CAIRO: Al-Ahram Beverages Co. (ABC), which changed hands twice in the past decade, is now firmly in Heineken s hands.
The company was nationalized in 1963 then privatized in 1997. For five years thereafter, it was headed by Ahmed El-Zayat, who turned around the company, bought out competitors and introduced several new brands including I.D. and Fayrouz.
In 2002, Heineken purchased ABC for LE 1.3 billion but El-Zayat retained management control for another three years.
In keeping with the acquisition agreement, El-Zayat s tenure at the helm of ABC came to an end in December, and Heineken brought in Marc Busain as the new chief executive officer of ABC. Despite the change at the top, the rest of the senior management team remains largely the same.
Busain hopes to maintain the spirit which El-Zayat enthused while making procedural changes to improve the company s bottom line. We have great brands and a great quality of products, says Busain. For instance, in January, the Heineken which was brewed and bottled in Egypt was named the second-best Heineken all over the world.
Going forward, Busain plans to focus on the basics of his business. Sometimes the strategy of a company should not be too sophisticated, says Busain. Making beer, making soft drinks, we are in a simple business … Just make sure that your customer receives his beer in a cold and branded glass, on a coaster, and in a place where he s served with a smile; that will definitely already make a difference. We should also focus on the basics of production and sales.
However, improving efficiency and making the staff more cost conscious will be a major challenge. We ll keep the good things from the past, which were excellent, says Busain, Try to develop the ones that were not given enough attention, such as human resource policies and cost cutting. But cost-cutting doesn t mean that you have to cut down personnel expenses.
ABC will benefit from Heineken s production procedures and personnel practices to reduce its expenditure. We will definitely need also to focus on our people, Busain explains.
Improved margins should be accompanied by top-line growth. We need to be close to our consumer, says Busain, and reduce the market share of the competition to a minimum, and also take additional market share on soft drinks.
Sales of alcoholic beverages are supported by ABC s retail operation, Drinkies. There are currently 60 Drinkies outlets and Busain says this will grow to 100 by the end of this year.
ABC s main non-alcoholic brands are Fayrouz and RC Cola. Fayrouz, which is sold in Egypt and exported to Saudi Arabia, competes head-to-head with such brands as Coca-Cola and Pepsi, and Busain estimates the drink makes up 14 percent of the carbonated beverage market in Egypt.
Fayrouz is a non-alcoholic, natural beverage, Bisain explains. The big difference between Fayrouz and a regular carbonated soft drink is that Fayrouz is a malt-based soft drink, so there are no chemicals or concentrate in it.
While up-to-date market figures for RC Cola are not currently available, the company will continue to promote this brand and aims to increase its sales this year.
In terms of inputs, ABC uses locally-cultivated barley – the primary ingredient of malt – for many of its beers and for its Fayrouz products; it also recently completed construction of a malt factory. The output of the factory will be exported to member countries of the Common Market for Eastern and Southern Africa.
The idea is to first export [malt] to Heineken companies, says Busain, but it could also go to other companies.
ABC imports grapes from Lebanon and South Africa for some of its wines. We have a project to develop a high-quality Egyptian wine, says Busain. We have signed a contract with Spanish consultants and they will help us and farmers to develop vineyards that will deliver grapes that could make high-quality wine.
The company s beers are brewed in a facility in Obour which was built in 2001. Our ambition is to make [the brewery in] Obour the shining star of the region, says Busain, adding that the company will seek quality certification from the International Standards Organization in an effort to maintain high standards. I want us to be compared with France and the Netherlands, and I think we have the people and the tools to do that.
ABC sold 196 million liters in 2005 and its revenues increased by 19 percent last year. The company plans to increase its volume by 15 percent in 2006.