Dubai Refreshment PJSC

DIVERSIFYING TO THRIVE IN AN EVER-COMPLEX F&B MARKET

DUBAI REFRESHMENT PJSC

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FOOD & DRINK

A Refreshed

APPROACH Operating in a complex food and beverage market, industry veteran Dubai Refreshment PJSC is responding to challenges and opportunities by diversifying its product portfolio Writer: Tom Wadlow Project Manager: Matthew Selby

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he UAE’s food and drink industry is in a stable state.

Home to several longstanding and successful enterprises, the sector represents one of if not the most important manufacturing segments contributing to the nation’s economy, an economy which the government is determined to further diversify outside of oil.

And it appears to be doing a commendable job. In 2017 the BMI Risk/ Reward index ranked the UAE as the most favourable environment in the GCC for the food and drink trade, and fourth most attractive globally.

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DUBAI REFRESHMENT PJSC Further research suggests the industry will reach $196 billion in 2021, up from $130 billion recorded in 2018, with subsectors such as non-alcoholic beverages among those tipped for solid growth.

Indeed, this market is tipped to expand by an annual rate of around 5.9 percent thanks to the popularity of products including fruit and vegetable juices, soft drinks, mineral water and spring water.

For F&B manufacturing and distribution specialist Dubai Refreshment PJSC (DRC), today’s dynamic backdrop offers tremendous potential to grow both its core and supplementary lines of business, building on a legacy stretching back 60 years.

“The fact I am working for a company with such an extensive legacy fills me with great pride,” comments Chief

BRAND POWER DRC bottles/packs and/or distributes products for a number of leading brands, including:

• Pepsi • 7UP • Mountain Dew • Mirinda • Nestlé ice cream • Lipton Ice Tea • Aquafina • Gatorade • Robinsons • Teisseire • Edita • Snack Time

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“THE MAIN PRIORITY IS TO INCREASE THE SIZE OF OUR NON-TRADITIONAL PRODUCT CATEGORIES TO HAVE A FAIR BALANCE WITHIN OUR PORTFOLIO. IT IS IMPORTANT NOT TO RELY TOO HEAVILY ON ONE PRODUCT LINE, SO BY GROWING IN SEVERAL AREAS WE CAN SAFEGUARD AGAINST ANY UNFORESEEN CHALLENGES” Operations Officer Sherif Elmeligy.

“We are very well-known to the local communities here in Dubai who will know DRC for its factory that was a landmark on Sheikh Zayed Road for over 40 years. It was on the outskirts when it was built and now it lies in the centre of Dubai.”

Elmeligy’s journey to the emirate is a somewhat unconventional one, the Egyptian starting his career in finance

before moving into the drinks business and working in Saudi Arabia, Ghana, Algeria and back home in Egypt, the switch in industry triggered by a desire to be operating at the frontline of business.

“It has been a series of life experiences being able to meet and interact with different cultures and societies,” he adds, recalling how he was approached by DRC while he was on a

Dubai, UAE

Expect the best!

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DUBAI REFRESHMENT PJSC business trip in Thailand back in 2012, the move to Dubai coinciding with the instability surrounding the aftermath of the Arab Spring.

MOVING WITH THE TIMES An immediate task was to help steer and realise DRC’s plans to build a new,

Mahmoud Elmeligy

state-of-the-art manufacturing base.

Though iconic, the site on Sheikh Zayed Road had its limitations, so the long-term decision was made to develop a facility fit for the future.

“The entire process, from planning through to construction and operation, took four to five years, and now it is one of the biggest soft drink manufacturing facilities in the lower Gulf,” Elmeligy says.

“We have the capability to produce three different beverage categories – carbonated soft drinks, iced tea and purified water. This translates into a current capacity of around 60 million cases – however, the infrastructure can accommodate 120 million cases by adding more lines and vertically expanding our storage, meaning we have catered for the long-term expansion of the company.”

This is where Wael Nehme, VP of Supply Chain & Projects, enters the conversation.

PEOPLE POWER Elmeligy and Nehme are the first to admit that DRC’s workforce are the lifeblood of the company, from blue collar staff on the frontline to supervisors and management in the back office.

“We are still a labour-intensive industry in many areas such as merchandising and loading delivery vehicles, so it is important to offer a competitive package to attract the labour we need,” Elmeligy explains.

“We provide our labour workforce with quality accommodation and amenities such as soccer fields, multipurpose courts and recreation centres. Many of these workers are expats working away from their families, so it is important we give them a home away from home.

“On the other side, around one third of our employees are supervisors and management, and we are creating lots of opportunities to promote from within via a fair performance development review process.”

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“Our lines have been selected from the top manufacturers – several from Germany and another from France,” he explains.

“They are all automated with minimum need for human intervention and operate with extremely high efficiencies and output. The machines

Wael Nehme

A

l Bonian FM is a market-leading provider of Integrated Facilities Management Solutions in the UAE. We offer bespoke FM solutions, with the added benefit of advanced engineering expertise in MEP systems (mechanical, electrical, and plumbing).

