Advanced Baking Concept, a Dubai based industrial bakery, is combining authentic European recipes with the latest freezing technology to provide the region’s retail and foodservice sectors with a new way of supplying fresh bread and pastry. Mark Salman, CEO, tells Retail News Middle East how the business plans to change the face of baking in the Middle East region.
RNME: Tell me a bit about the company? When was it established and who by?
Mark Salman: This is a company that has been under development for the past 30 months or so. The idea is that nowhere in the Middle East is there a factory that is providing a bakery solution to the different trades. There are quite a lot of bakeries here in the UAE but none of them are really an industrial frozen bakery, which is really the way to the future.
In the US and Europe, up to the 1980s there was probably no frozen bakery as such but then the industry evolved in a way that allowed the baking of products very close to where they were consumed. This helped get rid of all the other complicated processes like mixing, proofing and finishing. Bread would be produced partly baked, and would then be frozen. It would then be delivered close to where it would be consumed.
This allows many different types of products to be produced on an industrial scale. You bake it close to the point of consumption, giving freshness, variety, and an economy of scale. This is obviously much better than producing manually at a hotel or a supermarket. The Western world adopted this kind of frozen bakery solution in the retail sector and then in the food service sector.
RNME: Have any companies taken this approach in the Middle East?
MS: It’s an industry that has evolved so well in the Western world and yet the GCC countries have adopted an import solution instead, so you have a lot of imported products coming to the market place. You also have some smaller players that have a walk-in freezer. They try to freeze the product but it’s not always done properly. And that’s where the idea of Advanced Baking Concept comes in. We did the soft opening of the factory in August although we’ve been targeting some customers such as a couple of open houses here. Now we’ve just started producing products that we ship to the market place.
RNME: But who was actually behind bringing the concept to the region?
MS: The original family member that came up with the idea is Rafic Charafeddine, chairman, and Jad Charafeddine is the managing partner and was involved in the construction of the plant. I was involved in pretty much everything else to do with setting up the systems and the sales procedures. The partners in this business had identified an industry that has not been developed yet. When I came on board, the bakery sector had been my background for the past 25 years.
RNME: What is the capacity of the factory?
MS: We have the capacity to produce 20,000 metric tonnes a year, equivalent of maybe 1000 truck loads a year. The value of this depends on what products you are selling but it is a major operation. It is by far the largest operation I know of in the GCC and the Middle East. The ownership is very aggressive in its pursuit of this industry and we really have plans to do more than just this first plant.
RNME: Who is actually producing the bread, and how is the company organised?
MS: We have two French chefs who between them have 28 years of experience. We also have well experienced managers for 10 production lines. Advanced Baking Concepts has two divisions; one brand is ProBake, which is our professional brand for professional food service operators and in store bakeries. The distribution of our products on this side of the business has been assigned to TransMed, which is a big player in the UAE’s FMCG sector.
We have another brand called Bread & Co, which is a bakery retail chain. These can range from bakery cafés, which could be 200 sq metres or more to something as small as a kiosk that could be 12 sq metres. These could be operated by us, or by people who have some basic experience of running foodservice outlets.
On this side of the business we just opened a bakery café in Dubai, as well as two kiosks. Over the next sixty days we are opening five more. We’re putting various kiosks in different shopping centres so we will have many of these stores by 2007. We’ve also just signed an agreement to open one in conjunction with the Landmark Group, which is setting up a big 120,000 sq ft electronics store in Sharjah. We’ll be setting up and running their internet café. That’s one side of the business.
RNME: How about the retail supply side of the business?
MS: The other side of the business, the bakery solution that we bring to the independent retailers, is aimed at all types of stores, from hypermarkets to grocery stores. About 90% of the bakery products sold by most of the hypermarket groups of the world are from frozen products. These companies have invested a lot in their bakery infrastructure, and this is partly because there has been a lack of an alternative solution in the region. That target may take a little more time to come round to the idea than the smaller supermarkets, convenience stores, and smaller independent groceries, which have been helpless in trying to compete with the hypermarkets. They will probably adopt our solution more quickly.
RNME: Do you think the larger supermarket groups will adopt the service?
MS: The bigger supermarkets and hypermarkets will come round to the idea when they figure out the value of the solution. This solution will save them a lot of investment in their bakery. All that they need is ovens, so it will save them a lot of space, and real estate is expensive in this part of the world, and they will save in terms of resources such as staff.
