Mars Wrigley Confectionery sees Egypt becoming its production hub for the Middle East and North Africa region in the near future, vice president of corporate affairs for the Asia-Australia, Middle East and Africa region (AMEA), David Kiu, said.
The company held an inauguration ceremony on 27 February for the first phase of its investment expansions for its Sixth of October factory, within the company’s plans to transform Egypt to a regional industrial and exporting hub in the AMEA region through supplementing two new production lines worth EGP 750m of investment.
These expansions coincide with Mars’ celebration of 17 years of operating in the Egyptian market, through which it managed to increase its investments twentyfold, from EGP 50m in 2001 to over EGP 1bn at present. This is an addition to exporting its products from Egypt to 20 other markets in Asia, Africa, and the Middle East.
Daily News Egypt sat down with some of Mars Wrigley’s leadership to talk about the company’s business and investment strategy for Egypt.
The transcript of the interview with Duncan McCulloch, regional managing director; Pascal Bouye, vice president of supply; and David Kiu, vice president of corporate affairs is below, lightly edited for flow and clarity.
There are so many countries that have great investment returns like Egypt. Why did you choose expanding your business in Egypt?
Bouye: The consumer base in the country is very attractive as the percentage of young people in the population is very large and Egypt’s location is very distinctive, in the middle of Africa, Asia, and the Middle East. In addition, it is a great platform in the Middle East.
McCulloch: Egypt is a very big consuming market as it contains 100 million people and is full of investment opportunities. The market is also very promising, leading the company to launch its regional hub for export in Egypt.
Kiu: Investing in Egypt over two decades has been successful, so it encouraged us to invest more in the country.
What is the company’s investment plan for the country? What is your outlook for its economy?
McCulloch: I think this is the perfect time to invest in Egypt. We are very much looking at investing and have ambitions to expand more in Egypt, as our investments multiplied 20 times over 17 years. Besides, we seek achieving growth to export more from the country to the world as we only export 65% of our production in Egypt to the world and we need to increase that to reach 80-90%.
Bouye: We recently launched two production lines to double our plant’s capacity and this represents a long-term investment. Thus, our engagement with Egypt is historic and will last for a long time.
Kiu: The company’s industrial expansion does not only reflect an increase in the production capacity of its factory, but also represents a true turning point in operations, making Egypt the core of Mars’ industrial and exporting processes in the region. It further reflects the company’s upbeat outlook towards the Egyptian economy’s future, particularly following the recent economic reforms package implemented by the Egyptian government.
What is the plant’s production capacity in Egypt and what is the size of Mars’ investments globally?
Bouye: The local production of our plant in Egypt is about 70,000 tonnes and I think there is growing demand on chocolate, which means that we will double our business in the country, but also, we will expand in the Middle East, Africa, and Australia.
Currently, our business outside Egypt amounts to $42bn, which will grow to reach $100bn by the end of the current year.
Kiu: We have 53 confectionery plants around the world, and we have another two plants in Saudi Arabia and Dubai. However, once we launch our second production line in Egypt after six months, it will be the largest in the Middle East.
Should we expect new products or brands to be launched in the Egyptian market in the coming period?
McCulloch: In terms of brands, we are interested in building new big brands all the time.
What is the company’s market share in the Egyptian local market?
McCulloch: We are the second biggest player in the chocolate market in Egypt, compromising 30% of the market.
After the liberalisation of the Egyptian pound, the purchasing power of Egyptian customers has decreased. Can you explain how this affected your business?
McCulloch: Obviously our business still continues to grow and we are keen on providing products at affordable prices and making all brands available for every client.
Although the government of Egypt has achieved progress in improving the investment climate through some encouraging legislation, there are some challenges that hinder some investments in Egypt. In your opinion, what are these challenges?
McCulloch: The government has achieved great progress in simplification of doing business in Egypt and improving the infrastructure to make it easier for an international company to do business here in Egypt.
However, the main challenge we would like to highlight is the customs process, as we provide top quality products to allow consumers to enjoy them in the fastest possible time. I think the government has to streamline the customs process.
What is the ratio of Egypt’s local component in your products?
Bouye: Our raw materials, such as powder, sugar, and cacao, from Egypt are at about 30%. We believe that it is not enough, but we have an active programme to reach more local suppliers. However, 70% of our packaging is from the local market, but the company is working to source 100% of its packaging material from Egypt by year’s end and is also planning to increase its dependence on locally sourced raw materials.
