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 On the brink of a big boom - Strengthening the economy -
New investment vehicles - Telecommunications on the Nile - Thriving export potential -
Pharaonic projects - Improving its overall infrastructure - Shifting towards the private sector -
New era in tourism 
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INTERVIEW WITH
MR. RACHID MOHAMED RACHID
CHAIRMAN OF FINE FOODS GROUP -UNILEVER
Wednesday 9th December, 1998
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1/Q: Mr. Rachid, could you give our readers a historical background of Fine Foods Group?
The company is originally a family business that has been established in the fifties. The activities of our family group are very much focused on consumer products and mainly the food and beverage market. We have been established in Egypt as I said earlier, in the 50s, but then we had a period of interruption because of the nationalization period when Egypt was not accommodating private investments. But, we came back very early into the market in the 1970s. Since then, we have been active in consumer products and mainly in food and beverages with a base of manufacturing and distribution, marketing exports, to use our manufacturing capacity that was established in Egypt. In doing that, we have been linked to a number of international companies and a greater number of joint ventures, agreements, licenses. The biggest part of our group now is a joint venture with Unilever and that is under the name of Fine Foods Group. It is covering a number of food and beverages products like tea, cheese, tomato, soups. In our group we cover other areas like bakery ingredients, instant things. In the past we were involved in carbonated soft drinks in a joint venture with Coca Cola for a number of years. We are trying to keep expanding within this category.
2/Q: The food sector is one of the promising sectors in Egypt. What are the main guidelines of your strategy and the best opportunities for future growth?
The food industry is very interesting because you have a large population in Egypt that exceeds 60 million people. What is also interesting in the food industry is that you can look at it from a regional perspective because, fortunately, we are in the middle of a region that has a lot of common habits regarding food and drinks. Although food has always been a local business because of the habits and tastes of people, in our position today, Egypt is in the heart of the Middle East. There are at least 15 or
20 countries that share with us a lot of commgn habits in food and drinks. That makes the market very interesting. As for how we approach it, we identify sectors that allow us to have some sort of value added. We are not interested in commodities or unbranded products like sugar, flower or fats. We are very much keen to be in areas where we can have value added and brand our products. Once we identify these sectors we try to establish links with a good source of technology and know-how. We are trying to gain a market share and at the same time enlarge that sector because many of these sectors are not quite developed in Egypt and the Middle East. So, if you look at the per capita consumption in many of the food and drinks items where there is value added, they are really below international standards. So, there is a role here to increase the market size.
3/Q: Our readers are business people who are interested in figures. Could you give us some figures such as the number of employees, exports, market share?
As a total group we have a fixed independent manufacturing facility in different locations covering all of Egypt. Within this structure we also have 12 to 14 branches on the distribution side. The total number of employees is in the range of 3500 people. We also have an impact of what we call indirect labor, which means that we calculate the number of people who are not directly working with us but their jobs have been created due to our existence. In this case we are talking about a number that exceeds
15,000 people with all our suppliers, contractors, distributors and all other functions. As I said earlier, we are not only operating in Egypt we are also exporting to other countries. Our exports are in the range of 15% of our production. So, around 80% to 85% of our production goes to the local market.
4/Q: You have been chosen to be among the President’s Council of the Egypt -USA partnership for Economic Growth and Development. According to you, how does this partnership affect the Egyptian economy?
I am heading the committee of the Promotion of agro-business in Egypt. This promotes investment from the United States to the agro-business in Egypt. I will focus on this to answer your question. The agreement is extremely important because what Egypt is trying to achieve in its relationship with the USA is to increase the level of trade and investment and reduce the level of aid coming from the USA. Within the Presidents’ Council we see a tremendous potential for American companies in particular to invest in Egypt. One of the areas identified is the agro-business. Two areas have been identified as top priorities. One is the high-tech area and the other is the agro-business. Egypt imports from the United States a significant amount of agricultural products. But, we also feel that Egypt needs a significant amount of technology transfer and investment in the field of agro-industries and food technology in general. The opportunities are quite good. The role of my committee, my colleagues and myself is to try and identify this and communicate it to the American side. There is no doubt that there is a significant value of having this partnership. American investments are increasing in Egypt and we hope that they do so more rapidly. We have a big number of success stories of American companies in Egypt whether they are in the oil filed, construction, consumer products, food industries, car manufacturing or banking. We need to see more and more of them coming into Egypt. Our job is more challenging now because of the overall situation of the global economy and the concerns about emerging markets. These are the benefits and expectations that we have for this partnership. I will not touch upon the trade side because it is moving quite well. On the American side, there are a number of imports of American products into Egypt of food products, machinery. Egypt is trying to catch up with this huge gap between our imports and exports to the United States. We are increasing our exports to the United States slowly but surely.
5/Q: You are also a member of the executive board of Egypt International Economic Forum. What is the role of such forum?
