Going global

Aujan Industries is investing heavily in product marketing and targeting new markets in an effort to double annual revenue within five years. Retail News Middle East found out more from Alex Andarakis, the company's chief executive.

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By  David Ingham Published  March 1, 2005

|~|alex.jpg|~|Andarakis: “We are a local company becoming global.”|~|Retail News Middle East: Where is Aujan now and where do you want to take it?

Alex Andarakis: Aujan is a Saudi company that, over the last six to ten years, has started to move into the rest of the Gulf, and now we have a very established position. In the last two years, we’ve extended out of the GCC into Iran and Iraq, as well as 19 other countries. It’s a Saudi company going global.

In terms of performance, this company has enjoyed double digit growth year on year over the last three to four years. This year [2004], we’re going to have high double digit growth, driven primarily by the fact that we’ve had outstanding sales in the Gulf, we’ve had outstanding entry into Iran, and two other markets where we’ve had a good start are Iraq and Libya.

Which products lead your export push?

Aujan has a couple of portfolios. We have four of our own brands, which are Vimto, Rani, Hani and Barbican. Then we have third party beverage brands, where we act either as a manufacturer, distributor or both… and we have a third party confectionery business.

Our export business is tailored around our own brands, and the brand that gives you entry into export is Rani and specifically Rani Float, which is a unique product in this region. After building Rani, we have gained the confidence to look at Barbican, Hani and Vimto.

What is unique about Rani?

It’s a juice drink with real fruit pieces in it. No other product in this market has that type of characteristic. That product can enter these other markets because consumer habits are very similar to those in the GCC.

You have big targets. How are you going to double revenue over five years [from US $250 million to $500 million]?

The motto we’re using in the company is five with five with five: Five hundred million over five years with five brands. At the moment we have about [US] $250 million in [annual] revenue with four brands.

To get to $500 million means we have to grow by 15% per annum year in, year out. Is that possible? First of all, you’ve got to look at what you’ve done. This company has delivered that kind of growth for the last three or four years, so we’re quite confident we can do it.

I think in Barbican we’ve got an outstanding brand in a market segment that is growing, which is non-alcoholic beverages. We’ve got Rani, which has tremendous potential in export markets and the GCC.

Vimto continues to grow year in, year out. The question becomes how do you leverage what you have in Ramadan [when Vimto is traditionally drunk during Iftar] throughout the year.

The last one is Hani, which is a juice drink for kids. The question now is whether it’s a beverage or a kids brand. The way we’re looking at it is that it’s a kids brand. If a juice in a one riyal packet is an impulse product, what else can be an impulse product for kids?

The other [method of growth] is acquisition and strategic alliances on other brands. We have the capacity and the marketing expertise in beverages, so we’re actively looking for brands that we can bring to the Middle East. There are a lot of categories that are open to that.

As a company, we don’t want to play in the mainstream markets. That means we don’t want to be a dairy company; we don’t want to be a CSD [carbonated soft drinks] company, we don’t want to be a Coca-Cola or Pepsi; we are a new age alternative drinks company.

The three mainstream markets are 100% juice, dairy and cola. Those have got players in very established positions that rely on heavy volume. We’re operating on the fringe of that with alternative drinks.

How broad is your retailer coverage currently and how do you get on the shelf and stay there against all these brands?

Aujan is in a unique situation where we own our own distribution system. We cover 27,000 outlets on a weekly basis, we have the second highest investment in coolers of any beverage company in the region. At the latest count, we have something like 20,000 coolers in the GCC. We have one of the widest distribution networks of any company in the region.

Are you present on all the major supermarket shelves, or is your business driven through the smaller neighbourhood shops?

We have universal presence across the channels. [However], we are stronger at the bottom end. Our company happens to be very strong at the bottom end because of the fact that we are a direct distribution company. We are present at the top, but you look at the relative sales and say that we could be stronger in the supermarket and hypermarket segments.

How are you going to get large supermarkets to give more prominence to Aujan’s brands on your shelf?

