GMR June 2010 by MediaquestCorp.

SECTOR ANALYSIS REGIONAL AND GLOBAL FOOD BRANDS FIGHT FOR BIGGER SHARE A MediaquestCorp Publication

JUNE 2010 - NO 187

BRAND ANALYSIS FUELLING LOYALTY AT THE PUMP

SPECIAL REPORT HOW TO WIN AT SPORTS MARKETING

RESEARCH SAUDI CONSUMER SPEND FORECAST

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SECTOR ANALYSIS REGIONAL AND GLOBAL FOOD BRANDS FIGHT FOR BIGGER SHARE A MediaquestCorp Publication

JUNE 2010 - NO 187

BRAND ANALYSIS FUELLING LOYALTY AT THE PUMP

SPECIAL REPORT HOW TO WIN AT SPORTS MARKETING

RESEARCH SAUDI CONSUMER SPEND FORECAST

Registered in Dubai Media City

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PROFILE

Excess baggage: Samsonite chief Ramesh Tainwala talks marketing spend and strategy

www.GMR-Online.com

JUNE 2010 – ISSUE NO. 187

NEWS

Adidas new pitch process sidelines Carat. Oman’s Amouage to open first international boutique. World Cup promo fever sweeps the region. Ogilvy launches specialist Islamic marketing practice. JC Decaux Dicon installs new walk-in format at Dubai Airport. Khamis Al Muqla honoured at IAA congress. Clique Media links up with Linkedin.

WORLD NEWS

INSIGHT

US social media sponsorship spend hits $46 million 2009. TLC’s Kenya Airways summer promotion takes off. Media bartering movement gathers pace in US. CNN mulls news café in London. Coke chief heads US Muslim reach out programme. Samsung Group invests $21 billion in renewable energy. Unilever is Cannes Lions Advertiser of the Year. Starcom loses Kraft UK to Phd.

Saudi consumer spend is on the rise once again but will it reach prerecession levels?

BRAND CHECK

Does Arwa’s rebrand herald a fresh new look or is it just a watered down version of the old ID?

GEMAS EFFIE CASE STUDY 26 The fiercely contested Best Youth Marketing Campaign category attracted some of the most robust entries.

COVER STORY 30 PART 1: BLUE OCEAN STRATEGY

86 4 Gulf Marketing Review June 2010

Scouting for new markets does not necessarily mean looking for new territories, not according to the Blue Ocean theory anyway.

PART 2: EMERGING MIDDLE EAST MARKETS: There are still large tranches of the Arab world that offer as yet vast untapped potential for brands.

HALAL LIFE CSR

Quranic structures on the economic, social and environmental impact of running a business are a blue print for modern CSR, says Dr Mah HussainGambles.

STRATEGY

Following last month’s cover story on shopper marketing Y&R’s stresses the role of packaging within the discipline.

SPECIAL REPORT SPORTS MARKETING

OK, so everyone loves international football but when it comes to regional sports there is a long way to go before they become viable a marketing platform. We report back from the recent Sport Accord conference where this and many other issues were tackled.

SECTOR ANALYSIS: FOOD

Import dependency continues to fuel innovation and investment in the region’s food sector. The Middle East is the among the top ten world markets for confectionery. Acquiring farmlands in Africa and Asia leads land grabbing accusations in the GCC. Baqalas outsell supermarkets in Saudi, says Kantara. The latest in packaging. Talking to Rami Abu Ghazaleh, chief of Saudi CDR brand Al Baik. Euromonitor reveals food spend per category, per country plus PARC data and analysis and Sekari top word searches.

76 SECTOR ANALYSIS: FOOD MediaquestCorp. Dubai Media City Al Thuraya Tower 2, 24th Floor United Arab Emirates Tel: +(971) 4 391 0760 Fax: +(971) 4 390 8737 www.mediaquestcorp.com

MANAGING EDITOR Siobhán Adams siobhan@mediaquestcorp.com DEPUTY EDITOR Precious Jasper de Leon precious@mediaquestcorp.com

AUDITED BY ART DIRECTORS Sheela Jeevan, Alvin Cha

Reproduction in whole or part of any matter appearing in GMR is prohibited by law without the prior written approval of the publishers. Opinions expressed in GMR do not necessarily represent the views of the publishers and editorial staff of the magazine. The publishers do not hold out any guarantee as to its accuracy, neither do they indemnify any loss arising through use of the information. All dollar prices ($) are US dollars, unless otherwise specified. All marketing data is subject to confirmation. Printed in the UAE by Atlas Printing Press

6 Gulf Marketing Review June 2010

Europe: S.C.C Arabies 18 rue de Varize 75016 Paris, France Tel: +(33) 01 47 66 46 00 Fax: +(33) 01 43 80 73 62 Lebanon: Beirut, Lebanon Tel: +(961) 1 202 369 Fax: +(961) 1 202 369

CONTRIBUTORS Radhina Coutinho, Alex Malouf ADVERTISING: MEDIALEADER United Arab Emirates sales@mediaquestcorp.com Tel: +(971) 4 391 0760 Saudi Arabia: Ghassan A. Rbeiz ghassan@mediaquestcorp.com

PUBLISHED BY: Medialeader FZ/MediaquestCorp FZ Europe: S.C.C Arabies, 18 rue de Varize 75016 Paris, France Tel: +(33) 01 47 66 46 00 Fax: +(33) 01 43 80 73 62

CO-CEO Alexandre Hawari CO-CEO Julien Hawari CFO Abdul Rahman Siddiqui Managing Director Ayman Haydar Creative Director Aziz Kamel Distribution & Subscription Director JP Nair, jp@mediaquestcorp.com Marketing Manager Joumana Haddad, joumana@mediaquestcorp.com KSA GM Tarek Abu Hamzy, tarekah@mediaquestcorp.com, Tel: +966 1 4194061 Lebanon GM Nathalie Bontems, Nathalie@mediaquestcorp.com, Tel: +961 1 492801 North Africa GM Adil Abdel Wahab, adel@medialeader.biz, Tel: +213 661 562 660 France Sales Director Manuel Dias, dias@arabies.com, Tel: +33 1 4766 46 00

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News

world Cup - related promotions sweep the region JC Decaux leads with new airport format, Coke teams with Nancy in anthem video

Keeping score: more than 8 million passengers are expected through Dubai Airport in June and July

MeNA The region’s brands and services are finalising their FIFA 2010 World Cup related promotion plans as the countdown to kick off begins this month. JC Decaux Dicon will help travelers keep score by installing its Discovery Grand Screens in Dubai Airports Terminal One (T1) and Terminal Three (T3) with live updates of latest scores and commentary. The screens will be sited above passport control in T1 and in the baggage reclaim areas of Emirates T3. T3 will host a 32 sq m LED screen while T1 will have four 8 sq m LED screens. The entire package consists of five digital screens, eight wall wraps, welcome walls

in T3, and 12 light boxes plus a welcome window in T1 – all of which will feature the sponsoring product. At time of writing a sponsor had yet to be finalized but Yoann El Jaouhari, sales & marketing director, JC Decaux MEA told GMR that official World Cup sponsors would be given priority. Total passenger traffic for June is forecast at 3.9 million and 4.2 million for July. Decaux debuted a similar format at New York’s JFK airport with Emirates Airline, but in a different format, during the 2006 tournament. Emirates Airline is the official World Cup carrier. Saudi telco Etihad Atheeb Go meanwhile has teamed up with broadcaster Al Jazeera

allowing Go subscribers access to Al Jazeera’s Sport’s World Cup Package. The offer includes Go’s Home broadband modem, advanced voice, and fax services FOC and is valid for both existing and new subscribers. Lebanese singer Nancy Ajram is also lending her support.

She, along with African hip hop artist, K’naan, is working with Coca-Cola Middle East to create a special soundtrack, ‘Wavin’ Flag – Coca-Cola Celebration, to be released in 15 countries. The song will also feature in TVCs, the Coca-Cola trophy tour and online. Wavin’ flag depicts the core creative idea where fans from Syria, UAE, KSA, Yemen and Egypt share their celebrations a with the other fans from all over the globe. Parts of the video were shot in Amchit and Ashrafieh in Lebanon. Lebanese company Kitsch Cupcakes is also grabbing a slice of the action with its range of World Cup inspired cupcakes. For every box of 12 cupcakes purchased in its Dubia outlet during tournament consumers will be entitled to enter a raffle draw where they can win Kitsch gift cards worth up to $131 each. The winners will be drawn on the day of the World Cup final.

Flying the flag: Kitsch Cupcakes taste victory

8 Gulf Marketing Review June 2010

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News

‘New Muslim Consumer’ revealed Islamic branding unit launches with comprehensive research

MeNA Online professional network LinkedIn has appointed Clique Media FZC as its exclusive sales representatives for the Middle East and Africa region. Under the agreement, Clique Media will offer regional advertisers and agencies direct access to LinkedIn’s extensive range of display advertising products and sponsorship options. Advertisers can reach these members through ad placements and targeted in mail messages.

Boom economy: building consumer relationships takes effort says Tanya Dernaika (inset).

MeNA According to a new study, Brands, Islam and the New Muslim Consumer, 38 per cent of respondents say that Islam is what gives them direction while 62 per cent agreed to the statement, “I am proud to be a Muslim.” The two-year survey was conducted by TNS and Ogilvy & Mather. It looks at what drives Muslims as consumers and the effect Islam has on lifestyle choices and in turn how brands and businesses are affected. The report is the launch pad for Ogilvy Noor, a multidisciplinary global Islamic branding practice. Led by Ogilvy offices in the UAE, Pakistan, Malaysia and the UK, the global unit taps into the Muslim consumer sector, which sees the halal segment alone worth $2.1 trillion, and growing at $500 billion annually. A wide network supports the core team across all the Muslim markets.

“We didn’t want to just raise questions, we wanted to provide the answers and the toolkit to realise the solutions,” said Tanya Dernaika, planning director for Memac Ogilvy across the Middle East. The report also reveals that 45 per cent of these new Muslim consumers will find ways to adapt Islam to their lifestyle. It also found that, although halal labels are important to showcase certification, they are no longer sufficient to persuade Muslim consumers that the brand is in line with Islamic values. There were 2,600 participants to the survey, which covered Malaysia, Saudi Arabia, Egypt and Pakistan. Focus groups were also used while academic and religious experts were also involved. A global roadshow officially launches the practice in September. In addition to the qualita-

LinkedIn takes on Clique Media

tive and quantitative research, Ogilvy Noor launches the first Noor Brand Index and Noor Category Index, which benchmarks of Muslim consumers’ perception of specific brands and categories. “To build a long term relation with consumers, you need to make the effort even when you are already operating in a Muslim-dominant environment,” Dernaika told GMR. “Surprisingly, global brands like Nestlé and Lipton score better on the Noor Brand Index compared to regional brands because they showed more effort into incorporating their brands into the Muslim lifestyle,” Dernaika added. When it came to categories, food topped the index, followed by personal care. Last on the list is finance, which Dernaika explains is due to a lack of understanding on how a bank makes itself Shariah compliant.

They just clicked: Clique and LinkedIn

The Middle East accounts for more than a million of the company’s 65 million members globally. “This new representation is in line with our strategy to represent two or three key online properties in the region for our display advertising business,” said Sagar Shetty, director, Clique Media. Clique Media also have exclusive partnerships with mobile advertising marketplace, AdMob, social media monitoring company, Statsit, and augmented reality pioneers Total Immersion in this region.

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News

experiential OOH format debut for DXB Walk in ‘lounge’ allows stronger interaction with brand

walk through: Passengers at Dubai airport get closer to the brands

GCC JC Decaux Dicon has broken new ground in the region’s airside advertising sector. The Dubai Airport OOH joint venture debuts its new augmented reality (AR), experiential “lounge” this month. Called the VIP Serenity First Class Kisok, the walk-in format offers AR brand activation including alcoholic beverages sampling subject to strict controls. A hostess will check that all participating passing-

ers are non Muslim and more than 21 years old. The hostess will also give a brief introduction to the experience. The exterior of the 4m x 2.5m x 2.5m fixture features an interactive digital TV screen to“engage” passengers while they are waiting to enter the lounge, which only hosts one person at a time. Once inside they can sample the brand, chat to a brand mentor and experience more

HOUSE Of AMOUAGE OPENS ITS DOORS TO THE WORLD

AR activation including the history of the brand and how it is made. The first client to sign up is Johnnie Walker Black Label for its campaign, Johnnie Walker Double Black Experience. The initiative is supported by a teaser campaign on 15 light boxes in the Dubai Duty Free area inviting passengers to go to the ‘lounge’ and try out the Double Black Experience.

IAA honours for Khamis Al Muqla Bahrain Khamis Al Muqla, Bahrain-based Gulf Marcom group chairman, IAA Worldwide Board Member and president, IAA Bahrain Chapter, was presented with the IAA Medal for Merit Award at the Kremlin Palace Congress Centre in Moscow during the recent IAA 2010 World Congress. Al Muqla said that the award demonstrated the recognition by the international marcoms sector of the region’s achievements including the hosting of three world congresses. “It is also a reflection of the significant role played by the IAA Chapters in the Middle East, as well as the active involvement of the IAA Bahrain Chapter through its participation in the IAA Regional and Worldwide Board Meetings as well as World Congresses,” he added.

Oman Luxury fragrance brand The House of Amouage is due to open its first mono brand store outside the Middle East in London this month. It will be the second store to open outside of Oman, with the first unveiled last month at Dubai Mall. A collaboration between UK agency JHP Design and Amouage creative director, Christopher Chong, the Dubai Mall store was designed after an Arabic home. It is also houses the brand’s recently launched leather collection, making it the first time the category is available outside of the Sultanate. “This is the first part of our expansion strategy to open mono brand stores in key opinion-forming cities throughout the Gulf, Europe and United States,” said David Crickmore, CEO of Amouage. There are currently four flagship Amouage stores in Oman. The 25year old already sells its broad product range through shop-in-shop concepts in key retail chains across the GCC and several up-market department stores in Southeast Asia, Europe, Russia, the US and Australia.

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World NeWs

Uncle Ben deserts TBWA for BBdo UsA Uncle Ben’s, the Mars Foods rice brand, has switched creative agencies within the Omnicom Group, leaving TBWA\Chiat/Day for BBDO. This the latest in a series of agency shifts since last September, when Mars announced it would reorganise ad assignments under four lead agency partners: Omnicom shops BBDO, TBWA and DDB, and independent SapientNitro reports Ad Age. Earlier this year Mars handed Snickers, Wrigleys and Extra to BBDO as part of what Ad Age describes as its continuing realignment of the agency roster according to brand. Recently the food company also transferred Twix to TBWA from Sapient Nitro. TBWA also handles Pedigree and Whiskas along with Skittles and Starburst.

Unilever takes pride of place at Cannes Latest award brings Lions haul to more than 200 since 1961 Global France Anglo-Dutch FMCG giant Unilever has been named Advertiser of the Year at the 57th Cannes Lions International Advertising Festival. The accolade goes to advertisers who have shown inspiring innovative marketing of their products and who embrace and encourage the creative work produced by their agencies. Unilever won its first Cannes Lion for OMO washing powder back in 1961. Since then, its brands have gone on to win close to 200 Lions, including the Media Grand Prix in 2002 for “Magnum 7 Deadly Sins – Give In To It”, and both the Cyber and Film Grand Prix in 2007 for its ground-breaking Dove “Evolution” ad. Keith Weed, Unilever’s chief marketing officer, said: “The

A cannes do attitude: Unilever collected its first lion in 1961

long-standing relationships we have built with our agency partners over many years have enabled us to develop many striking – and more importantly – effective advertising campaigns. “More than this, the depth of our relationships has engendered the trust required to foster the genuine strategic thinking, creativity and innovativeness that delivers both long-term brand equity

and outstanding work.” Unilever is present in more than 100 countries with 400 brands spanning 14 categories of home, personal care and food products. Its portfolio includes some of the world’s best known brands including 11 1 billion euro-plus brands. The portfolio features brands such as, Lipton, Dove, Axe/Lynx, Knorr, Hellmann’s, Wall’s ice cream, Flora/Vaseline, Surf and Cif.

Cadman now Ceo Publicis, seattle

Phd grabs Kraft post Cadbury buy out

UK Mark Cadman has become CEO of Publicis Seattle, reporting to Publicis USA chairman and CEO Susan Giannino. Cadman was most recently CEO at Euro RSCG London. His previous clients included Volvo, Tesco and Unilever (Hellmans and Sure). Under his leadership, Euro RSCG enjoyed three consecutive years of growth to become the fifth biggest agency in the UK. Prior to Euro RSCG, he was part of the management team at Lowe Lintas.

UK Publicis’ Starcom has lost the battle to retain its $35,834,947.78 Kraft UK business, which it has held since 2004. The loss follows the food giant’s $11 billion takeover of Cadbury earlier this year. Media for both brands will be handled by Cadbury incumbent Phd. The combined account is reputedly worth $ $71,689,024.77. Phd won the UK Cadbury business from Starcom two years ago. Kraft recently consolidated its US account into the Pub-

spreadable: Kraft’s $35mn goes to Phd

licis network, continuing its long relationship with the group. Many thought that it would replicate this in the UK.

Recent changes at Cadbury since the takeover include the departure of its marketing director, Phil Rumbol. In separate but related news, Cadbury US has unveiled a completely new brand that is targeted specifically at women. Coco By Cadbury is positioned as gift to be bought for women by women “to celebrate female friendships”. The milk chocolate covered truffles are sold exclusively at David Jones at $12.95 for 195 gram gift bag.

