More and more Omani brands are visible on the hypermarket shelves. Akshay Bhatnagar takes a look at how Omani brands have carved out a niche despite stiff competition from imported brands and the role played by the government in this transformation
Many of us start our day by getting up from a Raha mattress, slip into a dress washed with Bahar detergent, drink Mumtaz tea made with Zain milk, eat Nabil biscuits and omelette made from Barka eggs in Minara oil, drive to our office in a car running on an Antara battery, use computers powered by wires from Oman Cables in the office cabin having Sadolin paint on the walls and Al Shams tiles on the floors. Just look around and you will see how much Omani brands have become an integral part of our lives.
Step into any hypermarket; chances are you are bound to see Omani brands craving for your attention from the shelves of most of the products. Those who are new to the Sultanate may not register it. But for the local community as well as the expatriates who have been here for quite some time, the transformation is fairly visible. Over the years, a fairly large number of homegrown brands have come up, and some even overshadow the foreign brands that were dominating the scene earlier. Quite a few Omani brands have scaled up to the market leadership status too.
Marching ahead
A few months ago the Ministry of Commerce & Industry (MoCI) appointed Advanced Business Consultants (ABC) to do an in-depth study Omani Products - Consumer Perception to gauge the consumer behaviour towards Omani products. ABC contacted a select number of consumers in different regions of the Sultanate.
After months of field survey and data analysis, ABC submitted its report based on the survey findings, and its recommendations, to the ministry. The report's summary is expected to be released to the media in September but OER managed to get an exclusive preview of the study findings.
The MoCI-ABC findings are definitely a matter of concern for the international brands and a matter of pride for the Omanis. The study indicates that Omani brands and products are firmly entrenched in Oman, with significant displacement of the imported product space. The propensity to buy Omani products is also high for most of the categories.
Food & Household Category
As many as 17 of the 29 products (from the sample) in this category have developed to become a dominant or 'halo' Omani brand there are four 'champion'* and 13 'above average' products. The aggregate volume of Omani manufactured product domination in these products exceeds 65 per cent in terms of market share.
At the bottom end of the hierarchy in this category, there are seven products where imported brands still hold sway, but where Omani brand awareness and favourableness of disposition indicate a propensity to an increased market share in the future.
The 'below average' range in this category constitutes five products where the degree of penetration by the Omani products has influenced, to some extent, the market dynamics. The aggregate volume of Omani manufactured products in this category is approximately 36 per cent in terms of market share.
In the winning products section, it's largely a case of one or two winning Omani brands dominant in their respective categories, followed by other lesser known Omani brands. While market share may not be high for the lesser known brands, there has been a significant improvement in awareness in almost all categories of products.
The MoCI-ABC report finds that each Omani product group has two main types of successful brand creators:
Brands from Omani manufacturers who are well entrenched in the Omani market for very long periods.
Brands from Omani manufacturers having a formal collaborative membrane with an established global manufacturer.
Star Performers
The food sector has achieved a high degree of homogenisation, closely followed by the consumer household products category, indicates the MoCI-ABC study. The report identified a set of products clubbed as 'Locomotive Sector' which have competitive brands and are significant contributors to the local economy.
The products in this category include mineral water, batteries, dates, juices, milk, steel furniture, industrial cables, aerated soft drinks, ceramic tiles, eggs, mattresses, poultry meat and tomato ketchup.
Some of us may take the report findings with a pinch of salt but look around in the market and you will agree that the trend (as the report indicates) is becoming a reality.
In the mineral water category, we have home grown brands such as Salsabeel, El Jabal El Akhdar and Tanuf belonging to National Mineral Water Co. SAOG, besides others, giving a hard run to MNC brands like Aquafina.
Sultan foodstuffs, part of W J Towell & Co LLC's Sultan Products Division, are enjoying an increasing consumer loyalty in the region.
Suroor, the chips brand from Mehdi Foods LLC, is a force to reckon with even for global brands like Lay's.
Areej Vegetable Oils & Derivatives SAOG's Minara is the top selling sunflower oil brand in the market.
