HBG invests US $25 million in Jordanian market

HBG Holdings, a UAE-based FMCG distributor, is investing in a new plant in Jordan and plans to start distributing to Iraq.

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By  Roger Field Published  September 10, 2006

HBG Holdings, a-Dubai-based distributor of food and drink products, is investing some JD17.6 million (US$25 million) in its Jordan subsidiary, HBG Marketing Jordan, in the next 18 months, as part of an aggressive three-part expansion plan. In the first phase of the plan, HBG Holdings, which distributes products from manufacturers including Kraft Foods, Unilever, Kellogg’s, Wrigley, Heinz, California Gardens, and Diamond will acquire new agencies and enter new segments, such as frozen foods, to complement its existing portfolio. To this end, cold storage facilities will be increased to 8000 square feet, on four levels and 900 pallet positions, with a total storage capacity of 1200 tonnes. The second phase of the plan will extend HGB’s current ERP system by introducing handheld computers in order to increase efficiency of the distribution network, improve marketing programmes and measure performance. The final phase of the growth plan will focus on expanding the distribution network into Iraq with the construction of a distribution centre in the north of the country. The investment is mainly in response to a buoyant Jordanian FMCG sector, Zulfi Hydari, managing director, HBG Holdings, told Retail News Middle East. “The Jordanian market is flourishing,” he said. “Independent quotes suggest that the population has grown by about one million in a year…that has created a lot more demand so business is booming.” Furthermore, this growth will be given added impetus when retailers such as Carrefour and Al Shayer Group open branches in Jordan later in the year, Hydari added. Looking further ahead, HGB Holding is also planning to set up a distribution centre in the north of Iraq, in response to strong demand for FMCG goods, particularly branded products. The company discovered the potential of Iraq after acquiring Spinneys Jordan, a distributor, in 2003. Indeed, Spinneys Jordan became a stepping-stone into the Iraqi market,” Zulfi said. “We’re looking to set up a proper distribution centre in the north of Iraq,” he added. “We are currently looking for land – at least 100,000 sq ft plus, so that we can set up a proper centre, because we think there is enough demand coming from the Turkish side and from the Jordanian side. Distribution properly positioned would be ideal for our expansion plans.” Indeed, while Iraq is viewed by many companies as a no-go area, Zulfi points out that parts of the country, such as the north, are relatively stable and offer good business opportunities. “There are pockets of Iraq that are stable, where business is being transacted and those pockets alone are more significant than certain countries,” he said. “I think the Iraq market is the jewel in the entire Levant. It’s a bit like Saudi is in the GCC. You’ve got to be in Saudi if you’re a GCC player. I think ultimately you’ve got to be in Iraq if you’re a Levant player. You can’t sit on the sidelines forever just because things are not doing so well because people are piling in now.”

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