Saudi Arabia: Star performer

Aujan, the Saudi beverage giant, aims to double turnover to US $500 million within five years. Half a year into its five year plan, known as ‘5, 5, 5,’ Alex Andarakis, CEO, discusses the progress made so far.

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By  David Ingham Published  September 5, 2005

|~||~||~|How is 5, 5, 5 progressing? The last time we talked, we were looking at 5, 5, 5 and what we would do under this strategy. We look at it as a Formula One season. Each quarter is a lap. We’ve just finished our second lap of year one. You write a strategy and then start to see whether it’s working or not. From our perspective, we’ve finished the first half of this year [January-June] 26% ahead of last year. The most significant part of this was that in our 5, 5, 5 plan, the most important aspect was getting Saudi Arabia to grow again. We’d had fantastic growth in the Gulf, fantastic growth in export and zero growth in Saudi Arabia. This year, our star market is Saudi Arabia. The whole place is buzzing because we’ve got Saudi Arabia back to its glory days in terms of turnover. Why has Saudi Arabia been a star performer if it’s a mature market? From a sales perspective, we restructured the way we operate. The business, over the years, had got a bit heavy on the sales side in Saudi Arabia. When I joined, we had 27 branches in Saudi Arabia, in each branch we had multiple managers and it’s going to sound harsh, but I cut all that out. First of all, the branch had to make minimum turnover, otherwise it was closed and it became a depot, as opposed to a branch. We ranked our top managers and they took the jobs in the branches, so we have a single point of accountability in each branch. We have improved our IT systems, so now, all of our salesmen have GPS handheld computers. Now, they enter the route they are going to take for the day and they will be told they have to drive a certain way to be most productive during the day. The system will give you information about the customer, so that you know how to load the truck most efficiently. If you’re on a route where you traditionally sell 40 cases of Barbican a day, you don’t want 500 cases on the truck. We now have a better assortment on the trucks, so productivity is up. We’ve really improved the efficiency of our distribution system in Saudi Arabia. The third element was we focused on areas where we were weak. We were very strong in Damman and Riyadh — Central and East — but we were weaker in the West, in Jeddah. The reason we were relatively weaker there was that it’s our key competitors‘ home base. What we did was move the person who runs Saudi Arabian sales to Jeddah. Now, in Jeddah, we’re enjoying tremendous growth. We didn’t have the distribution level there we have in other markets, the customer relationships or the brand activation. With senior sales people there, we’ve got much stronger relationships, sharper brand activation in outlets and better distribution. On top of that, we’ve refocused on key accounts Like Al Othaim and Panda. Visibility is much improved on the ground. We also looked at focusing on winning brands, moving from a supplier-based mentality to a consumer-based mentality. We have superstar products: Why focus on Rani Tetra when Rani Float is such a superstar? We haven’t cut Rani Tetra, it’s there where we need it, but it’s not an area of priority. The final point, and a very important one, it’s the first time in years we’ve spent significant money on advertising. We’ve got a Barbican campaign which as good as any campaign you’ll see on any brand in the marketplace. Our Rani relaunch has been extremely successful. We treated a packaging relaunch like a major innovation: It was 25 years since Rani had changed its look. Imagine if you hadn’t changed your clothes in 25 years. Why do it in a small way? We treated it as a major relaunch. The day we broke the new look was the second of April. On that particular night, we had advertising from 6pm until 12pm on every single pan-Arab channel during every single ad break. Anyone who watched a pan-Arab channel that night could not have missed the Rani relaunch. The airtime value was around half a million dollars and we paid significantly less. This year has noticeably been about Rani and Barbican. What about Hani and Vimto? We’ve done below the line activity using the Disney property of The Incredibles. We were able to negotiate with Disney to make Hani an Incredible. We’ve done a promotion on that throughout the GCC and Hani is one of the brands where we’ve got lots of plans to innovate. We’re not quite ready to go yet, but that will probably come through in the next six months. We’re repositioning it as a kids brand and The Incredibles was a great way of delivering on that positioning. On Vimto, which is our fourth brand, we’re about to unleash the 79th Ramadan of Vimto. We’ve got new communication and a new Ramadan plan, as it’s very much a product for Ramadan. The advertising, I think, is the best we’ve come up with so far. I think it really sums up what Ramadan means to Muslims. It’s all about a family reunion, celebration and reflection. The communication is an absolute tearjerker. Our next set of Rani communication will be all about the bits in Rani Float coming to life. Its key selling point is the real fruit pieces. The Barbican ads were also a big hit. A researcher doing an Arab youth study asked if he could use the campaign in his training sessions. He said it shows normal people talking to each other, it doesn’t come across as a manufacturer heavily pushing a brand and it’s how kids communicate with each other. In fact, a part of those ads was unscripted. We took normal people: Khalid in Dubai is a real person. If I wanted to sum up what you’re doing, would it be right to call you the next Pepsi? I think the biggest single story on Aujan is that we are the biggest alternative drinks company. At the moment, we are a local company becoming regional and with the vision of becoming more than regional. Right now, our base is GCC, Iran and Iraq. We’re targeting Africa and the minute we have the production capacity confirmed and it’s sustainable, we’ll start looking at markets like India, Pakistan, Russia and CIS. To deliver 5, 5, 5, we need to do 15% per annum five years in a row. This year, we’re running at 26%. To achieve it, you need sustainability and the actions we are taking now aim to provide us with that.||**||

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