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World NeWs

A mother of a campaign for Papa John Pizza UsA Papa John is relying on social media to help it deliver a new recipe for its speciality pizzas. The Papa’s Specialty Pizza Challenge is connecting with consumers via Facebook, asking them to create a new recipe. At the time of writing there were more than 6,500 entries. Since the campaign launched, the application tab has been loaded close to 80,000 times, with users publishing upwards of 1,700 Facebook news feed

Coke’s Kent heads Us- government backed Muslim outreach programme UsA Muhtar Kent, chairman and CEO of the Coca-Cola Company, is helping the US foster better relations with the worldwide Muslim community. Kent has been named vicechairman of Partners for a New Beginning (PNB). PNB is a group of US businesses working with the US Department of State to advance a new beginning between the US and Muslims following President Obama’s 2009 Cairo speech. Former US Secretary of State Madeleine Albright serves as chair. Coca-Cola is the third largest employer and fifth largest investor in the Palestine Au-

reaching out: Muhtar Kent is vice chairman of Partners for a New Beginning

thority Area, employing more than 350 Palestinians and providing livelihoods for 5,000 families, said a press release. Its bottling partners operate 54 manufacturing plants, employ 40,000 people and the company invested $1 billion

in the last few years across the Arab world, it added. This year it also increased its investments in Malaysia ($302 million) and Pakistan ($250 million), where it has been present since 1936 and 1953, respectively.

euro appetite for frozen and chilled food grows to reach $20.6 billion UK is largest Euro market worth $7.43b says Leatherhead A slice of the action: Papa John’s

items, reports Mashable.com. The top three recipes will be integrated into the Papa John’s menu and sold throughout August. The finalists are expected to use their social media presence to promote their recipes, thus promoting the brand. Each one is given a finalist marketing budget of $1,000. The overall winner receives pizza for life, a guest appearance in the next Papa John TVC and 1 per cent of the recipe’s sales – up to $10,000.

europe European sales of frozen and chilled foods could reach $20.6 billion euros in 2013, up from $15.36 billion in 2009, says Leatherhead Food Research (LFR). The category includes ready meals, pizza, coated foods and savoury bakery products. Ready meals accounted for almost 43 per cent in value sales in 2009. Pizza followed with 24 per cent. Coated foods (usually fish or poultry) accounted for 23 per cent. Ready meals are expected to remain the Western European market’s largest sector,

Hungry for more: european ready meals sector to grow dramatically

rising by 9.5 per cent between 2009 and 2013 to reach $8.8 billion. More dynamic growth is forecast for pizza, which is expected to increase by 11.4 per cent to almost $5.02 billion.

By 2013, the market is expected to exceed $4.8 billion in value terms, up by 11.4 per cent compared with levels in 2009, says LFR. The UK is the largest market, worth $7.43 billion in 2009.

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World NeWs

CNN to open news café in london UK CNN International is opening a news café in the heart of London’s shopping, tourist and business district, the West End. Offering food and beverages served up with the latest daily news via multimedia and traditional media, the CNN News Café will also double as an OBU for live interviews and broadcasts. Customers will also be able to create and submit their own news stories via CNN’s interactive user-generated iReport booth. The initiative follows the CNN Grill, which opened during the 2008 US Democrat and Repub-

Cash-sponsored social media is fastest growing ad spend in UsA Value grew at CAGR of 77.6 per cent from 2004-2009. UsA The emerging category of social media sponsorship grew by 13. 9 per cent to $46 million in 2009. According PQ Media’s Social Media Sponsorships Forecast 2010-2014, the value of sponsorships grew at CAGR of 77.6 per cent, 2004-2009. This year it is expected to increase 23.6 per cent to $56.8 million. Cash-sponsored social media is the fastest-growing segment with spend up 37.3 per cent to $10.3 million driven by brand requirements to reach specific “influentials” such as young females and mothers. The largest brand categories

social Media: Word of the mouth

by spend were CPGs, F&B, health and beauty, and media and entertainment. While social media sponsorships accounted for less than 3 per cent of overall WoM spend, this is expected to grow fueled by the controversial sponsored conversations segment, said the report.

Sponsored conversations help brands by paying social media content generators. Brands, however, cannot control whether the coverage will be positive or negative. Non-paid sponsored social media, in which the social media publisher is provided samples of the product or coupons, reached $35.7 million in 2009, an 8.5 per cent gain over 2008. Challenges to social media sponsorships cited in the report include the lack of national scale as it remains difficult for brands to go to source to make a national buy.

West end Boys: CNN’s new café

TlC takes off with Kenya Airways in three month long summer promotion

lican National Conventions. Mark Haviland, CNN’s marketing director said: “We are looking to take our product and ideas direct to our audience, and create a space where people can interact with us and each other around the world, through some of the most innovative communication technologies available.” “This experiential approach has been developed into an exciting brand sponsorship opportunity as well and as such, we are seeking an exclusive sponsor that will benefit from some highly novel brand activation on the ground.”

south Africa Kenya Airways is using washroom media specialists TLC for a three-month summer campaign. Targeting South African’s business travellers and holidaymakers, the campaign aims to generate awareness about the destinations that the airline services. Utilising standard A4 washroom frames in 10 airports – domestic and international – across South Africa for the first two months, the format will switch to 35 mall holdings nationwide for the final month. “Discover the world of Kenya Airways” is the first creative,

onboard: Kenya Airways promotion

which will be followed by photographs of the different destinations to which the airline travels. “The second creative also draws the consumer in, as they

are made aware that affordable holidays are available when flying Kenya Airways,” said TLC, which is owned by Primedia Unlimited. In separate but related news TLC – Targeted Lifestyle Communication – has recently rebranded using creative agency five0six. “Our new image is fresh and portrays something of a more matured media business than we were over 10 years ago. We believe the redesign will make the market consider the targeted washroom space more seriously,” said TLC chief Brett Tucker.

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INSIGHTS

REAL GROWTH IN SAUDI GDP AND CONSUMER EXPENDITURE: 2005-2014 16.0

Real GDP Consumer Expenditure

14.0 12.0

٪ Real Growth

10.0 8.0 6.0 4.0 2.0 0.0 -2.0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source: Euromonitor International from IMF/Euromonitor International Financial Statistics and World Economic

ROCKY ROAD TO RECOVERY Saudi consumer spend is recovering but is unlikely to return to pre-recession levels. AFTER A DOWNTURN in 2009 amid the global recession, Saudi Arabia’s economy is forecast to return to a healthy rate of 4 per cent real GDP growth in 2010. This has been sparked by the recovery of oil prices, increased government spending and the resumption of local bank lending. The recovery is expected to be accompanied by an acceleration of consumer expenditure growth. This boost bodes well for companies doing business in Saudi Arabia.

Saudi Arabia suffered a 0.9 per cent real GDP contraction in 2009 as oil revenues – representing more than half of GDP – were weakened by a sharp decline in crude prices. This was a turnaround from 4.4 per cent growth in 2008, but forecasts suggest that the figure will jump to 4 per cent in 2010. The latest figures suggest the recovery began in the second half of 2009 and the estimate is that real GDP grew by 0.2 per cent over the year.

The Saudi stock index is expected to rise by 20 per cent in 2010 and earnings are forecast to increase by 26 per cent after a 2009 decline of 21 per cent, according to GCC financial services institution Shuaa Capital. A turnaround will help restore investor confidence. Consumer expenditure is set to increase by 6.7 per cent in 2010 in real terms, after relatively low growth of 3.9 per cent and 2.4 per cent in 2008 and 2009, respectively.

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POPULATION, MEAN AGE AND GDP PER CAPITA IN PPP TERMS OF SAUDI ARABIA, UAE AND EGYPT: 2009

GDP measured at PPP per capita (000$)

International $ / mean age 50 45 40 35 30 25 20 15 10 5 0 -5

25.0

26.0

27.0

28.0

29.0

30.0

Mean age Source: Euromonitor International from IMF/Euromonitor International from national statistics/UN Note: Bubble size indicates population size. Purchasing power parity PPP

Implications The decline in GDP was not due to failing businesses or low consumer spending but to depressed oil prices; petroleum products accounted for 84 per cent of Saudi exports in 2009. Real annual disposable income will continue to rise at a rate of 6.2 per cent in 2010, after real growth of 2.5 per cent in 2009. Combined with Saudi Arabia’s young population, this will help drive consumer sales and the purchase of bigticket items such as cars and electronics. Indeed, the communications sector was especially resilient during the downturn – recording 3.4 per cent growth in 2009 in real terms – and is forecast to outpace all other areas of consumer expenditure in 2010-2011. The telecoms sector is undergoing

greater competition and investment, and the market is far from saturated. Saudi Arabia is an attractive market in the region for consumer goods – it has a young population that is larger than the UAE’s, and Saudi consumers have much more purchasing power than those in Egypt. Prospects However, unemployment is expected to have exceeded 10 per cent in 2009 and is particularly problematic among younger Saudi men because of the economy’s over-reliance on oil – which is not labour intensive – and the high number of positions that are filled by expats. In the World Bank’s Doing Business rankings, Saudi Arabia rose from 87th in 2004 to 13th of 183 countries in 2009.

Saudi Arabia UAE Egypt

The government made efforts to improve the business environment by opening “one-stop shops” for foreign investors, but the country still lags behind in contract enforcement. Saudi Arabia’s real GDP is forecast to reach 5 per cent growth by 2014. However, the economy remains vulnerable to oil price shocks. Consumer expenditure is set to rebound in 2010, although it is unlikely to achieve the growth seen prior to the recession. The government is supporting a programme of economic diversification. It has budgeted for spending on infrastructure projects and is working to establish new economic cities such as Riyadh’s $9.6 billion King Abdullah Financial District. ■ Copy supplied by Euromonitor International.

June 2010 Gulf Marketing Review 21

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CRITIQUE

Client: Damas Agency: The Ideas Agency (Dubai)

CREATIVE VIEW Damas, The Art of Beauty. RAK Bank, Don’t Get Bitten. Saadi Alkouatli regional creative director TBWA\RAAD Dubai For a communication to have the best shot at giving its message, the attention it deserves, a balance of art and strategy must be achieved. When both art and message go hand in hand, a magical moment happens and the communication clicks with the consumer. Below, I critique each execution from an art perspective and from a message perspective. Here we go: Damas Art: The photography is very tasteful in terms of the model and the setting. The picture is timeless and takes the reader into a magical and natural moment. But the art is unclear in terms of the message it is trying to deliver.

Is this ad nothing but a beauty shot to showcase the Damas gold bracelet? Or is the message intending to highlight the design of the bracelet and the fact that its design was inspired by nature? Message: It seems there are two messages coming through: “Only Gold is Everchanging,” and “Damas, The Art of Beauty”. This leaves me without having received a personal and direct meaning. That gaze and yearning in the picture needs to be directed. This could easily be solved with one smart line. Ultimately, everything depends on the target audience, of course. If the target is women, then let me know in words what it feels like to be a Damas gold lady. If the target is men, let the men know what happens emotionally to a woman who receives this bracelet as a gift. I would do a campaign for both targets.

RAK Bank Art (Print): In the print ad, the freaky creature looks too artificial and overly exaggerated. The idea should have been communicated with a simpler and more sophisticated approach. Art (TVC): In the TV spot, the low production values don’t do justice to the concept of a credit card that promises quality and value. In this case, the low production values are counterproductive to the image being sought by the bank for a titanium card for elite members. The over-acted comedy doesn’t give me a sense of assurance; humour is a great tool, but only if used right. This ad feels like Jay Leno trying to pull an Ali G joke. For a bank, a mix of wit and elegant humour can reward the consumer and give them a reason to associate with a progressive brand.

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Client: RAK Bank Agency: Fortune Promoseven (Dubai)

Message: The idea “Don’t Get Bitten” has legs. It’s very visual and can inspire great creative. It’s a strong line that illustrates clearly what will happen to a consumer if he or she uses the wrong credit card. If only the translation of that message was in harmony with the art chosen to represent a bank that promises to be “simply the best” among its competitive peers. After all, the whole banking industry today is on the line. This bank had better be cautious, or the consumer will think it doesn’t take people’s money seriously and will look elsewhere. Michael Koeditz creative director Horizon Draftfcb, Dubai Judging other creatives’ work as a creative is always fun – especially without knowing anything about their brief, their client, their work load, their rejected ideas, their burnt out creative director… So I don’t have to grapple with reality. That makes it much more comfortable.

Damas First thing I noticed: the lady seems to be unmarried, which is already a good sign. Not sure what that huge golden bracelet means: maybe a rich guy has tried to woo her (which would be too bad). Unfortunately, I can’t see her ring properly, so it’s a bit difficult to guess… To make things even worse they must have somehow forgotten to mention her phone number. Maybe I can’t read it, as the JPEG I got sent is quite low res. Which in the end defeats the whole purpose of the ad, I think. (What was the idea of the ad again?) RAK Bank I was quite surprised when I saw the TVC and the print ad for the first time a while ago. Having a bank in the region advertising like this is a bit like Mercedes bragging about the road fatalities caused by their cars. In other words, its “more benefits with XY” is an unusual approach that is in constant danger of not looking

serious enough. I have no clue why this commercial should make me sign with RAK Bank, and it doesn’t appeal to me. But it definitely got my attention. The TVC is nicely executed, considering the fact that Ridley Scott probably wasn’t the director. On the subject of execution, the print ad is nothing compared to the corresponding television commercial. ■ SAADI ALKOUATLI

Damas RAK Bank

MICHAEL KOEDITZ

Damas RAK Bank

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BRAND CHECK

WATERED DOWN Unisono’s Liam Farrell gets to grips with Arwa’s new package design THE COCA-COLA Company’s new Arwa bottle was unveiled late last year. Packaged “to instill vitality into daily life”, the new and award-winning package design hopes to convey the brand values of health and vitality, and the purity of the product. But the redesign tweaks will be lost on all but the most observant: The revised bottle shape and new logo, typography and water graphic are all quite subtle. The slogan “Vitality for Life” is a completely new addition, however. The shape change makes the bottle lighter and easier to grip, according to a press release.

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But speaking as an occasional drinker of Arwa, I think I would’ve put my designer’s attention elsewhere – the older bottle was easy enough to carry. Arwa is selling briskly, according to Coca-Cola, so the quest for sustainability has become ever more pressing. This VITAL CHANGE Liam Farrell, founding partner and executive creative director, Unisono Bahrain

new design is apparently part of the Coca-Cola Company’s efforts to be more environmentally friendly. But is the new bottle more environmentally friendly? There is little to substantiate their “easier to recycle” bottle claim. Sure it is thinner, and now made of PET, but it still isn’t biodegradable. So little real progress there. The label is also plastic, not eco-friendly, FCC-approved paper, so reducing the size of it will do little to help Mother Nature. At least they make the cardboard boxes they ship the bottles in from 100 per cent recycled pulp. But then, who doesn’t these days?

The press release tells us that “water is one of the most refreshing beverages” and that Arwa’s maker wants “consumers to recognise the benefits of drinking water”, yet there is nothing on the label to tell us how. A thought leadership opportunity lost. The label is supposed to be less cluttered than its predecessor, though it has a similar number of design elements. The new “Arwa” logotype is certainly lighter and friendlier than the original, but it needs a key line to make it stand out against the strong water image. The tacky gold lines at the top and bottom of the label have gone, lending the whole bottle a more open feel, helped by the use of the clean-lined Avant Garde typeface. In general it’s a safe redesign that is as uninteresting as it is inoffensive. Despite the brand promise of “great flavour”, the design is arguably as bland as the product. n

BACKGROUND BRIEF According to the Coca-Cola Company, Arwa’s new packaging is part of the company’s corporate sustainability efforts to create innovative packaging designs that are environmentally conscientious. The new look was devised by Lloyd Ferguson & Hawkins, and its launch was supported by point of sale materials. “Arwa has taken its original characteristics to another level,” says Antoine Tayyar, public affairs and communications manager for Coca-Cola Middle East. “Merging practicality with both style and individuality, while still communicating its refreshing natural qualities, the brand still holds true to the original Arwa that consumers know and love.” The Arwa brand was acquired by the Coca-Cola Company in Qatar in 2001 and now has a presence in Bahrain, Saudi Arabia, UAE, Kuwait, Palestine and Oman. The brand is locally produced in Riyadh (Saudi Arabia), Qatar, Kuwait City, Al Ain (UAE), Bahrain and Ramallah (Palestine). Close to 300 million bottles are sold per year across the Middle East.

OLD

NEW

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G E M A S E F F I E C A S E S T U DY

CATEGORY: BEST YOUTH MARKETING CAMPAIGN General Motors drives off with top honours as we continue our series of GEMAS Effie Mena Awards 2009 winner’s case studies.

THE GOLD AWARD Client: General Motors Middle East Sector: Automotive Product: Chevrolet Aveo Campaign: Aveo Totally Street Agency: Starcom MediaVest Group and Leo Burnett, Dubai Media expenditure: Confidential THE CHALLENGE Chevrolet wanted to engage ﬁrst-time car buyers and grow Aveo’s customer base to encompass graduates, university students and young executives who are in transition phase in their professional and personal life. OBJECTIVE To improve the awareness of Aveo

nameplate; target the younger demographic in the UAE; and attract female consumers. THE BIG IDEA Through an Aveo website, provide a platform for the youth to express their creativity and passion under the ‘Totally Street’ theme. To offer the opportunity to completely customise a car through design and make it their own. The region’s youth have limited opportunity for self-expression. BRINGING THE IDEA TO LIFE Creation of the online ‘Experiential Centre’ Aveo website through which entrants can win the car they customised.

On-ground activity included a region-wide motorcade of 10 customised Aveo5 cars touring youth hangouts, promoting the Chevrolet Urban Challenge (expressive platform featuring graffiti, breakdancing and lyrical improvisation), and distributing flyers and giveaways. Dealerships across the region were encouraged to come up with customisations to develop limited edition Aveo5s that would appeal to younger demographics. EFFECTIVENESS Not available for publication. JUDGES’ COMMENTS A very straightforward decision.

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G E M A S E F F I E C A S E S T U DY

THE BRONZE AWARD Client: Johnson & Johnson Middle East Sector: Personal care Product: Clean & Clear Campaign: Touch 100 UAE National Skincare Campaign for Girls Agency: Promax PR Media Expenditure: below $500,000 THE CHALLENGE There is no bespoke media targeting eight to 15-year-old Emirati girls, the target audience for Clean & Clear treatment for acne.

THE SILVER AWARD Client: Frito Lay Inc. GCC Sector: F&B FMCG Product: Doritos Campaign: Guess the Mystery Flavour Agency: OMD Dubai Media expenditure: $2 million THE CHALLENGE Since the brand launch in 2007, Doritos’ communication has focused on functional attributes – crunch, flavour, triangular shape – and creating an engaging eating experience. The challenge now was to grow usage via trial and increased frequency while building incremental consumption via emotional benefits – positioning Doritos as a positive interruption by broadening the flavour segment, Hot Salsa – targeted to the youth. OBJECTIVE Increase brand awareness by a third; meet sales targets of Hot Salsa within six weeks and further build Doritos as a youth icon brand. THE BIG IDEA To launch Hot Salsa with an air of mystery and curiosity that a youth audience could relate to by encouraging them to ‘Guess the Flavour’, using a media plan led by digital.

A plain black chips pack adorned with only a big question mark was created. Included on the pack were invitations to ‘guess’ the ﬂavour by registering online and voting on what they thought they were tasting – Fiery Tomato, Spicy Paprika and Hot Salsa. Prizes included cash, a year’s supply of Doritos, iPods and Sony Ericsson mobile phones. BRINGING THE IDEA TO LIFE A teaser campaign using on and offline and ground activation to have a solid presence among the target group. Media included Facebook and textbased advertising with Mobily, which reached four million prepaid users. The revealer phase deployed all previously mentioned touch points plus television campaigns, packaging and outdoor campaigns.