Moving to the biscuit category, National Biscuit Industries Ltd. SAOG's Nabil brand is way ahead of the competition including names like Nutro, Tiffany and McVities.
Some of the world's favorite food service brands like KFC and Pizza Hut in Oman prefer to use food products of AATCO LLC which has a range of Omani brands.
Amouage LLC's range of premium perfumes under the brand name Amouage is a rage in the upmarket lifestyle product category.
Reem from Riyam Investment and Trading Establishment LLC is quite popular in the personal care category especially eau de colognes, roll-on deodorants and air fresheners.
Detergent brand Bahar, part of National Detergent Co. SAOG, is a classic example of how Omani brands can take on the world's best if they have the courage of conviction.
Oman Cables is ruling the roost when it comes to wiring cables in the Sultanate.
Raha range of mattresses, pillows, bed linen, upholstered furniture and other furnishing items are the preferred choice for a large base of consumers.
Al Shams brand of ceramic tiles, part of Al Anwar Ceramic Tiles Co. SAOG, holds sway in a product category which is not known to be brand led, and has competition coming from China, Italy, Spain and other GCC countries.
Reem Batteries & Power Appliances Co. SAOC's dry charged battery brand, Antara, commands leadership in a market characterised by a plethora of imported brands and local products riding on price parity.
Oman Foodstuff Factory LLC's Al Mudhish range of foodstuff including milk powder, potato chips and tomato paste etc. are popular in Oman and abroad.
In the paints segment, the wide acceptance of Sadolin Paints Oman LLC's range of paints has quelled the perception that only imported paints are of good quality.
The list of Omani brands making their presence felt in the market is quite exhaustive with a number of small and medium size brands in different stages of their lifecycle also fighting it out in the market.
Winners despite odds
Most of the brands doing very well have one thing in common. They all had to fight against all odds to prove that Omani brands could succeed in their respective product categories. Some of the issues stacked against them were:
Raising finance for the entrepreneurs was a major issue in the initial stages Recalling the early days, Hussain Bin Salman Al-Lawati, Vice Chairman & Managing Director of Oman Cables Industry, says, "Way back in 1984 when there used to be very little manufacturing activity taking place in the Sultanate, we decided that we must get into manufacturing cables as we could sense a great opportunity underlying there. But most of the institutions and people we approached for financial support refused to invest in our idea. With great difficulty to the extent of even landing up with heavy personal debt we managed to translate our dream into reality."
Consumers initially refusing to consider Omani brands as quality products Munir M Khan, General Manager, Sadolin Paints (Oman) Ltd. informs, "In the initial phase, Sadolin in Oman was considered a local brand against the imported brands. Therefore, Sadolin products were always seen to be inferior to the other internationally manufactured products."
What about the behaviour of expatriate segment of the consumers towards the Omani brands? Prem Maker, Executive Director, Areej Vegetable Oils & Derivatives SAOG replies, "The perception of any brand, Omani or non-Omani, depends on the individual brand image and personality. If we take the case of Minara, it is designed to appeal to both Omanis and non-Omanis, and is favourably considered by both groups of consumers."
Saibal Sen, Director & General Manager, National Mineral Water Co. SAOG, has a similar opinion: "Omani products are periodically tested by the Ministry of Commerce & Industry. Even the expatriate segment has good faith in the quality of Omani brands."
Convincing the consumers to pay a high price for an Omani product, the way they do for an imported quality product Syed Anwar Ahsan, General Manager, Poly Products LLC, says, "Raha has always believed in providing the best quality to its customers, due to which its products are not always the cheapest. It hence took quite a bit of effort in convincing customers that Raha products are good value for money considering their usable life period."
Being the first movers, National Biscuit Industries Ltd faced challenge on the marketing front. N S S Subramanian, Regional Marketing Manager, explains: "Nabil was the first biscuit manufacturing company to produce biscuits in the GCC. Though Nabil was the first Omani brand in the market in the biscuit category, there was stiff competition from most of the international brands.
