Masafi was hit hard by a government ban on exports of ground-sourced water last year. But the CEO of the home-grown brand says the move won’t stop its expansion plans
There’s a saying about the well running dry.
But in the case of the UAE’s first bottled water company Masafi, it was faced with a challenge last year that was not so much about a supply shortage as finding a new source altogether in order to continue exporting its product.
The curveball for the 38-year-old brand came in the form of a UAE government decision to ban the export of Emirati ground-sourced mineral water from August 2013.
It was aimed to preserve the precious resource amid growing demand from a burgeoning population. But with Masafi’s product sourced from the foothills of the Hajar Mountains, as opposed to other local producers that use a desalination process, the policy was a tough one to swallow.
“That ban was on mineral water exports, so we were really the only company that was impacted by that,” Masafi CEO Reginald Randall tells Arabian Business from the company’s Dubai head office on Sheikh Zayed Road.
“It meant that we had to accelerate our plans for GCC expansion and as a result we spent a good year and a half trying to find a water source that matched our water source and we eventually found one in Oman.”
Randall says the company, which has a 34 percent share of the $599m UAE bottled water market, bought and gutted a factory 130km southeast of Muscat, installing new machinery from Germany, which is due to be commissioned by the end of February.
Crucially, he says, it is on the same Hajar mountain range, allowing Masafi to maintain consistency in its product and its much-valued brand equity, while Oman is also already a big part of its export market, making the move a “no brainer”.
Prior to the ban, exports derived from production at Masafi’s existing plant in the town of Masafi, Ras Al Khaimah, which produces an estimated 110,000 bottles an hour, made up 30 percent of its revenue, with its product sold to 52 countries worldwide.
“It’s a sizeable portion of our business,” Randall says. “It did mean that we had to produce and ship a lot prior to the ban and also put pressure on us as far as our commissioning of the new facility to get that up and running as quickly as possible.”
However, the company also introduced another plank to retain its export market. It formed a partnership with an undisclosed Turkish firm to produce spring water for Masafi’s international markets.
Randall says that production in Oman, which is expected to reach 36,000 bottles a day, will for the time being be solely for the sultanate, while Turkey will be used for all other overseas markets, which include Kuwait, Japan, Qatar, Bahrain, Saudi Arabia, Afghanistan, Jordan, Djibouti, Syria, Bahrain, Morocco, Taiwan, Germany, the UK, Bangladesh and Pakistan. “Who knows what’s going to happen in the future as far as Omani regulations are concerned and hence we went to Turkey because they are very open to exports,” he says.
Masafi, which is chaired by billionaire businessman and Mashreqbank CEO Abdul Aziz Al Ghurair, sells the bulk of its product in the UAE, which remains its biggest market within the GCC, where most of its revenue is derived.
“The Masafi brand, as it stands, is the number-one beverage in the UAE – it’s ahead of Pepsi and Coca-Cola, which is quite amazing,” Randall, a South African-born, former Coca-Cola executive, says.
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