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New local producers bite into a growing market
By Nabila Rahhal
Whether it is quinoa chips or chia seed cookies, snack food products, once dismissed as pure junk, have taken a turn toward the healthy and natural, and it seems the world’s consumers couldn’t be happier.
Globally, consumers are increasingly aware of the importance of a good diet on their health, according to Reema Mansour, founder of Biolicious, a Lebanese company which produces organic and gluten-free snacks and foods. “People are much more aware that what they eat has a direct impact on how they feel. Plus, there has been a large global rise in food sensitivities and allergies,” Mansour explains.
This increased awareness has come with a splurge in spending, too. According to Euromonitor, a global market research firm, worldwide sales of health food products are estimated to reach $1 trillion by the end of 2017. Between 2015 and 2020, the global organic food market is projected to register a compound annual growth rate of 16 percent, according to a TechSci Research report entitled “Global Organic Food Market Forecast and Opportunities, 2020.”
The agro-industrialists Executive spoke to believe that healthy and natural snack food is not just another passing fad, but a lifestyle change that is here to stay. “I don’t see the health food industry dying any time soon. It’s one of the fastest growing industries in the world, and everything is being switched to something healthy: equipment lines are being redesigned to produce healthier food and chocolate companies, such as Cadbury and Mars, have reduced their portion sizes. Everybody is trying to ride the bandwagon of health. It’s not a trend; it’s a fact and reality,” emphasizes Soumaya Merhi, founder of Lebanese company BreadBasket sal, which produces several varieties of healthy snacks branded Taqa.
The Lebanese scene
Lebanon has only recently hopped on the organic and natural foods bandwagon. Less than 10 years ago, the few brands of natural or health foods available in Lebanon were restricted to a couple of shelves in the corner of the supermarket labeled “diet.” Today, however, many of Beirut’s and Mount Lebanon’s supermarkets have dedicated health food sections, which are awash with imported brands of gluten free and organic items. Moreover, there are at least 20 specialty shops across Lebanon that only sell natural or organic food products.
Although there are no numbers that quantify the market size of healthy snack foods in Lebanon, indicators suggest that it remains a niche, despite its rapid development. This could be due to the price of such products – especially when imported – or the lack of awareness of the importance of healthy eating among many Lebanese. “In Lebanon, there are many locals who lack health awareness. For example, many don’t eat olive oil because they think it’s fattening and they don’t know its health benefits; or they eat gluten free bread since it’s the trend,” says Hill Skaff, processed food value chain leader at the USAID funded Lebanon Industry Value Chain Development (LIVCD).
Made in Lebanon
While snack food production is arguably well-developed in Lebanon, it is no easy task to find locally produced and healthier varieties of savory or sweet treats. Recently, major food producers in Lebanon have woken up to the potential profit in healthy snack foods and have introduced alternative snacks to their existing production lines. Examples include Masters Chips introducing air-popped rice crackers, Al-Oumara bakeries launching rice cakes and oat breads, and Castania Nuts producing trail mixes.
Meanwhile, the past five years have seen an emergence of small-to-medium sized enterprises that solely produce healthy snack foods. Their number, however, remains quite low, and they face numerous challenges.
The most common challenges that companies voiced to Executive were elevated production costs and difficulty in gaining market exposure. “These companies need support to get more exposure and awareness among consumers. On the technical level, in healthy foods production, they need semi or full automated equipment to decrease their cost of production, and standardize products,” says Skaff, giving the example of how LIVCD invested in semi-automated machines to help ready-to-eat kibbeh producers decrease the time spent on producing them manually.
Biolicious
In 2013, Reema Mansour found out that the aches in her joints and back were a result of an autoimmune disease, which meant she had a high level of inflammation in her body. To control these pains, she decided to cut all foods from her diet that might cause this inflammation, such as grains and pulses.
This left her with a very narrow list of foods available to eat in the Lebanese market, especially when it came to snacking. “The texture of food available to me was very restricted, and I started craving food with a crunch. What was available in Lebanon in terms of healthy food of that kind was very limited and very expensive. There were a couple of very good shops that were bringing in organic produce of excellent quality, but the tastes of these specific things that I wanted were not very good,” recounts Mansour, adding that the vast majority of the products she found were imported.
So Mansour, who says she has always enjoyed cooking, took matters into her own hands. “I started doing some research and making my own foods. In the meantime, I was doing an online course on holistic food coaching, and that opened my eyes to the possibilities, and how I can make things happen in terms of creating and marketing healthy food,” she explains. Mansour recounts that she started out small by making vegetable crackers, which she distributed to friends and family. Gradually, through word of mouth, the reputation of her products grew and friends in the food industry became interested.
