Dubai: Launch a full-fledged ready/frozen meal brand – and not have any production facility of your own making them? Welcome to the world of asset-lite businesses.
It’s the tactic that Delektia – registered at Abu Dhabi Global Market - is honing in the UAE before extending the brand to other markets, regional and beyond. It was in September last that Delektia made its way into local stores, packaging all-time favourite Middle Eastern meals.
“All this without having a single owned production facility of our own,” said Ziad Bushnaq, Managing Partner of Delektia, which is both the name of the company and the food range that it puts out. “We pride ourselves on our ability to work with state-of-the-art manufacturers under a strict quality control mechanism and supervision. Working with multiple international distributors allows us to keep our focus on new offerings and results in quicker penetration into new markets.”
Not to mention the reduced capital expenditure that this entails. It frees up Delektia from committing to upfront investments on plant and equipment, and instead devote all of the attention to get the menu of products right and creating the network.
On this score, the brand seems to be hitting its stride. It has representation in Oman and Jordan apart from the UAE. Next up will be Saudi Arabia, Kuwait and Qatar. “Delektia’s products have recently obtained US FDA approval to start the process of entering North American markets,” he added. “This will be announced in the near future.”
The ready-to-serve food category has been having some outsized growth in these two years, with consumers willing to give the options a try, especially those packaged with health benefits in mind.
Interestingly, other areas of the F&B space have seen versions of this asset-lite approach. There are the ‘virtual’ restaurants that operate through cloud/dark kitchens, where the menus are the point of difference between success and failure.
Will Delektia stick with the no-owning production tactic even when entering overseas markets? “Owning our own facility will be happening - in key global locations - in the near future,” said Bushnaq. “We are in the business of challenging the status quo of retail frozen food.
“The younger generations are more time-efficient and always looking for quick solutions. But, quality is also very important. Delektia is changing the perception of ready-made frozen foods. We currently have 15 products, with about 75 more in the pipeline. All of these will hit the market over the next five years.”
Hot food counters are now a staple at hypermarkets, and represent a sizeable revenue creator for them. Would Bushnaq think of hot food options too?
“We created our products to be staple items in every freezer and on every shopping list,” he added. “Our offerings are designed to make life easier for people with busy lifestyles who want healthy and home-cooked meals. In particular, the needs of working mothers, stay-at-home moms with kids, and young professionals with limited time on their hands were taken into account as we were designing our product range.”
In time, when the brand gets to go global, other cuisine options will come into play.
"I am confident that global food prices will eventually stabilise, as everything usually does," said Ziad Bushnaq. "But these prices will be set higher than what we are used to. On our part, we are adjusting the margins downwards for now to stay relevant to our consumers and make things easier for them during this period of sharply increasing commodity prices.
"We hope that other brands and retailers would also do the same..."