Masafi to focus on acquisitions in GCC

One of the biggest players in the UAE bottled water industry, Masafi, plans to expand into a full-fledged food and fast-moving consumer goods (FMCG) company, said Ashraf Abushady, CEO of Masafi since 2006. Speaking to Emirates Business, he said the company is adding new items to its product portfolio and increasing its export revenues, though the UAE market would always remain its primary focus.

The company has seen huge growth since 2005, he said, and revenues in the first quarter of this year were 35 per cent higher compared to the same period the year before.

However, this growth has not come about at the cost of environmental concerns, Abushady said, and the company is committed to setting the standards for eco-friendly growth in this sector, from using recyclable materials for its packaging to efficiently managing the water table at its source in the eponymous mountains in Ras Al Khaimah.


How was the company's performance last year and what are your expectations for this year?

Our turnover was Dh400 million. We have a healthy balance sheet with the revenue doubling between 2005 and 2007. Masafi registered net revenues of Dh73m during the first quarter of 2008, an increase of 35 per cent compared to the Q1 of last year.

In the past two years we were able to double our revenue through the addition of new product lines such as juices and flavoured water, and by introducing our gallon bottles. The spurt in the first-quarter revenues this year can be specifically attributed to the launch of the four-gallon water bottle, which is 100 per cent recyclable, with a one-way and one-time faucet that is unique in the industry.

Masafi tissues recorded a 55 per cent growth in sales volumes, along with our water and juices that grew at 20 per cent and 15 per cent respectively. Our flavoured water has garnered an 83 per cent market share in the non-carbonated flavoured water segment within 12 months of its launch and is growing at nine per cent compared to last year.

We have consolidated our market leadership thanks to world-class offerings, driven sales efforts and innovative communication campaigns. We also announced the rollout of our bottle recycling campaign. The company is currently the only bottler to have a dedicated facility to recycle PET bottles. We plan to aggressively focus on the recycling campaign during the current fiscal year.

How is the competition within the UAE bottled water industry?

The water business has many players, both major and marginal. Our nearest competitor is Al Ain, which also has a significant presence particularly in Abu Dhabi and Al Ain. They had a market share of 25.3 per cent in January 2008. Masafi currently enjoys 40 per cent of the local market share for bottled mineral water. Our flagship mineral water has grown so far this year by 32.4 per cent compared to last year.

Do you intend to increase production of Masafi water in the near future, and, if so, by how much?

Yes we are going to increase our production of Masafi water by 20 per cent.

What impact does the Minister of Economy's restriction on the price of bottled water have on your revenues and profit?

Masafi's top lines [revenues] have not been affected. In fact, we have been growing at more than 40 per cent. However, we have challenges with our bottom line [net profit] due to ongoing increases in operational expenses and the cost of raw materials.

The Gulf has been reliant on bottled water due to the scarcity of fresh water here. This, however, has had adverse environmental impacts. How do you mitigate these impacts?

As a socially responsible corporate entity, Masafi is committed to the preservation of the environment. The sources of Masafi are four wells (owned by Masafi) that lie among the foothills of the Masafi Mountains in Ras Al Khaimah.

At the source, the levels are always monitored to ensure the water tables are not disturbed. As the Masafi region is located in an area that enjoys seasonal rainfall, its underground reserves are regularly replenished. Therefore, Masafi company has not caused irreparable damage to the local water table levels. Our containers are recyclable and the company is committed to furthering the cause of recycling. We have sponsored the Clean-up UAE drive, initiated by the Emirates Environment Group. Masafi also partnered with them to launch a plastic recycling initiative across the country.

Masafi has won the ISO 14001 certification for environmental management and is the first mineral water company to have an in house facility dedicated to recycling plastic.

Where does Masafi rank in the UAE's food and commodity market? Can you tell us a bit more on what your portfolio includes and how much you are producing?

Masafi's wide product portfolio includes mineral water, tissues, Masafi juices and the newly launched Masafi flavoured water. The mineral water product line comes in bottles of 1.5litre, 1litre, 500ml, 330ml (regular and sports) four gallons, 330ml kids packs (regular and sports) and mineral water cups in sizes of 250ml, 200ml and 125ml. The volume of water that Masafi produces in a year is 260 million litres. The tissue line includes boutique fragrant tissues in three scents, floral tissues in purple, pink and green colours and car tissue. The hugely popular Masafi Juices come in an array of original flavours. Flavoured water is available in four flavours – strawberry, lemon, peach and mint and lemon in 500ml sizes.

You have launched quite a number of new products in the market. What promoted you to take such steps and how has this strategy affected your profitability?

We believe in continuous innovation and, therefore, we are developing and looking at several opportunities. Our progress was vertical but now we are primed to expand horizontally and to evolve into a total food and beverage company. Masafi's growing product line is an integral part of our long-term strategy to become a complete FMCG company.

In which countries are your strongest markets and which ones are you looking at strengthening?

We are proud of the fact that we are a UAE company. Our priority is and will always be the UAE market. The company exports about 30 per cent of its product portfolio to different countries. Our major importers are Japan, Oman, Kuwait, Qatar, Bahrain, Afghanistan and Djibouti. The company also exports to Germany, the United Kingdom, Australia, Taiwan, Pakistan, Morocco, Yemen, Sudan, Bangladesh and the Ivory Coast, among others.

What are your expansion plans locally, regionally and internationally?

Our mantra is leadership through innovation. In the immediate short term to medium term we aspire to increase our share of the beverage market domestically and regionally. Acquisition of companies – regionally – will be a focal point of our growth and expansion plans. We are seriously considering joint ventures with international companies to produce their brands locally. In terms of an industrial sector, our next move will be into the food sector.

You also have been increasing your presence through marketing and advertising. What else is in the pipeline?

We have been very creative in our communications approach and consistent in our stringent quality standards. If you see our product profile and positioning, you will notice that customer preferences have been the driving forces behind our business decisions. Our strategies are also very different from conventional "bottled water" companies.

Two things that have more or less defined our communication campaign is innovation and quality. It may sound clichéd but this is the only route for a product where the differentiation is greatly limited. The company has retained its market leadership for the past three decades by providing world-class products, which are renowned for their natural freshness. This has seen Masafi become the premium reference for bottled mineral water in the entire region.

We also invest in the brand by associating with some of the region's most prestigious events, such as the Desert Classic, Dubai Tennis Open, etc. This has helped us maintain our lead for round 30 years now.


PROFILE: Ashraf Abushady, CEO, Masafi

Abushady has been with Masafi since March 2001 and has spearheaded the company's growth, with a 40-per cent increase in revenues over the past seven years. He joined Masafi to oversee the sales, marketing and distribution of the Masafi water, tissue and refreshment divisions. He was promoted as General Manager to oversee the total production, selling, marketing and distribution of Masafi and its subsidiaries.

In May 2006, he was designated as the Chief Executive Officer. Abushady is experienced in the beverage industry, having worked in several senior positions at Coca-Cola and Pepsi in Saudi Arabia and Qatar, prior to joining Masafi.

He holds a bachelor's degree in business administration from Ein Shams University, Egypt.

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