It was established very recently. It is part of the international forum that arranges the biggest conference every year. The idea is that we want to make sure that we are able to convey the message to the international community and business people that Egypt is the place where they can have more investment and more trade. We are trying to increase our contacts and our links with leaders and decision-makers around the world that influence the decisions concerning trade and investment. That is something which we seek for the future of Egypt. At the same time we are trying to convey to the local community, whether the government or the business community, what the expectations and the requirements are in order to make Egypt a more interesting place. So, we are running the dialogue on both sides now.
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6/Q: The market is becoming more and more competitive. Food industry is a promising sector. What specific advantages does your company possess compared to your main competitors?
Our real comparative advantage is focus. We are one of few groups in Egypt with significant size which is very much focused on a certain sector. We have taken a view from the beginning that we do not want to be all over in terms of investment and activities. So, we have to focus on our side and that means for our competitors that we are a company of a significantly big size that dedicates all of its resources to the food and beverages industry. We are very selective in the areas in which we operate. So, the real comparative advantage is our strategic direction by which we clearly say where we want and do not want to be. As I mentioned earlier, we want to be in value added and branded products. I think that once you have your strategy right as we simply do, I think that the biggest comparative advantage that we have is the people. We have a group of managers and employees that are unique and definitely on the top of this industry in the Middle East. This applies to the sales, marketing, manufacturing and commercial divisions. We have invested extensively in the last twenty years. We have been able to really develop a network of people that is exceptional. A lot of them have received training abroad and acquired experience with international companies all over the world. They also worked abroad and now they are working here. We have a group of people now that are giving us this comparative advantage.
7/Q: Our readers are very much interested in new business opportunities. In which areas of your activities are you interested in attracting new business?
Attracting new investments is part of our strategy. My job is to pursue further investments in agro-business and food industries and we are doing that with multinational partners and foreign partners.
8/Q: During the last years the government has adopted a more liberal attitude. What should the government do in order to stimulate the economy even further?
The government has definitely taken a more liberal approach to the economy in the last few years. What is required now is to continue in that direction and especially with the challenges that we are facing today, not only as Egypt but also as an emerging market. It is the time of choice for many markets now as we have seen in different parts of the world. Markets are faced now with the challenge of choice whether they should continue now in that liberal and open market process or under the pressure that they face from different directions some of them are backing off and trying to be either slower or more protective of their markets. I think that what we have to ensure in the case of Egypt that with the pressure that we are facing as an emerging market that we do not back off and continue. We know that we are moving on the right track with very valid objectives. We should overcome our temporary problems whether they are difficulties concerning exports, lower flow of investments or pressure from foreign currencies.
9/Q: According to you, what should be done so that Alexandria becomes the glowing business place that it used to be?
I am the Chairman of the Alexandria Development Center. It is a non-governmental body that acts like a advisor to work on projects and ideas to improve the situation in Alexandria. We are a group of academics and business people. The center has been quite effective and diversified in approaching the problems of the city. The biggest challenge that we have in Alexandria today and we are working on, not only as a center but also as the entire business community and decision-makers here, is opening up Alexandria to the world. If we go back in history, even recent history, you will find that Alexandria was an important city in the world. It was very important in the region and most important in the Mediterranean. That was 50 or 60 years ago. This was the case because Alexandria was an open city. By ‘open’ I mean that we had a very cosmopolitan population, there were a number of foreign companies in Alexandria and the Egyptian Stock Market was in Alexandria. In addition, Alexandria had the biggest cotton stock market in the world and the biggest port on the Mediterranean Sea. Unfortunately, Alexandria lost that position for many reasons. In my personal assessment, one of the reasons is that Alexandria as a city became less open. The challenge that we are faced with now is how to open Alexandria and establish more accessible links from the city with other parts of the Mediterranean. It is unacceptable to find that a very significant number of ports and cities in the Mediterranean area do not have sea access to Alexandria. The same applies to our airways. Alexandria, as a city, has all the fundamentals and factors that can make it a very important city in Egypt and the Mediterranean. I think that could happen easily and much faster if we work out the problems of accessibility and opening of the city. Like many other cities we have problems like the infrastructure and the population of the city have increased. But, I believe that these are secondary problems. Alexandria could become much more active and attractive for investment because it has a very unique position in Egypt. According to statistics, we have the highest level of education in Egypt in many fields including high-tech. So, we have a clear comparative advantage in education. The people are willing to be more open as well.
10/Q: What has been your most satisfying personal achievement since you have been General Manager of your company?
It has undoubtedly been the people. This is very difficult to demonstrate because people are not things that you show around. As I mentioned earlier, my biggest achievement is that we have been able to develop and maintain a group of exceptional people. All of our staff has been trained in the company. I am not saying this in comparison to other companies in Egypt but in comparison to what you will find anywhere in the world. Today, we believe that with the opening up of the economy and lifting the barriers on trade, we are going to compete with everyone in the world. To be able to compete with all the big names around the world we must have people here that are capable of that level of competition.
11/Q: What is your final message to our readers?
I would tell them to come and invest in the agro-business in Egypt. |
© World INvestment NEws, 1998.
This is the electronic edition of the special country report on Egypt published in FORBES Magazine,
May 31st issue.
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EGYPT