RNME: How do you approach potential customers with such a new concept, and how does the system work once retailers decide to adopt the ABC concept?
MS: We go to them with our concept. We have the merchandising unit we can show them. If they decide to go for it, we have a fiveday training programme for their staff. We bring them over here, train them and then they go and execute the programme. We supply the frozen product and they bake it on their premises. The 24/7 chain in Dubai is adopting this solution and independent stores such as Lifco and smaller players love it.
It’s an almost finished product that they bake. It has quality, convenience, value and variety. You name it, they can sell it and they to hire a French baker to do it, or a marketing manager to say how they’re going to present it. We are even going to start putting our bags inside the frozen box so that the factory material is handy for them and they don’t have to look anywhere else for it.
RNME: Which side of the business do you think will become the biggest?
MS: Both have to be strong. We have to be good at offering the Bread & Co concept and growing it, and we also have to be good at providing frozen bakery solutions to the hospitality industry, to the in-store bakeries, caterers.
The product is the same, it’s about the marketing of it, and when we partnered with TransMed, we didn’t go to the cheapest, we went to the best in the country because we know that we need to get a good distribution and a good sales team. On Bread & Co we will also be partnering with players who can also help us deliver these solutions to the market place. At this point we’ve focused on the food service side of the business with Transmed, but we will also be looking at the retail side of the business with them as well.
RNME: Do the directors intend ABC to become the biggest bakery in the Middle East?
MS: Everybody on the management team is very ambitious. The family has really invested a lot in this plant and has also been very aggressive in its strategy to penetrate this industry. We aim to be the leader in this industry. There is a leading European bakery called Fripan. Back in 1986, the company had no share in the Spanish market. Today, it has more than 60% of the frozen bakery product in Spain. When you invest heavily in an industry and go in at an early stage, if you execute it well, have a good quality product at a fair value, you should be successful.
RNME: Do you see other large, industrial bakeries as much of a threat?
MS: Most other bakeries concentrate on fresh bread rather than frozen, but fresh bakeries are no longer fresh – their products are often 24 hours old. They mix the product the day before and they package it the day before distribution.
RNME: Are there plans to expand the business beyond the UAE?
MS: We have already started exporting across the border to Saudi Arabia and we are now in discussions to ship to other neighbouring countries. This is not a factory that has been set up just for the UAE market, although this is a great position for us here. We have a GCC growth plan. The first phase of our growth plan is to get this plant up to full production and as soon as we are into our third shift we should go ahead and start the next step. We have about 100 employees right now.
RNME: Are there many challenges you face operating in the sector?
MS: Sure, there are challenges. One is for the trade to know about us, because up until now, they have assumed that a quality product like ours is not affordable because pretty much all frozen bakery products are imported. Whether it’s supermarkets or hotels, they’re all using some frozen breads already but they’re trying not to use it a lot because it’s very expensive. This is the main challenge for us, to tell these operators and these hotels that there is a quality solution that is made in Dubai and is affordable. They won’t have to overstock or run out of stock.
The second challenge, which I think we have solved by partnering with Transmed is logistics, because this is a frozen product and you can’t have it sitting in a loading dock for 30 minutes before it’s put in a freezer. It would destroy it. So we implemented that in the past seven weeks that we have been distributing it.
Another challenge is to find other good strategic partners for sales and distribution in the area, in Saudi Arabia, Kuwait and other countries. On the Bread & Co brand, the challenge is around location and operators, because at some point, this will become a concept that we don’t want to keep operating on our own – it’s a concept that is for franchising.
RNME: How are you going about promoting the company?
MS: For marketing we are adopting guerrilla tactics right now, trying to do it as inexpensively as possible. We are also supporting different causes and we recently finished raising money for Lebanon. Being a good corporate citizen and helping causes that are important to our customer base is important.
RNME: What do you like about working in the bakery sector?
MS: I love the bread and the smell of fresh products. I love the way the product is made right then and there. Any pastry chef that takes our products can focus much more on being creative and executing their job well. Pastry chefs are very creative people and our products give them the chance to be creative. Everybody gets a kick from seeing a product they have made being consumed in a restaurant or hotel.
"Everybody on the management team is very ambitious. The family has really invested a lot in this plant and has also been very aggressive in its strategy to penetrate this industry. We aim to be the leader in this industry."
"We have already started exporting across the border to Saudi Arabia and we are now in discussions to ship to other neighbouring countries. This is not a factory that has been set up just for the UAE market, although this is great position for us here. We have growth plan."
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