"In general, resistance to switch brands is a normal thing among consumers and in our case, overcoming the resistance and make them switch to Nabil was really a challenging task. This was achieved mainly through rigorous product sampling and ensuring excellent availability of products, at all times across all parts of Oman, with our own distribution network," shares Subramanian.
A clutter of international brands jostling for space in the market makes the task difficult for a new brand, especially an Omani one, to carve a niche for itself. Radha Mukherji, Executive Director, DDB Oman, has managed brand communication for a number of Omani brands in the market.
Shedding light on this dilemma for Omani brands, she says: "Building a brand is building a brand, and there is no unique set of rules for building an Omani brand versus any other. There are just strong brands and weak brands in any market, and this is as true for America as for Oman."
"The difference between strong and weak brands comes about because of the different levels of understanding of the potential power of the brand, and investment made, in building and sustaining it.
Certainly, it is easier to invest more in brand building when the market base brings bigger returns. So, in terms of sheer scale, local brands in small markets will always be at a disadvantage, compared with international brands," Mukherji elaborates.
"Thus, Omani brands will have to work harder and invest more, relative to revenue, in order to hold up to international competition even in the home market. I am not talking about just investment in the image created through advertising but in every aspect of business from investment in technology, manufacturing processes, quality control, staff training, to the final delivery of the brand to the consumer in terms of packaging, advertising promise, service and so forth. The principles of building and sustaining brands are basically the same, the investment required, relative to returns, can be steep in smaller markets, like Oman," concludes Mukherji.
As she, has pointed out, the small size of the market makes the task more difficult for an Omani brand.
Perhaps that's the reason why most of the Omani brands have sizeable exports to make the financials of the company more healthy. In some of the cases, almost two-thirds of the revenue comes from the export market.
Some of the companies sell their products under a different brand name outside Oman, and some even sell their products to foreign companies who sell under their own brand names. In a way, the acceptability of Omani products in the international market indicates that Omani companies are increasing focus on the quality front, as international quality norms are quite stringent.
Government's support to Omani brands
National Products Promotion Committee has been set up under the Ministry of Commerce & Industry (MoCI) "to create awareness and promote Omani products." Manal Mohammad Al-Abdwani, Director General of Planning & Follow-up, MoCI, heads the committee (see her interview on page 27). The committee is running a special 'Omani Products Promotion Campaign' to meet its objective.
Briefing about the activities and plans of the campaign, Khalid Saeed Al-Shuaibi, Head of Executive Office for the campaign and member of the committee, says, "In 2005, we launched a three-tier product promotion plan among government authorities, school children and the general public." The three-tier promotional plan was:
An awareness exercise about the Omani products in the government offices so that, while making a purchasing decision, the government authorities could prefer Omani products.
Various competitions based on Omani products organised among the children. A proposal to include information about Omani products in the school curriculum is also under consideration.
For the general public, special exhibitions in hypermarkets and supermarkets besides retail shops in gas stations organised on a regular basis.
Khalid adds, "We have seen that with every special promotion, the sale of Omani products increases by 25-30 per cent. In some cases, it even goes up to 200 per cent." Theatre shows and radio programmes figure among some of the popular promotional activities.
...But corporates want more
Most of the companies contacted by OER expressed satisfaction with the government's support. They appreciate the government's efforts to strengthen them to come out of tough situations. Munir M Khan of Sadolin Paints acknowledges: "When the company started in 1977, initial years were very tough. But the government's support of import duty on paints also helped in improving our economics at low volumes."
But some of the corporates feel that the government can do a lot more. Mohamed Ali Abdul Amir Sultan of Sultan Products Division, W J Towell & Co LLC, suggests, "There should be support on export guarantees.
Transportation facilities, ports infrastructure and shipping line services could be enhanced for more and efficient delivery of goods. Legal costs should be more supportive whether they are governmental or through local embassy. Cost of shipment charges should be reasonable. Also, some more export incentives will help Omani products achieve international stature."
