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Food and beverage sector faces economic challenges

People attend the HORECA exhibition at BIEL in Beirut, Tuesday, April 1, 2014. (The Daily Star/Mahmoud Kheir)

BEIRUT: The absence of tourists in Lebanon and the deteriorating security situation have weighed heavily on different sectors of the Lebanese economy, and the food and beverage industry is no exception.

“Our sales dropped remarkably in the past year due to the absence of Arab tourists,” said Ali Beydoun, brand manager at Balkis, a manufacturer of fresh juice, on the sidelines of the HORECA 2014 trade fair being held in the Beirut International Events and Leisure center.

“We used to rely heavily on tourists in mountain areas and on the beaches to reach a decent sales level, but we were not able to do so this past summer,” he said.

Beydoun explained that Balkis juice was more expensive to produce than other products because they were fresh, and thus his company could not make up for the loss of revenues from summer Gulf tourists by marketing to Syrian refugees.

“Syrian refugees, of course, would not be interested in buying our products. They’d rather go for less expensive items in order to be able to survive,” he said.

While some food and beverage companies have failed to achieve growth in recent years, others have relied on foreign markets to make up for their domestic sales drop.

“We were surely affected by the difficult situation over the past couple years because our products are not considered to be a basic need for people,” said Peter Daniel, managing partner at Castania, a well-known Lebanese brand of roasted nuts.

“However, we were able to make up for our drop in Lebanon by exporting to other markets, which helped us in maintaining our stability,” he said. “We are present in over 30 countries now.”

Castania is considered lucky compared to food manufacturers who have been unable to turn to export because of the high cost of production in Lebanon, which has prevented them from being competitive.

“We cannot rely heavily on exporting our products because of the high cost of production in Lebanon, which makes our items less competitive compared to oil products from other regional countries,” said Elvire Kettaneh, director of Slim Oil in Lebanon.

“We would like to export but we cannot compete outside because of the high costs.”

Kettaneh added that the Lebanese market was very difficult because the purchasing power of people had diminished in the past few years.

“We have not been able to achieve any growth, unfortunately,” she said.

Slim Oil is also facing a major challenge from foreign companies that do not have to pay customs on the oil they import to Lebanon, which makes her products vulnerable to competition from foreign brands.

Other food industrialists interviewed by The Daily Star at HORECA voiced their worries over Syrian factories that had launched operations in the Gulf and that are expected to impact their exports to these areas in the coming months.

“A lot of Syrian factories have started operating in the Gulf, and we are expecting a drop in our exports to this area soon,” said Jamil Haffar, area sales manager at MEC3, a manufacturer of chocolate and ice cream ingredients.

Following the beginning of the Syrian civil war, some Syrian industrialists moved their businesses to other countries in the region including Lebanon, Egypt and Saudi Arabia.

However, many of those who have moved to Lebanon resorted to illegal operations in order to avoid paying taxes and other dues. This has affected Lebanese industrialists, mostly in areas outside Beirut.

“Some Syrians opened shops and factories, and this has definitely affected our business because they do not pay taxes or social security for their workers,” Haffar said. “Some of them do not even pay rent, but they live in the buildings that house their businesses as well.”

HORECA is the region’s premier hospitality and food event and features nearly 15,000 square meters of product displays, as well as a program of culinary, business and industry innovation activities.

 
A version of this article appeared in the print edition of The Daily Star on April 02, 2014, on page 5.

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Summary

The absence of tourists in Lebanon and the deteriorating security situation have weighed heavily on different sectors of the Lebanese economy, and the food and beverage industry is no exception.

Other food industrialists interviewed by The Daily Star at HORECA voiced their worries over Syrian factories that had launched operations in the Gulf and that are expected to impact their exports to these areas in the coming months.

"A lot of Syrian factories have started operating in the Gulf, and we are expecting a drop in our exports to this area soon," said Jamil Haffar, area sales manager at MEC3, a manufacturer of chocolate and ice cream ingredients.

Following the beginning of the Syrian civil war, some Syrian industrialists moved their businesses to other countries in the region including Lebanon, Egypt and Saudi Arabia.


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