EVERYONE LIKES A BISCUIT

Lebanon 2015 | TRANSPORT | VIP INTERVIEW

TBY talks to Fouad Es-Said, Chairman & CEO of Transmed, on the FMCG business and trends in Lebanon, the GCC and Africa.

How did the idea of establishing Transmed arise, and how has the company evolved since it was founded in 1946?

My grandfather founded the company nearly 70 years ago. He was very interested in commerce, and traveled to the US to see what the consumer trends were. He brought some items from the US to sell in Lebanon and that's how the business started. He established partnerships with various multinationals like Procter & Gamble, Mars, and Clorox, and he grew steadily in Lebanon before expanding into Jordan in 1975, the UAE in 1977, and then other markets in the rest of the Levant, as well as East and West Africa. Today, Transmed is present in 10 markets worldwide with on-the-ground operations, and we work with about 40 multinationals, distributing their fast-moving goods on an exclusive basis in these markets.

What trends in the industry are you currently seeing in Lebanon and how does Transmed respond to them to better serve its clients?

Transmed is basically an extension of the partners that we work with, whether it's Procter & Gamble, Mars, Kellogg's, Clorox, Sysco, Mondelez, or any other company or brand. We are the sales and distribution arm of those companies. They are not really present on the ground there, but they support all our marketing and advertising activities to build their brands, while we handle the trade and all key accounts, import the products, and distribute them. In terms of keeping a finger on the pulse of trends, we get firsthand contact with consumers. Certain trends do stand out; for example, most households that consume the products we distribute are double income households where both the man and woman are in work. That leads to growth in demand for products that are easy to use, easy to handle, and convenient, because those are the kinds of products that people with limited time most appreciate.

How do you ensure that each product gets the best promotional exposure from your sales teams?

We make sure not to sell conflicting brands, although some of our principles can have two or three brands with the same category—but brands that cater to different markets and consumers. For example, we distribute three kinds of detergent, namely Ariel, Bonux, and Tide. These three brands cater to different consumers. Ariel is the best cleaning detergent on the market, and the most expensive of the three, whereas Bonux is more affordable, with Tide somewhere in between. So they cater to different income groups, but we would never have two brands or two Principals that directly compete with each other in the same territory. We make sure we have dedicated focus by principle and by channel. We have one team that covers modern trade (MT), one that covers middle trade, and another that covers the small stores and bakkalas.

What is Transmed's approach to human capital?

We hire fresh graduates and promote them from within. Very few companies do this, and we take pride in what we do. This creates a unique corporate culture at Transmed. If you go to our various offices around the world and ask our executives what their first job was, many of them will say Transmed. Today, we have about eight general managers in those markets and most have been recruited straight from university, be it AUB, LAU, and so on. We have about 30 nationalities at Transmed. We have also developed a partnership with the London Business School whereby every year we send our top 25 executives to work with leading professors working on case studies that are similar to our businesses. The LBS is the second ranked business school globally, so this is a very important partnership for us.

What type of partnerships are you looking for to strengthen your core distribution business?

We tend to operate alone most of the time in our other markets, relying on our own skill sets. We regularly transfer people between the various markets, and believe that the wide experience this promotes helps us better serve consumers and clients. Having said that, should a partnership opportunity arise somewhere, we gladly assess it.

What is the importance of the UAE for Transmed?

The UAE is our largest market, and the second largest market by GDP, after Saudi Arabia in our region. It's really the backbone of our company. We've been there since 1976, and our market shares are very high in the UAE, up to even 80% in some categories. The trade structure in the UAE is different from most other markets, being up to 76% modern trade, mostly supermarkets and hypermarkets. We have been witnessing double- digit growth in the UAE, year after year. The market is growing as the population continues to grow; there is considerable spending power, a vibrant consumer culture, malls, restaurants, businesses, entertainment, and so on.

What opportunities do you see in West Africa and what is your growth strategy in the region?

We entered the African market seven or eight years ago, beginning with Sudan. Since establishing ourselves in East Africa we have expanded into West Africa, and are on the ground in three regional markets; Ivory Coast, Senegal, and Ghana. We also cover several markets including Togo, Benin, Burkina Faso, Sierra Leone, Liberia, Mali, Gambia, and Cape Verde, and have distribution relationships in all of them, with an export team based in Accra, Ghana. Consumers are all quite similar; everyone washes their hair, brushes their teeth, washes their clothes, and enjoys a biscuit or a chocolate. But you do have to cater to different consumers in terms of affordability; GDP per capital in West Africa is far less than what it is in the Gulf and GCC. In the UAE you have GDP per capital at around $43,000, while in West Africa it's somewhere between $1,500-$2,000. So you can't provide the same detergent, shampoo, or diaper. That is the main challenge we face in West Africa, although we expect continue expanding there, and are now looking at other markets in West Africa.

How do you envisage Transmed's future trajectory?

We will remain true to our core competencies and will always be engaged in consumer goods, food, and logistics services. We will also always look to partner new principals and move into fresh markets. Our main focus for expansion is Africa. But once we have maximized our presence there next region to look at will likely be Eastern Europe.

© The Business Year - March 2015