S Gopalan of Antara batteries believes that more needs to be done, especially in the area of protecting the consumer from the influx of sub-standard products. He says, "It is no secret that many of the brands available in Oman today are well below the minimum quality levels specified under international standards. In fact, a number of such brands are so poor in quality that their performance parameters barely cross the halfway mark. The use of such substandard products is likely to have a damaging impact on the consumer's vehicle. Therefore, the government should take a serious look and advise suitable measures to curb the entry of such products."
With or without government support, the tougher lot has proven that if one could produce a quality product and market it strategically, then the tag of an Omani brand is not a bottleneck. But the successful Omani brands need to be ready to face more competition. The Sultanate's greater integration in the global economy means fewer entry barriers for the MNC brands!
A brand is designated as champion based on a numerical model consisting of a ratings index which takes into account parameters including market share dimension, product perception and economic performance.
OER considered the brands from fast moving consumer goods (FMCG) and consumer durables segments only for the story. The name of the brands and companies mentioned in the story is only indicative and not exhaustive.
'Enhancing Competitiveness Instead of Protection'
Manal Mohammad Al-Abdwani, Director General of Planning and Follow-up, Ministry of Commerce & Industry and Head of National Products Promotion Committee, discusses with Akshay Bhatnagar the initiatives taken by MoCI in conjunction with stakeholders to promote Omani brands
Tell us about the origin and progress of the 'Omani Products Promotions Campaign'.
We started the campaign in 1997 by organising mobile exhibitions across Oman and undertook different activities to promote Omani products in the subsequent years. The turning point came in 2003 when we decided to review our modus operandi. We consulted companies from 50 different industries on the specific promotional elements, to engage the consumers to promote Omani products. Based on the feedback and our understanding, we targeted three segments government authorities, to facilitate and influence them to purchase Omani products; school children, to make them aware of the Omani products; and general public at large, through exhibitions at hypermarkets and various other activities like advertising, radio programmes etc.
The ministry and private sector companies jointly fund the exercise. We are going to launch an aggressive three-month-long campaign in September this year. All the possible communication channels will be activated to push the message.
What is your budget for promotion in 2006?
We have allocated RO110,000 for the campaign this year. Around 60-65 per cent of the investments will be made by the private sector through sponsorships. Oman Mobile, Omzest Group, Daleel Petroleum, Al-Nasr Marble, Oman International Bank, Oman Emirates, National Detergents and Ali Shaihani Group are the sponsors of the campaign. There is a special sponsors' committee which will liaise with the executive office for the campaign on a monthly basis to manage the campaign activities.
Are you planning to tap Internet also?
Yes, we are looking at developing a portal which will act like a digital catalogue showcasing the range of Omani products.
What made you undertake the consumer perception study and how was it done?
The objective was to assess the performance of Omani products in the local market. We appointed Advanced Business Consultants to undertake this survey. A sample of 38 products was selected by MoCI after a preliminary survey. And ABC contacted around 1,000 people across the Sultanate drawn from various categories including consumers, manufacturers, dealers, retailers, consultants, contractors, and institutional and industrial users. Thereafter, ABC submitted the data, analysis and recommendations to MoCI. The entire exercise took three months. The study focuses on aspects like product's market share, ability to face competition, image perception, packaging, availability in market, price, quality and even respective company's financial performance also studied. It also looks at the success factors of certain products which are termed Champions so that others could draw inspiration from their success.
When do you plan to release the study findings?
We are going to disseminate the information at two levels. We will share the executive summary with the general public including media expectedly in September. The detailed analysis will be shared with the respective industries on a one to one basis.
As the report also gives recommendations on what should be done to push Omani products, how do you plan to take them forward?
The recommendations will be discussed among the stakeholders including the ministry, committee members and the industry bodies and players. It is important that we involve the industry as many recommendations are meant for the companies to follow. For example, the report says the campaign's role has to be enhanced. To do that, the industries would be required to provide more support.
How do you plan to protect the interests of Omani brands with Sultanate's integration with global economy by way of WTO membership and impending US-Oman FTA?