Using an initial investment of $80,000 secured from a personal fund, Mansour was able to officially launch Biolicious in 2015 with a line of vegetable crackers, which she dehydrates at a very low temperature to save the nutrients, a process she describes as lengthy and time-consuming.
Following the positive response to the crackers, Mansour introduced kale chips a year later, and wafers the year after that, translating into a new product line every year, with more to come. “I still have a lot of recipes in my repertoire and want to expand, but [I] have to choose ones which would be viable in the market in terms of shelf-life and demand. It also takes time, so I am growing slowly,” she explains. Biolicious’ products have a shelf life of four to six months.
Biolicious products are certified by Instituto Mediterraneo di Certificazione, an Italian certification body operating in Lebanon, and therefore comply with international standards, such as having completely organic ingredients.
She says that it has not been easy in Lebanon as the market for organic produce is underdeveloped, therefore driving her cost of production up. Whenever possible, Mansour tries to use locally produced organic ingredients in an attempt to lower costs. As such, fresh produce used is grown in certified organic farms in Lebanon, and ingredients such as tahini, molasses, sun-dried tomatoes and apple vinegar are brought from Adonis Valley, a local producer of organic food products.
Still, Mansour believes organic and health food producers like herself would benefit from more support and development for this sector, so they can at least manage costs. “Supporting organic and alternative productions in the agro-industry in general would be a very good step in supporting small producers like me. If there was more organic production in Lebanon, I would buy at a lower cost, and then be able to produce at a lower cost,” she explains, citing Berytech’s Agrytech program as an example of support and funding for the agro-food sector.
Mansour has to import whatever ingredients are not found in Lebanon. This is another challenge, as she has no storage space, and thus, must purchase small quantities – further increasing the cost of production.
Beyond the cost of production, Mansour says that there is the cost of the environmentally friendly packaging and the one employee she recently hired to handle distribution. Otherwise, she works alone in a semi-industrial kitchen. A small box of crackers is $3.50 while a bag of kale chips is $5.67.
While today Biolicious is present at 25 points of sale, concentrated in Beirut and Mount Lebanon, Mansour says she would like to have wider distribution and more exposure. “A challenge is that it is a very niche product, in a niche market. I work with a lot of organic and health shops, delicatessens, specialty stores, high-end supermarkets, diet centers, gyms … but it could be a lot more. I would like to expand on many levels. I tried chain supermarkets, but the payment terms for small producers are very difficult,” she explains.
Mansour first started promoting Biolicious in exhibitions and farmers’ markets in Lebanon. She still sees them as effective tools to reach consumers and give them the chance to try her healthy snacks. “It’s very helpful that I can go to markets and participate in any activity happening by offering samples of my products. That’s what people like. You might have looked at this [box of crackers] for half an hour on the supermarket shelf and not bought it. But when you taste it, and you like it, that’s what matters to me,” enthuses Mansour.
Mansour recognizes the need to be present in regional markets to grow Biolicious, saying she has the facilities to expand production and hire workers, but needs the right opportunities. She would prefer the kind of direct contact she has with the consumer in Lebanon when expanding to international markets and again laments the lack of support for such initiatives. “I want to go to these fairs and exhibitions and take a stand to show my products and get things distributed there, but it’s not an easy task. If you look in other countries, they have systems and bodies that support such industries, and they go together as a country to share new things like this.”
Still, Mansour says she has garnered interest from Singapore, Qatar, United Arab Emirates, and Saudi Arabia; having already shipped small quantities to Singapore. She believes Biolicious’ competitive edge is in its Mediterranean taste and speaks with pride of her products’ reception in these markets. “I went to Dubai to check things out, and I was very proud because these countries have access to similar high-quality items produced in the USA and Europe, but they were interested in Biolicious. So I am very happy,” concludes Mansour.
Eshmoon
Samer Tutunji, a chemist and yogi, says he was driven by the holistic health philosophy promoted by yoga to start Eshmoon, a company that develops “products that promote conscious minds.” Eshmoon is named after the Phoenician demigod of health and was established in 2003, with the intention of promoting a natural well-rounded lifestyle for the emerging niche market of health conscious consumers in Lebanon.
While Tutunji originally wanted to make use of his chemistry background to produce natural beauty products and soaps, he felt the Lebanese market would not trust such products just yet and decided to start with food. “We chose to start with food because it is the basis of everything. If you eat healthy, it means your mind is healthy,” he elaborates.