Our strong and established background in MEP design, contracting, and maintenance, which started regionally in 1987, and in Dubai back in 1997, is the cornerstone on which we base our growth and for which are very well reputed.

Our specialised team of experts delivers the highest quality of services, providing technologically advanced, sustainable, and cost effective solutions, which are aligned with local and international best practice standards. Our services offering is diverse and well structured, with us offering turnkey hard and soft FM solutions to clients across various sectors including residential, commercial, retail, hospitality, and industrial.

We look after properties of varying scales, from small single property contracts to full portfolios.

Our hard services team follows a proactive approach in day to day issues across the facilities we manage, by following predictive and preventive approaches to maintenance. This team is also capable of preparing energy saving studies. We offer retrofit solutions that save energy, allow our clients to better manage their MEP systems, and promise a solid ROI.

Our partnership with DRC Our story with Dubai Refreshments (DRC) began in 2012 when our MEP contracting team at Albonian International was awarded the contract to carry out all MEP installations, including cooling and air conditioning, food and beverage piping networks, electrical installation, and plumbing systems, at DRC’s new greenfield factory development in Dubai Investment Park. The construction work was challenging due to sheer scale of the operations planned by DRC’s vision for a state of the art facility to re-affirm their place as market leaders in the food and beverage manufacturing industry in the region.

Once the factory was operational, Al Bonian Facilities Management took charge of the MEP installations maintenance works along with the maintenance of DRC’s portfolio of properties. Our dedicated team of skilled technicians works hand in hand with DRC’s own team to ensure the production runs as smoothly as possible. We have recently renewed our commitment to DRC for another three years, well into 2021.

Our partnership with Dubai Refreshments goes well beyond the contract and our team supports DRC no matter the cost. We stand firmly by DRC’s journey towards sustainability and growth, working tirelessly to ensure its achievement.

Our soft services team is built on partnerships with market leaders in cleaning, security, and other services, to ensure we deliver the perfect balance between quality and price. We choose our soft services team based on each contract’s requirements to meet the applicable needs of our clients and their properties.

Dubai, UAE

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T + 971 4 223 4500

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DUBAI REFRESHMENT PJSC are also flexible in that they can produce various pack sizes and shapes.”

Nehme’s remarks are backed up by some striking figures. In operation since 2016, the new facility is able to manufacture up to 180,000 cans per hour, 80,000 plastic bottles per hour and 24,000 glass bottles per hour, with room to add another five lines.

Nehme continues: “In terms of our warehouse, current storage height is around 14 metres, but we can go to a high bay warehousing system as high as 37 metres in one area, which allows us to introduce further capacity.”

For Elmeligy, the new site combined with the company’s established reputation with large brands is what differentiates it in a competitive marketplace.

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“For example, we have a strong local share in PepsiCo’s Mountain Dew, which equates to around 30 percent of our business at the moment,” he adds. “In terms of the citrus segment generally, our share is much higher than any other competitor, which is a large portion of the UAE’s soft drinks industry.”

Such partnerships translate into an impressive company reach which is served by its in-house distribution operation.

The company sells to around 16,000 outlets, with around 95 percent of orders being fulfilled by DRC’s own transport fleet, another facet of the business which enables seamless integration of further product verticals.

This element of control from start to finish results in what Elmeligy

Since 1981, Interplast has been setting manufacturing benchmarks across the Middle East. The ISO 9001:2008 & ISO 22000:2005 certified company manufactures a diverse range of products from facilities spread across Sharjah, Dubai and Abu Dhabi. With decades of experience and modern manufacturing facilities, Interplast manufactures products to international quality standards and caters to customer demands by ensuring timely delivery and providing exceptional services.

Harwal Container Manufacturing (HCM) is a sister company of Interplast and a member of Harwal Group. The ISO 9001:2008 & ISO 22000:2005 certified company manufactures PET preforms and bottles for Mineral Water, Juice, Carbonated Soft Drinks and Dairy Products by providing complete bottling solutions with closures. HCM has commissioned top of the range injection molded machines for forming PET preforms of various sizes and is continuously expanding to meet the increasing needs of the industry in addition to manufacturing custom design bottles according to specific customer requirements.

www.interplast-uae.com

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www.hcm.ae

DUBAI REFRESHMENT PJSC

Cornelius Cornelius is PepsiCo’s global leading partner in beverage dispensing technologies.

As part of the Marmon Group/ Berkshire Hathaway Company it has a global market footprint, operating six factories and six innovation centres.

Cornelius equipment portfolio accommodates carbonated and noncarbonated drinks, frozen carbonated beverages, water, juices, teas and nitro cold brew coffee.

The latest fountain innovations include digital, IoT and flavour shots enabled solutions to support and uplift the Pepsi brands in state-of-theart installations in QSRs, cinemas and C-store outlets.

george.domeyer@cornelius.com

describes as a superior customer service, the addition of technology to the distribution operation helping to provide real-time information on orders and enabling clients to order via web-based applications.