There is no protection for the Omani brands. We want to propel Omani brands by way of enhancing their competitiveness in quality, price, presentation and availability. We cannot provide protection anymore. The government is taking an active role in ensuring Omani brands' promotion, and developing the management capability of the Omani companies. We are collaborating with the private sector to make sure that Omani companies become strong enough to face the competition from other countries. The consumer perception study has strengthened our belief that Omani brands are capable of not only succeeding in Oman, but also challenging the international brands in their own territories.
Quwat Jabal's duel with Mountain Dew
When Coke decided to fight Pepsi's hugely successful Mountain Dew in the GCC market, it launched Quwat Jabal, a new citrus aerated soft drink. Quwat Jabal means 'Strength of the Mountains' and that's exactly what Coke banked on against its formidable opponent. Though not an Omani brand technically, this soft drink was conceived specifically for the Omani market before spreading its wing to other parts of the region.
Launched in 2003, the then regional marketing manager of Coca-Cola Middle East had said: "The Coca-Cola Company develops local brands according to demands and tastes of our local consumers. The introduction of Quwat Jabal in Oman is an achievement on its own, as it will be the first market in the region to receive the new citrus flavour from Coca-Cola." The Coca-Cola Company's local representative is Al Ahlia Gulf-Line General Trading LLC.
The Sultanate's celebrity rally driver Hamed Al Wahaibi, was also roped in to promote the new brand. Though Quwat Jabal has not, so far, managed to undo the Dew but it was the first time that a multinational of this stature launched a high profile brand conceptualised exclusively in the Sultanate.
Raha : Soaring High
Though Poly Products LLC, as a company, was established in 1979, its flagship brand Raha was born only in 1985. Today, a whole range of products comprising mattresses and beds, pillows and bed linen, upholstered furniture and other soft furnishing items under the Raha brand are sold by the company. S Balan, Head Marketing & Sales, Poly Products LLC, says, "Raha as a brand means confidence for its customers, and has very high brand equity. There is no real competitor who is equal in stature to Raha."
The stress on international quality at affordable pricing is the key to Raha's success. The company also has its own laboratory and testing facilities to ensure international standards and benchmarks. "Quality gets built into Raha products right from the raw material stage to the ultimate delivery stage. The company has one of the largest bedding facilities in the Middle East, equipped with the latest technology machinery. A hundred per cent conversion of raw materials to finished products is done in-house, without any sub-contracting, thereby ensuring consistent delivery of good quality," says Balan.
The quality focus has resulted in great demand for Raha in the international market, especially GCC, with exports contributing 65 per cent of the company's US$25 million turnover. Adds Balan, on the domestic front Raha commands more than 70 per cent market share overall.
Capitalizing on its strong regional market presence, WJ Towell & Co LLC developed and launched its own Sultan brand of foodstuff in 1984. Featuring a mix of locally manufactured and imported products, Sultan has the distinction of being an Omani brand enjoying strong consumer loyalty across the GCC markets. The Sultan brand's pool of customers has been growing tremendously over recent years despite competition from other brands in the cereal line (Kellogg's), coconut powder (Maggie) and fish products (Diamond, Alali).
What makes the Sultan brand so successful? Mohamed Ali Abdul Amir Sultan, Managing Director of Sultan Products Division, W J Towell & Co LLC replies, "Sultan is not different from other competing products in terms of quality and technology...We try to position ourselves as being second to big international brands.
Our cereal products enjoy good market share in the GCC market. As for other products, we will gain more popularity and standing over time. It isn't about how to be different from competitors, but how we can be different in a way that we reaches people in the deepest possible way and how our brand can create a human connection."
He further adds, "We have our own distributing operations in Oman, UAE, and Kuwait along with good associates in Bahrain, Qatar, Saudi Arabia and Jordan. We maintain good quality, fresh ingredients and modern designed products for the market. Sultan has never lost sight of the fact that good food products need to combine hygiene, nutritional value, ease of use and great taste. Our vision for Sultan is to create a long lasting image of Oman in the people's minds."
