Political crises across the region makes it difficult to accurately forecast figures, say Clive Smith, vice-president of the Greater Middle East and Africa (GMEA) region at global provider of PET solutions for liquid packaging Sidel and commercial director for the region, Andrea Del Grosso. Daily News Egypt sat down with the pair to discuss the packaging business in Egypt, the company’s consumption and production trends, and their future investment plans.
What is Sidel’s main line of business and how long have you been in Egypt?
Del Grosso: We have been in Egypt for 80 years, providing filling machinery. Since then we have been in a relationship with the Egyptian market. We are present in Egypt with variety of equipment and solutions. These businesses vary from the water business to juice and edible oil.
Smith: Sidel Global is a package machinery supplier for PET bottles. In respective of the product that goes into the PET bottle, it could range from beer, soft drinks, to edible oil. In Egypt, the big areas of interest for us are edible oil and carbonated soft drinks (CSD) and water.
Who are you main clients in the Egyptian market?
Smith: The main clients are Nestle, Coca Cola, Pepsi Cola and many other small and medium players and producers in the market.
Do you have a production facility here in Egypt?
Smith: No, we have just set up our headquarters for the GMEA in Dubai. We moved all of our frontline team out of Europe into Dubai. We have partners in Egypt who look after our business as well as Libya, Jordan, Lebanon, Syria and Sudan. Those partners have their own team of people and they have been working for us for 25 years. We are importing the machines from Europe, where they are manufactured, and those machines are then installed and commissioned by us.
So there is no plan to construct a facility in Egypt?
Smith: No, but our partners are quite substantial manufacturers of other equipments that goes with our equipments. So as an additional element to their business, they also represent our business.
What is your market share in Egypt?
Smith: The market share is not particularly relevant in our business, it varies from one year to the next. Companies like Pepsi or Coca Cola are not investing in buying two or three lines a year. So the market share can go from 80%, because we get the business, or it can go to nothing. Across the zone, it is more relevant because you have a turnover business. What we can say is that the amount of business we take in the GMEA is more than all the other suppliers this year.
How are things looking up for 2015? Were any orders placed yet?
Smith: We have [political instability] challenges across the region. The makes it very difficult for us to forecast what is going to happen and we can’t quantify the numbers. But to Sidel, GMEA is a great area and we are probably the second most important zone after China, in terms of the size of increase.
Can you name some of the other challenges you face in Egypt?
We have a very easy business in Egypt. It is close to Europe and has quite a modern approach to all it does. The customers are very sophisticated in Egypt. I think a lot of the challenges are less to do with what to supply and more to do with the diversity of the market. A bottle design for example, in order to make it for Egypt, you need to understand what the [market] wants.
What are the local trends that you have witnessed in the country?
Del Grosso: In Egypt, there is a high demand for carbonated drinks and water, and this is the automatic process with the Egyptian life style. Also, edible oil is a growing market.
In terms of beverages production, Egypt is number 36 worldwide and the consumption per capita is more than 26 litres.
Smith: Light weighting is also key sustainable target to most customers now. Reducing the weight reduces the cost. For mineral water, we are down to 7.9g and a lot of water bottles [in the market] now can be around 14g or 15g. It is quiet a big saving for the producers but also a nice thing for consumers.
Do you expect your profit in the Egyptian market to grow?
Smith: Our profitability is very favourable. If we talk about targets then I can say that our zone, GMEA, is exceeding its targets, from a sales and a revenue perspective. We are exceeding by quiet a long way. This happened because of what we have that was so different from all other suppliers. All other suppliers are still in Europe while we are in the zone.
What is the contribution of Egypt to the GMEA region’s profit?
Smith: It varies. Last year, we did some work with Nestle and we installed quite a large amount of equipment. They had a fire in their factory so we replaced a lot of equipment. Last year was significant because we did that and we did some other lines. As I said before, the market size from one year to the next can be significant and then negligible and then average and then significant.
You’ve previously mentioned some innovative steps that your company is trying to make. What are these steps?
When you walk down a supermarket shelf and you see lots of different bottles you’ll go and choose one. The reason you choose this bottle will be based on the design, this is one of the reasons why we try to be innovative. Another thing is as we talked about is light weighting. In order to make a bottle that withstands pressure we need to make certain things in the design. All of that innovation that would allow the client to claim that their packaging materials are the most eco-friendly in the business.