A spirited performance

MMI’s F&B arm is expanding, with a broader product lineup, new restaurants and geographical expansion

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By  Shilpa Mathai Published  July 20, 2004

|~|clive.jpg|~|Clive Rogerson: Selling wine is much more demanding than selling Heineken or Chivas.|~|MMI, the consumer and leisure brand marketing company, is opening a brand of casual dining bars in Dubai. The first Left Bank outlet will open on August 1 at the Madinat Jumeirah souq, the upcoming hospitality project developed by Jumeirah International. “Left Bank is a concept we developed exclusively with some top UK consultants,” says Clive Rogerson, head of beverages at MMI, Dubai. “It is designed to be a casual dining bar, very female friendly, a place where you can hang out and relax with a nice bottle of wine. It is a unique concept, one we will roll out into other areas in Dubai.” The company is also in the process of acquiring a restaurant in Muscat to be developed differently to its Left Bank brand. Rogerson says MMI is moving away from its distributor/logistics heritage to become a marketing services partner for the brands it represents. It owns and operates the master franchise for Costa Coffee in the UAE and has developed a European bistro styled restaurant chain Seasons. “Both Seasons and the Costa coffee franchise are successful and it is a natural step to go from retailing coffee and sandwiches to bringing our food and wine expertise into the equation,” he says. The core of MMI’s business historically has been the provision of food and beverages, as well as non-food brands to the hotel, institutional and retail segments of the UAE and now Oman. The company represents some of the best-known liquor brands, including Ferrero, Heineken, Anheuser-Busch, Amstel Light and Moet & Chandon. The company is currently putting together its new wine portfolio and is introducing several new wines into the market to cater to niche customer needs. Wine sales are booming in the market and Rogerson says MMI has had a 75% year to date growth in wine sales over 2003. The growth in upscale and five star hotel business in the region has a heavy impact on wine sales as these outlets are biased towards wine unlike budget hotels that thrive on whisky or beer sales. “The challenge with the hotel industry at the moment is the pace of its growth,” he explains. “The phenomenal growth makes it difficult to forecast product demand.” Most five star hotels now employ a professional sommelier to choose the different wines needed in various F&B outlets and the accent is on exclusivity. “Hotels want exclusive wines, they do not want a brand widely available in the city, and we have to import special wines to cater to specific customer needs,” says Rogerson. “That means carrying large inventories, which makes forecasting absolutely critical.” MMI has a database of the top wine consuming outlets and projects demand based on the revenue in different outlets. Besides this, it factors in new property openings and carries large inventories. According to Rogerson, it is absolutely essential to carry higher stocks of wine than either beer or spirits. Storage facilities are critical and MMI has large chilled storage areas in Jebel Ali for its wines. The company also has a large regional wine business and supplies to diplomatic missions and companies in the region and exports wine as far the Subcontinent. Consumers in the Middle East are becoming more adventurous. While they are still buying Bordeaux, they are also experimenting with wines from Chile, USA, South Africa and Australia and the growth rate of new world wines is much faster than traditional French or Italian wines. The company has invested in line with market growth, to keep pace with the changing needs of its customers. Six years ago, MMI only had a part time wine manager who also had a sales job; now it has a full-fledged wine department with six employees. “We will be adding on in the coming months. Wine has become a very important part of the portfolio and it is much more demanding [to sell wine] than selling Heineken or Chivas Regal,” says Rogerson. Does this rise in volume sales translate into a fall in beverage prices in the region? Rogerson agrees that when volumes are high, the company can afford to work on lower margins. He says MMI is making lower margins than in the past and that it has suffered greatly at the hands of the weak dollar. There is a clear value-to-price ratio consideration in terms of wine preferences and this is pushing consumers towards wines from the new world, which haven’t been affected by the Sterling or Euro fluctuations. Chile, USA, South Africa and Australia are becoming more prominent and the old world wines of France and Italy are not expanding as fast. Tourists are big consumers of wine and, depending on the season and their national preferences, they are a distinct segment that drives wine sales. Local residents are also becoming more outgoing and tend to drink more white wine than red wine. Fruity white wine, Sauvignon Blanc and Chilean Chardonnay are some of MMI’s top sellers. Currently, there are only two licensed alcohol suppliers in Dubai, but Rogerson does not rule out further competition in the future. With possible changes in agency laws following the UAE’s accession to the WTO, he says it will be tempting for principals to set up shop in the region. “It will be much more tempting for a large beer or spirit principal to do that because with wine there is no great dominant brand,” he explains. “However, wine sales are very diverse and so there is no one producer big enough to set up shop on his own. We have a good relationship with our principals and they value our expertise, so I don’t feel there is a danger of our wine principals thinking ‘I can go and do this better and cheaper.’” The beverage market is highly competitive and customers are getting bigger and exercising their purchasing power. Bootlegging and home delivery has a big impact on MMI’s retail business, although it does not impact institutional sales as hotels are required by law to submit returns to the CID, which makes it difficult for them to manipulate figures. To tackle the retail bootlegging issue head on, MMI has recently segmented its retail offering to suit the requirements of its two clear consumer groups. Retail demand can be split between Western and Asian expatriates and product offerings need to be different for the two groups. In line with the demands of their Asian consumers, MMI has launched a retail concept, Sell A Saver, for Asian consumers, focusing on a broad range of spirits and beers and less on wines. MMI shops in Bur Dubai and Karama have been converted into this concept and Rogerson claims it has been a successful move. “This is going to tackle the bootlegging issue for us,” he says. “We have changed our pricing policy. Key bootleg items were the budget scotch whiskeys and the budget beers. We are now quite competitive with the bootleg market so it is going to encourage people to apply for licenses as our products are more affordable and licenses much easier to obtain, so we will increase the number of permit holders and build turnover.” To simplify the process of obtaining liquor permits in Dubai, smart cards are being introduced in the market. Pilot cards are being tested and cards will be issued to the public over the next couple of months. Application forms for permits will be available at licensed retail outlets in the city. “We plan to open more stores and the test will be to get more licenses into circulation. As soon as we can see demand going up, we will open more stores,” says Rogerson. He says MMI has an efficient round the clock delivery system and an online ordering facility to simplify the ordering process for hotel and restaurant clients. As the number of online orders has grown, the company has invested in its order processing team and is simplifying the process to make it more user friendly. Consumer demand drives everything and to move closer to its customers, MMI has developed new business interests in restaurants, cafes, bars, inbound tourism, retail and events. “We work outside the box with the hotel industry by not just supplying products to them,” argues Rogerson. “We also supply services in terms of marketing such as events, wine dinners and other promotions, which drive footfalls for the hotels. We are not just supplying products for a price; we promote the venue and the hotel using our events. Our after sales service includes providing mystery diner programmes for restaurants to gauge quality and upselling and training schemes for staff.” 2003, according to MMI CEO Kerem Camcigil, was a momentous year for the company. In terms of financial performance, it was one of the best years in the company’s history. “Sales turnover and profits increased ahead of target and all MMI divisions — beverages, consumer, leisure/retail, travel and MMI managed companies in Oman — performed well. Sales turnover in our leisure/retail division increased by more than 100% compared to 2002,” explains Camcigil. Buoyed by a solid performance in Oman, MMI is committed to further regional expansion. Watch this space.||**||

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