Antara : Powering The Auto Mart
Launched more than a decade ago by Reem Batteries and Power Alliances Company SAOC, the Antara brand of batteries was positioned as a quality product comparable to the Japanese brands, which enjoyed a good reputation in the market. "Antara, powered by technology from Johnson Controls Inc., USA, is the premium brand in the dry charged segment, and the market leader in several GCC countries. Designed with the harsh Middle East conditions in mind, Antara batteries have also been termed as 'Desert Proof' batteries. Quality is continuously upgraded through process improvement, led by our in-house research & development division," says S Gopalan, CEO, Reem Batteries and Power Alliances Company SAOC.
Talking about the brand's strength in the Sultanate, Gopalan says, "Today, Antara is sold in every nook and corner of Oman. In a survey conducted by MOCI, Antara had 77 per cent brand recall among Omani households. Another testimony to our quality is export of our batteries, under several brands, to 42 countries around the world including Europe and South America. Apart from our sales to the aftermarket in these countries we, in our capacity as "manufacturer's manufacturer," also export batteries to several internationally reputed battery manufacturers, to complement their range."
Al Shams : Glossy Expanse
Launched in 1998, Al Shams lost no time in pushing out dominant brands from Italy and Spain, besides a few regional brands, and emerging as the market leader in Oman in its very first year of operations. It has maintained this position ever since. "The competition, however, is still not brand led. Another reason why Al Shams stands out in the market," says A. Shamsuddin, CEO, Al Anwar Ceramic Tiles Co. SAOG. The company's plant at Nizwa is equipped with state-of-the-art technology supplied by the leading names in Europe.
Designs, glazes and pigments are sourced from leading international firms. Coupled with strong research and development, Al Shams has become one of the most cost effective producers of ceramic tiles in the region.
"Our success in the domestic market has extended to foreign markets as well, with Al Shams establishing a strong presence in the GCC, as well as in Syria, Jordan, Tanzania, Kenya, Zanzibar and Pakistan. We have doubled our manufacturing capacity to 6 million square metres per annum, bringing in the latest technologies in ceramic tile manufacturing, and thereby enhancing our cost competitiveness further," adds Shamsuddin.
On the focus of the company, he says, "The major market for us is the GCC region which is 100 million square metres in size for ceramic tiles a market that is growing robustly. We are geographically well placed to address this market. About 70 per cent of this market is in the mid-price segment which is fiercely value driven. This is the segment that Al Shams focuses on."
MoCI-ABC Study's Proposed Interventions
For Government
The government should re-energise the Omani Products Our First Choice campaign in a more modernised way to meet global needs of the 'Made in Oman' brand promotion, as well as intensify the programme locally to cover all regions of Oman (currently, the programme focus seems to be limited to the Capital Region). The other government interventions include:
Ongoing shop audit to constantly monitor the degree of success of the local brands.
The MoCI should provide a screening matrix to prioritise attention on a limited focus set of products (in rotation) at a given time; provision the necessary funding to create a market data base; and harmonise promotional efforts across all its agencies/bodies/industry.
Branding Oman should focus its efforts to make 'Made in Oman' to be synonymous with 'Assured Quality'.
This has to be ensured through a conscious effort to build quality into the products and sustain them. The government should usher in a 'Quality Regime' in Oman by strengthening the agencies concerned for quality measurement and certification.
For Industry
Improvement in soft factors of the product attributes: The Omani products fare well in terms of the hard factors like quality, price and availability; but fare relatively poor in terms of soft factors like packaging, product range and presentation against the imported brands. The industry should work on improving these aspects.
Product promotion: The benefits of international branding and promotion (umbrella branding) by MNCs for certain are not available to the local brands. The units can work on better brand building strategies, with financial support from the government, focusing on the GCC market.
Merchandising: Training of the field staff, planning incentives and regular audits by senior management regarding the effectiveness of the merchandising activities would improve the over-all performance of certain products.
Quality 'First and Always': This will be an essential part of the Brand Oman exercise, where the local industry will have to ensure availability of quality products in building 'Made in Oman' image as prestigious as possible.
© Oman Economic Review 2006
