Al Ghurair Foods eyes Mideast, Asia expansion

Dubai-based food manufacturer and exporter Al Ghurair Foods is keen on strengthening its global presence by investing in markets such as Saudi Arabia, Pakistan (specifically Peshawar), Indonesia and Japan, a company spokesperson has confirmed on Monday.

A family-run business, Al Ghurair Foods – which currently operates flour mills in the UAE, Lebanon, Sudan, Iran and Sri Lanka, a rice mill in Pakistan as well as silos in Algeria – is also exporting its flour and grain products to the Philippines, Singapore, Malaysia, Vietnam, India, China and countries in the GCC region.

“We have different avenues of investments, which we are willing to explore. We are expanding,” says Mohammed Essa Al Ghurair, senior trader-oil of Al Ghurair Commodities.

The company is reportedly eyeing the operation of a pasta factory in Saudi Arabia sometime this year, but Al Ghurair hinted at other investments in the kingdom’s food industry.

Despite declining to give further details about the value and timeframe of its expansion projects in the Middle East and Asia, Al Ghurair said their company is serious in moving forward with their investment scheme.

“We’re serious in our investing. Our business, for the past 30 years, has grown from producing 100 metric tones of flour per day from our Jebel Ali factory to 5,000 tonnes per day total output from all our global operations. We discharge storage vessels at a rate of 48,000 tonnes per day, which no company in the region does,” he said.

He added that farmland investment is not part of their expansion plan.

Crisis effect on food industry minimal

Constant demand for food as a basic commodity has slightly cushioned the blow of the global economic crisis on food industry, says Al Ghurair.

“Global trade did not grind to a halt. The demand has always been there. We didn’t see a major slowdown in the global trade except the usual market trends of supply and demand of raw materials,” he said.

Al Ghurair explained that various dynamics such as agri-production concerns, political issues and government-imposed export restrictions play their parts in the exportation of raw supplies.

“When Ukraine decided to stop exporting wheat in 2007, there was nothing much we could do about that. We had to look for alternative sources of wheat,” says Al Ghurair.

The UAE, like other Gulf states, relies heavily on imports to sustain its food supply requirements as local agricultural production tends to be more costly due to the region’s climate.

Other market trends in the region that became prevalent during the economic meltdown were a change in consumers’ spending habits and the banking sector’s tight liquidity, says Al Ghurair.

“Customers have less money in their hands and there is less liquidity in the market because banks are more conservative in financing trades. Otherwise, the population in the Middle East is growing so there’s always a huge demand for food products,” he mentioned.

At the height of the economic crisis in 2008, global food prices spiked due to agflation (coined from the term agrarian inflation) or the rise in agrarian commodity prices. Al Ghurair said it will be difficult to forecast when food prices will drop again as the market will remain volatile to various factors such as biofuel production.

Because certain grain products constitute a viable alternative to fossil fuels, the summer-2008 surge in oil prices drove the price of grain substitutes to a 10-year high. The United States, for instance, currently uses 30 per cent of its corn production to create ethanol.

Gulf region lacks R&D

Al Ghurair added that their company seeks to be at the forefront of R&D (research and development), an area that he feels many of their competitors in the region fall short of.

“The R&D does not exist in this region [in as far as] food products [are concerned]. We want to be at the forefront of R&D by developing specific products, [for instance] a mixture of wheat that creates flour that helps the body absorb cholesterol. This is the [kind of] research required in the region,” he explained.

Al Ghurair also believes that R&D results to product innovation. Recently, the company introduced in the retail market a specialty flour for diabetics. Aptly called “Diabetics Flour”, the product is said to have higher fibre content than ordinary flour.

Another new product in its flour portfolio is the Cholesterol Care, which debuted in Gulfood this week and will be available in local stores tentatively by March.