BEIRUT

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Beverage makers thirsty for bigger profits

The Aruba stand at the HORECA exhibition in Beirut, Friday, April 4, 2014. (The Daily Star/Hasan Shaaban)

BEIRUT: While some large beverage factories in Lebanon witnessed a remarkable drop in business due to the economic slowdown and tense political situation, others with less expensive products have succeeded in boosting their sales.

“We have been able to increase our sales in the past year because our products are not expensive compared to other beverages,” said Gaya Delgopiatof, Brand Manager at Darina, a Lebanese producer of powdered juice who spoke on the sidelines of the HORECA 2014 trade fair held at the Beirut International Events and Leisure Center.

“The flow of Syrians to Lebanon has also helped increase our sales, particularly in the Bekaa Valley area because refugees always look for more affordable products due to their difficult financial situation,” she added.

According to the U.N. refugee agency, the number of Syrians registered as refugees in Lebanon after fleeing war in their country has surpassed 1 million, and most of them live in poverty and depend on aid for survival.

Refugees have been given vouchers by domestic and international organizations to help them buy the products they need to survive.

“Most of the Syrian refugees in Lebanon are receiving food vouchers to help them in buying their basic needs,” said Samer al-Hachem, Co-Owner of Aruba, another manufacturer of powdered juice, adding that this had helped him grow his sales.

“Syrians are familiar with powdered juices, and they are used to it,” he said. “We have been doing really well in this area.”

For Hachem, the market for powdered juice is growing in Lebanon because the general public’s purchasing power has dropped in the past few years.

“We sell one liter of our drink for LL250, which is affordable to everyone everywhere,” he said.

But Hachem admitted that even the most successful beverage factories had not been spared by the economic recession in Lebanon.

“We are suffering from a cash flow problem in the Lebanese market,” Hachem said.

“Our clients used to pay their dues on time but now payments are being postponed from 30 to 60 and 90 days sometimes,” he said.

Hachem added that money collection was a big issue in the market today because industrialists were lending the market funds that would normally be used to manufacture more products.

In addition to cash-flow problems, other factories are suffering from the low confidence in Lebanese products.

“Some people prefer to buy foreign products because they do not trust the quality of locally produced items,” Delgopiatof said. “People should trust the local production more because they are very good quality,” Hachem added.

As opposed to Darina and Aruba, many of the factories that produce affordable drinks have reported losses in the past year.

“Our sales dropped by around 60 percent in the past year because at some moments we were unable to deliver our products to areas with security issues, such as the southern suburbs [of Beirut] and Tripoli,” said a representative of Yamama, a factory specializing in the production of juice syrup.

He explained that the company’s juice syrup costs LL3,500 per liter but that when water was added, the quantity increased by much more than one liter.

“The quantity that we offer for this price is reasonable, and our product is not considered to be expensive at all but the deteriorating political and security situation has affected us significantly” he said.

He added that when his products did not reach the client on time, they were replaced by other brands.

Some businesses that have suffered from the events in Lebanon and next door in Syria have tried to make up for the economic slowdown by exporting their products and entering new markets.

“We cannot rely only on the Lebanese market to cover our costs and increase our turnover,” Hachem said. “This is why we rely more on exporting our products to maintain our cash flow.”

Hachem said that his capital was more secure when he exported products because he was paid on time and through financial institutions.

Darina is also trying to expand to other markets in order to make up for the drop in local sales.

“We have been successfully exporting to Jordan for some time and we are entering new markets such as Africa in the near future,” Delgopiatof said.

Likewise, Wadih Kassatly, a producer of natural condiments, syrups and spirits, has also reported a 60 percent drop in its sales.

“The public’s purchasing power has decreased over the past several years, and this is why they no longer want high-quality products,” said Robert Kassatly, general manager of the company.

He attributed their sales drop to the security problems in areas such as the northern city of Tripoli and the Bekaa Valley.

“It is tough to deliver your products to such areas on a constant basis. This is why we are relying more and more on exports for our survival,” Kassatly said.

 
A version of this article appeared in the print edition of The Daily Star on April 05, 2014, on page 4.

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Summary

While some large beverage factories in Lebanon witnessed a remarkable drop in business due to the economic slowdown and tense political situation, others with less expensive products have succeeded in boosting their sales.

For Hachem, the market for powdered juice is growing in Lebanon because the general public's purchasing power has dropped in the past few years.

Hachem admitted that even the most successful beverage factories had not been spared by the economic recession in Lebanon.

Hachem added that money collection was a big issue in the market today because industrialists were lending the market funds that would normally be used to manufacture more products.

In addition to cash-flow problems, other factories are suffering from the low confidence in Lebanese products.

Some businesses that have suffered from the events in Lebanon and next door in Syria have tried to make up for the economic slowdown by exporting their products and entering new markets.

Hachem said that his capital was more secure when he exported products because he was paid on time and through financial institutions.


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