Distributors essential, argues HBG
HBG Holdings, one of the region’s largest FMCG players, has delivered a call to arms for the beleaguered distributor.
At a time when the role of retail’s middle-man is repeatedly being called into question, one of the region’s largest and most active players, HBG Holdings, has delivered a call to arms for the beleaguered distributor. “Despite those who say that the role of the distributor is under threat, we believe that the role of the distributor is essential in the supply chain,” the company’s CEO, Imtiaz Hydari told RNME.
After successfully reversing the fortunes of Spinneys Jordan following an acquisition in 2004, HBG is engaged in a very active 2005, having recently signed a deal to be the exclusive distributor for Pakistan company Young’s Food Products in the region. The move forms part of an overall strategy to become the first company of its kind to comprehensively cover the Levant, GCC and South Asia regions.
“There is no other company operating in a truly integrated regional distribution network here. HBG is increasing its market share through acquisitions and joint ventures and will operate in more than eight markets by the end of 2005. We expect to expand further in 2006,” said Hydari.
Despite the current industry grumbling, Hydari insists that the supplier is crucial to the success of both retailers and manufacturers, mainly because they are busy focusing on their own objectives and thus require a dependable link. “Manufacturers are increasingly focused on developing and maintaining brand equity and this is their key job,” he asserted. “We see this with our own partners, especially the multinationals such as Kraft, Unilever, Wrigleys and Heinz.
“All these companies require an efficient distributor with specialised expertise in warehousing and logistics as well as the ability to execute below-the-line marketing plans. On the other hand, the retailer expects us to deliver products on time and ensure they are adequately merchandised and that the products are moving from the shelves. The retailer charges listing fees in order to sell the products and will penalise a distributor by de-listing their product if it does not perform as per expectations,” he added.
Under the agreement with Young’s, HBG will market and distribute the company’s ‘French’ brand of mayonnaise, chicken and sandwich spreads and honey, along with its ‘Shangrila’ brand of oriental sauces across the UAE, Oman, Jordan and Qatar.
“Young’s Food Products is one of Pakistan’s biggest food manufacturing and processing companies, and has been exporting its line-up of products across the world from Bangladesh, Oceania, the GCC, Africa, Europe and the US,” said Khalid Salamat, HBG’s director of sales & marketing.
HBG’s own sphere of operation is also growing rapidly. In the GCC, its markets are the UAE, Qatar and Oman, and according to Hydari, the company is looking to, “rapidly expand into Kuwait, Bahrain and eventually Saudi Arabia through targeted acquisitions. The UAE remains a key market for us and we are always seeking to boost our presence in there.”
Hydari believes the company derives its strength from being able to achieve a wide coverage in each of its markets. “We deal with all the largest outlets like Carrefour, Spinneys and Lulu, but also the Co-operatives, mid-size supermarkets as well as the smaller outlets that are hardest to reach,” he said.