04 April 2007
While Oman may be best known as an exporter of energy, it is quietly working to develop its overseas sales of another precious liquid other than oil - water.
Oman has some of the finest mineral waters in the region and has been striving to promote the quality of its products to its neighbours and beyond, while seeking to expand its domestic penetration.
Oman is a net exporter of mineral waters, though its market is being hard pressed by rivals in the region, especially from the United Arab Emirates. In 2005, the last year for which full figures are available, the sultanate exported non-alcoholic beverages, excluding fruit drinks and juices, to the value of $23.5m, while importing $22.6m worth of drinking waters.
Though still low by international and regional standards, consumption of bottled water in Oman is on the rise, having increased by more than 50% in the past seven years, according to a 2006 report by the US-based Pacific Institute.
One obstacle to the industry's growth is the generally good quality of water that is provided on tap. Both state authorities and tourism industry advisories say that Oman's tap water is safe, something that is not always the case in the region.
However, industrialisation and the ever-increasing urbanisation of the sultanate, combined with a greater awareness of health and safety standards, have seen a surge in the bottled water industry.
Oman's geological diversity means it has one of the near essential ingredients for pure spring water - mountains. Some of the best of the sultanate's springs are to be found in the Western Hajar Mountains and particularly around the Wadi Tanuf. Quite apart from the natural beauty of the region, which draws tourists from near and far, the bubbling springs also help feed Oman's commercial water sector.
There are at least 12 local firms in the Oman water market, along with at least eight foreign firms, most being based in the UAE, with products ranging from large household or office 12 litre sizes down to small 250 mm packs and specialised mineral waters.
One of Oman's leading producers of bottled water in its various forms is the National Mineral Water Company, which markets the Tanuf and El Jabal El Akhdar brands.
Announcing the 2006 year-end results for the firm on April 1, Sheikh Aflah bin Hamad bin Salim al-Rawahy, the chairman, said that despite international competition, domestic sales increased by 23%, totalling $13m, with a pre-tax profit of $150,000.
However, due to the growing local demand, along with the increased pressure on supplies, Sheikh al-Rawahy also reported a fall in overseas sales, which traditionally made up around 25% of the company's revenue.
"Because of capacity limitations, particularly reduced quantity of natural mineral water available from our own wells, exports had to be curtailed. Consequently exports were lower than previous years," he said.
The fall in the National Mineral Water Company's overseas sales highlights a problem for the sector in Oman. There is only so much water to be had, restricting growth potential and exposing the industry to more powerful and well supplied international competitors.
The sector underwent a radical change in 2004, when the international brand Aquafina, a product of the Pepsi Corporation, hit the market. Thanks to slick promotions, a widespread distribution network and a wide range of products, Aquafina quickly captured a 25% share of the Omani market.
Aquafina's entry prompted a rethink by many of the domestic producers, who saw the need to upgrade their communication campaigns. In the last two years, a number of local water firms such as Dima have come up with new designs for their bottles.
The National Mineral Water Company has also sought to fight back, announcing a repackaging of its two leading products.
"We are confident the new packs will enable us to increase our sales and profit," said Sheikh al-Rawahy.
Operating with high outlays and low margins, Oman's water sector has worked to cut overheads. However, it is no easy task, with the price of plastic used for containers rising sharply over the past two years and distribution costs, which account for up to 50% of expenses, also hit by increases.
While Oman may be best known as an exporter of energy, it is quietly working to develop its overseas sales of another precious liquid other than oil - water.
Oman has some of the finest mineral waters in the region and has been striving to promote the quality of its products to its neighbours and beyond, while seeking to expand its domestic penetration.
Oman is a net exporter of mineral waters, though its market is being hard pressed by rivals in the region, especially from the United Arab Emirates. In 2005, the last year for which full figures are available, the sultanate exported non-alcoholic beverages, excluding fruit drinks and juices, to the value of $23.5m, while importing $22.6m worth of drinking waters.
Though still low by international and regional standards, consumption of bottled water in Oman is on the rise, having increased by more than 50% in the past seven years, according to a 2006 report by the US-based Pacific Institute.
One obstacle to the industry's growth is the generally good quality of water that is provided on tap. Both state authorities and tourism industry advisories say that Oman's tap water is safe, something that is not always the case in the region.
However, industrialisation and the ever-increasing urbanisation of the sultanate, combined with a greater awareness of health and safety standards, have seen a surge in the bottled water industry.
Oman's geological diversity means it has one of the near essential ingredients for pure spring water - mountains. Some of the best of the sultanate's springs are to be found in the Western Hajar Mountains and particularly around the Wadi Tanuf. Quite apart from the natural beauty of the region, which draws tourists from near and far, the bubbling springs also help feed Oman's commercial water sector.
There are at least 12 local firms in the Oman water market, along with at least eight foreign firms, most being based in the UAE, with products ranging from large household or office 12 litre sizes down to small 250 mm packs and specialised mineral waters.
One of Oman's leading producers of bottled water in its various forms is the National Mineral Water Company, which markets the Tanuf and El Jabal El Akhdar brands.
Announcing the 2006 year-end results for the firm on April 1, Sheikh Aflah bin Hamad bin Salim al-Rawahy, the chairman, said that despite international competition, domestic sales increased by 23%, totalling $13m, with a pre-tax profit of $150,000.
However, due to the growing local demand, along with the increased pressure on supplies, Sheikh al-Rawahy also reported a fall in overseas sales, which traditionally made up around 25% of the company's revenue.
"Because of capacity limitations, particularly reduced quantity of natural mineral water available from our own wells, exports had to be curtailed. Consequently exports were lower than previous years," he said.
The fall in the National Mineral Water Company's overseas sales highlights a problem for the sector in Oman. There is only so much water to be had, restricting growth potential and exposing the industry to more powerful and well supplied international competitors.
The sector underwent a radical change in 2004, when the international brand Aquafina, a product of the Pepsi Corporation, hit the market. Thanks to slick promotions, a widespread distribution network and a wide range of products, Aquafina quickly captured a 25% share of the Omani market.
Aquafina's entry prompted a rethink by many of the domestic producers, who saw the need to upgrade their communication campaigns. In the last two years, a number of local water firms such as Dima have come up with new designs for their bottles.
The National Mineral Water Company has also sought to fight back, announcing a repackaging of its two leading products.
"We are confident the new packs will enable us to increase our sales and profit," said Sheikh al-Rawahy.
Operating with high outlays and low margins, Oman's water sector has worked to cut overheads. However, it is no easy task, with the price of plastic used for containers rising sharply over the past two years and distribution costs, which account for up to 50% of expenses, also hit by increases.
© Oxford Business Group 2007
