Staking the premium ground

In three decades, Masafi has become a key player in three categories – and the company shows no signs of slackening its pace.

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By  Roger Field Published  September 10, 2006

|~|200masafifature.jpg|~|Tarek Megahed: "When it comes to brand image, to consumers Masafi represents premium products, quality and health."|~|Masafi, a well-known brand of water in the UAE for some three decades, has attracted much attention lately. While the company expanded its reach to premium tissues some years ago, it was the launch of a range of fresh juices earlier this year that really made the wider FMCG community take a fresh look at a company that is becoming synonymous with quality and health.

Tarek A Megahed, brand manager for juices; Marwa Omar, senior brand manager for water and tissue; and Faysal Awar, assistant brand manager for water and tissue, tell RNME about the challenges and benefits of taking an established brand to a new level.

RNME: Tell me a bit about the company. When was it set up and how has the business progressed?

Tarek A Megahed: The company started in 1976. It’s been operating for almost 30 years. We were the first major player to go into water and we were the first major player to have a full distribution network that covers the whole UAE.

We were also the first company to go into kids packaging, to introduce the sports cap in the UAE and the first to have export business outside the UAE. In 1998, we were also the first company in the region to switch from PVC to PET bottles. Our products are now available in about 26 countries as far as Japan, Australia, and the USA. We are a company known for our innovation.

We were also one of the first players in the region to go into premium tissues back in 1999 – we have the highest grade tissues in the region. We recently launched our premium juices and are looking to diversify into other categories. We have 450 staff spread across our regional distribution depots and our plant located in Masafi City, Ras Al Khaimah.

RNME: Tell me more about Masafi’s core business – water.

Marwa Omar: The water is all sourced from the mountains of Masafi. There is a big reserve there and we now have 19 wells. Each year we increase our capacity depending on demand.

The market for water is very dynamic with lots of international and local brands. We are the market leader with a market share of more than 40% in the UAE. It’s becoming very aggressive in terms of competition, especially with the entrance of international companies and activities undertaken by local companies. Masafi’s objective is to always keep up with that and we’re aiming to grow our market share.

We have a market growth, in terms of volume, of around 8% to 10% a year. The market place is growing and our volume is growing as well. The water category is a commodity category, so it all depends on presence, the availability and the in market communication when it comes to rate of sale and communicating the message…our strength lies in our availability, our coverage, and our presence in the market.

RNME: How is the company facing up to this tough competition?

Omar: Masafi has a very strong brand equity, especially when it comes to consumer perception, so there is a huge demand for Masafi as a brand. This is giving us an edge to extend the brand to other categories. We always intend to increase our trade presence and offer better margins to the trade in order to increase our sales.

RNME: You mentioned that water exports are increasing. How much of the business do they account for now?

Megahed: We export 30% of our total volumes, so the exports market is very big for us and contributes heavily to our revenue. The main export markets include Oman, Qatar, Bahrain, Kuwait and Japan. Water accounts for about 75% of our business. By default, this figure will be reduced as sales of our other products increase. We have juice now and new products in the pipeline, so the water contribution, by proportion, will go down.

RNME: The launch of the juices drew a lot of attention earlier in the year. How are the they performing?

Megahed: In a word, super. We are beyond happy with how the juices are performing in the market right now. The pull in the market is phenomenal, consumers really like the product. They notice the differentiation between our product and other products – and when I talk product I mean the core product, which is the juice itself other than branding elements that we have done, our in trade activities.

If you calculate the average daily sales of the category, we have captured about 5% of the market. That’s compared to the total juice category and it’s more or less what we predicted.

RNME: How have you been promoting the juice?

Faisal Awar: As far as Masafi juice is concerned, we are not involved in television advertising. We use print, magazines and newspapers, outdoor. We utilise all the existing outdoor locations we have in the region. Whenever we have a consumer promotion or whenever we have a Masafi event open to the public then we go for a radio campaign.
Our strength as Masafi comes from our trade presence and in trade activities.

Megahed: We have adopted the same strategy for juice as the water, which means we have gone for maximum product availability and visibility, and it has proved phenomenal. If you go into any of the key accounts or any of the smaller outlets and you find a very creative presence there, Masafi material and stands.

Omar: We are utilising our existing fleet to maximise our coverage and increase our presence. Everything starts from the products so when it comes to the juice we have pure juice, which is high quality and the Masafi brand name also helps sales. It’s an opportunity to sell.

RNME: Is the juice being exported as well?

Megahed: It’s not only in the UAE that the demand is great. It’s also in the export markets. Oman is doing very well, sales are picking up on a day-to-day basis. We are getting orders almost every second day.