Tutunji decided to start his business with the most universally loved food product, chocolate. “We started with chocolate because it is a tasty treat – and therefore we can sell it – but is usually considered junk. People are addicted to chocolate even though they know it is bad for their health, but now we are giving them an alternative, which is made of all-natural healthy ingredients,” says Tutunji, giving the example of how he uses grape syrup, instead of sugar, for sweetening.
Tutunji launched Eshmoon with an initial investment of $150,000 – from personal funds and family support – which he invested into testing and small-scale equipment. The company gradually grew, securing revenues by producing chocolate for weddings. Tutunji then reinvested another $150,000, from the profits generated, into developing his kitchen and designing a $25,000 outlet in Boushrieh, Metn (adjacent to the industrial kitchen), where Eshmoon products are currently sold.
Eshmoon gradually added more products to its offerings, and Tutunji says this expansion only intensified in 2015. Eshmoon currently produces a variety of chocolate products, organic cereals, honey and molasses. Tutunji adds that he is looking into producing organic nuts next.
Eshmoon’s prices are at least 1.5 times as expensive as the mass produced versions ($7.50 for a box of chocolate cereal, for example), but Tutunji says that his products are both tastier and lighter. He justifies the price as due to the high cost of production since although he tries to use locally produced ingredients, he still has to import many items. “In our choice of ingredients and products, we are aiming toward locally produced, but at the end, there are some products which are simply not grown in Lebanon. Still, we try to promote rural agriculture through the choice of our products whenever possible,” he says, giving the example of the locally produced molasses used as a sweetener, or the locally grown oranges used in the chocolate-coated oranges.
Other costs are relatively low, since many of Eshmoon’s ingredients are locally sourced and Tutunji has a small team (seven employees maximum during peak times such as holidays). “We don’t want to drown in fixed expenses as we need to remain versatile,” he explains, adding that they use recycled material for packaging and the store’s layout to remain cost efficient, and also to be in line with Eshmoon’s minimalist philosophy.
In addition to the store, Eshmoon is present at several points of sale and has gained exposure through social media and its participation in many exhibitions and fairs, such as Souk El Tayeb and Salon Du Chocolat. “In exhibitions, we have the chance to make people taste, so we’re growing through word of mouth, which is proving to be a success,” enthuses Tutunji.
Tutunji acknowledges that there has been a mistrust of locally produced foods, but says this is slowly changing. “The healthy snack foods trend is here, but we imported a lot of products because consumers did not trust locally produced items. This is slowly changing, and there is a niche of consumers who want to buy local to reduce their carbon footprint and eat fresh,” he explains.
While Tutunji says the local market for Eshmoon, and health food in general, is growing in Lebanon, he still sees it as limited. “The market in Lebanon is very narrow in that it is restricted to Beirut and Mount Lebanon. So if we need to grow, we have to start exporting and are aiming for that,” says Tutunji, adding that he would export anywhere health-minded consumers can be found.
Tutunji believes Eshmoon products can compete globally because of locally produced ingredients, such as grape syrup or carob molasses, which are not found internationally. He had considered exporting to the Gulf countries – where according to him, Lebanese foods have acquired a positive reputation – but the high cost of shipping following the closure of land trade routes through Syria has since discouraged him.
Although the desire to export is there, Tutunji says he needs to expand production and work on marketing, which requires time and capital. While Tutunji is satisfied with the organic way Eshmoon has been growing, he is not against bringing in investors at this stage – if they believe in the company’s philosophy and mission. “I am not looking for investors who are just in it for the cash because they see there is money in organic and healthy [products] nowadays. I want an investor who would sacrifice his or her money as part of investing in the cause. Of course, it will bring them back their money, but I want to feel that they are giving it as a donation, not as an investment,” argues Tutunji.
Nature’s heart
For Malek Karam – owner of the company United Market Team that produces Nature’s Heart, a line of cookies and crackers – it all began with the natural sweetener stevia.
Karam first learned of stevia when he grew concerned about his health and began researching sugar substitutes. Upon discovering stevia, a natural plant-based sweetener – as opposed to the artificial sweeteners found in the market, such as aspartame whose harmful effects on health are well known – he saw the potential in bringing it to Lebanon.
In 2012, Karam began importing processed stevia, produced in Malaysia, to Lebanon under the brand name Green Light, which he distributed in both bulk form to dessert producers, such as Bachir Ice Cream, and in packaged units to retail spaces.