OBJECTIVE To engage and educate about skin care – and the fact that handling acne is part of the daily skincare routine – through a speciﬁcally targeted campaign. THE BIG IDEA To visit 250 schools in the UAE, educate 140,000 girls about skincare, distribute samples and connect with the audience. BRINGING THE IDEA TO LIFE Develop a skincare educational campaign with the Ministry of Education, which includes a ‘Friendship Booth’ in which girls can take pictures with other friends and engage with the brand. EFFECTIVENESS Brand grew by 40.1 per cent NTS; 32.5 per cent STT; 9.7 per cent market share; 2.4 per cent points up vs 2007. Programme to be expanded across the region. ■

EFFECTIVENESS In the first six weeks sales targets were exceeded by 25 per cent, leading to sell-out in several areas of Saudi Arabia. Thanks to the campaign, which reached about three quarters of the youth target, more than 35,000 people entered the competition to guess the flavour, with brand affinity tripling after the campaign and exceeding brand metric target by a third.

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ÂŠ Getty/Gallo Images

COVER STORY

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OcEans apart Emerging market potential is not necessarily defined by geography. In TOdaY’S overcrowded industries and markets, competing head on results in nothing but a bloody “Red Ocean” of rivals fighting over shrinking revenue and profits. But by creating “Blue Oceans” of uncontested market space, organisations can make their rivals irrelevant and thereby achieve hyper-growth. Blue Oceans Blue Oceans are defined by untapped market space. They are created well beyond existing industry boundaries, as well as within existing industry boundaries. Let’s look at the differences between Blue and Red Oceans: From Table 1 it is clear that the Blue Ocean strategy is a paradigm shift from the conventional, Red Ocean thinking. For example, an organisation that follows Blue Ocean thinking can pursue low cost and differentiation simultaneously. This is what makes the strategy attractive.

Why Blue Oceans? Technological advances have created an unprecedented array of products and services, resulting from supply exceeding demand in an increasing number of industries – for example, airlines, fast food, FMCG and industrial products, etc. Globalisation is also resulting in monopolies and niche markets disappearing, due to trade barriers being dismantled. Many free trade zones have been established globally. The biggest need for Blue Oceans is the commoditisation of products and services, increasing price wars and shrinking profit margins. Many organisations believe that differentiation will help them gain a competitive edge. However, when industries become overcrowded, differentiating brands too becomes harder.

How to create a Blue Ocean strategy Value Innovation is the cornerstone of Blue Ocean strategy, where equal emphasis must be given to value and innovation. Value without innovation only creates value on an incremental scale. This does not make brands stand out from the competition. Innovation with value creates technological marvels that go beyond what buyers are ready to pay for. Therefore, value innovation can occur only when organisations align innovation with price, utility and cost positions, as seen in Table 2. Hostile markets These are characterised by the following : • Shrinking demand for products and services. • Aggressive price discounting to stimulate demand.

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COVER STORY taBLE 2

taBLE 1 Red Ocean Strategy

Blue Ocean Strategy

Compete in existing market space

Create uncontested market space

Beat the competition

Make the competition irrelevant

Exploit existing demand

Create and capture new demand

Make the value/cost trade off

Break the value/cost trade off

Strategic choice of differentiation OR low cost

Pursuit of differentiation AND low cost

Eliminate / reduce

raise / create

rather than focusing only on existing customers, Blue Ocean strategy requires focus on non-users in a given market. • Unethical trading practices to gain unfair advantages over competitors. • A large proliferation of products and services. • Shrinking profit margins due to price discounting and declining market demand. Declining markets, in most instances, create hostile markets. However, hostile markets can also occur in a growth contexts, if there is overcapacity caused by too many competitors. With the global economic crisis, hostile and declining markets were created even in developed countries. Needless to say, this created a ripple effect in developing and underdeveloped countries. Marketing in Blue Oceans for hostile markets How can Blue Ocean thinking work in hostile/declining markets? In order to illustrate the practicality of the Blue Ocean strategy in such markets, here are some examples. In my native country, Sri Lanka, the economy had many reversals, due to internal and external factors. Hence the market had all the characteristics of hostility and decline.

COSTS

Enter a local bakery-cum-food outlet chain. In Sri Lanka, bread and related products are made and sold in traditional bakeries, using fairly primitive methods. Prices are kept low, quality is a variable. At the other extreme are five-star hotel bakeries, offering excellent quality products at higher prices (catering to a niche market). Hence, a Blue Ocean was present, i.e., good-quality bakery and related products at affordable prices (note – not the lowest prices). This is the Blue Ocean that this local chain entered. In true Blue Ocean strategy, they worked hard to eliminate and reduce unnecessary, non-value creating expenditure. They raised the bar on quality of finished products, and created a range of novel products – of which even fivestar hotels would have been proud. The results have been amazing. Over the past five years, sales and profits have been great. Customer volumes are growing. The good news is that no direct competitor has been able to make it, as yet – although many have tried. Another excellent example of Blue Ocean strategy is Malaysia’s low-cost

Value Innovation

VaLUE

carrier Air Asia, which operates in the fiercely competitive airline industry. What is the Blue Ocean that they captured? Rather than focusing on existing air travellers, they focused on non-travellers, a much larger segment. In order to provide lower prices, they reduced all possible non-value creating costs. Simultaneously, they differentiated by creating a good service standard, convenience of travel and speed. The results are simply astonishing. In an industry where many front-line players are bleeding in Red Oceans, Air Asia is hugely profitable and has been able to sustain their competitive advantage. Conclusion Organisations in emerging and developed economies would do well to explore Blue Oceans. To do so, out of the box thinking is required. Further, rather than focusing only on existing customers, Blue Ocean strategy requires a focus on non-users in a given market. Blue Ocean strategy will be something hard to beat in the years to come. ■

Prasanna Perera, marketing and management consultant, chartered marketer, cIM UK sri Lanka

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COVER STORY

VAST AND FURIOUS Countries in the region that until recently were strife-ridden are now proving a magnet for brands and businesses, says Ibrahim Nehme THOMAS FRIEDMAN argues in his book The World is Flat that a country’s decision to develop in a flat world (a world turned borderless thanks to technology) should focus on four basics: The right infrastructure, including Internet, telephony, modern airports and roads; the right educational system; the right governance; and the right environment. A quick tour of some of those Mena countries currently dubbed “emerging” shows that we still have a long way to go to meet Friedman’s criteria. However, despite being troubled and tired lands, they have recently become magnets for regional businesses. Countries such as Iraq, Iran, Algeria, Yemen and Libya, for example, which

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were (or still are, depending on who you listen to) considered to be the hotbeds of terror are now the hotbeds of opportunity. The emerging world is enjoying the most spectacular growth in history. The emerging world’s share of global GDP was 36 per cent in 1980. In 2008 it reached 45 per cent, and by 2014 it looks GOLDMINE

Vincenzo Ventricelli marketing director, Philips Consumer Lifestyle, MEA

set to reach 51 per cent. In the Middle East, which has the fastest-growing population in the world, governments are spending more than $2.5 trillion on infrastructure projects. Khurram Siddiqi, marketing director, Kraft Foods, New Markets, sees tremendous potential in these markets, thanks to economies opening up, rising per capita incomes and increasing literacy rates. “We invest 20 per cent of our revenues in these markets and our market shares have grown significantly as a result,” he says. “These countries continue to demonstrate growth rates that far exceed those of developed markets,” Hussein

Hachem, chief executive of Aramex, told GMR. Africa itself offers a consumer base of more than 900 million people. Alexandre Beaulieu, GM of TBWA\ DJAZ in Algeria, attributes the rush of business to Algeria to the gradual opening up of the country’s economy after a long slump caused by the internal security situation. He believes Algeria has the most unexploited potential in North Africa, with 35 million consumers and a relatively high GDP per capita at $4,845. Vincenzo Ventricelli, marketing director at Philips Consumer Lifestyle, MEA, considers Iran to be a potential goldmine for brands, with its rapidly growing economy, rising population and increasing household incomes. He says the Iranian market for branded consumer goods continues to grow at a phenomenal pace, and explains that international top labels such as Louis Vuitton, Dolce & Gabbana and Dior are returning following their exit after the 1979 revolution. Nestle Middle East, meanwhile has opened a factory there and has invested in a bottled water production facility in Polour. Today, Nestle Iran employs more than 400 people. Libya, too, is on the ascent and is witnessing an increased demand for five-star hotels. Rixos Hotel, for example, opened in Tripoli earlier this year. The company’s chief executive, Kees Hartzuiker, says that a number of global hotel chains will follow throughout 2010 due mainly to a large influx in business travellers. He says that although these emerging markets are in their infancy, they form a very important part of Rixos expansion plans. Similarly, Yemen, one of the poorest countries in the Arab world, is witnessing unprecedented growth opportunities. The Yemen Tourism and Promotion Board announced a billion-dollar tourism investment programme as it embarks on an ambitious investment

Rising share: The emerging world’s share of global GDP was 45 per cent in 2008

There is a widespread misunderstanding of the role of the advertising agency, in part caused by some less-than-stellar work… plan that will see six major projects built in the next five years. The country will also play host to the most important football event in the Gulf, the Gulf Cup of Nations, later this year. Then there’s Morocco.“Morocco is steadily progressing towards greater internal modernisation and globalization,” says Ventricelli. With the creation of the country’s first BULLISH

Kees Hartzuiker, chief executive, Rixos Hotel

commercial courts, streamlined custom services and regional investment centres dedicated solely to facilitating new business ventures, it is becoming easier to do business there. Emerging markets represent around 10 per cent of WPP-owned Mediaedge CIA’s billings in the region, according to Yves-Michel Gabay, the Dubai general manager. The agency is in Morocco, Algeria, Tunisia and Egypt; it runs operations in Libya through the Tunisian office and in Iraq through the Dubai office. The opportunities stretch all the way to Turkey. Although the country is not economically an emerging market per se, it is attracting lots of regional clients and agencies. Wolff Olins Dubai has just won the pitch for branding Izmir city.

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COVER STORY

Big market: The Iranian market for consumer goods continues to grow at a brisk pace such as this shopping centre in Tehran

The business mentality tends to be short term, with a limited vision… “Turkey has a great future and we would like to be part of it,” says Abed Bibi, managing partner. “Ideally, we want success stories that we can use in any part of the world, and such opportunities exist in Turkey.” And then there’s Iraq. Iraq is targeting annual economic growth of 9.4 percent within five years according to its 2010-2014 development plan, set by the planning ministry and said to include more than 2,700 projects worth about $186 billion, aimed at diversifying the economy away from oil. Next month Emirates airline will launch its first flights to Baghdad. HH. Sheikh Ahmed bin Saeed al-Maktoum, chariman and chief executive, stressed in a press

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release announcing the news that Iraq is well on the road to recovery. “There is a high proportion of traffic heading both in and out of Iraq and we are in the right position to capitalise on this demand,” he said. And in February, General Electric signed contracts totaling $200 million to supply power generation equipment HIGH HOPES

Michel Ayat, chief executive, Arabian Automobiles

services for two independent power projects in Kurdistan. Michel Ayat, chief executive of Arabian Automobiles, says that Iraq, second only to Saudi Arabia in oil reserves, is a market that everyone is watching closely. Arabian Automobiles recently signed an agreement with a local distributor for Nissan. General Motors also has high hopes for the country. Muneer al-Hasan, regional manager for Iraq, Kuwait and Levant, says that Iraq is a very important due to its high growth potential. In 2009, GM sold more than 12,000 units in the country, a fivefold increase on 2008, and for 2010 the company forecasts a 50 per cent growth over 2009 figures. Similarly Volkswagen has recently signed a partnership agreement. “Preparations to start the business there are under way and there will be

a fully operational showroom and service centre later this year,” says Stefan Mecha, managing director of Volkswagen Middle East. To Pikasso, an OOH company with operations in Lebanon, Jordan, Egypt, Algeria, and Iraq, the latter two countries represent 45 per cent of the group’s business. Antonio Vincenti, chief executive, says there are huge barriers to entering the countries. But he believes there are also opportunities. FMCG giants are also keen. Yassin Attas, Proctor & Gamble’s external regional director, Middle East and Pakistan, says Iraq is the sixth biggest business for P&G in the region. Challenges Obviously, operating in these emerging markets comes with a unique set of challenges. Anil Gupta of the University of Maryland at College Park points

Lack of competition... has made the case for brand building harder to defend. out that these markets are among the toughest in the world, adding that the “distribution systems can be hopeless, income streams can be unpredictable, governments can be infuriating, sometimes meddling and sometimes failing to provide basic services”. “The key challenges revolve around initial business start up,” Kraft’s Siddiqi says. OPPORTUNITY

Alexandre Beaulieu, general manager, TBWA\DJAZ, Algeria

Local supplier networks, like-minded partnerships and database management are all limited in these emerging markets, according to Rixos’ Hartzuiker. Hence, “one becomes more self-reliant and tries to work with all willing partners to strengthen the infrastructure”. Logistics can be a major issue due to the state of underdeveloped infrastructure. Hachem says one of the key challenges is a dysfunctional supply chain. He says that most of these markets remain vastly underserved in terms of functional, modern logistics facilities and adequate transportation infrastructure, like ageing ports, airports and roads and a general lack of investment in new technology. At the same time, there is an urgent

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COVER STORY

Must see: Algerian movie Masquerades which premiered at the 2008 Dubai Film Festival and which went to win critical acclaim at film festivals across the globe is further evidence of the country’s economic and artistic resurgence.

We’re in a very young market, so there is a lot of explaining and convincing to do. need to harmonise processes, domestically and regionally, to ensure greater efficiency. “Efficiency is clearly a critical issue,” Ahmed Shaboury, head of brands at Aujan, which operates across the GCC, Iraq, Iran, Egypt, Libya and Jordan says. He says having the right distribution model/partner is critical to the success of an FMCG in these markets. “Our distributor partner plays a fundamental role in P&G’s business, managing the everyday security challenges successfully,” says Attas. He says that the security situation and the scarcity of retail and consumer information that help guide P&G’s strategies are major challenges in Iraq. Pikasso’s boss Vincenti says that in addition to safety “there are all these problems related to logistics and distribution”. He admits that retail in Iraq is very

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traditional and it’s only recently that malls started to appear in Erbil. “In Algeria, distribution is the main challenge, importing goods is very difficult, customs fees are high, and retail is done as it was 25 years ago,” he says . Siddiqi highlights another challenge, which is that local rules and regulations can vary from market to market. “It can take some time to ensure that our products comply with local rules and regulations,” he says, adding that Kraft struggles to obtain consistent and UP TO THE CHALLENGE

Yassin Attas, external regional director, P&G

accurate market research data. Attas says that lack of clarity in operational laws and regulations is a major obstacle. In normal situations, the regulatory system and trade laws are available to the public, but in Iraq there is serious difficulty gaining access to such critical data. There is also the issue of talent. Beaulieu finds it hard to find good local talent in Algeria, and prefers to scout abroad, although he confesses that remuneration levels make it almost impossible to retain expatriate talents. Eddy Rizk, GM of Nokia North Africa, told GMR that Nokia has, for emerging markets, a training support academy that ensures retailers are well-trained to respond to client needs. While Hartzuiker still relies on team members from his other properties, he is very much focused on developing local Libyan talent, and believes that the reliance on external teams will diminish in the near future.

©Getty Image

COVER STORY

Shopping: Retail in Iraq such as in Erbil (above) is still very traditional

Each group will respond to a different set of triggers, and our job is to find those triggers to be able to engage with the consumers. From a marketing perspective, Beaulieu says that the lack of competition in certain sectors of the economy has made the case for brand building harder to defend. “The business mentality tends to be short term, with a limited vision.” He adds that there is a widespread misunderstanding of the role of the advertising agency, in part caused by the less-than-stellar work produced by some. “We’re in a very young market, so there is a lot of explaining and convincing to do.” Gabay thinks that the lack of reliable research prevents from building a coherent rate card. Kamil Kuran, managing director of H&C Leo Burnett Beirut, says that operating in a new market requires extensive

40 Gulf Marketing Review June 2010

knowledge of its legal, financial and operational frameworks, in addition to immersion in the culture, habits, trends and insights of its people. This is particularly challenging for Shaboury, who struggles to bring local understanding and insights into brands’ communication, especially in markets where the ad industry is not yet developed. Different cultural differences within the same country don’t make this any POSITIVE

Yves Michel Gabay, general manager, Mediaedge CIA

easier. Mecha explains that these markets comprise different ethnic groups with diverse backgrounds. “Each group will respond to a different set of triggers, and our job is to find those triggers to be able to engage with the consumers.” Wolff Olins’ Bibi thinks that language is to a large extent a window into their soul. Adapting a brand’s message and tone of voice to local cultures is critical; however, “the question about how much to adapt is one the hardest questions in branding”, he says. But however immense these challenges may be, the opportunities are just too good to ignore. And someone who can genuinely attest to this is Ahmad Aweidah, the head of the Palestine Securities Exchange, who told Dow Jones Newswires that despite problems, “there is little that the Palestinian private sector can do about it, but that doesn’t mean we should stop working. So we’re full steam ahead.” Clearly, they’re not the only ones. n

AP-Lionel Messi-PR-21x27.pdf

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10:48:37 AM

PROFILE

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THE GMR INTERVIEW Dr. Ramesh Tainwala, Samsonite chief, is overloaded… with too much cash. How will he handle it all? Siobhan Adams finds out. DR. RAMESH TAINWALA, the globetrotting president, Asia Pacific and the Middle East, of Samsonite Corp, carries a heavy burden. The slightly-built, 51-year-old Indian is, in common with many business contemporaries, wading through the financial morass of the continuing – some would argue deepening – crisis. His company’s revenue dropped 12 per cent in 2008-2009. At the same time, investment in travel and tourism declined by more than 12 per cent, according to the World Travel & Tourism Council. And, let’s face it, that’s far from ideal if you’re heading a luggage company. None of this, however, weighs heavily upon Tainwala: His burden is that of wealth. “We’re a cash-rich company,” he tells me during a recent Dubai stopover from New York en route to Melbourne. So cashrich, in fact, that he has just jacked up the company’s 2010 marketing budget by $50 million, adding to the $120 million

he announced in January. That figure alone is a significant jump when compared, for instance, to the $84 million allocated in 2008. But more of that later. Right now, however, Tainwala is brimming with confidence. So much so that even the dreaded recession holds little fear. FANTASY CV Name: Ramesh Tainwala Born: 1959, Ranchi, Jarkhand, India Education: Vikas School Ranchi, BITS Pilani Qualifications: Bachelors in Industrial Engineering; Masters in Business Marital Status: Married, two children Lives: Mumbai Hobbies: Movies, Hindi film music Fantasy Job: Teacher in a primary school

To hear him talk, you could be mistaken for thinking it’s actually a good thing. “2010 to 2011 are unique years. These times will not come again,” he says almost wistfully. But what about the downturn in travel, surely that must have hurt just a little? “For the time being travel is low and business is a bit low, there’s no doubt about that,” he says. “But will it remain low forever? Definitely not.” Tainwala is highly optimistic about the future of the 100-year-old company, with which he has been associated since 1996. Refreshingly free of media-trained mantras, his confidence is authentic, reasoned and can be summed up in one word: Asia. Asia, he says, is the global centre of gravity. And by his geographical definition, it is a sizeable chunk of the planet. “If you look at Asia there are three big regions,” he says. “China, and India, and then there’s the third big piece: the Middle East.”

