The growing number of hypermarkets in the Gulf and the burgeoning population continue to drive the expansion of the food processing sector, according to Jean Marc Lourau, Head of GCC Operations at French multinational Gyma. The company processes and sells spices and dry fruits, a segment that Lourau says is worth $64 million (Dh235.5m) in the UAE alone.
Gyma has a 70 per cent market share worth $45m. While the company's UAE turnover has been growing at seven to 10 per cent a year, its exports have increased at 45 to 50 per cent.
These figures make Lourau believe that even though the UAE market for processed foods is becoming saturated there is space for several new players at the regional level.
In an exclusive interview with Emirates Business, Lourau reveals the company's plans to expand across the GCC and beyond.
How has Gyma been affected by the global financial slowdown?
Last year we grew by 36 per cent and this year we expect to grow by 18 per cent. We continue to have double-digit growth but at a lower level than before. So the effect has been mild.
Why has the effect been mild? Why would people continue to buy your products when they avoid others?
Our products are a part of the staple diet. We deal in dry fruits and spices and our products are part of families' shopping lists. If chilli powder has been part of a family's meal it will continue to be so.
How has your turnover increased over the years and what are your future targets and plans?
We have grown from a turnover of $8m eight years ago to $50m now. We plan to have a turnover of $70m by 2012. We have an aggressive expansion plan charted out for the next three years. We plan to expand into all the GCC countries. And, with Dubai as the centre of operations, we also want to expand into countries such as Iran, Syria, Jordan, Egypt, India and Pakistan. In fact we made a foray into Iran and Saudi Arabia a year ago.
Does that mean that you are planning asset enhancements in terms of setting up processing units or will it just be a marketing drive?
It will be a mix of entering into partnerships with marketing chains and setting up processing plants. While we plan to set up processing units in countries such as Saudi Arabia, we plan to market our products in markets with relatively small customer bases like Kuwait, Bahrain and Qatar. The GCC is the market we are primarily focusing on. We have a dedicated team of 30 senior officials and executives working on our expansion plans.
Where will you obtain funding when the entire world is facing a credit crunch?
We will meet 30 per cent of the requirements from our own resources and raise finance for the rest of it. We have long-term relationships with BNP Paribas and the United Arab Bank.
What makes you believe there is such a huge demand for your products?
All the indicators have been bright. Our exports have been growing at 40 to 50 per cent. In the UAE, where we have operated for the past 17 years, we are growing at seven to 10 per cent.
We see similar potential in the other GCC countries.
Gyma has moved from a free zone to the Dubai Investment Park. Why?
We realised the potential of the GCC market. Even though a free zone has its benefits we had to pay customs duty whenever we crossed a GCC border as a free zone company is not treated in the same way as a UAE company.
But as part of the DIP we enjoy all the benefits that the GCC common markets provide.
The economic boom in the GCC, which brought in several hypermarket chains and hotels, changed our targets. I could not have controlled distribution from a free zone.
Though we share our capital as per UAE law, I have 100 per cent control over our operations.
Considering there are such untapped markets in the GCC, is there room for other new players?
Yes. Not that we would like several others to come in!
Who do you and your competitors identify as your customers?
Everyone living here. We make products that meet the requirements of all expatriate and national groups. We make products for Indians, Arabs, Sri Lankans, Europeans and Filipinos.
You distribute products made in your European factories here. How is that segment performing?
It's less than five per cent of our turnover in the UAE. There are several players in this segment.
Do you export authentic Arab products such as dates to the West?
Our units in the West handle exports to Europe. We export dates from countries such as Tunisia and Algeria.
PROFILE: Jean Marc Lourau Head of GCC Operations, Gyma
Lourau has a degree in mechanical engineering, specialising in aeronautics, and an MBA in marketing.
He worked at Airbus for two years but decided he preferred "making pickles".
A meeting 25 years ago with the then chairman of Gyma changed Lourau's career. He joined the company as a commercial manager and eight years ago became the company's head of operations in the Middle East.
Lourau says that he loves golf, goes camping at weekends and spends most of his spare time with his three children.