It comes down to demand. The more consumer demand you have for your brands, the more interested any retailer is in stocking your product. One of things we’re doing is restructuring our sales force so we have specialised key account functions. As opposed to people who just walk in and take an order, you want professional managers who deal with an account almost as a brand. We’ve got three particular areas we’re looking at: availability, visibility and connectivity.

As a business, Aujan has been great at availability, which we define as physical presence in outlets and affordability. Most of our products are sold at one riyal.

The second one is visibility, where if we had to give ourselves an assessment, we’re fair. That’s one area we’re going to really focus on. That means making sure our coolers are in the right place, having merchandising material that showcases our brand and brand positioning, it means that we have the right level of advertising to bring the brands to life.

The last one, and the one where our key account team is going to work very hard, is making sure we have the right level of connectivity. Connectivity means giving people an experience with our brand when they are at the point of purchase. That means having the right type of sampling in store, the right type of activity in store, having the right type of call to action in store.

How much is your budget for marketing going to be?

[US] $30 million. It’s a big budget.

Where will you spend that and what will the creatives look like?

We’re going through that process right now, but it’s fair to say that we will have a mixture of what we would call traditional media, which is TV, magazine and outdoor, and we will have a lot of innovative media that will really target where people are. For Barbican, our target market is 18-21 and if they spend time in City Centre on their mobile phone, we’re going to activate communication in City Centre and on their mobile phone. Part of our budget will go into mass media and a lot of our budget into micro marketing for specific targets.

When will we start to become more aware of your brands?

I would be disappointed if we didn’t increase awareness of our brands by at least a factor of 50% by the middle of next year [2005.] We will kick off 2005 in a very aggressive way.

Aujan is around 100 years old and already growing in double digits, so why has it suddenly decided to embrace marketing and brought in international management?

Look at business models across the GCC. A company starts as an importer or agent for brands. They then move into distribution and then decide to have their own manufacturing site. Once you’ve got those three components of the chain right, you start to look at marketing. This company’s gone through that evolution.

We’re at the crossroads right now that says we can stay where we are or become a serious player in this marketplace. The family have decided they want to be a serious player.

They believe they have got the fundamentals in place and now they need the flair and the flair comes in marketing and in being innovative in the way you sell and distribute, which is why they looked at bringing in professional management and marketing. We’ve done the same thing in logistics: we’ve upgraded a lot of our enablers, so over the next three to four months we’ll have upgraded handheld terminal systems in place with GPS [global positioning system technology.]

Aujan has just invested in a new [US] $40 million facility in Dubai Investment Park. We will now have two supply sources: our factory in Dammam and our factory in Dubai. The Dubai one allows us to ensure that we are well covered for the Gulf, well covered for the initial assault into Iran and at some point if the Iran volumes justify it, investment will happen in countries outside the GCC. We are a local company becoming global.

What do you think of wholesalers?

The wholesale sector is alive and kicking in the GCC. We deliver to 27,000 outlets direct, so we do a lot of direct distribution, but we sell to wholesalers and wholesalers do re-distribution.

Would you rather bypass wholesalers?

No, you still need the wholesales sector. Anyone who believes the wholesale sector will die in the GCC is going to have a lot pain in their business, I believe. The wholesale sector, whilst it’s lost its absolute size, is an absolute requirement in this region and will continue to be there. No one company could ever go direct to the 155,000 outlets in the GCC.

How would you sum up your aims for the company?

We’re coming up to one hundred for years for Aujan. It’s been a fantastic journey so far and as a company, Aujan is very proud of its history. What’s important is that it is obsessed with its future… and the responsibility I’ve taken on board is to develop the roadmap for the company and develop the corporate strategy.

The most important thing is to communicate internally what this strategy means for the company, making sure the corporate culture is in line, that the reward systems are in line and to navigate us through this journey.

It’s a five year plan that will constantly be reviewed, but I’ve got to say that I’m very excited. It’s a great challenge in a company that has all the ingredients. It just now needs to be orchestrated.||**||

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