Dubai: Postponement of the Expo 2020 to next year could prove costly for small and mid-sized businesses in the UAE, and especially those that had scaled up in anticipation of the event opening in October this year.
These businesses were part of Expo 2020 Dubai’s “licensee programme” and had pinned hopes on the event to be the platform for their homegrown brands to win maximum exposure.
To prepare for Expo 2020, Stevie Lowmass had moved into a 9,000 square foot industrial complex in Dubai Silicon Oasis last year and three times the size of her first manufacturing unit in Al Quoz. Her company - Camel Soap Factory - produced 10,000 tons of naturally-milled soap a month and the plan was to scale this up to 50,000 tons. The investment in the new factory and equipment came to around Dh1 million.
The Expo 2020 postponement will have a “major effect on our bottom-line as our forecasts had been dependent on the visitor numbers it was looking to attract,” she said. “We are now having to pivot the business completely in any case.
“We are looking to market direct-to-consumer on many of our core products. This has some advantage in terms of being able to manage product pricing and, most importantly, improve profitability.”
But can the pivot work?
For any small or mid-sized business, managing the cashflow in the coming weeks and months will be the biggest challenge. Is there enough demand coming in for their products and services to justify the rents and all the attendant expenses?
“How do we make it pay off for us for the next 12 months?,” wonders Lowmass. “I am naturally thinking of looking at alternative income streams - maybe use my facility to manufacture for other companies.”
How do we make it pay off for us for the next 12 months
Funds already spent
Yousuf Saleem, who manages The Dates Bar Company , had a commitment with Expo 2020 Dubai to produce 20 million date bars between September 2019 and 2021, called “Simply Dates” – a below 100-calorie mid-day snack. The bar, costing Dh5, would also sell at select supermarkets and key points in the city, apart from the Expo venue from this year.
That was the plan. For Saleem, the date bars do have a ready consumer base, though there has been a slowdown in payments from some retail clients.
What worries him however is that come October there won’t be the 25 million visits he was expecting, for which he had invested in a Dh5 million automatic production line and Dh400,000 in packaging materials.
“The coronavirus has also hit the tourism and the souvenir industry and that affects us,” he said. ""We are hopeful that with the Expo most likely movig to 2021, it allows us the time to sell our Expo products over a longer period."
With new dates on the horizon, “Expo 2020 licensees will now have to start planning to win over a whole new market next year,” said Murray Strang, Head of Dubai Office at Savills, the real estate consultancy.