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|24 May, 2017

Halal chocolate-maker Patchi to double capacity in UAE

Patchi’s current facility at Dubai Industrial Park is halal-certified, which is a first for a luxury chocolatier in UAE

Patchi chocolates in a box.

Patchi chocolates in a box.

Patchi/Handout via Thomson Reuters Zawya
24 May 2017

By Emmy Abdul Alim

Patchi in the United Arab Emirates broke ground on May 24 on what it says will be its largest factory in the world that can produce 100 percent more chocolates compared to its current facility in Dubai. “The production capacity here is 5 tonnes a day with overtime. In the new factory it’s going to be 10 tonnes per day without overtime,” Aline Ashkarian, Patchi UAE chocolate factory general manager told Salaam Gateway.

“Currently, our average production is 3 to 3.5 tonnes [per day]. In the high seasons it increases to 4.5 to 5 tonnes,” she added.

Patchi’s current facility at Dubai Industrial Park is halal-certified, which is a first for a luxury chocolatier in UAE. The new factory, also at DIP, will be operational in 18 months.

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The company is currently working overtime to meet demand for the high season of Ramadan to supply to its 33 boutiques across the country, as well as to Thailand Duty Free, and Morocco.

Its plan leading up to 2020, according to Ashkarian, is to double manufacturing and retail capacity in UAE, where it currently employs around 700. The office headquarters, boutiques, and logistics division employ around 500, and the remaining are directly involved with manufacturing.

The company will be opening four more boutiques in the UAE by the middle of next year.

Patchi UAE’s expansion plans reflect positive growth of the country’s overall chocolate confectionery sector, and the company expects its newly-acquired halal certification to help it enter new markets.

For its export markets, Ashkarian considers Patchi UAE’s halal certification an “added value”. “The halal certification will open more economic roads to other countries as a whole,” she said.

DOMESTIC DEMAND

At home, Euromonitor reported a 14 percent growth in UAE chocolate retail to reach 1.4 billion Emirati dirhams ($380 million) in 2016.

UAE, Saudi Arabia and South Africa alone contributed 69 percent of additional sales growth in 2016 for the Middle East and Africa. The research company attributes the sector’s growth in Saudi and UAE to their large expatriate population, and their ability to afford chocolate, which is two times more expensive than sugar confectionery.

Countline and straightline chocolates dominate the market. Mars, the world’s biggest confectionery company, leads in the UAE, holding around 33 percent retail market share with its popular brands such as Snickers, M&Ms, Galaxy, and Bounty.

However, the boxed chocolates segment is expected to grow at a faster pace than countline as increasingly affluent UAE residents choose premium chocolates. This is the target demographic for Patchi UAE.

“We call ourself a chocolate gift destination,” said Ashkarian of the company that sold a box of chocolates wrapped in genuine leather and hand-made silk, for 5,000 British pounds in 2008 at Harrod’s in London. The box had 49 suede hand-wrapped chocolates separated by gold and platinum linings.

“We are perceived as luxury chocolate in the eyes of our consumers because we have targeted all high-end locations and we are present in the culture of the UAE,” she added.

According to her, Patchi produces bespoke labels for an elite clientele that includes UAE royalty. This is a source of pride for the Lebanon-headquartered Choucair family-run company that opened its first boutique in UAE 33 years ago.

“We are part of [the UAE culture] and we work very hard to maintain and grow this [relationship],” said Ashkarian.

Catering to Emirati high society has given Patchi UAE a competitive advantage in the country over international rivals. Influenced by this clientele, the company adapts to their preferred tastes with new collections in their boutiques.

EXPORTS

Patchi has only recently started exporting to Thailand Duty Free from its UAE base, and is confident new markets will follow, thanks to its halal certification.  

According to Ashkarian, Thailand Duty Free was happier for the company’s halal certification, which is unsurprising as the Southeast Asian nation has been actively wooing the growing Muslim tourist market. The country is the second Muslim-friendliest among non-Organisation of Islamic Cooperation (OIC) nations, according to the Mastercard-CrescentRating Global Muslim Travel Index.