June 2010 Gulf Marketing Review 43

PROFILE

We are tactically increasing ad spend because we believe that for every dollar we spend we can buy three dollars’ worth. In Samsonite’s world order, the Middle East includes Iran, Iraq, North Africa and all of Central Asia – about 30 countries in all. “If you combine these as one group this region has enormous buying power,” he says. In 1996, Asia contributed 2 per cent of the company’s revenue and made no profit. “In fact, it consumed some money,” Tainwala recalls. This year the region accounts for 40 per cent of revenues and almost 75 per cent of profits. No wonder that when it comes to Asia, he gets quite carried away. Tainwala explains his excitement. The GDP of developed countries is forecast to grow by a measly 2 per cent within the next two years, he says. Asia is forecast to grow 6 per cent. Although it’s a mistake to focus on GDP alone, he adds. “The funny thing is we are all reacting to GDP growth, but the problem with GDP is that it includes everybody, low income people as well.” Far more sensible, he says, is to focus on the top 20 per cent of Asia’s consuming population – or on those on the verge of starting to consume – whose annual

44 Gulf Marketing Review June 2010

average increase in disposable income is estimated to be rising 85 per cent a year. Another crucial factor is the annual average savings rate in Asia, which five years ago was more than 50 per cent. Today it’s 32 per cent. “So the rich guys that were saving earlier are now spending more,” Tainwala says. And they don’t have to consume nor spend that much more to have an enormous impact. He cites orange juice as an example: Americans consume on average 31 litres a month. The rest of the world’s average is less than 1 litre. “So you don’t have to wait for the Asians alone to start consuming the same. Even if they were to double their average intake to two litres a month, the world wouldn’t have that many oranges,” he says. The potential for brands is obvious. It is similar with travel, Tainwala says. Airports are crowded, but only 20 per cent of the world’s population is actually travelling. “So what does that tell us?” he asks. “If Samsonite is currently selling 1.2 million pieces of luggage a month, next year, if everything goes this way, then we will have to sell two million pieces,

which means we have to produce two million pieces. “One of our biggest challenges is that we cannot keep up with demand because we are reacting to GDP growth only,” he said. Now Tainwala is travelling the world telling his executives to rewrite their 2010-2011 plans. “Anything less than 40 per cent growth only shows you are not doing a good job,” he’s telling them. “I said, ‘Be ready to produce more, be ready to order more.’ Even after a lot of push no one would believe me. We now are into a situation where demand far exceeds supply.” Economics and logistics aside, there is another crucial factor – in fact, the most crucial factor – that in Tainwala’s view makes Asia the current master of the universe: A radical change in consumer mindset. Asians have developed a huge sense of self-confidence, he says. “The whole psyche of Asians is changing and that’s a bigger influence.” As a vivid illustration, and with disarming candour, he recollects his student days in the US some 30 years ago. “When we used to travel outside of India, as an Indian you were always very conscious of yourself,” he says. “I was almost made to believe that my body had a strange odour that colleagues in university could make out. They used to say, ‘Ramesh we know when you are coming.’ It was bullshit, but it made me so conscious

of myself. So whenever I used to travel or when I was talking to somebody I was always very conscious of my presence, as I identified myself as different from everyone else, so I was not very confident.” But that’s not the case today. “I don’t give a shit what people think,” he says. And he suspects that Arabs, especially young Arabs, feel the same. “I think this revival of Asian confidence will change the whole dynamics of business of the world.” Tainwala’s early shortage of self-confidence is surprising coming from the heir to one of India’s more prominent family businesses, the Mumbai-headquartered Tainwala Group. The company’s interests include personal care products, industrial plastics, and chemicals and plastics. And it was the latter that, in a roundabout way, brought Tainwala to Samsonite. Armed with an undergraduate degree in Industrial Engineering, he went on to earn a Masters in Business Administration and a PHD in Business Economics. A brief spell with the Industrial Bank of India kick-started his career, but it wasn’t long before he relaunched himself as an entrepreneur. In doing so he combined his technical degree in plastics with marketing learnings from his PHD. “I wanted to be in consumer marketing, but with something I could use my learnings of polymers,” he says. In the early days, however, marketing

Sometimes when you make a lot of money you start to imagine yourself to be the emperor. We started to imagine ourselves to be a luxury brand. and polymers did not prove an obviously winning combination, and Tainwala struggled to launch his first business. It’s now the highly successful consumer utilities division of the Tainwala Group, which includes Good Knight Mosquito Repellants and Fresh Ones Wet Wipes. In 1996, around a decade later, fate intervened. A local manufacturing plant making American Tourister luggage was facing bankruptcy. Given his knowledge of polymers and consumer marketing, the bank approached him. While negotiations were under way, American Tourister told him they were being bought out by Samsonite. A year later Samsonite South Asia Pvt Ltd formed as a joint venture, with Samsonite Corporation USA Ltd holding 60 per cent. “I was part of the process in which we traded up the brand, because before 1996 it was known to be functional, reliable, durable luggage. That was the brand personality,” he says. “Most of our products used to be black, and if you wanted to make it more exciting you used dark grey.” Since then, Samsonite has worked to reposition itself as an aspirational luxury brand, primarily through its then global

agency TBWA Brussels. TBWA was responsible for the Life’s a Journey print campaigns featuring Jean Reno (Graviton range 2007) and Milla Jovovich (Black Label Weekend Collection 2008). Gorgeous as these executions were (shot by Vanity Fair’s Norma Jean Roy), did they not suffer from an almost inevitable comparison with Louis Vuitton’s global campaign Journey, featuring such luminaries as Keith Richards, Mikhail Gorbachev, and Mikhail Baryshnikov immortalised by the legendary Annie Leibovitz portraits? “You are right,” he laughs. “I think that the celebrity endorsement and that kind of advertising was, somewhat, the result of overconfidence. Sometimes when you make a lot of money you start to imagine yourself to be the emperor. We started to imagine ourselves to be a luxury brand.” So, does this mean Samsonite abandoned its luxury positioning? “We are a premium brand and an affordable luxury,” says Tainwala. “We are not cheap and we don’t want to be cheap. We want to bring in a good quality product retailing our core heritage, which is functionality, reliability and durability.”

June 2010 Gulf Marketing Review 45

PROFILE

AGENCY ROSTER Creative: JWT Asia, Amber Communications Media Planning: Phd PR Middle East: Landmark PR & Events COMPANY CREDS Samsonite Group is celebrating 100 years this year. To commemorate the occasion, the group has announced aggressive growth plans across the Middle East during the next three years. As part of its strategic expansion, Samsonite Middle East is planning to open more than 25 new stores, of which 10 will be opened by the end of 2010. Over and above this expansion of its retail footprint, Samsonite will also look at expanding its presence in relevant department stores for its ICT and business collection and backpacks. Established in 1910 by Jesse Shwayder with $3,500, Samsonite has grown from a company with 20 employees in Denver, Colorado, into a global corporation with more than 8,000 employees in 30 locations. Its products are available across 195 countries, and it filed annual sales of $1.2 billion in 2009. Samsonite’s plans centre on building market share for accessories, business and backpacks in the Middle East, including 12 new lines under the Samsonite brand and 20 new lines under American Tourister. A marketing conundrum then, as the phrase “worthy but dull” immediately comes to mind. “Yes,” he admits. “We didn’t want to be boring. We wanted to retain our core brand values but bring an element of style to the whole thing.” That was evidently why the brand recruited celebrities, but Tainwala says they went a step too far. “It was not only the celebrities but the execution. It brought out the element of style very well but we lost the core values.” The new campaigns for its latest range Cosmolite, created by JWT Asia, stress

46 Gulf Marketing Review June 2010

the stamina and endurance required from professional sport to invoke the core values while managing a certain stylishness. “Ice hockey is a stylish game,” says Tainwala. “So it brings the element of toughness with an element of style.” The media strategy has changed and it is here, in particular, that Tainwala expects a very big bang for his 170 million bucks – $510 million, to be precise. “This time [2010-2011] when you spend money on advertising, there are multiple benefits,” he says. “The first is that you can buy more for the same dollar. The second

is that your share-of-voice is much higher.” With fewer advertisers in the region – especially the once-ubiquitous property in outdoor branding and print – those brands that are advertising do not have to compete so hard for consumer attention. Amid the blanket real estate advertising at Dubai airport and along Shaikh Zayed Road in 2007 and 2008, Tainwala doubts anyone would have much noticed the odd tactical Samsonite ad placed during the Dubai Summer Surprises, or similar efforts. “We are increasing ad spend because we believe that for every dollar we spend now we can buy three dollars’ worth. We have too much money lying around and we want to use it to make the brand omnipresent in key markets. That is our global thinking. We want people to start to see Samsonite as a larger than life brand. The cost benefit of tripling ad spend now will carry us through the next ten years,” Tainwala says. It’s no surprise that most of the budget – 67 per cent – has been allocated to Asia. The UAE, Saudi Arabia, Kuwait, and one other country – probably Egypt – will be the most likely recipients. Established retail infrastructure is the main determinant (although the company has already staked its claim in Iraq with Black Label Boutiques in Erbil – soon it will also set up shop in Baghdad). In the meantime, sales-to-date are 42 per cent ahead of last year, although Tainwala points out that Q1 2009 was when the full impact of the 2008 crisis hit home. That aside, he feels the sales surge is indicative of renewed consumer confidence, not just in Asia but also in the US. Straightforward, honest, and genuinely insightful, Tainwala is clearly focused on the ambitions he has set out for the company. I ask if he holds any personal or business philosophies that will help him see those ambitions achieved. “We should not allow small differences here and there to be seen as big deal and allow them to shackle us,” he says. Practical and pragmatic, too. It seems Samsonite is in very good hands. n

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HALAL LIFE

48 Gulf Marketing Review June 2010

PURELY DRIVEN If you think eco-ethical businesses are a recent innovation, then go read the Holy Qur’an, says Dr. Mah Hussain-Gambles. DURING THE early development phase of Saaf Pure Skincare – the world’s first halal and organic certified skincare range and the first halal certified skincare range in the West – I quickly realised that the definition of halal goes way beyond “alcohol-free and pork-free”. It also goes way beyond gambling and usury. Halal permeates all aspects of life, including personal hygiene, care for the environment, animal welfare and not wasting God’s natural resources. And in business, halal principles could easily underpin corporate social responsibility or a company’s ecoethical business model. My career is rooted in science, with years spent at global pharmaceutical firms and training healthcare workers in evidence-based medicine in the field of cancer. It is frustrating to see many socalled organic and natural skincare products “greenwashing” their marketing literature. If I picked up a cream with

“organic” on the label, I would expect it to be organic, not contain 1 per cent of only one organic ingredient. If I saw a claim of cruelty-free, I would expect to see evidence of this, not just some emotive statement that means nothing unless it’s backed up by an independent, third-party stamp. This was one of the reasons for creating Saaf. I wanted a skincare range that did just what it said on the tin. Formulation was not an issue. I am trained in pharmaceutical formulation and NPD. Getting the range accredited by independent bodies in the UK was easy as well. It was certified organic (by the Soil Association), cruelty free (BUAV and Naturewatch), and vegetarian and vegan. But in my quest to produce the world’s purest skincare (backed up by scientific evidence and independent accreditations), I searched for ways of making Saaf even more pure.

It was my husband who led me down the halal route. As a recent convert to Islam, he pointed out that many of my cosmetic products contained alcohol. At first I dismissed him, saying that the alcohol evaporates on the skin, and what is inhaled is minimal. Besides, alcohol is permitted in medicinal products. This is what I was brought up to believe, especially living in the West, where finding pork-free food takes precedence over such finer points. Yet what he said was true. Using alcohol-containing hairspray, for example, means that some will get into your lungs. Alcohol also dries the skin, and it is for this reason that Western consumers increasingly avoid alcohol-containing skincare products. But, to be honest, I was in denial. I was also concerned that getting Saaf halal certified would put my Western clients off. Halal, after all, is in the West strongly associated with animal cruelty.

June 2010 Gulf Marketing Review 49

HALAL LIFE

Balanced view: The Islamic Foundation for Ecology and Environmental Sciences in the UK promotes respect for nature and compassion for animals Natural resources: There are very strong parallels between halal living and eco-ethical principles

My personal mission is to break down any negative stereotypes associated with halal in the West and to promote halal as the new eco-ethical accreditation. As for Muslims, many shared my misunderstanding that alcohol in fragrances and skincare is minimal and thus permitted in Islam. Others just thought I was trying to make a quick buck by tapping into the growing halal market. Before I draw parallels between halal and eco-ethical living, I want to put the Western principles of eco-ethical into context. Eco-ethical market is the fastest growing market in the West. It is about using products that are cruelty-free (no testing of raw materials or finished products on animals and no exploitation of animals to obtain raw materials); caring for the environment (recycling, reducing the carbon footprint, not wasting natural resources); not harming the body (natural formulations, organically grown and products that are free from harmful ingredients); and pursuing a policy of corporate social responsibility. It must already be evident to many GMR readers that these principles are

50 Gulf Marketing Review June 2010

similar to those laid out in the Holy Qur’an and in Hadith some 1,400 years ago. Islam is a deeply compassionate religion, especially regarding animal welfare. In God’s eyes, animals are equal to humans. Islam also teaches man to respect nature. The Earth’s natural resources are available to us, but they are gifts from God. We may use them but only in a way that does not upset the ecological balance and does not compromise its viability for our children and grandchildren (please see the Islamic Foundation for Ecology and Environmental Sciences – www.ifees.org.uk). The Qur’an is also very clear on the economic and social impact of running a business. Zakat (alms giving) is an obvious example. Of course, whether a business can be classed as halal depends on its nature. But a halal business may also incorporate principles of equal opportunity, for example, or the non-exploitation of workers and children.

Minimising the carbon footprint when doing logistical planning could be another. The latter forms part of the ecoethical business model, and is already successfully employed in the West. I believe halal principles are no different from the eco-ethical principles adopted in the West. My personal mission is to break down any negative stereotypes associated with halal in the West and to promote halal as the new eco-ethical accreditation, and remind people that halal goes beyond alcohol-free and pork-free. It already encompasses eco-ethical principles laid out in the Holy Qur’an 1,400 years ago – before the eco-ethical business model, which was developed in the West only in the last decade. n

Dr. Mah Hussain-Gambles, founder/chief executive, Saaf International, UK Due to her continuous lobbying of halal as the new eco-ethical accreditation, Dr. Hussain-Gambles’ Saaf Skincare won the Best Creative Marketing Campaign Award at the recent World Halal Forum. She has also been named British Female Innovator of 2009.

Getty/Gallo images

research

Shopping AroUnd

Shopping habits of recession-wary consumers in Saudi Arabia and the UAE are rapidly changing, new research reveals. techniques, starting with bulk shopping, something taken up by 77 per cent of UAE respondents as opposed to 46 per cent globally. Other budget-friendly methods include shopping at stores that offer bigger discounts (69 per cent) and switching to cheaper brands (64 per cent). It could be that a sense of job insecurity among the UAE’s expat population (a consequence of the country’s economic hardships) contributes to this belt-tightening. In addition, a sizeable majority (60 per cent) of UAE residents believe grocery prices are too high – though this is well below the average global result of 76 per cent. Interestingly, in Saudi Arabia there is less concern over unemployment, but higher grocery prices are a key factor behind

changes in shopping habits, according to a separate Synovate study conducted in June 2009. Consumers in the country are buying smaller quantities (86 per cent), switching to cheaper brands (75 per cent) and no longer buying certain food categories altogether (65 per cent). While 39 per cent of UAE residents tend to make one big weekly grocery shopping trip, a significant number – 21 per cent – say they shop “when they have time”, the second highest in the survey after Hong Kong at 32 per cent. Consumers in both markets feel “timepoor” thanks to a combination of long hours at work and long commutes (and too much time spent in traffic). As a result, they tend to squeeze in shopping whenever they can, and often buy in bulk to avoid repeat trips.

The far-reaching repercussions of the global financial slowdown have extended beyond headlines about national debt and corporate failures to one of our weekly routines: doing the household grocery shopping. A recent survey by Synovate revealed that 56 per cent of UAE residents say they are spending less than they did 12 months ago, the highest spendthrifts in this global survey and well above the worldwide average of 40 per cent. They are followed by 50 per cent of Malaysians. Synovate surveyed more than 6,700 grocery shoppers across 10 markets to learn about their habits and how these have been affected by the global economic crisis. Not surprisingly, people in the UAE are adopting a number of cost-saving

54 Gulf Marketing Review June 2010

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ÂŠAziz Kamel

research

hoW oFTEn do YoU USUALLY BUY groCEriES?

WhErE do YoU BUY YoUr groCEriES?

100

60 39%

40 20

u n i T e d

a r a b

e m i r a T e s

19%

21%

15%

one big shop a month, plus extras

49% 36%

one big shop a week, plus extras

Every day

Whenever i have time

i do not buy do not know/ groceries, refused someone else in my household does

WhAT do YoU moST WAnT From A groCErY Shopping ExpEriEnCE? A one-stop shop somewhere i can buy groceries, homewares, entertainment needs and even clothing all under one roof

29%

Lots of time to myself to browse and choose

14%

do not know/refused

80 78

20 Yes

2 3

4 6

100

recycling facilities

online

A playground for children

A community/gathering place for people to meet friends and family A place for men to relax and enjoy sports or a drink while waiting for shoppers A place for women to relax and wait for other shoppers A feeling of the outside, even though you are inside

20%

Very personal service; staff who understand the products and can help me choose

10%

Big hyper- Supermarkets The local Quick conven- do not know/ markets (Tesco, (non-chain) ience shops refused Carrefour, etc) grocery store (ie, 7-Eleven)

WoULd YoU Find ThE FoLLoWing USEFUL And/or inTErESTing?