We are going to go as far as the USA to export our juices. We are already present in the countries where the water is present. I have the confidence to say that we are targeting the number-one position in juice in the next couple of years.

RNME: What differentiates your juice from the competition?

Megahed: At the end of the day, what differentiates us from our competitors is the core product, and the core product is the juice itself. For example, for the mango juice, we use the most premium mangos available and the juice consists of 65% alfonso pulp.

The industry average is 35%, so we are really spending heavily on the concentrate itself. Add to that our branding, which on the shelf differentiates our product from the competition, plus our in store activities.

Our juice is also produced differently from our competitors’ juices. We are the first to have a hot-filled line where the juice is filled at 85 degrees centigrade and bottled. The air is then removed with a vacuum and the bottle capped, so it does not need to contain preservatives. This gives the juice its freshness and it can stay longer on the shelf.

RNME: Are there plans for more juices?

Megahed: We have launched four four main players and by the end of the year you will see some more. In fact, every quarter from now on you will see new flavours coming out. This is only one facet of our business.

There are also a lot of other initiatives that we are going to be taking with our juice. The juice category as a whole is growing by more than 50% on a yearly basis for the past three years at least and in value, it’s worth AED 620 million in the Middle East, so we’re very optimistic.

RNME: How big is the tissue side of the business? What proportion of the sector do you have?

Omar: Our product accounts for around 20% of the sector in the UAE, making us the number-one player. We produce different SKUs and types, from the normal tissue paper to our recently launched kids packs. This is giving us an edge over competition, as we are the only brand producing children’s tissues. It’s under the Masafi brand name but we are building on our children’s characters as well, which belong to our kids range for the water and tissue.

Megahed: Across the GCC, our share in tissues ranges from 15% to 25%. Oman is our biggest market. The children’s tissues are recent launch and it will take a couple of months to see how the product is performing.

RNME: What kind of research did you do before launching the product?

Megahed: We conducted some research back in 2005 on Masafi as a brand and what consumers relate to when they think of a brand. One of the things we found was that at the top of peoples minds was the children’s characters. We just took the idea forward and built on the quality of our tissues and the Masafi brand equity and our brand equity in tissues, and our cartoon characters for kids. Based on that we introduced our kids’ tissues. We’re hoping they will perform very well.

Marwa: The characters are a property of Masafi and belong to our kids range of water. It’s an area we want to expand in. We’re building on the characters with our web site for children which we continually update and try to make as interactive as we can.

RNME: What can we expect to see from Masafi going forward?

Marwa: After research it was proven that the Masafi brand name is very strong and it could be extended to other categories. Given that the market is growing and there are lots of offerings and people are moving out to consume other types of beverages, the company has decided to expand the portfolio of brands and get into other categories other than the existing ones of juice, water and tissue, and explore opportunities in other categories with the objective of becoming a total food and beverage company. That’s our strategic direction that’s we’re heading towards.

This involves a lot of research to identify the categories that we want to tap into, given that Masafi has a well-established brand equity and character, so everything has to come in line with our brand image as well. The whole objective is to offer more products to fulfill consumers’ needs and to perform profitable business for the company as well.

Megahed: Two very important drivers behind this are our chairman Mr. Abdul Aziz Al Ghurair, and our CEO Mr. Ashraf Abushady. The chairman is pushing for the expansion and we have the excellent leadership of our CEO. This sort of expansion has been planned for a few years now and when our current chairman came aboard, it was his initiative to expand. Meanwhile, it was the CEO that proposed us going into juice and has taken this forward.

RNME: How would you describe the brand image?

Megahed: When it comes to brand image to consumers, Masafi represents premium products, quality and health. So the consumer expectation of the brand is healthy products of premium quality. That’s why we have to research carefully the products that we go into, which have to deliver on health, quality and cleanliness as well.

So there are categories that by default we would be interested to join. We are going to stay true to our core values and a strategy of focusing only on being premium is not enough in today’s world. There have to be other benefits to associate with that and health is one of them.

RNME: What other challenges is the company facing?

Megahed: There’s a lot. We face constant threats on a daily basis. In the UAE market competition is very aggressive, and that is partly because the consumer base is diversified. All companies need to keep up with consumer expectations.

We need to cater to all their needs and desires. Masafi is a smaller company that is operating with an international mind set, so we always want to keep ahead of competition and keep up our leadership in the market and develop Masafi as a local brand. This adds to our brand image as well.

Maximising our presence and coverage and making ourselves available with our SKUs is also important. We are always trying to utilise our company’s assets to ensure the products are as widely available as possible, and this is true for our export markets as well as the UAE. ||**||

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