schools in Oman. We are also a partner of many major cultural and economic events, such as the UN’s World Water Day under the regional municipalities and Water Resources Ministry, the Muscat Festival, which is close to 30 days of celebration and is a great event, the Salalah Khareef festival, and more.

What is the importance of human capital and Omanization in your company?

The Ministry of Manpower has set Omanization targets for each sector. For the manufacturing industry, the target is 35%. Our Omanization rate is 42%. In that respect, we are seven points higher than the target. There are managers, supervisors, skilled works, and semi-skilled workers. For each category, we are trying to achieve that minimum number. To get that golden figure requires hiring the right people with the right skills and attitude. We also offer incentives to our staff to recommend new employees. Then, if their recommended person is recruited, they receive an incentive. Oman Refreshment also has a training and development budget for the entire company, focusing on Omanis in particular. We have a program working on different fronts, such as technical skills. For that, we have the PepsiCo University, which is focused on leadership skills, marketing and technical skills, and so on. It is a long-term program. We have other programs, also through PepsiCo University. We are working to be among the top 10% of players in Oman’s FMCG market and we review the situation constantly—the strategy is to benchmark ourselves to the leading players every two years. This year we have selected the 15 best Omani employees, then held a separate felicitation ceremony for them with valuable gifts for their good work. We have an annual bonus system that focuses on employee performance as well.

© The Business Year – July 2014

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