30%

get in and get out of the supermarket, hypermarket or grocery store as quickly as possible with what i need

19%

60 80 do not know/refused

100

pLEASE TELL US iF YoU AgrEE or diSAgrEE WiTh ThE FoLLoWing: i am spending less on food and other supermarket items than i did 12 months ago

i always go to the supermarkets, hypermarkets or grocery stores that offer the biggest discounts i prefer to buy local food brands over foreign food brands

i generally shop with a shopping list

4 40

i buy grocery items in bulk to help save money

3 4

i think grocery items in my country are overpriced and should be cheaper i think the government should do more to monitor food prices sold at supermarkets, hypermarkets and grocery stores i would buy my grocery items online if i was sure the service was secure and i would receive the highest quality food i would go out of my way to shop at an environmentally friendly supermarket, hypermarket or grocery store Loyalty programmes are an important incentive to me when deciding where to shop

i will switch food brands if i find a cheaper alternative

3 25

74 80

0 Agree

disagree

20 do not know/refused

1 3

100

Due to Synovateâ&#x20AC;&#x2122;s data presentation methods some figures have been rounded down.

4 27

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research

This has also contributed to the popularity of community grocery stores in the UAE, with 19 per cent preferring those outlets to much larger hypermarkets or supermarkets. On the other hand, while North American shoppers would prefer a no-frills shopping experience – and, presumably, lower prices as a consequence – the research suggests that people in the UAE and in Malaysia are more interested in improving the overall atmosphere at their outlets through investment in community areas and entertainment facilities. Without doubt, shopping in the UAE is seen as a form of entertainment. This was dramatically highlighted by a Syno-

vate survey of high-income consumers a couple of years ago, which found that about 75 per cent of men and women consider shopping to be their favourite form of entertainment. Retailers are already responding to this changing consumer behaviour by using promotions more frequently. But our survey also pointed out a business opportunity for grocery retailers: 48 per cent of consumers in the UAE would buy their groceries online if they were certain that the payment system was secure and that they’d get the highest quality products. This was higher than the global average of 42 per cent and, interestingly, much higher than the US (29 per cent) and Canada

hoW oFTEn do YoU USUALLY BUY groCEriES? 100

39%

one big shop a month, plus extras

37%

one big shop a week, plus extras

Every day

Whenever i have time

get in and get out of the supermarket, hypermarket or grocery store as quickly as possible with what i need A one-stop shop somewhere i can buy groceries, homewares, entertainment needs and even clothing all under one roof

11%

i do not buy do not know/ groceries, refused someone else in my household does

Supermarkets

A community/gathering place for people to meet friends and family

36%

healthy products

do not know/ refused

100

47 59

A place for men to relax and enjoy sports or a drink while waiting for shoppers A place for women to relax and wait for other shoppers A feeling of the outside, even though you are inside recycling facilities

10%

do not know/refused

online

A playground for children

20%

Very personal service; staff who understand the products and can help me choose

Big hyperThe local Quick convenmarkets (Tesco, (non-chain) ience shops Carrefour, etc) grocery store (ie, 7-Eleven)

WoULd YoU Find ThE FoLLoWing USEFUL And/or inTErESTing?

30%

Lots of time to myself to browse and choose

29%

WhAT do YoU moST WAnT From A groCErY Shopping ExpEriEnCE?

g L O b a L

64%

40 17%

17%

19%

Per-henrik Karlsson, business development director, Central/Eastern Europe/middle East, Synovate

WhErE do YoU BUY YoUr groCEriES?

100

(23 per cent), where e-commerce is so well established. Loyalty programmes are another important incentive when deciding where to shop, appealing to 80 per cent of respondents in the UAE. Likewise, going green should be another attractive option for UAE retailers, with 74 per cent of their potential customers agreeing they would go out of their way to shop at an environmentally friendly supermarket. n

48 50

20 Yes

60 80 do not know/refused

100

pLEASE TELL US iF YoU AgrEE or diSAgrEE WiTh ThE FoLLoWing: i am spending less on food and other supermarket items than i did 12 months ago i always go to the supermarkets, hypermarkets or grocery stores that offer the biggest discounts

i generally shop with a shopping list

i will switch food brands if i find a cheaper alternative

i buy grocery items in bulk to help save money

5 2

52 80

20 do not know/refused

disagree

Agree

36 33

i prefer to buy local food brands over foreign food brands

Due to Synovate’s data presentation methods some figures have been rounded down.

55 58

100

58 Gulf Marketing Review June 2010

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S t r at e g y

PAcking uP Following last month’s feature on shopper marketing Y&R’s Rohit Arora picks up on the importance of packaging within the process. Shopper marketing has been on the rise as marketers focus on winning over consumers at the “moment of truth”. The last mile is critical in the consumer buying cycle. While advertising plays a big role – educating, reminding, triggering, enticing, etc., emotionally or rationally – shopper marketing has a single-point driving goal, and that is “conversion”. This paper is focused on packaging, a crucial component in successful shopper marketing. Packaging is right at the centre of the brand’s consumer and shopper proposition. If we peel the onion further and think of our own shopping behaviour in the

region, there are lots of brands with which we had – and continue to have – our first interaction by simply noticing them on the shelves. And what drives awareness is largely the packaging. P&G calls package design “the first moment of truth”. regional brands While many international brands have the right mix – for example, it is not easy to ignore Oreo among the clutter of biscuit brands – there are few regional brands that can say the same. Almarai is an exception. In a commoditised category with little product differentiation, Almarai’s packaging really

stands out. Think of brand recognition. Remove the label and you can still identify Almarai milk by its packaging ergonomics. Internationally, Coke is probably the most common example. Masafi is another regional example of effective packaging. It is a leading brand despite the presence of many international players with deep pockets. retailer reaction Retailers have come to realise that points of sale and displays can sometimes clutter the environment and cause consumers to retract. Spinney’s and Waitrose (in the UAE), for instance, are pricier than some hy-

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Marketers must decide whether to create dissonance by disrupting the category status quo. permarkets, but they attract many loyalists. To be less cluttered, retailers are limiting PoS, which means that packaging has to work harder and smarter. environment Consumers are most concerned with package appearance and function. Once these must-haves are satisfied, eco-friendly messages are next. As sustainability awareness increases, brands are being proactive in justifying their packaging. Masafi’s re-cycling initiative – oxo-biodegradable shrink wrap that degrades in two years – is a regional case in point. Dissonance vs. resonance Marketers must decide whether to create dissonance, by disrupting the category status quo through conspicuous packaging, or generate resonance, via simple, straightforward design that communicates the brand proposition. These are not mutually exclusive – one can create dissonance by simplicity. Innocent drinks, with its quirky design in a category dominated by pictures of fruit, comes to mind. Regionally, Illume energy efficient compact flourescent light (CFL) bulbs are a fine example. In a low involvement category the insight

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S t r at e g y

Change of plan: tropicana had to abandon its new design and revert to the old one following complaints

While it is important to contemporise the brand, the crucial visual hooks must be carried forward. came from supermarket shelves where incandescent bulbs and CFLs are mixed together so there is little motivation to choose CFLs due to their being nearly 500 per cent more expensive. The campaign was packaging-led with a quirky-yeteducational tone clearly highlighting the difference with incandescent bulbs. Degree of change Another consideration is the degree of change. The design change has an impact on brand loyalty as consumers get used to the look and feel of a brand. Consider Tropicana, for example, which had to abandon its new design and revert to the old one following consumer complaints. While it is important to contemporise the brand, the crucial visual hooks must be carried forward. If the packaging has tremendous visual equity marketers must explore evolutionary change route.

Consumer engagement While it’s common to see a pack shot in a TV campaign, print, etc there are only a few brands globally that have utilised packaging to engage consumers. Jones Soda’s “your photo, your soda, your brand” campaign (from the UK) is a case in point. Unlike Pepsi’s strategy of putting its brand ambassadors on the pack, Jones used consumers’ pictures. My Jones website lets consumers customise their own labels with their own pictures and messages, and choose their flavour for their wedding, birthdays and any other occassion. One consumer statement on their website says it all: “If I could marry Jones Soda I totally would, that’s just how outrageously amazing it truly is.” There are 377,700 Jones Soda fans on Facebook and the campaign has received tonnes of press converage. Orbit’s “u can’t touch this” is another

campaign (from the Czech Republic) based on packaging where they strengthened their bonding with consumers by letting them select, create and submit their own repulsive pack design online that would scare people into taking gum from their pack. Within the first four weeks 1,400 unique covers were created. The project was so successful that it was extended indefinitely. Kurkure, with its “Chai time achiever’s awards” (from India), wanted to create awareness about product versatility. This campaign made real people famous by inviting them to submit recipes using Kurkure. The winning family and recipe appeared on a million packs. The idea was integrated with TV cookery shows. Some 264 families participated across 88 episodes, creating unique recipes. So, how does it all add up? Consumers are rapidly questioning the traditional, linear and narrowing consumer-purchasing-funnel, where they develop awareness through traditional advertising. The multi-dimensional communication scenario of today demands strategically crafted packaging integration within the communication mix. action points • Question the role of packaging in the communication mix and decide if you want dissonance or resonance • Investigate the appropriate degree of change and leverage the brand’s existing visual equity. • Assess the environmental impact and minimise the carbon footprint. • Unleash the role of packaging in your communication mix. n

rohit arora, planning director, Y&R, Dubai

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©Getty/Gallo Images

I N N O VAT I O N

THE ONE THAT GOT AWAY… There’s much more to innovation than casting around for new ideas. I WAS fortunate to spend an afternoon fishing recently. The skipper liked to talk – and among the details he gave about lines, rods and nets, he was careful to stress that the most important thing was to plan your trip carefully. A bit of planning before leaving shore could significantly increase the catch, he said. Back on dry land, and in the middle of conducting a benchmarking study into the ways in which large companies around the world approach innovation, I was struck by the similarities between his search for fish and our search for more and better innovation. The essence of what the skipper, Yasser, had been explaining was that,

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in a profession where uncertainty and hope prevail, a degree of forward thinking and planning can make a difference. This is particularly true when the economic waters are a little rough. In the current environment, clarity about what innovation is aiming to achieve is more important than ever. Many companies are choosing not to go out in the storm, LACKING INNOVATION Recent benchmarking work with YouGov Siraj shows that less than half the companies in the region have an innovation strategy, fewer still have allocated a budget, and less than 15 per cent have any process to manage innovation.

but history suggests that, for those that do, there are potentially rich pickings (Microsoft, Apple and Google were all created in turbulent economic times). In the past few years, many companies have approached innovation like someone who has decided to get into fishing by dashing out and buying a flashy boat and all the gear without first thinking about what kind of fish they are after and where they might find them. Fascination with the process of fishing and having the best kit (process, creativity, ideation, events, and so on) rather than interest in the nature of the catch has been the overall trend. These fair-weather fishermen are now the ones cutting back,

©Getty/Gallo Images

selling their barely used trawlers or looking to fish closer to shore. In contrast, many other businesses are quietly pursuing growth in spite of the dramatic headlines. These are the real innovators. From our work (and limited experience of fishing), we have identified four signs of fair-weather innovators. Dubious commitment levels Fishing requires patience and perseverance – you can’t give up when you have a barren spell. And if you’re serious about it, you need to go to sea whatever the weather conditions. Failure in innovation is inevitable. Not all companies either accept this fact or tolerate it. This is especially true when market conditions get tougher. However, innovation needs to fit with the longerterm corporate goals and should not just be seen as a short-term solution to filling gaps in this year’s numbers. Unclear expectations Are you are fishing for fun or for your livelihood? How big does the catch need to be to make the trip to sea worthwhile? Are you after shoals of little ideas or a few high-value “marlin” ideas? In some companies there is no sense of how many innovation projects should be worked on or how much revenue these projects should deliver. Should innovation be central to the company culture or something that remains on the periphery? Not all innovation projects are born equal; they vary in both size and risk. Sticking to the shallows If you always fish in the same waters, the fish get fewer over time and eventually there are none left to catch. You need to be prepared to travel further from the shore to find bigger fish. There is a natural tendency for companies to search for opportunities where the business has traditionally been strong, especially when times are tough. This is indeed a safe strategy that builds on existing capability and experience, but doing so exclusively rarely gets the big fish.

Small pond: Overfishing in shallow waters results in diminishing returns

Failure in innovation is inevitable. Not all companies accept this fact or tolerate it. Throwing a line and expecting instant results You need to know where to fish in order to have a better chance of catching something. Knowing where the fishing banks are before you set off saves time and increases the size of the catch. Creativity is an important tool in successful innovation, but it is exactly that – a means rather than the end product, an ingredient rather than something done for its own sake. Focused use of creativity yields better results; you need to be clear on what the problems or opportunities are before you apply creativity to solving them or making best use of them. Innovation, like fishing, will always involve luck, irrespective of the weather.

Exactly how much is down to chance depends on how much of a strategic approach is adopted. Developing an innovation strategy needn’t be complicated. It just requires some agreement on the answers to three questions: • Why are you innovating? • How much should it deliver? • Where will you look for the opportunities and ideas? n

Nick Pye, founding partner, Mangrove Consulting, UK

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special reporT

A SPORTING CHANCE The region’s race for success in the sports industry is just getting started. Precious de Leon reports from the recent SportAccord Conference in Dubai. The much anTicipaTed International SportAccord Convention was held in the Middle East for the first time this year, indicative not only of the UAE’s stable position on the conventions map, but also of its role in the changing geography of sports. The event brought together agents, federation leaders, various Olympic committees and their partner brand owners into one six-day programme. Although UAE figures are unavailable, SportAccord brings in upwards of 1,500 delegates plus international media. It is expected to contribute more than $4.5 million to the London economy – next year’s venue.

One of the event’s biggest attraction, however, is not its financial injection to the economy – it brings together decisionmakers to discuss some of the most hotly debated global and regional issues. This year’s event, for example, emphasised the need for the global sport community LOOkING AHEAD

Mohamed Juma Buamaim, vice-chairman and CEO, Golf in Dubai

to reach out to new markets, notably to China, India and the Middle East and North Africa. The need to seek out a fresh audience is met with the changing attitude people have towards consuming and participating in sports. “In China, the growth of sports is brought on by the growth of the economy,” said Ma Guoli, chief executive and managing director for China’s Infront Sports and Media Co. “This enabled more people to spend on it and make time for it.” Sports in China, he said, initially became popular purely for its entertainment value. In India, on the other hand, sports is

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largely dominated by cricket, with big events such as the Indian Premier League and the World Cup all heavily sponsored by advertisers and companies. But while cricket remains the country’s most popular pastime, there’s room for other sports to come to the fore, said Peter Hutton, COO of Taj TV’s Ten Sports. “There is still a great opportunity to cultivate other sports and create sports heroes,” he said. These signal a potential boost in viewership and more opportunities for brands to connect with fans through partnerships with athletes and teams, and supporting sports events. In addition, issues in sponsorship, regional broadcasting rights and the evolving relationship between a sponsor and the athlete or sports event organisers were also highlighted during a panel discussion at SportAccord. In the Middle East, infrastructure or resources to build them is certainly not lacking. In the UAE, for example, there has been investment during the past 10 years in sports and sports marketing. Getting the likes of Andre Agassi and Roger

Low audience figures in Qatar, kuwait and the UAE are a big problem. Federer to play tennis on the Burj Al Arab helipad and positioning the Dubai World Cup as the richest horse race in the globe show the sports marketing spectrum in the Emirates. These were, of course, part of a bigger plan that saw sports spinoff into tourism, hospitality and real estate. But it’s not so much a case of “build it and they will come”. The global shift in attitude towards sports, for example, isn’t as evident in the region. “Low audience figures in Qatar, Kuwait and the UAE are a big problem,” said HE Saeed H. Al Tayer, chairman and chief executive, Meydan. “The youth have lost passion for sports because it’s not part of the curriculum in schools anymore. “The current level of sports in the region is not what we want to see. It will take up to 10 years to get there. Infrastructure may come first but passion will take time

– even regional sports leagues can’t bring that automatically,” he said. Echoing Hutton’s suggestion, Al Tayer calls for “the creation of sports heroes” and looking at promoting various sports. Investing in cultivating several different sports bases in the region, after all, will ensure there is enough for brands to sponsor and enough variety for spectator involvement. One idea that emerged is to have a singular effort across the region to promote sports and sports venues. This means higher profile events that draw bigger crowds, which will make the event easier to promote to potential brand sponsors, said Mohamed Juma Buamaim, vice-chairman and chief executive, Golf in Dubai. He hinted at plans to create a Middle East-wide golf tour that would encourage participation from nationals as well as golfers and golf enthusiasts from around the world.

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special reporT

Greater brand visibility: Getting top tennis players to play on the Burj al arab helipad showed the sports marketing spectrum in dubai

Companies are also being encouraged to look at supporting local sports and talents in the region. Ahmed Ali Al Hashmi, group senior vice-president for brand management at Etisalat, agrees. “Right now people here look at sports as just another form of entertainment. They’ll only go to an event if they have time. They have to see it as a part of life. But right now, they will only see sports when they have nothing else to do,” he said. Etisalat actively supports Dubai Racing Club activities and most recently announced its sponsorship of the Godolphin Mile, which is a part of the 15th Dubai World Cup. The company also supports other sports including the Abu Dhabi women’s football team. “For sponsors, it about getting people to be passionate about your brand through its association to a particular sports or sports event,” said Al Hashmi. “Our association with FC Barcelona enables us to have farther geographic reach for our brand and therefore enables our brand to become more globally competitive.

However, we also acknowledge the need to support local endeavours, and that’s why we support the UFL [UAE Football League].” Al Tayer agrees that regional sports need to be promoted, but adds that in places like the UAE, where 80 per cent of the people are expatriates, international sports will naturally dominate the airwaves. On the other hand, Dr Tariq Humaid Al Tayer, UFL chairman, sees a different future. He suggests a comprehensive plan to “ignite passion” across the region. “Part of our job is to create awareness of where the pitches are located and advertise existing resources and competitions. Creating national awareness will lead to passionate fans and athletes which will lead to larger audience figures and larger sponsorship interest,” he said. Another hotly discussed issue at the convention was the impact of exclusive TV broadcast rights. Adnan Hamad Al Hammadi, chief executive, Horizon Media and Sport Services, felt strongly about the need to create “tiered models” for sports broadcast rights.

