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Lebanonwire, June 7, 2003

The Daily Star

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Ghandour prefers quiet road to riches
Company has translated international success into local recovery
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Family enterprise has engineered spectacular comeback in wake of civil war

Hadi Khatib
Daily Star staff

The food and beverage company Gandour has made a successful post-war recovery by sticking to what it knows best, and that is sell, sell, sell.
The civil war generation may not know much about Gandour, but almost everyone you ask would most probably associate the name with chewing gum. Well, chew on this.
Gandour has made a remarkable recovery from the ashes of the 15-year war. The conflict practically destroyed the factory in Shoueifat, which for many years left its imprint on our minds as a reminder of the horrors that took place during that time.
Working behind the scenes, Gandour has slowly, almost secretly, re-established itself in the Lebanese market and expanded its activities in Africa, Asia and the Arab world with a variety of food and beverage  products. “While you know the Gandour brand name, you may not know all our products, but, this may be part of our policy,” Ali Ghandour, fifth-generation co-owner of the family business, told The Daily Star in an interview earlier this week.
If you know Gandour and how it likes to operate, there is nothing ambiguous about the statement. It is part of the company’s policy to let its products speak for themselves without too much promotional effort.
“The product makes its own noise,” Ghandour said.
Unable to manufacture during the civil war, Gandour relocated its headquarters to Saudi Arabia, where it established two plants in 1986 and 1989. That was the beginning of a number of smart moves to preserve the brand name, improve the products and gain sales in highly competitive markets.
“In Saudi Arabia, we tapped into a large market with high purchasing power, which naturally led us to become a bigger operation,” Ghandour said.
Operating in a hot-weather market, Gandour surprisingly succeeded in selling, of all things, heat-sensitive products.
“In Saudi Arabia, chocolate has become our biggest industry,” Ghandour said. “Saudis are probably the biggest consumer of chocolate in the region. They have a sweet tooth.”
Chocolate, a personal favorite with Ghandour himself, is associated with disposable income, “but we like to make it accessible to everyone.”
Tofi Luk (Caramel for You in Saudi Arabia) ­  milky chocolate flavor and caramel-coated biscuit bars ­ are a favorite there, and are, according to Ghandour, starting to become popular in Lebanon as well.
Gandour began consolidating its operations in the early 1990s. But the company made its major move in 1997. That year, the original M.O. Gandour company was fully acquired and integrated into Saudi Arabia operation, and that led to revamping the Lebanese operation and expansion into the Asian and North African markets.
“By 1999, the Lebanon plant underwent a major face-lift, which cosmetically gave people the impression that we were back in business, but in reality we invested heavily in the core, modernizing and refurbishing the factory,” Ghandour said.
Gandour invested in a beverage plant, expanded the food and beverage range, re-launched the vegetable oil business and reintroduced sesame-based items like tahina and halawa.
Gandour expanded simultaneously in Asia, which had so far been in the planning stages.
“Our natural expansion into Malaysia came as a result of the proximity of that part of the world and the exposure to our products to Asians who were primarily guests in the Gulf,” Ghandour explained.
In a special legal arrangement that allowed Gandour to retain full ownership of the company, the factory in Malaysia had to export 80 percent of its products. But that’s not such a bad deal. Benefiting from cheap but highly skilled labor, Gandour has the luxury of selling high-quality, low-cost products anywhere in the region.
Today, Gandour has penetrated markets in China, the Philippines, India and other parts of Asia and the Arab world.
“These are still early days,” said Rabih Keyrouz, manager of international sales. “We are not market leaders and our brand recognition is not there yet, but we are well on the way.”
He said the company was still adapting to the culture, tastes and rules, and had 250 Asians on staff to provide expertise and insight into that market.
Last year, the company built a rice-refining and packaging mill in Egypt.
“Rice is very important in the food and beverage range and Egypt is one of the largest producers in the world (4-6 million tons of paddy rice a year),” Ghandour said.
Gandour rice is exported out of Egypt and can be purchased in Beirut in bags of 1, 2, 5, and 25 kilograms, “which along with its compatibility with vegetable oil, is part of the daily staple food products.”
Next year, Gandour plans to expand into confectionary products at its Egyptian factory.
In Lebanon, the traditional chocolate brands such as UNICA remain dominant, but the company has also introduced appealing beverage products such as Koolz fruit drinks and Gandour pure juices, and claims leadership in the vegetable oil ‘class A’ division.
“We have renewed the look, size and packaging of our biscuit line, now enriched with better ingredients,” said Walid Feghali, the company’s marketing director.
Ghandour said that if one examines his firm’s products on supermarket shelves, “you see a wider range and better packaging in the last two years, which for instance made UNICA by far the leading chocolate brand on the market today.”
Gandour does use a variety of marketing techniques to promote its products, which includes TV and billboard advertising, and free distribution and sampling of products in neighborhoods and in supermarkets.
However, it has not been easy. “Lebanon is a small market, with everyone competing for a small share of the pie, so yes, it is tougher here,” said Khairallah Wakim, Gandour’s chief operating officer.
Whereas Gandour is seen as an imported product abroad, simplifying its introduction into markets, Lebanon offers a different dilemma. “Lebanese can be more finicky when it comes to choosing between a local and an imported product, but we are working on closing that gap and bring loyalty back to the product,” Ghandour said.
Nonetheless, he looks positively at competition.
“It keeps you focused, drives you to be innovative and forces you to look at your cost factors,” he said. “Not all industrialists would agree with me, but we welcome the open market policy. It makes us better.”
He said the key was to have the right product, the proper capitalization and smart market positioning, as well as long-term commitment. “If industries need to survive by changing their product profile, then they need to do it, but they cannot insist on producing products in an open market economy, when next door, someone is selling similar items for 20 percent less,” Ghandour said.
Gandour, which employs about 2,000 people worldwide, had to lay off some 200 of its employees in Lebanon to become cost-effective with the remaining 400.
“Everyone was more than fully compensated, but it still was not an easy decision to make,” Ghandour said. “But we had to remain young, regroup and be efficient to compete.”
The Ghandour family plans to keeps its recipes within the family, refusing joint-venture offers from multinationals, and it is tight-lipped about its total sales volumes. But it is almost ready to unveil what it calls a new and exciting product on the Lebanese market at the end of the month.
“We have not made any noise about it yet,” Ghandour said.
So what else is new?

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