What new initiatives is A’Saffa Foods currently involved in?
AL SHANFARI: Despite the risky nature of agro investment, A’Saffa has decided to continue to invest in food. We are currently working with investors from Oman and the region to develop a very large hatching egg (parent) farm. Investors are developing a project worth roughly $165m. Another initiative A’Saffa is currently involved in is developing a further processing food project in Muscat. We will be producing around 3,000-6,000 metric tons of frozen precooked meals. The processed food will range from vegetables to fruits and meats to fish.
How would you describe the business climate in Oman?
AL SHANFARI: The business environment and the ease of doing business in Oman are very good. Oman is quite attractive to FDI. I think we need to look more precisely into the competitive advantages of the country as a whole. Firstly, we are in a very good location. There are many ports being developed along the shorelines of Oman, they serve us as well as neighboring countries. Oman also has a sophisticated banking system. As a result, finance and loans are available for new projects. The capital market systems also allows for investors to generate more opportunities to raise funds through IPOs and bonds. Oman also has highly sophisticated consumer trends. This means that we have modern packaging and processing which appeals to consumers. We also have a very good quality assurance program, which helps market Omani products worldwide. Many retailers worldwide are asking for Omani products because of their high quality. Omani products are well known for meeting best quality and are being demanded by global and local markets.
How are consumer trends and consumer behavior changing? In which ways are consumers becoming more sophisticated?
AL SHANFARI: The issues that today’s new generation is facing have to do with presentation, appearance, and quality. These are some of the aspects of sophistication that need to be addressed by producers. Once you understand the psychology of your consumers and respect their choices, you will then be able to address their needs through proper presentation and packaging style and techniques. We are also experiencing a change in consumer behavior. Consumers are now becoming more connected to global trends, which means that we are having a global consumer. Therefore, it is important to understand that consumer behavior 30 or 10 years ago is not the same as today. We have a new generation that sees products from a different perspective. There is a lot of design and artwork that goes into the appearance of the product. Nowadays, if you go to the retail stores, supermarkets, or department stores, you will see the same products that are in Europe. This means that the trend is spreading all over and we now have global consumers that can acquire similar products worldwide. However, the local consumer will be looking for certain products like in the case of halal. This region’s consumers are sensitive to the issue of halal products. As a result, we have another dimension and market that provides further investment opportunities, the ability to combine between cultural value system, consumer behavior and marketing communication will give product developers a better edge in this very sophisticated and complex business environment any where in the world.
Which traditional and non-traditional markets are you currently exporting to? How do you see this evolving over the next 2-5 years?
AL SHANFARI: The GCC is a traditional market for us. There are new markets opening up; for example places like Egypt, Iraq, and China. Companies must have the proper understanding of the needs and consumer trends of these markets. I think the sky is the limit. I believe once you have the full capabilities and skills to adjust to the needs of these different markets, you will be able to find your niche there.
GCC countries import roughly 90% of their food requirements and the value of Omani food imports is expected to reach about $4.8bn by 2020. What actions are currently being taken to improve self-sufficiency and food security in Oman?
AL SHANFARI: It is important to understand that there are other dimensions to food security than just producing food via cultivation. Food security has to do with the processing of food, storage of food, logistics, and transportation. If we understand the other elements behind food security then Oman can play a major role as a food-processing hub. Which means we can provide food security for the entire region. I believe that we should use water more wisely. For example, it takes roughly 12 liters of water to produce one chicken. Contrary to this, it takes around 3,000 liters of water to produce 1 kilo of wheat. We need to look at the value of water and try to use it in a more sustainable way. Water is very much a scarce commodity. We need to become more efficient with our water usage and develop technology driven and water efficient projects such as hydroponics. Oman can also work more towards developing and implementing green technology. We need to promote the idea of using limited water in order to produce maximum amount of food. We have to understand how to utilize water more efficiently and I think Oman is in a great position to do so.
I believe that we should use water more wisely. For example, it takes roughly 12 liters of water to produce one chicken. Contrary to this, it takes around 3,000 liters of water to produce 1 kilo of wheat. We need to look at the value of water and try to use it in a more sustainable way.
GCC food retail prices have risen every year over the past decade. How has food inflation affected consumer demand here in Oman? How do you see this evolving over the long term?
AL SHANFARI: Presently, there is a consumer shift towards less expensive food. For example, consumer trends may shift towards more abundant and less expensive food. Consumers are starting to purchase less red meat and more white meat such as chicken. It must be noted that there are controls in place. The government helps control the costs of food. There are monitoring mechanisms in place to ensure that there are not any unreasonable hikes in the price of food. The monitoring of food costs has become a major role for governments throughout the GCC. The government will not interfere with how much you sell your product for but rather will make sure that food prices are in check given the costs of raw materials and production. With regards to the long-term, governments throughout the GCC have already started programs called land grabbing. They have begun grabbing lands throughout different parts of the world. Some have started in Australia, the Philippines, Africa, and South America. This is one way of looking at food security. However, I believe that the governments should not expand into sovereign lands that are owned by local communities. Instead, GCC governments should invest in existing businesses. The GCC countries need to look at this situation from a market perspective rather than a sovereign perspective. They should invest in businesses instead of land assets that may not be productive in the future. Some of the major investments should be done locally by focusing on food processing and bringing the raw materials here. You can process it here and then create your own reserves. It is also important to control the mechanism of the market from a supply and demand angle. However, once there is situation of high demand and less supply, then national food reserve programs should intervene and provide stability to the market.
How are regional brands such as A’Saffa and Khayrat perceived in the market over international brands? How has this progressed over time?
AL SHANFARI: Local brands are considered to be premier products here and in the region. Loyalty always lies with the local brands. As a result, we do not have any difficulties in marketing new products. Your local brands will not suffer as long as you understand the needs of your consumers. It is important to continue your R&D in order to see the current trends and match the continuous evolving trends of new generations. You need to treat your consumer as the most important asset that need your full attention and care.