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Foodco plans ties with European companies

After opening a new factory in Abu Dhabi, Foodco plans to manufacture goods for European companies.

Foodco, an Abu-Dhabi based distributor of branded food products is opening a new manufacturing plant as part of an aggressive expansion.

The company, which is also known as Abu Dhabi National Foodstuff Company, is planning to develop an 85,000 ² ft production plant in Abu Dhabi that will manufacture foods for European and other global food companies under license.

The plant, which is the product of an investment of some AED200 million (US $54 million), is expected to be operating by about mid-2007.

“We are in the process of establishing an industrial zone where we will do our packaging and manufacturing locally and distribute in the GCC countries,” Hagop Kassabian, Foodco’s director of marketing told Retail News Middle East.

“We have already signed an agreement with one European company, a German snack manufacturer called XOX Geback GmbH.”

In the initial phase of the venture, Foodco will market some of XOX’s products in the Middle East to raise brand awareness of the products, before starting to manufacture them in Abu Dhabi. Kassabian added that the company is also looking for joint ventures with other European food and drinks companies.

Foodco’s expansion plan is a continuation of developments in 2004 and 2005 that reaped the company an unprecedented profit increase of some 84% in last year. This profit surge was mainly due to the company’s decision to start distributing a small number of products including Mubarak Basmati Rice, Wrap ‘n’ Roll aluminium foil and Hafeet spring water.

“These are the three brands that were introduced and had a major impact on boosting the sales and profit of the company,” Kassabian said. “These were brands that could compete well in terms of quality and price with the leading brands in the market. The major impact in terms of sales and advertising and awareness happened in 2005.”

He added that Foodco also increased exports of its other products into the GCC and neighbouring countries, mainly Iran and Egypt, which account for about 15% of sales.
Foodco also experienced significant growth after it expanded its sugar distribution, according to Kassabian.

The company was already distributing sugar in the UAE, but in 2005, it stepped up this side of the business and signed a contract with a French sugar supplier called Sucden, based in Dubai. “We distribute sugar to leading supermarkets, catering companies, and hotels. It’s EU sugar and we are one of the major suppliers in the Abu Dhabi market as well as Dubai.”

Foodco is also increasing its presence in the food service sector. Its food service subsidiary, Sense Gourmet, in partnership with Western franchise companies, is planning to open a number of franchise restaurants across the UAE and GCC.

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