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Organic sees success in right price-quality combination

Organic goods market's new entrant builds distribution network with retail ambitions

The organic produce section at a supermarket
Image Credit: Bloomberg
The organic produce section at a supermarket. As a new entrant into the local organic goods marketplace, Organic is hoping to attain break-even in the next two to three years.
01 Gulf News

Dubai: Everyone realises that organic products — spanning the entire range from food to facial care — are good for them. But there aren't enough customers to buy these products and, just as important, keep on buying.

It is this conundrum that a brand new entrant into the local organic goods marketplace expects to turn to its advantage. And the promoters of Organic, as the venture is called, know well what they are up against.

"We understand the organic products market is very niche, but our studies reveal there is great unlocked potential," said Mohammad Ashiq Ariejeel, CEO of the new entity.

"Organic has identified the main gaps in the market which led some of the [earlier] companies to pull back. Our business strategy has taken into account these factors to be successful in our venture."

But hasn't the food price inflation of the last year and more made it even more difficult to affix price points on organic products? More so, as food items have historically represented the biggest chunk of the organic products value chain?

"This is where Organic is making a call — to find a new price gap in the market and to leverage this opportunity to grow the market," the CEO said.

"The management has made the critical decision to make the products available at affordable prices compared to its conventional counterparts, [while] at the same time making sure to provide the highest quality with European standards.

Financial backing

It also helps that Organic itself is part of a bigger business entity, the Sharjah based Al Hosany Group, which has interests in leisure and amusement facilities, property and real estate services and in advertising. In other words, the deep pockets are there to give the new venture the financial backing that it requires.

"The group has always looked at new businesses with a futuristic vision, to spot trends which has long-term value and implications on our corporate bottomline," the CEO said.

To keep the initial investments in check, the venture is working building a wholesale and distribution network and get into retail on its own at a later date.

"We are in talks with many retail entities to launch our product range," said Ariejeel. "Our focus will be on GCC markets even at the same time we make the entry into the UAE; our aim is to make the products available across communities. There is an expanding market of consumers who are more conscious of healthy food, a sustainable lifestyle and green conscious. This population can only go up."

Over the medium term, the company intends to get into its own retail space, particularly in Dubai, Sharjah and Abu Dhabi. Locations that could serve the future retail push are being identified.

Future plans

"Our aim is to open up new avenues for organic products; retail will be strengthened once we succeed in the first phase and we do hope the ground work we are doing will pave the way for a strong foray… whenever it takes place," said Ariejeel.

The promoters believe the overall organic products market in the Gulf will grow fast enough to ensure the company attains breakeven in the next two to three years.

At the same time, "Apart from our own growth, we will also be making an all-out effort to develop the wider market," said Ariejeel. "For us reaping returns in the short-term has not been an ideal," he added.

"Our foray into organics is conceived with the philosophy of doing something beyond business, support a good cause of weaning away consumers from products which excessively use artificial ingredients, toxic chemicals and GM foods."

Product sourcing: Europe leads supplies

Food and allied products obviously have the biggest representation in the Organic portfolio, but the bulk of the sourcing is from Europe. "The focus is on sourcing from Europe to maintain its quality and credibility of the products and brands," said Mohammad Ashiq Ariejeel, Organic's CEO.

"At this point in time we are not in a position to comment on local sourcing as it is a little complicated process; but we may focus in the future according to our development plans."

Beyond European sourcing, the tea will be imported from Sri Lanka, coffee from Brazil, Peru and Sumatra, while the chocolates come from Belgium. Moving beyond the initial phase, which will focus on organic foods and beverages, the company seeks to expand its product portfolio to include cosmetics, home care, as well as more specialist offerings for mothers and babies.