SAFEGUARDING THE FUTURE While the newly-expanded production and distribution numbers are cause for optimism, Nehme is quick to add another important factor behind DRC’s recent investments.

“This new, larger facility hasn’t just been about expansion,” he says. “We have also added new capabilities such as the Lipton Ice Tea and Aquafina bottled water, and we are continuing to diversify our portfolio.”

Such a move, while strategically a natural one, has been necessitated by the introduction of a recent 50 percent excise tax on carbonated soft drinks by the UAE government.

But while the levy presented an obstacle in the form of reduced sales, 10 | EME Outlook issue 32

DRC has embraced new partnerships which are helping to expand the non-carbonated soft drinks portfolio, which currently accounts for around 10 percent of business.

For example, it now operates a franchise of the Egyptian FMCG company Edita, specifically importing wafers and cakes. Another local franchise that DRC acquired is Snack Time, an agreement which sees the company distribute its croissants and Rusks range.

These are in addition to distribution rights for Robinsons and Tesseire.

This is not to suggest that the core business is not subject to development, however, as another new collaboration will see the company bottle and distribute premium mixers in the future.

“Our strength in the market has without doubt helped us to acquire these new lines of business, and given our capabilities we knew that diversifying was a natural option for us,” comments Elmeligy.

Dollar UAE Marwan Al Mulla, General Manager of Dollar Rent-a-Car UAE & Oman is passionate about providing a quality product, superior service and modern technology. These three core values drive our strategy and have yielded results.

Al Mulla commented that our partnership with Dubai Refreshment Company UAE is another example of how, despite competitive market conditions, we have delivered a service which is differentiated from others”.

DRC have outsourced a fleet of 150+ trucks to Dollar Rent a Car for the next five years.

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FOOD & DRINK

PepsiCo & Cornelius Together we create the future in beverage experience.

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EME Outlook issue 32 | 11

DUBAI REFRESHMENT PJSC

The new facility is able to manufacture up to 180,000 cans per hour, 80,000 plastic bottles per hour and 24,000 glass bottles per hour.

Yet it is currently only using 600 cubic metres of its total 1,300 cubic metres per day capacity, leaving room for expansion as it adds more production lines in the future.

Diversification has also occurred in relation to DRC’s power supply, another move which is helping to safeguard the company’s long-term, sustainable future.

“Last March we installed the largest rooftop solar integration in the UAE,” says Nehme.

“It is around 50,000 square metres in size and contains 11,000 PV solar panels, a huge increase on our previous installation which we used to heat 12 | EME Outlook issue 32

water. Now we can cover up to a third of our electricity demand using solar, which amounts to around five to six million kilowatt hours per year.”

This equates to an impressive annual carbon dioxide saving of 4,000 tonnes, while other plant efficiencies brought about by new machinery are estimated to be saving a further 1,500 tonnes a year.

Another important initiative involves ramping up the recycling of waste-

FOOD & DRINK

Reception

Name of congratulates Advert Dubai Refreshment P.J.S.C. on their 60th Anniversary

www.crowncork.com The facility’s current storage height is around 14 metres, but it can utilise a high bay warehousing system as high as 37 metres in one area

water, while further environmental and financial saving are being made thanks to investment in wastewater treatment.

“We have a plant which has a capacity of 1,300 cubic metres per day,” Nehme continues. “At the moment we only use around 600 cubic metres, so we have room to expand this as we add more production lines to the business.

Half of the treated water is used for irrigation and truck washing, and the other 50 percent is sent to companies involved in industrial sectors like construction.

“The benefits of this are two-fold,”

Nehme adds. “Clearly, it is more sustainable for the environment, but is also helping DRC financially by saving on costs such as drainage fees and water bills.”

These strategic investments leave the leadership duo in an optimistic mood, the conversation ending with a look into the future priorities of the business.

Coming back to the importance of diversification, Elmeligy concludes: “The main priority is to increase the size of our non-traditional product categories to have a fair balance within our portfolio. It is important not to

rely too heavily on one product line, so by growing in several areas we can safeguard against any unforeseen challenges.

“Since October 2017, carbonated soft drinks have been imposed with strict taxation measures which has resulted in a decrease in transactions, but we have responded to the challenges, stabilised the situation through a combination of sales improvement and cost reduction initiatives, and we have strengthened in other areas. This will always be a crucial segment to us, but our future is a multifaceted one.”

Dubai Refreshment Company Tel: +971 4802 5000 info@pepsidrc.ae www.pepsidrc.com

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DUBAI REFRESHMENT PJSC Head Office Dubai Investment Park 2, Street 49, Dubai United Arab Emirates Tel: +97148025000 info@pepsidrc.ae www.pepsidrc.com PRODUCED BY EME OUTLOOK MAGAZINE