“To understand the current status of TV rights in the Middle East, you have to know the history of TV in the region. It has grown rapidly in the last nine years. Pre-1994, there were only local TV stations and broadcast rights were non-exclusive. By 1994 though, pay TV entered the market and took exclusive rights so they could increase viewership,” said Al Hammadi. The competition for exclusivity, he said, hikes up broadcast rights, which then takes most local sports channels out of the running to secure the kind of viewership an international sports event offers. “We set aside upwards of 80 per cent of our budgets on TV rights. Collectively TV networks spend up to $2 billion alone on advertising on TV and outdoor, just for viewership increase and no real revenue stream,” he said, stressing on the kind of astronomical figures networks and advertisers have to work with when it comes to sports event broadcasts. PARC released 2008 data that showed Middle East TV ad spend reach $4.3 billion–accounting for 43 per cent of the total regional ad spend.

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SPECIAL REPORT

Teeing off: There’s a need to ignite passion for sport in the region, says Al Tayer

…if there are different packages, it enables a wider range of advertisers and sponsors. “In terms of exclusivity, $1 million was spent to air EPL [English Premier League] in 1994 for one season, and this year Abu Dhabi TV spent $330 million to air it for three seasons. As for UEFA $18 million was spent in 1998 while in 2008, Al Jazeera Sport spent $204 million,” said Al Hammadi, during a panel discussion. Other reports indicated that former Portsmouth FC owner Sulaiman Al Fahim said rights to broadcast EPL in 1994 was won for $6 million. Using these examples to show the exponential growth of some of the exclusive sports event broadcast rates, Al Hammadi said, “This can’t be sustainable. I think it will be the peak for the rates. Spending millions on one event isn’t sustainable.” Al Tayer agreed. “We can’t be risking it all in one event. We need to reconsider relationships and reinvest in comprehensive plans to increase attendance, viewership, etc,” he said.

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Etisalat’s Al Hashmi, in turn, points out that as the price tag for exclusive broadcast increases, the hike is passed on to advertisers and sponsors, limiting sponsorship to companies with deeper pockets. “I’d like to see other sectors, like the banking and finance sector, to take part, but some sponsorship packages are just too expensive,” he said. “Networks and events organisers must give equal opportunity for TV sponsorships and different tiers of sponsors also. If there are different packages, it enables a wider range of advertisers and sponsors,” Al Hashmi said. With proper sponsorship tiers in place, set packages could eventually become more tailor-made to the sponsor’s specific objectives, ensuring longer term buy-in from brand owners. This is essentially about evolving the relationship from sponsorship to partnership—a recurring theme throughout this year’s SportAccord.

To make that “sponsorship-to-partnership” transition, agents and sports organisers will have to find ways to extend the partnership contracts. “It’s about creating opportunities to involve the community and the partners and bridging a gap between the two to complete the road map for the future of sports,” said Dr. Rania Elwani, former Olympic athlete and IOC member. She also suggested customised sponsorship packages could include a showcase of investor products and services at the venue, and in addition an area for networking. “We often have brainstorming sessions about content and how the partnership and the event itself can be improved. They have ideas and we have ideas about how the partnership can improve and about each other’s roles,” said Erica Kerner, global Olympic Games director and head of London 2012 programme for Adidas. The company’s partnership with Fifa has been in place since the 1970s. UFL’s Dr Al Tayer has a different take on how to give a boost to sports sponsorships in the region. “Sports sponsorship in the Middle East has always been done through strong casual relationships. But in places like the US, companies are encouraged to support sports events through taxation exemptions. I know a lot of event organisers and brands may not like it but it’s a sure way of incentivising more companies to get involved. In the end though, sports organisers and agents must realise that it comes down to the investment returns. Emirates airline, for example, sponsors more than 20 different sports teams and events regularly – from being an official partner for the Fifa World Cup to supporting various golf tournaments. Boutros Boutros, divisional senior vicepresident for corporate communications, is unambiguous about the ultimate goal. “Sponsorship is a business. We’re not a charity. We do it as a commercial entity, as a commercial activity and to get ROI [return on investment],” he said. n

ikoo viagra ad (GMR).pdf 4/14/2010 11:24:52 PM

CMY

B r a n d a n a ly s i s

PumP uP the sales volume Forecourt retailers need to sell a lot more than fuel if they are hoping to build sustainable brand loyalty. attracting customers into any retail site can be tough, but it’s especially daunting if you are selling exactly the same product as your competitor. If that isn’t hard enough, fuel retailers have a uniquely tricky challenge: Few people see a visit to a service station as an enjoyable shopping experience. So, how do fuel retailers in the Middle East build loyalty in the commoditised market of service stations when everything seems stacked against them? understanding consumers It is tempting to think that any and every driver is a potential consumer. This may be true for that small percentage of drivers who need fuel as a

“distress purchase” (they’re running low and visit the nearest option), but it’s worth looking a little deeper at who the majority of fuel retail consumers really are. Depending on the site location, fuel retailers are likely to have very different consumer types with very different needs. Only when retailers have understood who their consumers are can they develop sensible strategies for communicating with them and offering the kind of services and products that they require. In general, the needs of a highway driver will be clearly different from those of a driver on a city street. Customers at urban or edge of city

locations, for instance, can be broadly split into two groups. The first comprises those who go to service stations to “fuel and go” as quickly as possible. Typically, these are the couriers, delivery drivers, reps – the “smokes, Cokes, and gas” customers, who waste no time and have no wish to queue behind others doing their evening shopping. The second group will spend a little longer and, depending on what is on offer, may buy their breakfast, lunch or evening meal. This group tends to be a little more affluent and to have a much higher basket spend than the fuel and go group. Some retailers are also seeing a new type of customer who, drawn by the

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convenience of the location, will drive in off the street to buy items such as snacks, drinks and newspapers. The truth is that a fuel retailer’s offer, brand and reputation determine what kind of consumer is predominant and what kind of turnover and margins can be expected outside of fuel spend. And although broad generalisations regarding consumer types can be made, it is also important to consider regional variations. For example, outside of the major cities in Oman, customer needs and tastes are quite specific. Likewise, the growing number of car owners in North Africa will lead to retailers developing offers specifically suited to local demand. attraction tactics In the past five years or so, fuel retailers have had to become more customer-focused as consumers have become more retail and brand savvy. No longer can retailers focus solely on fuel to drive their business; they must create reasons beyond keeping the car running to get consumers into their sites and to keep them coming back. In the UK and Europe, the smarter oil companies have given up attempting to be shopkeepers and have joined instead with proper retailers: Shell with Sainsbury’s; Esso with Tesco. But perhaps the smartest of the lot, BP, has forged a winning relationship with Marks & Spencer (M&S) Simply Food, a win-win partnership that offers M&S the critical mass that it desires in locations that would otherwise be impossible to target. While many Europe-based retailers offer virtually no vehicle service beyond fuel, two of our UAE-based clients, Emarat and Adnoc, focus much more on satisfying their customers’ motoring needs. They offer a full range of vehicle services presented in facilities that would be the envy of many F1 teams. These retailers compete on quality of service and price. Emarat has gone a step further: Based upon the success of its Emarat Plus shop, it has developed a stand-alone convenience offer called “Fresh Plus”. This combines

Fresh thinking: uae-based emarat has developed a stand-alone convenience offer

For years, forecourt shops have peddled convenience junk, and little else. own-brand, Bakeria bakery and Café Arabica coffee offerings, all under one roof. Product benefits At last, oil companies are offering customers choice and added value from their fuel. Whether it is extra miles for their money, a cleaner engine, or more power, drivers now have choice when filling up – another reason to choose one fuel retailer brand over another. consumer trends It seems that a few retailers such as Enoc and Emarat are at last waking up to the fact that the consumers who visit their sites like to wear and drive first-class brands. Why should their experience be any different at the forecourt? Unfortunately, many fuel retailers seem to be reactive rather than proac-

tive when it comes to setting decent standards in retail environments. It is critical to be aware of consumer trends and have a feel for what is coming next. For years, forecourt shops have been peddling convenience junk, and little else. But consumers are becoming increasingly aware of the nutritional benefits of healthy eating, and want local produce from local suppliers. With the introduction of supermarket retailers onto the forecourt, standards have improved dramatically. But there is still a good deal of room for improvement. n

robert onion Chairman Circle Brands, uK

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SECTOR ANALYSIS

FOOD Checking into one of the regionâ&#x20AC;&#x2122;s most dynamic sectors. Increasing appetite Confectionary Import dependency Packaging Al Baik Kantara Food spend Sekari search results Euromonitor PARC Analysis PARC Data

77 80 82 84 86 88 92 94 100 102

NExT mONTh hOuSEhOLD CLEANINg

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GROWING APPETITE Buoyed by growing populations and rising incomes, food firms are focusing on the Gulf, reports Alex Malouf from Riyadh.

WHILE MANY sectors may have suffered recently due to the global downturn, one industry that has bucked the trend is the region’s food business. Buoyed by a rapidly growing population and rising incomes, food firms, both local and global, are focusing in on the Gulf. The largest market by population, Saudi Arabia’s food giants have looked to benefit from the economic downturn by either partnering or acquiring rivals or companies that may complement their product portfolio. The largest dairy producer in the region, Almarai, made several agreements during the past 12 months – one with Egyptian dairy and juice manufacturer, International Company for Agricultural Industrialization Projects (Beeaty), and another with Jor-

danian drinks firm, Taibah’s Investment and Advanced Food Company. According to Almarai these acquisitions are designed to help diversify its revenue sources. The company says that it plans to boost its investment budget to $1.6 billion up until 2013. The Savola Group, owners of the Panda supermarket chain, has also been pursuing inorganic growth. Following its chief KEY PLAYER

Saleh Abdullah Lootah, chief executive officer, Al Islami

executive’s comments that the current global financial crisis could have positive implications for its operations through new acquisition opportunities, the Savola Group bought the Geant franchise from the Fawaz Al Hokair Group. The purchase of Geant has given the Savola Group a dominant position in Saudi Arabia’s food retail market with stores nationwide. The drive to develop a local food sector and manufacturing facilities has picked up pace over the last decade. GCC states import some 90 per cent of their food. In the UAE alone, food expenditure in 2009 reached $6.78 billion, according to Business Monitor International. Investments in the Gulf’s food sector have peaked recently due in part to the region’s desire to become more self-suffi-

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S E C T O R A N A LY S I S

hungry for more: Both local and global fast food chains are expanding across the region

other chains, most notably from recessionstruck America, are actively scouting locations in the Middle east. cient. Largely dependent on imports, Saudi Arabia has taken a giant leap in terms of food processing and vegetable, dairy and poultry production. New Zealand-based dairy firm Fonterra recently finalised the purchase of the remaining 51 per cent stake in Saudi New Zealand Milk Products with former jointventure partner Saudia Dairy and Foodstuff Company. Amr Farghal, MD of Fonterra in Middle East and Asia and Commonwealth of Independent States, said the acquisition, worth around $32 million, is a major step forward for Fonterra’s strategy in Saudi Arabia and the wider GCC. “We have great confidence in the stability and growth of the GCC economies, and see tremendous opportunity for our business in this region. With rising demand for high-quality dairy products, this acquisi-

tion secures our manufacturing capacity requirements for the future and helps us bring more world class ingredients and innovative new products to the Middle East region,” Farghal said. Saudi Arabia itself has announced plans to increase the number of industrial areas in the country from 14 to 24. Meanwhile, the UAE government is actively encouraging more food manufacturing plants to be set up there and has invested $1.4 billion in the industry. Today there are around 150 food processing plants in operation in the UAE, according to the Dubai World Trade Center. Another trend is the increased demand for prepared and packaged foods. Changing and busy lifestyles as well as aggressive marketing from food companies have created a demand for convenience foods.

With about 70 per cent of Saudis in their teens, and their preference for Westernstyle foods, international fast food chains such as KFC, Pizza Inn, Burger King, McDonald’s, Pizza Hut, Dominos, and local chains such as Herfy, Al-Baik, Al-Tazaj, Dajen and Kudu are continuing to expand. Other chains, most notably from recessionstruck America, are actively scouting locations in the Middle East. With the recession crimping sales in the America-based chains, brands are looking overseas for growth. “There are a lot of markets that these companies want to tap,” said Sanford C. Bernstein analyst Sara Senatore. For the CEO of US-diner Wendy’s/Arby’s, the opportunities are further afield. “If you look at long-term growth potential,” Roland Smith said, “not to focus significantly on the international opportunity would be a big miss.” The company says a franchise partner in the Middle East is aggressively opening stores. Dubai’s first dual-branded Wendy’s/Arby’s restaurant was set to open this summer. Many of the region’s food brands are also looking to tap into export markets, particularly the demand for halal food. Increasing demand for halal products from 1.8 billion Muslims around the world, as well as some non-Muslims, is fuelling the halal food industry to generate between $632 billion and $2.1 trillion annually, according to the Kuala Lumpur-based periodical the Halal Journal. One of the UAE’s leading halal brands, Al Islami, has publicly stated its intention to drive growth from expansion both inside and outside the Middle East. “Al Islami expects a significant growth in its profits and we are confident that we have the right people and infrastructure in place to realise this ambition,” chief executive officer Saleh Abdullah Lootah said last year. “With demand for halal food soaring worldwide, we look forward to consolidating our penetration into the new markets with the experienced teams who have in-depth knowledge of the FMCG market,” he said. n

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2010

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s e c t o r a n a ly s i s

Sweet SenSation

the region’s sweet tooth continues to grow despite the recession, reports alex Malouf. consumers in the Gulf are becoming more addicted to the sweet stuff, judging by the number of global confectionery brands entering the region. According to TNS Media Intelligence, the Middle East is one of the top 10 markets for confectionery products in the world. It values the total Middle East confectionery market at $113 billion, with growth of more than 15 per cent over the last three years. Saudi Arabia and Qatar experienced the largest increase, at around 24 per cent. That growth hasn’t gone unnoticed by chocolate, confectionery and ice

DeSSert DeSertS

Luxury: al nassma’s Martin Van almsick

cream brands around the globe. Hotel Chocolat, the British chocolatier and cocoa grower, launched its first stores in the region this year. Switzerland’s Teuscher Chocolates, meanwhile, marked its entry into the Middle East with a new boutique in Doha. Not to be outdone, the local confectionery industry has been looking to expand outside of the Middle East and into Europe. One Dubai-based brand aims to crack the US and even Japan with its unique selling point – camel’s milk. Dubai’s Al Nassma, which claims to

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be world’s first brand of chocolate made with camel milk, aims to capture the imagination of chocolate lovers looking for something different. “We aim to be the Godiva of the Middle East,” Al Nassma’s general manager Martin Van Almsick told the media last year. “It’s a luxury product, so we will never be in supermarkets. The plan is to be in one mall in each UAE city.” Other confectionery sectors have also enjoyed strong interest and growth, most notably frozen snacks. One American brand has opened up in Saudi Arabia and Bahrain, offering a different take on frozen yoghurt. Freshberry’s products are made out of all natural ingredients and feature tastes such as All Natural FreshBerry Tart, All Natural Decadent Dark Chocolate, and No Sugar Added Vanilla. Freshberry’s franchise owner in the

the Middle east is one of the top 10 markets for confectionery products in the world. region clearly believes that consumers will buy into enjoying a healthy snack. “Its an exciting moment in the history of our business, where we have added a new dimension with the introduction of the Freshberry brand which will not only educate, but provide mass appeal for a wide range of health conscious consumers in the region,” notes Rajendra Shah, head of regional marketing & franchise for United Food Company. While there’s no doubt that even economies in the Gulf took a hit last year, the regional consumers’ love for confectionery has not waned. Globally, sales of chocolates were on the rise during 2009, and there’s little to suggest that 2010 will be any different.

“It’s clear that, despite economic trouble this year, the world’s chocolate lovers didn’t deviate from their favorite treat. Chocolate is a small, affordable indulgence for shoppers who are cutting back on spending elsewhere. Even in countries not known for chocolate consumption, sales are on the rise,” says Marcia Mogelonsky, global food and drink analyst at food consultancy firm Mintel. TNS’ researchers put the growth in the Gulf region’s confectionery sales down to greater disposable income per capita, the influence of the region’s enormous population of young consumers, and the traditional role of sweets in Arab culture. n

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s e c t o r a n a ly s i s

Loads of aGRo Reducing dependency on food imports by acquiring farmlands overseas has left the GCC vulnerable to accusations of land grabbing. as Gulf populations continue their rapid growth a policy of purchasing farming land outside of the GCC for food production is causing controversy. A recent report by Saudi investment firm NCB Capital said that the region’s oil producers have abandoned long-standing policies of achieving food self-sufficiency at home in favour of investing in farm projects in more fertile countries. An increasing dependence on food imports is driving governments and investors to snap up land.

The report estimated that in 2007, the GCC’s import bill for agricultural commodities stood at around $10 billion, nearly 1.3 per cent of that year’s regional foReiGn foRay usamah al-Kurdi chairs agroinvest’s founding committee

GDP and around 1.7 times the average value of net imports during 2000-2004. “Apart from wheat, potatoes, vegetables, fruit, fish and dairy, more than half of all regional consumption needs of other food products are met through imports. In Saudi Arabia, the near selfsufficiency in wheat will give way to total import-dependency by 2016,” NCB Capital said. Only this April, Saudi-based agricultural investment firm Agroinvest announced plans to raise about $533

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million for foreign and local farm investments, its chairman said. However, agricultural experts have criticised the Gulf’s plans to buy farms in locations such as Africa and have called for a halt to moves by investors to snap up foreign land, amid claims that poor nations are losing much-needed farmland in a calculated land grab. According to the International Food Policy Research Institute, a Washington-based think-tank, up to 20 million hectares of cultivable farmland – roughly a fifth of all the agricultural land in the European Union – has been acquired since 2006, at a value of up to $30 billion. Farmland acquisitions by foreign investors have sparked some opposition in developing nations. Last year the UN voiced its concern that farmers’ rights in developing nations could be compromised.

Up to 20 million hectares of cultivable farmland – roughly a fifth of all the agricultural land in the eU – has been acquired since 2006. Companies such as Agroinvest believe that such investment can benefit both the GCC and recipient countries. Usamah al-Kurdi, who chairs Agroinvest’s founding committee, told Reuters that his company would look to “forge partnerships with local firms or farmers unions who have a project ready. If leasing the land is an option, then we will do it with our partners. Everybody is getting philosophical about this issue, but Agroinvest is not a real estate firm. We are in agriculture and we want to do this with firms and farmers’ unions in these countries”.

