ONE FACTORY AT A TIME

Iran 2011 | INDUSTRY & MINING | INTERVIEW

TBY talks to G.A. Soleimani, CEO of Solico Group.

G.A. Soleimani
BIOGRAPHY
G.A. Soleimani is currently CEO of Solico Group.

How did Solico Group become one of Iran's largest agro-industrial producers?

In 1976 I started in distribution with processed meat products that were locally made. Then in 1977 I opened up my own facilities for the production of hamburgers. Since then I have become famous as “the one factory a year entrepreneur".

I started in 1979 with my first sausage and processed meat factory in Shiraz under the Demes trading name. Later in 1980 I opened a second plant in Tehran under the name of Solico Tehran. In 1982, I began Almol Meat, another processed meat company.

In 1983, I branched out into fish products, and opened a plant in Bushehr that produced fish filets, deboned fish, fish sausages, fish fingers, and tuna fish. At that time, the level of domestic meat production in Iran was not sufficient to satisfy national demand. In 1984, I started another meat processing company in the city of Bushehr. Then, in 1985, I diversified into licorice, starting up a company called Aser in this field. In 1986 we diversified yet again into synthetic casings for sausages. By 1987 I was exporting natural casings to Europe. At the same time I was also exporting carpets. In 1988 I was exporting Salambur (sheep leather), to Italy. In 1990, I started a new meat factory in Kermanshah, in the west of Iran.

“We are continuously adding more machines to our lines to meet our sales targets..."

Kalleh Dairy is one of the biggest producers of dairy products in Iran. Where did your interest in the dairy industry come from?

I started in the dairy industry in 1990 with just 3 liters of milk. I began by collecting milk from farmers through collection centers that I introduced. Then I began selling milk as a raw material on a pilot-scale production level, starting with yogurt, cheese, and ice cream.

The reason I originally went to Bushehr, starting with fish products, was because of the insufficient level of domestic meat production in the country. I wanted to introduce fish products as a substitute to red meat, but it was not very successful because at that time most people preferred red meat over other products such as fish.

In that period, during the 1990s, there were insufficient numbers of sheep and cattle in the country. I was importing beef then, which was mostly used in my processed meat companies, but again there was an insufficient supply of red meat in the market, and that's why I diversified into fish and seafood products, as a nutritious substitute product for red meat. But the market acceptance for fish products was low, and there was little demand. One major problem was the geographical habits, tastes and food preferences of the people. Obviously, the demand for fish products was mostly found in regions close to the sea, where there was a stronger preference for fish, though in all other areas of the country the people showed a much stronger preference for red meat like lamb and beef.

So I came to a decision: I should pay a lot more attention to the red meat sector of the economy and improve the incentives for farmers to raise more cattle. That's why I started in dairy, in order to make sure that farmers were induced to invest more in raising cattle and have a secure source to sell their milk, as well as send their animals to slaughterhouses, and so incentives were provided. The milk they produced was bought in any quantity that they produced it in, so the farmers were encouraged to produce more and more. Consequently, the production of milk and beef both increased considerably, as non-milking cattle were sent to the slaughterhouses for processing. Therefore, this planned approach made me become more self-sufficient in my raw material requirements, and I was also freely procuring the beef that I needed for the Group's meat processing companies. Both dairy and processed meat production are complementary in terms of industry, and their raw material requirements come from the same source, which is cattle. Now you can see why I entered the dairy industry.

How many dairy products are your facilities capable of producing?

For cheese, we produce something between 130 tons and 150 tons on a daily basis, and the projection for the coming Iranian New Year is 200 tons per day. For yogurt, our production capacity is 400 tons but our actual sales are 800 tons. Right now I am outsourcing most of the production to private label producers.

Are your facilities working at full capacity?

Including our outsourced production, maybe more than that. We are continually adding more machines to our lines to meet our sales targets and reduce the quantity of private label products. For dairy drinks, our actual production volume is 300 tons, and after the installation of a new line in the next 6 months we will surpass the 700 ton mark. We produce a broad range of UHT products, flavored milk, cream, and desserts. We are also involved in the sale of condensed powder milk, and we import large quantities of butter—1,000 to 2,000 tons per month.

As the market leader in dairy products, how are you distributing your products to smaller, regional locations?

We have 20 centers throughout Iran providing direct sales to retail shops and supermarkets. They provide services to 45,000 retail shops throughout Iran, and are visited on frequencies of one to six times per week, according to their classification. Our future expansion plans include increasing the number of distribution centers to 32 in Iran.

What is the size of your company, and in which areas are you focused on producing?

We have about 6,200 employees spread across the Group's companies, and are involved in dairy, ice cream, meat processing, packaging, and non-dairy beverages like juices and alcohol-free beers. We have a daily turnover of $1.4 million to $2 million.

In dairy, we're producing 1 million liters per day, although our plan is to increase this to 2 million liters. This is the planned target for the production plant that we have in the city of Amol in the north of Iran. We are opening a second plant in nearby Tehran. We're also thinking of opening a third plant, though haven't come to a decision yet on where to locate it.

We have two ice cream plants. The second is still under construction and production hasn't started. Current daily production is about 80 tons, and we are looking to increase our projected sales to 300 tons. In addition to ice cream, it will produce chocolate and frozen pastries.

In the meat sector, we are currently allocating 100 tons of raw materials, and we are looking to reach 300 tons in our forecasts. A meat processing plant is under construction, and machinery is being procured. The range of products to be produced includes meat cuts, frozen ready-to-eat meals, sausages, salamis, and many others.

We are also in beverages, sauces and dressings. We produce juices and non-alcoholic beer, which is a new field of the industry for us. Our daily production for sauces is somewhere between 15 and 20 tons. With the new production facilities the production volume should reach 100 tons per day. We are in packaging as well, producing cups and containers, prints, and also casings.

How has the Iranian market changed since you first went into the dairy business?

The infrastructure of the country is changing rapidly. Before, those who lived in the city received their milk and dairy needs from the villages. Now it is changing, with the cities providing the villages with their dairy requirements.

Consumer trends and expectations are also changing. We see there is an increasing demand for manufactured products of higher hygienic standards. I visited a village with 400 families in the northeast of Iran, and astonishingly enough there were a number of little corner shops selling our branded dairy products. Equally, as the urban population is increasing, you will see rising demand for processed food products.

What do you export mostly, and to which countries?

Our sister company in the group for exports is called TOP, which stands for Trading Organization Premium. We export large volumes of assorted products to Iraq and our target is to increase our export sales to even higher volumes. We do direct sales and distribution in Kurdistan, Karbala, Najaf, Rahdod, and Basra, and we are also active in other parts of that country. We have joint-venture companies in a number of countries including the UAE, the Far East, and Afghanistan. We are planning to reach a marketplace of 300 million people in the near future.