While Green Light succeeded among Lebanese consumers, Karam observed that it was mainly being used as a sugar substitute in hot drinks; his goal was for it to have wider consumption. “People were mainly using it in their coffee, but I wanted them to use it in their cooking as well and in their cold drinks; in everything that needs a sweet taste,” he says.
Karam tried to promote the varied usages of stevia by giving talks in universities and distributing pamphlets in health stores. But when that did not achieve the desired results, he decided to lead by example and use stevia in a food product. “Because I wanted to grow the market for stevia in Lebanon, I introduced sweet cookies and biscuits under the brand name of Nature’s Heart as a first step to promote stevia as an ingredient. Because of stevia, we became cookie producers,” Karam muses.
Nature’s Heart’s production of wheat cookies began in 2013. Karam invested around $220,000 – $100,000 of which came from a Kafalat loan, with the remaining amount personally funded – into constructing the factory in the basement of a building he owned and buying the industrial stove needed for production.
The response for the wheat cookies was positive enough that Karam focused his efforts on developing and refining Nature’s Heart. He introduced oat cookies almost six months after establishing the brand to accommodate for those with gluten sensitivities. He also worked on refining the packaging to make it more attractive and to extend shelf life. Because of the vacuum seal bags and air tight plastic containers, Nature’s Heart products currently have a shelf life of six months.
About a year and a half after establishing the line of cookies, Karam decided to enter the savory snacks market by introducing all-natural oat crackers. As opposed to non-natural crackers, Karam explains, Nature’s Heart’s crackers use real ingredients for flavoring, rather than artificial ones (for example, real black olives are used in the mix of the olive flavored crackers). For him, it was the right time and place to take the step into the savory snacks market. “I noticed that Lebanese like to have a salty snack with their drink and that there are no natural locally produced alternatives to chips and crackers. I already had the industrial stove, so I thought why not?” he recalls, explaining how he developed the recipes for each cracker flavor purely through trial and error.
Today, Nature’s Heart employs 12 people and produces 40,000 to 50,000 bags of crackers and 6,000 boxes of cookies per month. Karam explains that external distributors take a 20 percent cut, and so, he has an in-house distribution team of five people and is present in over 200 points of sale across Lebanon, including health stores, gyms and major supermarket chains. According to Karam, Nature’s Heart’s selling points in the local market are its flavors, which appeal to the Lebanese, and its affordable price when compared to similar imported goods. A bag of crackers is priced at $2.60; while an eight-piece box of cookies is $2.
The natural flavors of Lebanese cuisine (such as aniseed in cookies, and thyme and white cheese in the crackers) are also a selling point in the countries Nature’s Heart exports to, which are Saudi Arabia (Farm and Panda supermarket chains), Jordan, Kuwait, and France (the Lebanese market in Paris).
Karam explains that his expansion into export markets was possible due to expats and Arab tourists who would try Nature’s Heart on visits to Lebanon and wanted it to be available in their own countries. He has set his eyes on the United Statesas an export market, which he plans to target through the speciality Lebanese markets there. Karam says getting to the US has been his biggest challenge so far, since there is no support system or network in Lebanon that would facilitate reaching that market, although he has tried to communicate with the Lebanese American Chamber of Commerce, to no avail.
Now that demand is growing in export markets, Karam plans to invest a further $130,000 in an automated production line, which would allow him to cut down on costs and produce larger volumes. He is also considering producing a line of potato chips, made from potato starch, and thus complete his savory snacks line.
Taqa
Soumaya Merhi returned to Tripoli, Lebanon from Montreal, Canada in 2013 with the plan to work in organic foods.
Eight months prior to her arrival, her father had started Bread Basket, a brand of oat bread, produced with a single bread machine in Tripoli. Merhi, who describes herself as a “doer,” decided to help expand the brand. “I saw that something was being done, and I had to sell, so I picked up the idea and started selling cookies at Souk El Tayeb. After that, I started to move very fast in the ‘niche market,’ meaning high-end delicatessens, or farmers markets. There were a lot of people doing healthy cookies at that time,” recalls Merhi.
A year and a half after taking over Bread Basket, Merhi created the Taqa bar. Taqa (which means energy in Arabic) is Lebanon’s first locally produced energy bar and is made with Levantine flavors, such as rosewater and orange blossom.
Merhi, a swimmer, says that the idea for Taqa bar came to her when she realized that there was no healthy, locally produced, energy providing snack. “As an athlete, or even if you are just having a busy day, you want energy on the go. We didn’t have something that is easy, quick, healthy and branded in the Lebanese market,” she explains.