As demand for food resources increases, there’s no doubt that countries in the region will develop means to guarantee food supplies. However, as the NCB Capital report points out, there are other ways to ensure that the Gulf adopts a healthy diet. “Another step is that GCC citizens should be educated about the need to change their eating habits to match the new market and farm conditions. GCC governments should also negotiate with major food producers to obtain some supply and price privileges and allocate funds to offset price increases,” it said. n

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Photo courtesy of National Prawns Company

S e c t o r a n a ly S i S

it’s A wrAp… not From safety to ecology, the food packaging industry is confronted with a host of issues on an ongoing basis, reports Alex Malouf. aS food companieS look to develop new and appealing products for consumers, one area that has seen increasing marketing activity is that of food packaging. The packaging sector giant Tetra Pak leads the way in developing new products. “The Middle East is one of the most important and rapidly developing markets for Tetra Pak,” says Martin Fejk, marketing director at Tetra Pak Arabia. “It is also the fastest growing, as the consumer base here is expanding rapidly.”

Fejk says that, taking into consideration the current market demands from both customers and end consumers, Tetra Pak’s recent product innovations have focused on three key platforms. They are: package differentiation (to address consumer needs), operational costs reduction, and environmental impact reduction. Tetra Pak’s most recent innovations for the packaging sector include iLine solutions, a new generation of high-

performance aseptic carton packaging that can help food producers achieve increased capacity and reduce operational costs by up to 40 per cent. And the company’s Tetra Lactenso Aseptic targets dairy producers to achieve superior and consistent product quality while reducing operating costs by up to 20 per cent and minimising their environmental impact. Tetra Pak claims that one pack launched locally by Al-Rabie Saudi Foods in 2006

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is still the first and only easy-to-open carton based system to package food products that otherwise come in cans (like beans and carrots). “We’re seeing a definitive move towards better packaging designed to be much more visually appealing to consumers, as people ‘eat with their eyes’ when they buy,” says Peter Fraser, director of commercial business at the Saudi-based National Prawns Company. For food brands, packaging can often make the difference when it comes to customer purchasing, says Fraser. But there’s much more to decision making than that – environmental and cost concerns have to be taken into consideration, for example. “Packaging has also improved considerably in terms of better storage and stacking options, materials, ease of opening for the end consumer and graphic design,” says Fraser. “The quality of photography, and use of colour and imagery is much better across the industry and as good as in other more mature food lines.” Sustainability is playing a major role, too. “Producers are looking at new, lighter, biodegradable or recyclable materials, but development is tempered by food safety, which is of paramount importance,” says Fraser. “Combined with better branding, these packaging trends will only increase as the industry grows more and consumers look for healthier seafood options in their diets,” he adds. With the largest base of food packaging products in the Middle East, Tetra Pak leads the way in how food companies adopt packaging solutions for their produce. “We see ourselves as providing cutting edge technology in the carton processing and packaging industry across the world and in the region,” says Fejk. “We work closely with our customers to maintain consumer confidence and gauge purchasing behaviour through the challenging times ahead.” n

sAudi’s AL wAtAniA AGriCuLturAL Co siGns CArrEFour dEAL According to a press release from Al watania Agricultural Company, saudi Arabia’s retail sales are projected to hit $97 billion by 2013, making the Kingdom the fastest growing food sector in the GCC. rising disposable income, a youthful population, and an expanding consumer base (driven by more active women spenders) are the principle growth drivers. Food and grocery, in particular, are expected to continue to account for almost half of total annual retail value. within the food sector organic is growing particularly quickly thanks to increasing health awareness, says Al watania. the company has recently signed an agreement with Carrefour to set up Al watania stands at its local branches as part of a series of expansion initiatives across the country. “we have been observing a very noticeable shift towards healthier lifestyles such as eating more nutritional foods, which is reflected by the increase in sales of our organic products. we intend to leverage the country’s strong retail market and increased interest in health foods to further strengthen our domestic presence,” says ibrahim Aboabat, general manager of Al watania. Founded in 1982, Al watania is endorsed by EcoCert and was the first agricultural firm in the region to produce all-natural fruits and vegetables.

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S e c t o R A n A ly S i S

lOCAl hErO Alex Malouf talks to Rami Abu Ghazaleh, CEO of Al Baik restaurants, one of the region’s most successful homegrown dining brands. lAunched in 1974 by the late Shakkour Abu Ghazalah in Jeddah, Al Baik is the result of the founder’s long-held dream to own a successful restaurant business built upon the pursuit of excellence. Today Al Baik is headed by Ihsan Abu Ghazaleh (chairman) and Rami Abu Ghazaleh (CEO). We interviewed Rami Abu Ghazaleh about the Saudi restaurant chain’s marketing strategy. Tell us about Al Baik’s topline marketing strategy. It is based on two pillars: Enhancing customer loyalty and being a good corporate citizen. Over the past 36 years Al Baik has become an iconic brand, recognised by Saudis, expatriates and pilgrims from across the world for the highest quality food, fast and courteous service and sparkling, clean restaurants. Our strategy is to focus on what our

customers want, which means consistently maintaining the highest standards at every level of operation and continuing to offer the best value for money. We also believe in visibility and transparency, and our marketing strategy encompasses the communications aspect of our organisation. Al Baik keeps its customers informed and up to date about everything that we are doing. For example, when we had to increase prices for the first time in 25 years, we prepped our customers so that they understood the reason was the global rise in the cost of raw materials. And, of course, when the cost of raw materials went down, we were very happy to inform them that our prices had come down as well. Visibility includes being where our customers are. As you are aware, Saudi Arabia has a mainly young and rapidly

growing population, and over the past 30 years our cities have expanded enormously. Wherever a new district develops we aim to be there – whether it’s in a mall or an independent branch – conveniently located so that our customers don’t have to go far to enjoy their favourite Al Baik meal. Being where our customers are extends to being where our customers need us. For example, 10 years ago HRH Prince Naif bin Abdulaziz, Minister of the Interior, invited food service companies to participate in the annual Hajj activities by setting up outlets in locations convenient to Allah’s guests visiting the Holy Shrines. Responding to HRH Prince Naif’s call, Al Baik established three outlets in Mina, one of which is considered the world’s largest quick-service preparation kitchen facility. Al Baik’s restaurants in Mina are operational during the Hajj season only, and the project is a non-profit venture for the benefit of the Hajj pilgrims, and

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it also supports charity programmes. The main facility is located in an area parallel to the Jamarat bridge at Mina. The restaurant is designed to serve 250,000 meals daily with a team of more than 400 on site preparing meals of the highest quality. High quality, quick service, cleanliness and incredible value for money are the most important elements in Al Baik’s Hajj operational philosophy, which is based not on profit, but on virtue, religious principles and patriotic commitment to the Kingdom of Saudi Arabia. How do you adapt your marketing strategy to market conditions? Each market is unique and to enter a market you have to understand the mindset of its people – within the same country two different cities can require totally different means of reach. Our key message is we see ourselves as part of each region we go into and this strategy is embodied in our “You and Al Baik are Neighbours” campaign, which we implement wherever we open a new outlet. Of course, we face many challenges. Nowadays there are numerous quick-service restaurant chains, but these are mainly foreign franchises. The fact that Al Baik is a Saudi concept, Saudi owned, Saudi managed and a Saudi success story has won us a special place in the hearts and minds of Saudi citizens – and also with expatriates from all over the world who are part of our multinational society. For this reason there is no need for us to differentiate ourselves as a Saudi brand, because the fact that we are a homegrown brand with a world-class menu offering is the very reason we are so popular. What are you doing to reach out to the youth? Saudi Arabia has a young population, but young or old, everyone loves the Al Baik experience. What we are doing to reach out to the country’s youth is in education and this comes within our CSR.

locally grown: Al Baik has three outlets in Mecca that open during hajj

It takes years to build brand loyalty and yet this can be stolen almost overnight. Al Baik is firmly committed to being a responsible member of the society we serve and the neighbourhoods we operate in. To put this into practice we are proactive in developing educational initiatives that are aimed at capacity building of youth, including enjoyable and entertaining programmes for children. We also have programmes that cover food safety and environmental awareness. Examples are the highly successful annual summer anti-littering campaign featuring the cartoon characters Nazeeh and Wartan, and the equally successful House Hero programme that builds self-confidence in our youth by teaching them skills in the fields of car mechanics, basics of electrical and air-conditioning maintenance, and first aid and fire fighting. We regard these as central to Al Baik’s activities as a socially responsible corporate citizen. What are you doing to defend the brand? Every successful brand has its imitators – as you know, IP infringement and coun-

terfeiting are a huge global problem. Al Baik is no exception. We see such infringements in over 20 countries around the globe, and our legal team is vigorous in defending our brand. Much of any company’s success depends on non-tangible resources that it has developed such as intellectual property and trademarks. It takes years to build brand loyalty, and yet this can be stolen almost overnight by those who think they can get rich off the ingenuity and hard work of others. Moreover, since unethical profit is their only motivation, counterfeited products and services are invariably produced at the lowest possible cost using cheap materials and labour, which can be dangerous to the health and safety of consumers. We believe that it is the responsibility of the Arab companies and the executive and judicial administrations to stop these infringements. For our part we do not hesitate to take legal action to put a stop to any encroachment on the Al Baik trademark and corporate identity. n

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S E C T O R A N A LY S I S

Chart 1: Measurement Tree on Food Spend per Buyer in (Saudi riyals) 5,533 (+3.1) Purchase Frequency (Trips per year) 204 (+7.9)

Spend per Trip (Saudi riyals) 27 (-4.6)

2009; figures in parentheses indicate % change on 2008

Chart 3: Food Purchases from Baqalas Spend per Buyer (Saudi riyals) 1,916 (+12.7) Purchase Frequency (Trips per year) 151 (+11.9)

Spend per Trip (Saudi riyals) 13 (+0.8)

Source: Saudi Kantara World Panel 2009

BAQALAS REIGN SUPREME They are still way ahead of supermarkets in the Saudi food distribution chain, says study. FOOD ACCOUNTS for some three-quarters of total FMCG household spend. In 2008, growth in spending on food was proportionally more than total FMCG growth, compared with 2009, when it was lower than total FMCG spend growth. Growth in FMCG spend was 4.5 per cent up in 2009 on the previous year. The increase in spending (Chart 1) on food (3.1 per cent) is primarily led by increased shopping trips. In 2009 there was a decline in spend per trip, indicating that either fewer items or items of a

smaller package size were bought. This behaviour is self-perpetuating. It results in households carrying lower food stocks and being forced to take more trips to baqalas. Baqalas meet one-third of the food requirements of a household (Chart 2). Baqalas are already over-indexed for food categories compared with total FMCG, indicating that they remain the preferred destination for food purchases. Supermarkets account for another 33 per cent of purchases, but spending was

stagnant in 2009. The only other channel that witnessed high growth was hypermarkets, but this is likely driven by new store openings rather than organic growth. A closer look at baqalas Growth in spending at baqalas (Chart 3) is driven by an increase in shopping trips. Categories frequently purchased are snacks, and dairy such as milk, laban, yoghurt and cheese. Baqala purchases of all food categories rose except two: edible oils and bouillon.

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WATCH MIDDLE EAST BUSINESS REPORT

Presented by Nima Abu-Wardeh MIDDLE EAST BUSINESS REPORT goes to the heart of one of the world’s most dynamic regions. This weekly programme looks into the Middle East’s main business and finance stories, as well as the people and companies making the headlines.

Fridays, 19.30 GMT and Saturdays, 05.30 and 22.30 GMT For advertising or sponsorship opportunities please contact Hani Soubra on hani.soubra@bbcworld.ae 0486 Middle East GMR.indd 1

14/4/10 15:22:24

S E C T O R A N A LY S I S

Chart 2: Spend Contribution by Channel Food indexed to Total FMCG

Hypermarkets 4% (+25.7)

Wholesale 5%

Others 7%

(-16.9)

Mini Market 16%

Baqala 35%

(-2.6)

(+12.7)

Supermarkets 33% (-0.7)

Hypermarkets

Supermarkets

Mini Market

Baqala

113

Wholesale

Source of Growth Baqalas Chart 4: Source of Growth Total percentage change

Chart 5: Switching Baqalas Supermarkets

Increased Purchasing

Mini market

7 Switching from other channel 6

All others

18 17 Wholesale 8 Hypermarkets 3

An analysis of the source of growth of purchases (Chart 4) indicates that the increase in spending at baqalas is derived almost equally from existing shoppers and shoppers shifting their purchases from other channels.

Which channel(s) are losing share? The switching analysis (Chart 5) shows that most of the gains for baqalas was at the expense of supermarkets. Baqala purchases by food category (Chart 6) indicates that impulse buying

Chart 6: Purchases by Food Category

Baqala Contribution

of categories such as ready-to-eat desserts and salted snacks is prevalent in baqalas; baqalas’ contribution to snack category continues to grow. The same is true of dairy products such as laban, fresh milk and yoghurt, which account for two-thirds of purchases made at baqalas. Other categories that have seen increased contribution from baqalas are juices, chocolates, biscuits, cheese, UHT milk and evaporated milk. There is high investment in the Saudi retail sector. New hypermarkets and supermarkets regularly open their doors, providing consumers with a much increased choice. Baqalas still hold the key, however. For the time being, at least, marketers should not neglect this important channel. ■

Alan Roy, senior account manager, Kantar Worldpanel – a division of TNS MEA World Panel This article is based on purchase behaviour captured from the Saudi Kantar Worldpanel.

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They love their sports and no matter what you call them, theyâ&#x20AC;&#x2122;re on Eurosport Arabia. With live sports coverage in Arabic and French arabia.eurosport.com is the online a and mobi mobile sports destination across the Middle East and North Africa. For advertisin advertising g opportunities opport contact +97143901161 or sales@mediaquestcorp.com.

Our fans fan are now able to check Eurosport Arabia on the go via our iPhone and Blackberry apps.

S E C T O R A N A LY S I S

Top 10 English Keywords

Global Travel Search Volume 571,900 7,670,422

Top 10 Keywords # 1 2 3 4 5 6 7 8 9 10

English Recipes Diet Cooking Weight loss Nutrition Organic Vegeterian Baking Diets Vegeterian Recipie

Arabic Cooking Recipe Diet kitchen Recipes Diets Dough Baking Nutrition Weight loss

Coverage 100% 100% 100% 100% 100% 90% 80% 80% 70% 70%

Domain www.ameinfo.com www.souq.com www.khaleejtimes.com www.eyeofdubai.com www.expatwoman.com www.gulfnews.com www.timeoutdubai.com www.timeoutdhabi.com www.lifestyle-uae.com www.abudhabiwoman.com

Top 10 search results google.ae ‫ﻃﺒﺦ‬ ‫ﻭﺻﻔﺎﺕ‬ ‫ﺭﺟﻴﻢ‬ ‫ﺍﳌﻄﺒﺦ‬ ‫ﻭﺻﻔﺔ‬ ‫ﺭﻳﺠﻴﻢ‬ ‫ﻋﺠﻴﻨﺔ‬ ‫ﺧﺒﺰ‬ ‫ﻏﺬﺍﺀ‬ ‫ﺗﺨﻔﻴﻒ ﺍﻟﻮﺯﻥ‬

# 1 2 3 4 5 6 7 8 9 10

Coverage 69.23% 61.54% 61.54% 53.85% 53.85% 53.85% 53.85% 46.15% 46.15% 46.15%

Domain ejabat.google.com www.ibtesama.com www.qassimy.com forum.sedty.com ar.wikipedia.org fashion.azyya.com www.lakii.com forum.hawaaworld.com www.moheet.com forum.mn66.com

English local traffic Arabic global traffic

# 1 2 3 4 5 6 7 8 9 10

THE MISSING LINK The Arabisation of English food terms doesn’t always produce accurate search results. THIS MONTH we decided to analyse food, but narrowed it down to the top websites where healthy food was being searched. The Arabic search volume for the Top 10 keywords is based on all searches globally, whereas the English is generated from local searches only. The results show that trying to do a direct word-for-word translation between Arabic and English will not necessarily result in an accurate search result. Local servers need to be used, as does the assistance of native speakers for accuracy.

Also some words such as “diet” may be searched with different spellings attributed to it. The Top 10 English websites are predominantly lifestyle-related, targeting expatriates, such as expatwoman.com, or news sites like AMEInfo.com and Khaleejtimes.com. For Arabic the Top 10 is mostly comprised of sites with a social media element, as well as forums and blogs, which demonstrates how important social media is to Search Engine Optimisation (SEO). Search engines are increasingly attributing more

page rank to social media-generated content. Brands that want to communicate with these customers need to consider SEO techniques that create content on the internet and foster conversations with these target customers. ■

Lee Mancini, founder, Sekari, Dubai

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s e c t o r a n a ly s i s

bAhrAin Egypt JordAn

impact Most of the UAE’s population consists of expatriate and migrant workers. A significant number of these foreign workers

are from Asian countries. These workers live in the UAE without their families and thus tend to be dependent on packaged and processed foods. Convenience foods are easy and quick to cook. Outside this important section of the population, a large number of processed and packaged products are consumed. Frequently consumed food products include milk, yoghurt, ice cream and confectionery. Apart from food, in the heat of the UAE, non-alcoholic beverages are in high demand. Consumers tend to enjoy having Coke, Pepsi or 7-Up in order to cool off during the summer. However, recently, the trend is shifting towards juices and health drinks. n Copy supplied by Euromonitor Intl

54,213 57,901 62,316 66,439 71,173 76,050

2009 2010 2011 2012 2013 2014

7,322 7,665 8,053 8,444 8,904 9,361

KUwAit

consumer expenditure on food and nonalcoholic beverages reached $6.2 billion in 2007 from $4.3 billion in 1995, an increase of 43 per cent. With population growth and an opening up of the market, requirements for fresh food – fish, meat and vegetables – have increased over time. These items are widely available. With growing health awareness and an increase in the per capita income of the population, there has been a renewed increase in the consumption of fresh foodstuffs.

2009 2010 2011 2012 2013 2014

4,139 4,288 4,458 4,670 4,896 5,113

QAtAr

Although packaged food top UAE consumption, fresh food is gaining ground.

1,032 1,050 1,073 1,109 1,145 1,185

2009 2010 2011 2012 2013 2014

2,717 3,226 3,680 3,812 3,935 4,060

SAUdi ArAbiA

A frEsh ApproAch

2009 2010 2011 2012 2013 2014

22,708 24,135 25,371 26,905 28,471 30,042

U.A.E.

Consumer Spend on Food ($ mn)

2009 2010 2011 2012 2013 2014

8,880 8,788 8,824 8,937 9,094 9,280

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1,926 1,907 1,923 1,957 1,997 2,046

278 330 376 389 402 414

2009 2010 2011 2012 2013 2014

2,980 3,173 3,344 3,562 3,778 3,992

2009 2010 2011 2012 2013 2014

1,191 1,186 1,200 1,225 1,255 1,290

bAhrAin

U.A.E.