HALAL CERTIFICATION

Patchi’s facility in UAE is its only halal-certified unit.

The company runs three other chocolate factories—in Lebanon, Saudi Arabia, and Egypt (its Syria plant has been shuttered due to the unstable security and political situation)—and four other manufacturing divisions in Lebanon, including a printing house for the production of packages, a factory for the silver-plated line, the porcelain division, and the artificial flower division for the production of the company's accessories.

Ashkarian stressed that while the other facilities are not halal-certified, all operate from the same rule- and recipe book. “The processes are followed exactly the same in every single country but they have not applied for halal certification. The difference is that we [in UAE] applied for it,” she said.

This is in large part due to UAE’s push, since the launch of the UAE Halal Scheme in 2014, for compulsory halal certification of all products and facilities that are halal. Additionally, halal food suppliers are also required to obtain certification for a food safety management scheme such as ISO 22000 or HACCP.

Ashkarian said Patchi UAE took only two months to get halal certification as the company’s manufacturing, logistics, and all raw materials and ingredients, were already halal to begin with. Patchi sources its raw ingredients such as cocoa and nuts from different suppliers, including from France and the Netherlands.

“We didn’t know, in the beginning, that it was easy to obtain [halal certification]. When I first met with the Quality Control and all other relevant members, everyone said the process would take one to two years. But when we met with the Emirates Authority for Standardization and Metrology (ESMA) and they did the tests, they said that we’re halal 100 percent and that we only needed the certificate to be officially halal-certified,” said Ashkarian.

She said the process for getting ESMA halal certification compared to its other certifications—ISO 22000, 9001, and HACCP—was “almost equal”.

“The only difference is, when you are working with halal certification and halal audits, the concentration is to have the whole process using all halal ingredients and products. [For the other certifications] it is more about hygiene, health and safety measures,” she said.

STAYING RELEVANT

Patchi has had its share of experimentation in product diversification to stay ahead of its market. It has tried branching into ice-cream, and high-end coffee restaurants in Lebanon, in collaboration with French chef Alain Ducasse, which served cakes and desserts.

Its biggest, and most recent, facelift was in 2013 when it underwent a re-branding exercise, and the company identified a key gap in its offering. “The gap was the new generation that is rebellious against their parents, saying, ‘I don’t want to buy what mum buys, I want to buy what is trendy and funky.’ This is the category that if you lose once you might never get back,” said Ashkarian.

The brand-wide global exercise resulted in the introduction of Patchi’s now signature green, a compound colour called “vert anise”, to replace the long-serving shade of bronze that while classy, said Ashkarian, did not speak to the younger generations, including the influential millennial demographic that makes up around 40 percent of Patchi’s core Middle East market.  

Patchi’s new packaging of vibrant colours for the box collections, which sit alongside trays that appeal to the older customers, are also aimed at the younger generation.  

The impact of the facelift hit the company “big time”, claimed Ashkarian. “What happened suddenly is that our gourmandie sales, which are the boxes, in the first year of launch, were up by three times,” she said.

Apart from reaching the younger demographic, the company also continues to invest in appealing to women, because, said Ashkarian, “chocolate is a product that speaks more to women than to men.” It updates the colours of its in-store floral bouquets to reflect what is on trend in Milan and Paris, she said.

But even as the brand has changed its colours, it is careful to retain a core that reflects traditions rooted in its most established Emirati customer base, and the company as a family-run business.

For the current high season of Ramadan, Patchi will once again bring out the big trays of its Tasali line that includes whole dates and dried fruits dipped in chocolate. And, said Ashkarian, she will also be rolling up her sleeves. “One of the cultures we have is that during Eid, whether it’s Ramadan or Adha, all the management, including the owners, go to the shops and work with the staff who are selling chocolates. During the last three days of Ramadan and the first day of Eid, we are inside the shops.”


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