FOOD MANUFACTURING

Lebanon 2018 | ENERGY & INDUSTRY | B2B

Food manufacturers continue to innovate and find new markets, though limited public support and an uncertain outlook have them keeping a close eye on business.

Moussa Rifai
MOUSSA RIFAI
CEO
Al Rifai
Marc Waked
MARC WAKED
General Manager
Liban Lait

How is your five-year strategy moving forward, and can any specific changes be expected for 2018?

MARC WAKED It is difficult to prepare a five-year strategy, as the Lebanese market itself is uncertain. Nevertheless, we are trying to concentrate our efforts on Lebanon and are going a step further by addressing environmental issues, especially regarding wastewater treatment. At the moment, we own around 3,000 cows and a production plant next to the Litani River, where toxic waste is discharged. Given that water is an important factor to raise quality Holsteins, we have decided to invest in a large wastewater plant, which will be ready by the end of 2019. It will allow us to capture most of the used water, and once it is treated, we will reuse it for irrigation and agricultural purposes. Overall, we are growing at 10-15% per year, which is strong in this region. However, we expect to see manufacturing companies further protected by the government; at the moment we have a serious problem with milk coming from Saudi Arabia, as it is dumping 20% of its excess into Lebanon at extremely low prices. We are now exporting to Qatar and hopefully we can put a foot in the Gulf region in terms of production.

MOUSSA RIFAI In terms of the areas that will contribute the most to our growth over the next five years, we expect exporting packaged goods to account for the largest percentage of our growth. We are focused on nurturing our business. For example, we have an exclusive deal with one of the largest retailers in North America. We are developing these products and expanding our presence in retail markets abroad. We see the value in having our own stores in various foreign markets, because it allows us to have more control over the specific details of our sales processes. Customers can buy into the Rifai experience.

How can the public sector help move the local manufacturing sector forward?

MW The government needs to help Lebanese farmers develop the sector and encourage them to focus on milk production. In the past, we signed a trade agreement with other Arab countries to import milk, but they did not agree on custom duty payments. This means that local farmers are getting hurt, especially the small farmers that are not getting any support. Liban Lait currently buys 250,000 liters per week from local farmers, but we only choose top quality milk. Therefore, we pay a high premium on milk, which explains why our price is higher than others'. As a company, we can manage against no protection on imports from countries that can sell the milk at much lower prices, but it is not the same case for small farmers. We need to find a solution to respect the agreement with our neighbors but also protect local manufacturing.

What are your expansion plans for the company, and what is unique about your franchise model?

MR In 1993, we expanded and engaged in joint partnership with a Kuwaiti partner that is largely responsible for the business in the Middle East. Now, we are at a phase where we are looking at expanding the business into Europe, South America, and Asia. We want partners that understand how we operate and can franchise our model successfully. Typically, franchises rely on a much simpler model. Rifai, however, deals with almost 700 different SKUs that have to be kept in check. Local preferences also have to be taken into account. In Cyprus, for example, the business focuses more on dry fruits, whereas in Lebanon, 60% of sales are based on nuts. Every day we receive four or five franchisee requests. We do a robust series of due diligence assessments before we franchise. Requests come from many different groups and individuals; however, we are most interested in passion. We want individuals who are dedicated to furthering the brand and maximizing the potential of the space. One passionate individual is much more preferable than a group that already owns a large portfolio of franchised locations. Usually, potential franchisers learn about us through word of mouth. People travelling internationally see our locations and recognize the value that these locations could bring to their markets. We also have a strong online presence, and this accounts for a large foundation of our business. We were the first company in Lebanon to acquire online credit card verification in 1998, and we have been a leader in online sales ever since.