Persian power

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Tehran is becoming a focus for many FMCG companies eyeing the Iranian market.

While Iran may be a major producer of foodstuff, it often seems that the country has failed to register with the region's wider FMCG community. But with major Middle East brands such as Al Islami, Aujan Industries, and Fine viewing the country as a market with major potential, old perceptions of Iran look set to change.

Indeed, meat producer Al Islami, beverage firm Aujan Industries, and Fine, a producer of tissue and hygienic paper items, are each establishing factories in Iran, signaling a new level of confidence in the country. Furthermore, Carrefour, one of the world's biggest hypermarket groups, is also poised to enter Iran with its Middle East partner, MAF Group, in 2008.

"The FMCG market in Iran is growing, but growing at a different rate for each industry or sector," Fine's Peter Janho said. "For our paper products it will grow by up to 8% a year but for the other sectors it will go up to 10%. There is a big market, the population is huge and the income per capita is reasonable, around US$ 8,700."

Despite this, the Iranian market has its share of challenges for FMCG professionals, and not least is a complex bureaucracy. "Iran as a country is really amazing - the weather, the culture, the people, the food, it is really nice," Janho said. "But when you come to business, it is a totally different story. In Dubai we are used to an easing of red tape, while in Iran you have to know your way around," he said.

"It is not too difficult but it takes you a long time to know the right people and the right way to operate. It is a big country and the systems are not always well documented. You have to take your time and stretch your deadlines. You can get things through but you do have to be patient."

But this type of challenge has done little to dampen the enthusiasm of companies such as Fine, which is now finishing the foundations of its US$18 million factory in Tehran. The factory is expected to be ready by December 2007, with full operations starting by March 2008. The factory will service Iran and some export markets.

"We will be exporting to nearby countries like CIS nations," Janho said. "One of the reasons to set up in Iran is that it is very difficult to export from Dubai or the Middle East to Iran because of the duties on finished goods. Our products tend to be bulky and therefore carry more freight charges, so the best option was to set up an operation in Iran."

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