Agthia has long been recognised as one of the largest food and beverage conglomerates in the Middle East, leading the market in various categories from drinking water to protein – but the firm has now set its sights on establishing itself in the same way in wider regional and international markets.
”Agthia has established itself with market leading brands across many key categories and geographies, such as bottled water and dates in the UAE, bakery in Egypt and processed meat products in Jordan,” Agthia CEO Alan Smith told the floor during the firm’s most recent investor meeting.
“But as part of our strategic vision to become a regional F&B leader by 2025, we recognise that more progress needs to be made such as moving from a UAE-centric focus to developing a stronger footprint in MENA+ markets and beyond; as well as shifting our portfolio from a commoditised one to include more value-added F&B brands.
“We are in a good position to make this shift as 50% of our revenue in FY2023 came from international markets – namely 27% from other Arab countries, 14% from GCC markets excluding the UAE and 9% from the rest of the world, so the key is to increase this focus.
“This was already significant progress from FY2020 where just 10% of our revenue came from international markets, and it was even more heartening that product innovation was what delivered 30% of the revenue growth.
“As it is, we are accelerating innovation to develop products including new gifting and travel ranges in the snacking category as well as new functional water products under the Al Ain Plus brand.”
The firm is first focusing on scalable development in feasible MENA+ markets, which includes Middle East and North Africa markets as well as those close to them based on characteristics such as geography, culture, language and more. Examples include Pakistan, Uzbekistan and Turkmenistan.
“The main focus is to expand into attractive categories and large, scalable markets in MENA+ that have stable macroeconomics and politics, favourable consumer demographics, and growing consumption,” he added.
“More detail on specific markets are in progress, but the whole idea is that we will allocate capital to specific F&B categories with proven scalable platforms – and in terms of any investing into existing local players, we will ensure that the targets are market-leading brands with experienced management teams.”
Upward confidence
Based on the firm’s recent FY2023 and Q1FY2024 financial results, Smith also expressed strong confidence that Agthia is well on the way to meet its 2025 targets.
“The revenue target for FY2025 is AED6bn (US$1.6bn) and in FY2023 we already hit AED4.6bn (US$1.25bn), whereas the FY2025 net profit margin growth target is 8.5% to 10% but in FY2023 we already hit 7.5%,” he said.
“FY2024 guidance currently projects our revenue growth at a further 10% to 12%, and net profit margin improvement at 30 to 50 basis points – so at these numbers and with no further acquisitions planned in the near future, we are well on track to achieve our targets assuming no significant deterioration in geopolitical outlook.”
The firm has also identified Asia as an important new export market for several of its products, particularly its recently-acquired dates brand Al Foah.
“We made a lot of M&A acquisitions over the past few years, and now to double down on growth, the plan for brands such as Al Foah is to accelerate growth driven by premiumisation and innovation for this to be successful,” he said.
“White-space expansion will be key and we will be doubling down on the Indian market where it already has some presence, as well as launching this brand into more new export markets particularly pan-Asia where dates are widely consumed as well as Brazul and the United States.”
