Message in a bottle

When drinks giant Aujan appointed its first ever ‘outsider’ to head the firm, critics feared for the worst. However, Alex Andarakis has proven them wrong. He speaks to Anil Bhoyrul.

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By  Anil Bhoyrul Published  October 15, 2006

|~|DSC_4891-200.jpg|~|COST CUTTER: Andarakis launched a raft of measures to lower distribution and manufacturing costs.|~|When drinks giant Aujan appointed its first ever ‘outsider’ to head the firm, critics feared for the worst. However, Alex Andarakis has proven them wrong. He speaks to Anil Bhoyrul. We have been playing eight holes of golf, when Alex Andarakis suddenly decides to step it up a gear. He whacks a shot from the ninth hole straight onto the green, putting it one shot later. An eagle. The rest of us look on, with a mixture of embarrassment, envy and jealousy. “You have to stay focused. Just keep your mind fixed on the job ahead, and never let your concentration go,” he explains. Sounds easy if you know how. And it is not just on the golf course, but also in business, that rivals have looked on at the CEO of Aujan with a mixture of embarrassment, envy and jealousy. Since coming to the helm of the 101 year-old company two years ago, Andarakis has displayed the Midas touch almost every day. His ‘555’ strategy – to achieve US$500m of revenue with five brands in five years is well on target to succeed, with this year’s sales touching US$360m – almost double the figure when he took over. Profits have risen by 28% and the company is in talks with bankers over a likely US$1bn flotation on the Saudi stock market next year. Every single method, tactic and opportunity there is to capture another slice of the region’s US$3bn a year drinks market, Andarakis is either taking, or has already taken. And nobody is safe from his well-versed sales pitch. “If I see a kid walking into a shop with two dirhams to spend, then I want his business. Anything else that attracts his attention in that shop is, in my opinion, a competitor,” he says. The Andarakis story is all the more impressive given that he is the first ever outsider to run the company for a century. The strictly “family business” decided in 2004 it was time to break with tradition, and hire a chief executive capable of taking the company to the next level – greater market share, bigger profits, foreign expansion – and a stock market listing. Andarakis, with five years of experience working for Unilever and 13 more years of sales experience, got the call out of the blue from Aujan chairman Adel Al Aujan. “I didn’t know him. I was in Johannesburg at the time, and he called me. He said he wanted to do a lot, and I thought ‘yeah, I want to do this.’ I wasn’t daunted at all. Aujan had all the recipes needed for success,” he says. Most executives would have been daunted. Having started off as a tiny trading company in 1905 in Bahrain, it now operates in 12 regional locations, with more than 2200 employees and a brand presence in 25 countries within the GCC, Iran, Iraq, North Africa, Levant and Central Asia. Apart from the hugely successful Barbican, Rami, Vimto and Hani brands, it has ties with leading international brands including 3 Diamonds, POM, Lipton Ice Tea, Wrigleys, Cadbury and Canada Dry. And most “daunting” of all was the fact that Aujan had never been run by an outsider. All the recipes, some would argue, that would heap failure on any incoming chief executive. “It’s true, it’s the first time they had approached an outsider. The owner took the view that in 100 years there had been various cycles of evolution. I think the chairman felt the Gulf is now going through a second wave of prosperity and he wanted someone with a sales and marketing background that could guide it through this phase,” says Andarakis. That said, Andarakis practically threw the Aujan operating manual out of the window on his first day. He quickly devised the ‘555’ strategy which - considering the company was already hitting US$220m a year in sales - was pretty ambitious. “I didn’t think it was that ambitious to aim for US$500m of sales in five years, I just didn’t. I mean, the Middle East has 200 million people under the age of 20. We have a big audience out there,” he says. However, the 555 strategy meant an aggressive plan for change, in particular, cost cutting. “It wasn’t popular,” he admits. Since taking the helm though, Andarakis has brought down the company’s distribution costs by 25% and trimmed manufacturing costs another 10%. Despite this, there has been no cut back on salaries or recruitment. As Andarakis is quick to point out, “everyone here is paid more than they were two years ago.” Part of the reason for the company’s growth is that just as aggressively as costs have been cut, new investment has been made – including a new state-of-the-art US$55m manufacturing plant at Dubai Investment Park. With the ability to roll out 1 billion packages a year, this has boosted the company’s production capacity by 50% (complementing the existing facilities in Dammam, Saudi Arabia). Iran has also been targeted for new growth, with a US$100m investment into a can making factory in Tehran. Andarakis’s desire for constant growth is bred out of the constant battle with the competition in the market. Pepsi, Coca Cola and Red Bull all have their eyes on further regional expansion, while even local player Masafi has begun a massive expansion plan, rolling out its new brand of Masafi juices earlier this year. Andarakis, though, doesn’t appear too concerned. “We will not be a cola business or a juice business. If we enter those markets then we would face a sumo battle. What we prefer is a judo battle, one in which we fight around the fringes.” Fighting around the fringes is what Andarakis appears to do best, and he will need to keep on performing at his peak in the next year, as the company looks to sell 30% of its shares on the Saudi stock market. He admits that the “owner now becoming an investor” will bring its own new challenges, but Andarakis is likely to be more than able to meet them. “There are very few times in anyone's career when you get to do so much from scratch, and without hiring any consultants to help you. It is gives you a great sense of pride. It is about managing a transformation." He shows little interest in the trappings of success, and doesn’t even have his own office - calling himself “a guest in the marketing department.” He explains: “When it comes to what I am doing here, it is not about power. For me the challenge is important. Power comes with the ability to see your business responding to your vision. What is important is having personal, professional and financial freedom. Of course, there is power in not having to ask someone for permission every time you want to do something, but power on its own doesn’t drive me. It just doesn’t. When it comes to management, I want people to have their own styles. They don’t need to have the same style as me.” But he admits that his success has at least brought a degree of financial freedom. “Having money gives you the ability of choice in your life, and that is something very special. But is it all about money? No, absolutely not! I don’t think anyone ever joins or leaves a company purely because of money. Money comes into it when they have to look at different options and the detail, but essentially you either believe in a company or you don’t believe in it. And that is why you stay or leave.” Having taken Aujan from US$220m to US$360m in sales since he joined, you would be hard-pressed to find anyone in the company who doesn’t believe in Alex Andarakis.||**||

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