Dubai Refreshments Company (DRC), the sole franchisee and distributor of PepsiCo products in Dubai and the Northern Emirates, is in talks with the US firm to launch new products in the country, a senior DRC official told Emirates Business.
"We are looking at a number of new products, both in terms of flavours as well as possibly introducing diet versions of some of the products that we have," said Tarek El Sakka, General Manager, DRC. "We are in discussions with Pepsi Cola for that," he said.
"People are getting concerned about their sugar intake etc, and we need to expand our portfolio of non-sugar products," he said, when asked if the company was contemplating introducing the diet version of Mountain Dew in the UAE.
"As well as that, people are looking for more variety; so we are trying to provide a wider range of flavours. We are also looking at moving into new fast-growing categories that do not fit into the traditional carbonated soft drinks category.
"For instance, we have the Lipton Iced Tea range that is expanding. We have introduced the Green Tea range, and more flavours will be coming in for both the green and black tea segments," he said.
DRC's 2009 annual report claims that the company's market share jumped from 71.7 per cent in 2008 to 76 per cent in 2009. "This is a significant achievement given the tough competition that exists in the soft drink category," DRC's Chairman Ahmad Al Shafar wrote in the Chairman's Report.
El Sakka said: "We have four very strong brands - Pepsi, Mountain Dew, Seven Up and Mirinda. To the surprise of many, Mountain Dew is now the No2 brand in the UAE. I think that has definitely been an agent for growth."
DRC's revenues grew 11.4 per cent to Dh698.85 million and net profits soared by 122.92 per cent to Dh32.1m in 2009, a year that analysts had reckoned would be bleak for the company.
"Most of the growth in 2009 came from exports," explained El Sakka. "We opened new markets and substantially increased our exports while the local business was actually down in 2009," he said, adding that countries in Africa and Asia where Pepsi did not have established bottling operations were the primary export markets for the company.
The company more than doubled its exports last year, from 3.3 million containers in 2008 to seven million in 2009. "We exported a lot to Angola last year [and] we have quite an established business for Afghanistan as well. We also reduced the discounts to the market. While the reduction was marginal, with the volumes we do, there was a positive impact on the bottom line," El Sakka added.
Moreover, the additional PET production line commissioned by DRC last year is set to achieve full production capacity this month. "The line has currently started production and is meeting our requirements, but it takes some time to reach maximum speed, and we expect that to happen this month," he said.
"This production line, in terms of PET, is twice as big as our existing capacity. So, it will triple our capacity in terms of producing PET bottles," El Sakka said.
"On the big bottles, we will be able to produce almost 30,000 bottles per hour once this production line is fully operational."
DRC also sold Aquafina manufacturing plant at Dibba to its affiliate firm Jeema Mineral Water Company for a consideration of Dh26.5m February last year, and entered into a long-term co-packaging agreement with Jeema.
"This sale has helped both the companies to improve profitability by leveraging economies of scale," Al Shafar wrote in the report.
By Vicky Kapur
© Emirates Business 24/7 2010
