|30 January, 2018

INTERVIEW: UAE food firm Agthia's CEO bullish on buying in Saudi Arabia

Owner of the Al Ain brand wants “to become number one or two” in the kingdom’s bottled water market

Tariq Al Wahedi, chief executive officer of Agthia

Tariq Al Wahedi, chief executive officer of Agthia

Al Ain/Handout via Thomson Reuters Zawya
Abu Dhabi-listed food and beverage firm Agthia Group is planning to expand aggressively in the Kingdom of Saudi Arabia (KSA) in the next three years, its chief executive has said.

“Most of our investments are currently going into Saudi. For the next three years, we aim to increase investments in Saudi,” Tariq Al Wahedi, chief executive officer of Agthia told Zawya in an interview during Abu Dhabi Sustainability Week earlier this month.

“As we told our investors in the quarterly briefing (for Q3 2017), KSA is a very important stepping stone for Agthia’s growth and expansion for many reasons. Geographically, we are one country and there is a lot of cooperation. Our markets are almost one, and there is also a large Saudi population, so naturally we should expand in Saudi,” he added.

Established in the United Arab Emirates in 2004, Agthia Group consists of a portfolio of businesses and brands in various food and beverage segments including water & beverages, flour & animal feed, dairy & frozen baked products, and processed fruits & vegetables. The group has been listed on the Abu Dhabi Securities Exchange (ADX) since 2005, and for the nine months to September 30 last year the company reported a 2.9 percent increase in revenue to almost 1.57 billion UAE dirhams ($427.5 million), although net profit attributable to its parent company dropped by 17.7 percent to 164.7 million dirhams.

“We aim to become number one or two in Saudi in bottled water, the same as we have been number one in UAE,”  That is why our investments, strategies, and human resources are largely focused on Saudi,” Al Wahedi said.

In order for the firm to reach this level in the Saudi market, mergers and acquisitions are a cornerstone, he added. Responding to Zawya’s question whether it is currently looking at the Saudi market for potential acquisitions or mergers, Al Wahedi said: “Absolutely, we are very bullish on the Saudi market to invest and expand, while maintaining our market share in this market (the UAE).”

In March last year, Agthia completed the acquisition of Jeddah-based water business Delta Marketing Company under a deal that was initially announced in November 2016. The company also set about expanding the plant by adding a new production line.

“We are now number seven or eight in ranking of market share in Saudi in bottled water, and this year we are supposed to be up to rank five after we finish the new production line.

There must be large investments in the network for distribution in Saudi, new lines of production, and new acquisitions. Our aim is to become number two in Saudi in the third year,” Al Wahedi  said.

Agthia is currently the leading brand in the UAE’s bottled water market with a 30 percent market share, Al Wahedi said, adding that there is a large gap between it and the second-placed firm, which has a market share of 19 percent. In flour, animal feed, and flavoured yogurt, the firm also holds the highest market share in the UAE. Its range of products includes brands such as Al Ain Water, Yoplait, Grand Mills, Alpin, and Agrivita, among others. The company serves markets across the GCC, Turkey, and the wider Middle East.

“We have interest in other countries in the Gulf region as well. In Kuwait, we have opened a plant that will start operating now. In Oman, we bought a plant last year, so we are expanding across the board,” Al Wahedi said.

On food and water security collaboration between UAE and Saudi, the CEO said: “We are a major corner of food security in UAE. We were invited regarding the privatisation of mills in Saudi because of our experience, with years in flour and mills, and we participated in the privatisation program,” he added.

“The second point is the subject of animal feed and we are very active in that in Saudi. We are partners with the world’s largest company in this segment called Anderson Hay and we established a joint venture with the company last year in UAE,” he said.

In 2006, Abu Dhabi decided to gradually ban growing some types of animal feed grass to conserve the country’s water reserves. And in 2016, Saudi Arabia ended its domestic wheat production to save scarce water resources, and it started to depend solely on wheat imports.

“Water is a very precious resource and there has been a lot of legislations in that regard in both Saudi and UAE for the long term interest for people. Today, there are alternatives to using the water we have, and we are ready for any programmes that could make Saudi a strategic partner in that area,” Al Wahedi said.

(Reporting by Nada Al Rifai; Editing by Michael Fahy)

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