A refreshing change

Masafi has transformed itself from a small regional mineral water producer into a multi million dirham food and beverage company with sights set on becoming an international player. Diana Milne meets its CEO Ashraf Abushady to find out more.

“We are meeting our business objectives in terms of volume and business”
-Ashraf Abushady

Just five years ago Masafi was known as the brand behind one product – bottled mineral water. Today it produces a range of fruit juices and has recently branched out into the lucrative snack market, with its own range of gourmet potato chips. I meet its CEO Ashraf Abushady at the end of the company's busiest period, Ramadan, when sales of its fruit juices rocket. "For us Ramadan is a very important month," he tells me. "The consumption of a lot of our products is much higher then. Juice products, for example, we sell more." Seasonal variations aside, however, Masafi is a company that has taken its place among the most successful brands in the region, a status recognised recently at the region's annual Superbrands awards where it was named the GCC's leading FMCG brand. The company's foray into the snacks market is a major milestone in its history, having traditionally focussed on water, juices and tissues. Abushady, describes the significance of the move: "We are no longer just a mineral water company. We have been working hard and investing heavily for the past five years to reposition ourselves and move away from that. Two years ago we introduced Masafi juice and we are now one of the top six players in the region with a six percent market share. Now we see big potential in the snacks area." So much potential in fact that Masafi has earmarked AED10 million to be spent on the development, manufacturing and promotion of the potato chips and has launched an integrated marketing and advertising campaign to win over the hearts and minds of the GCC's snack lovers. Describing the potential he sees for this product, Abu Shady, says: "Snack is a huge business in the UAE. Looking at the current trends at the moment it is showing high double digit growth year-on-year. There are currently a lot of different snacks coming to the UAE. We call them new age snacks. Potato chips is number one in terms of the popularity of these snacks." He goes on to say that given Masafi's existing well established position in the UAE market, he is confident that it will have the edge over other snack brands entering the market: "We have our own edge when it comes to quality and innovation. We are always seen as a company that produces natural and pure products. When it comes to innovation, in terms of our communicant and the way we engage with our customers, we are a very forward thinking company. These are our selling points which make us unique when it comes to any new product developments."

One of the reasons why Masafi is to keen to make its mark in the snack business is that the other non water segments in which its products fall, are, says Abu Shady, very fragmented markets in the GCC regions. This makes it difficult for the company to gain dominance in the market in the same way as it has in the mineral water business. This, he says, is particularly the case with the juice market: "The Juice market in the UAE is particularly fragmented with both long life and short life products. The top two players in this space are both contributing close to 12 to 15 percent market share. Then from number three to number ten we're talking about seven or eight percent market share." He goes on to say that Masafi is happy with the revenue it has succeeded in achieving within this market space. "We now have six percent market share which was a great achievement for us  We are currently meeting our volume expectations in terms of supply and revenue," says Abushady, adding that Masafi has not been significantly affected by the economic downturn in the region: "For now, looking at our figures for the first eight months of this year, as usual we are meeting our business objectives in terms of volume and business. In fact we have even improved our business figures in recent months."

In terms of its geographical spread the Masafi brand covers the GCC, east Africa and even Japan. Its strongest sales are in the GCC with the UAE its biggest market followed by Oman then Kuwait, Qatar and Bahrain. The Saudi market is however "very tough" according to Abushady. He says the company is particularly proud of the inroads it has made in a market so far from its home turf; Japan: "We have very good distribution systems in Japan and a good partnership with a Japanese company. When we export to a new market we don't handle distribution, we give our product to a distributor and they handle the rest of the business. We are doing extremely well in Japan and we hope to cover a lo of other potential markets in the Far East from there."

While the company is keen to grow its presence in the Far East, before doing so Abushady says it must first establish itself in the new sectors it is targeting within its home markets: "We believe in both horizontal growth and vertical growth. We want to grow our business domestically before we start to consider new markets. We have to feel comfortable about each and every business we enter before we talk about export. And we have to make sure we have enough capacity to cover any new market before we do that. It's a very tough equation when you have high demand, and you do have high demand from the export market that is more than we can afford. We don't have enough capacity to cover the high demand.
As well as focussing on its boosting its sales figures and exports to foreign markets, the company is keen to build a reputation as an eco-friendly green firm with a commitment to reducing its carbon footprint. With this in mind, last year it launched its Carbon Action Plan with includes several initiatives including the introduction of biodegradable shrink wrapping in its packaging and the opening of recycling centres throughout the GCC. These initiatives, says Abushady, are particularly important given the introduction of one use only four gallon water containers which replaced reusable ones for hygiene reasons. Abushady says: "It's important for us to be seen as environmentally friendly. We didn't want the press and the public to hold this against us and say "this is great, but what are you going to do about the empty containers. We have now established recycling centres in areas that are selling a high amount of gallons and we can now collect over 60 percent of what we are selling for recycling."
Because Masafi also produces plastic containers such as the four gallon one use water container, it is, says Abu Shady, affected by fluctuations in the prices of the raw materials to make these products. He describes this as one of the biggest challenges the company faces in the year ahead: "Our biggest challenge is the fluctuation in the cost of raw materials. Around 50 percent of our revenues come from raw materials so the main challenge in the future is this cost. Our PET plastic bottles are affected if the price of oil goes up. The price of paper and cartons is also affected which can tip our bottom line. We cannot continue to increase our prices for customers. We are a profitable company,. We don't work on low margins or decline."
However these are the sorts of challenges that Abushady is accustomed to dealing with, having come from a position at the multinational drinmks company Company international. He describes Masafi as a "healthy environment to work in" with high transparency. It's the sort of working culture you would hope for from a food and beverages manufacturer and one that has so far stood Masafi in very good stead: "Everybody here is free to talk and when you have such a healthy environment internally it shows externally in your products and your profits," says Abushady.