2009 2010 2011 2012 2013 2014

Egypt

6,342 6,744 7,093 7,527 7,964 8,410

819 857 898 948 1,001 1,053

1,714 1,765 1,830 1,878 1,937 1,991

JordAn

SAUdi ArAbiA

2009 2010 2011 2012 2013 2014

667 694 726 756 792 826

KUwAit

747 892 1,024 1,067 1,109 1,151

1,259 1,323 1,391 1,459 1,541 1,629

160 164 169 176 182 190

2009 2010 2011 2012 2013 2014

266 268 272 280 287 292

QAtAr

2009 2010 2011 2012 2013 2014

310 370 423 440 456 472

SAUdi ArAbiA

897 911 930 958 988 1,014

bAhrAin

KUwAit

2009 2010 2011 2012 2013 2014

Egypt

1,787 1,861 1,948 2,034 2,135 2,228

14,160 14,879 15,745 16,515 17,429 18,350

JordAn

2009 2010 2011 2012 2013 2014

KUwAit

12,855 13,753 14,818 15,794 16,911 18,058

162 166 170 177 183 191

QAtAr

Egypt

2009 2010 2011 2012 2013 2014

SAUdi ArAbiA

171 174 177 183 189 195

U.A.E.

bAhrAin

2009 2010 2011 2012 2013 2014

Consumer Spend on Milk, Cheese & Eggs ($mn)

2009 2010 2011 2012 2013 2014

574 607 634 668 707 745

U.A.E.

Consumer Spend on bread & Cereals ($mn)

Consumer Spend on Meat ($mn)

2009 2010 2011 2012 2013 2014

1,275 1,266 1,276 1,299 1,326 1,358

Source: Euromonitor Fastfood Expenditure, Middle East 2010 June 2010 Gulf Marketing Review 95

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s e c t o r a n a ly s i s

2009 2010 2011 2012 2013 2014

U.A.E.

814 808 813 823 837 852

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Fish and Seafood

Consumer Expenditure on Fruit

2009 2010 2011 2012 2013 2014

1845 1955 2048 2167 2288 2408

2009 2010 2011 2012 2013 2014

620 601 595 592 589 587

328 384 432 440 446 453 Consumer Expenditure on Vegetables

SAUdi ArAbiA

946 992 1033 1093 1136 1177

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Fish and Seafood

Consumer Expenditure on Fruit

2009 2010 2011 2012 2013 2014

240 281 318 327 334 342

1032 1050 1073 1109 1145 1185 Consumer Expenditure on Vegetables

QAtAr

439 523 599 623 646 670

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Fish and Seafood

Consumer Expenditure on Fruit

2009 2010 2011 2012 2013 2014

258 268 278 290 303 316

787 823 860 904 952 998 Consumer Expenditure on Vegetables

KUwAit

534 558 585 618 653 689

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Fish and Seafood

Consumer Expenditure on Fruit

2009 2010 2011 2012 2013 2014

127 134 142 151 161 171

2743 2833 2946 3030 3131 3227 Consumer Expenditure on Vegetables

JordAn

601 640 684 732 787 843

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Fish and Seafood

Consumer Expenditure on Fruit

2009 2010 2011 2012 2013 2014

13693 14908 16346 17745 19349 21034

110 112 115 118 122 126 Consumer Expenditure on Vegetables

Egypt

1534 1523 1523 1508 1499 1487

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Fish and Seafood

Consumer Expenditure on Fruit

2009 2010 2011 2012 2013 2014

140 142 145 150 154 159

2108 2223 2319 2442 2567 2690 Consumer Expenditure on Vegetables

U.A.E.

152 154 158 163 169 174

bAhrAin

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Vegetables bAhrAin

Consumer Expenditure on Fish and Seafood

Consumer Expenditure on Fruit

2009 2010 2011 2012 2013 2014

991 983 986 995 1010 1027

Source: Euromonitor Fastfood Expenditure, Middle East 2010 96 Gulf Marketing Review June 2010

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s e c t o r a n a ly s i s

1066 1120 1179 1238 1309 1385

2009 2010 2011 2012 2013 2014

133 138 144 152 160 167

2009 2010 2011 2012 2013 2014

88 104 118 122 126 130

2009 2010 2011 2012 2013 2014

5829 6216 6551 6944 7369 7800

2009 2010 2011 2012 2013 2014

1303 1282 1277 1282 1301 1326

175 206 232 237 242 247

1519 1622 1713 1826 1942 2060

2009 2010 2011 2012 2013 2014

436 428 423 422 427 433

478 497 520 543 567 592 Consumer Expenditure on oils and Fats

2009 2010 2011 2012 2013 2014

112 135 157 165 173 181 Consumer Expenditure on oils and Fats

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Sugar and Confectionery

U.A.E.

Consumer Expenditure on other Food

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Sugar and Confectionery SAUdi ArAbiA

SAUdi ArAbiA

Consumer Expenditure on other Food

2009 2010 2011 2012 2013 2014

227 238 251 266 282 297

478 497 520 543 567 592 Consumer Expenditure on oils and Fats

Consumer Expenditure on Sugar and Confectionery

QAtAr

Consumer Expenditure on other Food

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Sugar and Confectionery

KUwAit

Consumer Expenditure on other Food

500 518 539 560 585 610

1328 1376 1437 1487 1545 1599 Consumer Expenditure on oils and Fats

JordAn

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Sugar and Confectionery

JordAn

Consumer Expenditure on other Food

487 476 468 456 446 437

Egypt

2009 2010 2011 2012 2013 2014

KUwAit

5698 6387 7204 8026 8933 9867

32 32 33 34 35 36 Consumer Expenditure on oils and Fats

QAtAr

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Sugar and Confectionery

Egypt

Consumer Expenditure on other Food

49 49 50 51 52 54

bAhrAin

2009 2010 2011 2012 2013 2014

SAUdi ArAbiA

55 56 57 59 59 60

Consumer Expenditure on oils and Fats

564 602 635 676 719 760 Consumer Expenditure on oils and Fats

U.A.E.

2009 2010 2011 2012 2013 2014

Consumer Expenditure on Sugar and Confectionery bAhrAin

bAhrAin

Consumer Expenditure on other Food

2009 2010 2011 2012 2013 2014

323 326 332 341 350 362

Source: Euromonitor Fastfood Expenditure, Middle East 2010 98 Gulf Marketing Review June 2010

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s e c T o r a n a ly s i s

A biggEr slicE Ad spend in Kuwait topples Egypt’s to take top spot in 2009. The food secTor bucked the trend of a turbulent 2009 by posting a robust growth of 39 per cent in the region. Restaurants, including those in fast food category, shared 58 per cent of the total category spend of $359 million. The cheese category had a 26 per cent share, with the remaining 12 per cent allocated to other categories in the sector, including edible oil, dairy products, poultry and ghee. Pan Arab media with television, constituting a lion’s share of 99 per cent, gained 72 per cent over the last year to occupy a market share of 47 percent of the total ad spend in the region. Ad spend in Kuwait surged by a whopping 88 per cent. The country is now the top spending market in the region, replacing Egypt, which slipped to third place after posting a decline of 11 per cent. Ad spend in the UAE declined by 4 per cent and the country retained its rank as the second top spending market. Spend in Saudi Arabia surged 29 per

cent to take the country to the fourth spot. Spending in the UAE, Egypt and Saudi Arabia was nearly $30 million each, with minor variations. Other markets that reported positive growth were Qatar (+36 per cent), Jordan(+135 per cent) and Oman (+14 per cent). Those that witnessed a decline were Lebanon (-12 per cent) and Bahrain (-2 per cent). All major media vehicles reported significant growth in the region with TV spending increasing by 55 per cent. The medium now shares 64 per cent of the total ad spend in the sector. Newspapers gained 25 per cent and occupied 19 per cent market share, while magazines posted a positive 29 per cent variation and got a 4 per cent market share. The rest is shared among other media types. McDonald’s was the top spending brand within the sector in the region in all major media types – namely TV, print, radio and outdoor. The sector is poised to grow in

the region but growth may not be uniform across all markets. In Saudi Arabia, according to TGI survey conducted by PARC, the average spend by consumers on fresh and frozen food increased by 7.8 per cent. The likely increase of fuel cost in UAE will directly affect the advertising budget in the sector before the cost is ultimately passed on to the end consumer. In all likelihood the sector may record a double digit growth in the region in 2010, but some markets may witness a decline and UAE might be one of them. The ad spend is calculated on the media rate cards and does not account for incentives and discounts that advertisers may avail from media owners. n

shaharyar Umar, product manager, Pan Arab Research Centre, UAE

100 Gulf Marketing Review June 2010

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CMY

SECTOR ANALYSIS

CATEGORY: FOOD - MARKETS RANKING & MEDIA SPLIT (000 US$) MILLIONS US$359

MARKETS RANKING & MEDIA SPLIT (000 US$) Television Rank Market Name & Abbreviation Y2007 1 2 3 4 5 6 7 8 9 10 11

Pan Arab Media Kuwait United Arab Emirates Egypt Kindom Of Saudi Arabia Lebanon Qatar Jordan Oman Bahrain Other Markets** Total All Markets

PAN UAE KWT KSA EGY LEB JOR QTR OMN BAH OTH

%Var’n Y2009 YTD

Y2008

93,524 97,781 167,991 31,411 25,548 48,039 28,941 31,303 30,177 26,835 33,499 29,925 25,790 23,184 29,905 19,615 25,692 22,563 5,960 6,362 8,645 2,698 2,917 6,861 2,869 4,691 5,365 2,563 2,014 1,978 3,718 4,386 7,528 243,924 257,377 358,977

72 88 -4 -11 29 -12 36 135 14 -2 72 39

2009

%Var’n YTD

166,332 72 26,026 118 716 -33 10,792 21 2,115 -13 18,282 -16 0 -100 168 -76 491 42 0 -100 3,086 19 228,008 55

Newspapers %Var’n YTD

Y2009 2 19,547 11,600 4,969 10,421 442 4,241 6,368 4,715 856 3,402 66,563

Media Split (Millions US$) Magazines Radio 2009

%Var’n YTD

-80 1,657 71 1,825 -20 4,993 -9 1,575 4 772 -17 803 5 318 240 315 16 159 10 493 318 576 25 13,486

2009

115 3 80 -25 61 110 -18 -12 -44 9 -15 29

0 428 455 3,465 1,163 646 41 0 0 56 464 6,718

Outdoor

%Var’n YTD

2009

-100 0 -3 213 -36 12,165 46 9,124 59 15,434 -9 2,390 64 4,045 10 0 -46 2 47 0 21 43,383

39% Cinema

%Var’n YTD

2009

634 1 -38 61 3 115 -50 7

%Var’n YTD

0 0 248 0 0 0 0 0 0 571 0 819

-17 14 2

**Other markets: Combined - Syria, Yemen & Arasian

Ranking of Markets & Media Split (000US$) 100%

Category Split by Market 2% 2% 6% 3% 1%

75%

8% 8%

25% 0%

50%

Pan Arab Media United Arab Emirates Kuwait KSA Egypt Lebanon Jordan Qatar Oman Bahrain Other Markets**

47%

13% Total GCC LEV PAN KWT UAE EGY KSA LEB QTR JOR OMN BAH OTH 358977 296186 62791 167991 48039 30177 29925 29905 22563 8645 6861 5365 1978 7528

Television

Newspapers

Magazines

Radio

Outdoor

Cinema

SPLIT BY PRODUCTS (000 US$) - Y2009 GCC & Levant Markets 1% 8% 4% 58% 3%

Pan Arab Media 2% 2% 4%

13%

38%

26%

Cmb Dairy Produ Ghee Others

Restaurants-fas Cheese Products Edible Oil

59%

Levant Markets 4% 4% 7% 8%

26%

41%

Restaurants-fas Cheese Products Edible Oil

GCC Markets 2% 1% 4%

Cmb Dairy Produ Ghee Others

Restaurants-fas Cheese Products Edible Oil

55%

22%

Cmb Dairy Produ Ghee Others

Restaurants-fas Cheese Products Edible Oil

Cmb Dairy Produ Ghee Others

TOP BRANDS - ALL MEDIA (000 US$) - Y2009 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Brand Mcdonald`s Kentucky Kraft La Vache Qui Rit Pizza Hut Al Marai Domino`s Pizza Hardees Nour Kiri Afia Al Safi Danone Burger King Subway President Crystal Puck Health Stop Chilis T.g.i.friday`s

PAN ARAB MEDIA Value 45,817 26,651 22,083 21,162 20,681 18,039 16,070 11,106 10,958 8,664 7,559 6,919 6,688 4,990 4,317 3,504 3,461 2,757 2,745 2,744

102 Gulf Marketing Review June 2010

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Brand La Vache Qui Rit Kraft Domino`s Pizza Mcdonald`s Pizza Hut Nour Kentucky Al Marai Kiri Afia Al Safi Danone Hardees Subway President Burger King Puck Rahma Crystal Chilis Al Baik

GCC Value 19,798 18,941 15,465 12,965 11,828 10,925 10,328 9,974 6,154 4,804 4,485 3,870 3,553 2,569 2,349 2,307 2,092 2,008 1,960 1,939

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

LEVANT Brand Mcdonald`s Kraft Kentucky La Vache Qui Rit Pizza Hut Al Marai Domino`s Pizza Nour Hardees Kiri Al Safi Danone Burger King Afia Subway Puck Health Stop Little Caesars President T.g.i.friday`s Chilis

Value 41,492 22,066 21,409 20,531 19,033 16,856 15,623 10,958 9,288 7,227 6,919 5,992 5,522 4,926 3,163 2,757 2,696 2,569 2,502 2,473

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Brand Kentucky Mcdonald`s Picon Smeds Afia Hardees President Al Wadi Alakhdar Pizza Hut Crystal Kiri Rawabi Ganna Al Taza Al Marai Teama Atlal Plaza Khan Al Ifranj Mo`men Burger King

Value 5,242 4,325 2,369 2,225 2,037 1,818 1,748 1,675 1,648 1,496 1,437 1,410 1,294 1,232 1,183 1,065 1,021 1,012 814 696

Source: PARC

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SECTOR ANALYSIS

CATEGORY: FOOD - AGCC, LEVANT, PAN ARAB & ARASIAN MEDIA MARKET ADVERTISING EXPENDITURE FOR TOP PRODUCTS (000 US$) 2007 - 2009 (JAN-DEC)

MILLIONS US$359

Media Split % 2007 2008 135,477 157,052 71,865 61,095 12,537 16,103 7,204 4,231 2,147 4,364 14,694 14,532 243,924 257,377

Restaurants-fast Food Cheese Products Edible Oil Cmb Dairy Products Ghee (anim And Veg) Others Total

2009 207,875 91,706 29,877 13,405 4,550 11,564 358,977

%Var’n Y09/08 32 50 86 217 4 -20 39

Sh% 58 26 8 4 1 3 100

2009 Media Split %

TV 48 85 92 77 77 70 64

NP 29 3 2 14 0 8 19

MG 5 1 2 4 0 6 4

RD 2 1 1 1 2 5 2

Top Brands Y2009 (000 US$) OD 15 10 3 3 20 10 12

CN 0 0 0 0 0 1 0

Product Growth 2007 - 2009 (000 US$) 150000

FFR

125000

CHP

100000

EDO

75000

CDP

50000

GHE

25000

OTH 0%

20%

40%

60%

80%

100%

BNK

Newspapers Television Magazines Outdoor Radio Cinema

2009

INS

BKA

2008

CCT

LON

OTH

2007

OVERALL MEDIA SPLIT ANALYSIS (000 US$) Media Television Newspapers Magazines Radio Outdoor Cinema Total

Value 140,169 49,632 10,476 6,958 36,083 606 243,924

2007

Sh% 57 20 4 3 15 0 100

Value 146,788 53,340 10,437 5,540 40,472 800 257,377

2008

Sh% 57 21 4 2 16 0 100

Value 228,008 66,563 13,486 6,718 43,383 819 358,977

2009

Var'n % 2008/2009 55 25 29 21 7 2 39

Sh% 64 19 4 2 12 0 100

MONTHLY SPEND ANALYSIS (MILLIONS US$) 2007 - 2009 50 40 30 20 10 0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009

2008

2007

Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

2007 16 17 20 21 21 20 18 19 28 21 21 22 244

2008 18 19 24 24 24 23 19 17 28 15 24 22 257

2009 20 23 30 28 33 33 27 35 36 28 31 37 359

Var’n % 2009/2008 9 24 24 14 38 45 47 99 26 85 28 63 39

Overall Media Split 2007 - 2009 120000 100000 80000 60000 40000 20000 0

(000 US$ - Semi Logarithmic)

2007 Newspapers Television Magazines Outdoor Radio Cinema

104 Gulf Marketing Review June 2010

2008

2009

Television Top Spenders Rank Brand 1 Mcdonald`s 2 La Vache Qui Rit 3 Kraft 4 Domino`s Pizza 5 Kentucky 6 Pizza Hut 7 Al Marai 8 Nour 9 Kiri 10 Afia

2009 28652 20703 20515 15447 13569 12657 11472 10925 8434 7321

Newspapers Top Spenders Rank Brand 1 Mcdonald`s 2 Kentucky 3 Pizza Hut 4 Hardees 5 Al Marai 6 Little Caesars 7 Popeyes 8 Burger King 9 T.g.i.friday`s 10 Papa John`s

2009 7757 6327 4243 3606 1663 1607 1496 1397 1356 1105

Magazines Top Spenders Rank Brand 1 Mcdonald`s 2 Subway 3 The Edge 4 Philadelphia 5 Pizza Hut 6 Pinar 7 Kentucy 8 Hardees 9 Pearls_Caviar 10 Goody

2009 1125 461 304 288 285 251 219 203 190 158

Radio Top Spenders Rank Brand 1 Mcdonald`s 2 Kentucky 3 President 4 Doux 5 Pizza Hut 6 Chilis 7 Anchor 8 Beano`s 9 Sunny 10 Studio Misr

2009 863 800 619 531 281 209 163 163 159 150

Outdoor Top Spenders Rank Brand 1 Mcdonald`s 2 Kentucky 3 Al Marai 4 Pizza Hut 5 Hardees 6 Americana 7 Al Tazaj Fakieh 8 Burger King 9 Sammach 10 Kraft

2009 7011 5701 4767 3177 2511 2152 2049 1987 1386 1253

Source: PARC

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