Merhi always had big ambitions for her company, and in 2016 she decided to set the path to realizing them. “I am not working in an artisanal mindset, I want to be able to make it (the company) scalable. When you have scalability, then you become a key player in the trade market. It’s been very difficult to get to the point where I am – and it involved a lot of pushing and shoving – but I also work very hard,” says Merhi emphatically.
Driven by the need for scalability and larger consumer demand, Merhi focused on the ability to maintain and increase the company’s level of performance. She upgraded the factory and bought automated equipment, which helped her increase volume and add products to her lines.
She then decided to rebrand, morphing Bread Basket products to Taqa, explaining that it is a catchier name for export markets and is more fitting for the company’s diverse offerings. The Taqa brand will replace Bread Basket in May 2017. Today, Taqa is a confectionery bakery that specializes in off-the-shelf products, such as oat cookies, vegan maamoul, flat bread, buns, and dried fruit and nut bars. According to Merhi, “Bread Basket Square SAL aims to offer and constantly innovate a variety of different product lines, ranging from wheat-free, GMO-free, gluten-free, vegan, vegetarian, [along with] preservative, additive and improver-free, by sourcing premium raw materials.”
Merhi also rethought the packaging and design, with the aim of prolonging shelf life and making it competitive with imported products in Lebanon, as well as in the export market. Taqa’s new packaging, which will be introduced to the Lebanese market in May 2017, is simple and clean, with ingredient listings and nutritional facts in both Arabic and English. Products come in individual packets, as well as in single serving packets within boxes, with a shelf life of up to six months, despite having no additives. Merhi says they produced 24 tons of bread and 15 tons of baked goods and nut bars in 2016.
To be taken seriously among established tradespeople – and because there are no reliable regulatory or certifying bodies in Lebanon – Merhi decided to work toward the ISO 22000 2005, an international food management certification, which she admits is ambitious for a small factory like hers. “In Lebanon, it depends on your tenacity as a business owner to put the regulations in place because you want to grow. Nobody imposes standards on you, so I impose high standards on myself and the company,” Merhi says. As Executive was going to print, Merhi had achieved the certification by SGS (formerly known as Société Générale de Surveillance), making her one of the only three factories in Tripoli which are ISO 22000 certified.
In May, Merhi will also be launching the Taqa coffee shop on Pasteur Street in Gemmayze to bring her products closer to the consumers. “I’ve always loved having a small coffee shop, and it’s a place for people to meet the brand. As a consumer, how often do you get to meet the business behind the food you eat?” she asks.
All these developments and improvements to Taqa required a substantial capital investment, which Merhi raised in 2016 from an angel investor, a venture capitalist and an environmental foundation based in Lebanon. Although she declined to provide the amount raised, she says it was enough to cover the costs of the ISO certification, the rebranding, the upgrading of the factory and the creation of the showcase store on Pasteur Street.
Today, Taqa and Bread Basket products are available at 150 points of sale – mostly within wellness and fitness related spaces. Merhi has also signed with a local distributor to grow the products’ reach further, and be present in chain supermarkets. She explains, “If you really want to grow, you cannot just be in health stores or places that match your image, you have to be in supermarkets to reach the highest number of Lebanese. If this brand is not able to meet the heart of the Lebanese, from the south to the north, I have failed as a business owner, because I will be relying on a very small number of people who would spend on high-end [products].”
While Merhi admits that her offerings are not mass products just yet, she says she is trying to be as cost competitive as possible in order to reach the widest number of consumers. A small packet of cookies sells for $3.50 while a Taqa energy bar is $2.
The local response to Merhi’s products has been favorable, despite the usual preference for imported goods among high-to-medium end Lebanese consumers. “The Lebanese niche who are into health food are starting to become much more open to the idea that there are viable companies in Lebanon trying to do a very good job with their products,” she says.
Merhi has also signed with a buyer in both Kuwait and Saudi Arabia. She believes her edge over European imported brands in regional export markets is in the flavors of the Taqa bars, and the single serving sizes of favorites such as maamoul.
Although the brand is doing well, Merhi says it has been an uphill struggle. “Small manufacturers, of a sizable potential, in Lebanon need to be catered to because right now we don’t have support. If I continued the way I had started, I could not have sustained myself because I could not have grown to get interest from buyers. The niche market is too small and there is a threshold, but the good news is that it’s definitely growing,” she concludes.
Nabila Rahhal
Nabila is Executive's hospitality, tourism and retail editor. She also covers other topics she's interested in such as education and mental health. Prior to joining Executive, she worked as a teacher for eight years in Beirut. Nabila holds a Masters in Educational Psychology from the American University of Beirut.
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