Over the past 15 years, global food giant Mars has enjoyed phenomenal success in the Egyptian market, not only meeting domestic demand but also using it as a base to export to other countries in the Middle East and Indian subcontinent.
Mars Inc, one of the world's largest confectionery manufacturing companies, has enjoyed huge success in the Egyptian market in the past 15 years. A private, family-owned company headquartered in Virginia, US, the company's global sales exceed $33bn across all of its product lines in 2013 - which as well as confectionery also include pet care and drinks – and its operations in the Middle East, particularly Saudi Arabia, the United Arab Emirates and Egypt, account for an increasingly sizeable proportion of this.
Mars started selling its products in Egypt, the most populous country in the Arab world, in 2001. It opened its first office in the country in Cairo, the country's capital, in the same year. Following rapid growth in this new market, in 2005, the company opened a manufacturing facility in the city of Giza, 20 kilometres south-west of the capital. The factory was not only the company's first manufacturing facility in the country, it was also the first food factory in Egypt to earn an Leadership in Energy and Environmental Design Gold Certificate from the Green Building Council, a global environmental group.
Appetite for growth
Since its inauguration, Mars' Cairo facility has been subject to a number of expansions, the most recent of which - an $83m project - saw it add a production line for its Twix chocolate bar. This project is currently in its final stages, with production expected to begin later in 2015, and when finished it will carry the company's total investment in the country over the $200m mark.
The Egyptian market is seen as a key part of the Mars global sustainable growth strategy. “It represents one of the top 20 markets in terms of incremental growth to the Mars business within the next decade,” says Ahmed Seddik, the company's general manager for north Africa and the Levant.
Egypt plays a particularly significant role in Mars' strategy as it is a key regional hub, with export potential to markets in the Middle East, the Indian subcontinent, Africa, Europe and beyond. Indeed, more than 70% of the confectionary produced by the company in Egypt is exported to other countries in the Middle East and the Indian subcontinent. By having a local production facility, Mars can produce chocolate closer to the places where it is consumed, providing customers with fresher products, and enabling the company to tailor products to match local consumer taste and demand.
Today, the company employs more than 300 people in Egypt, 99% of whom are Egyptians. “We recruit and develop local talent though our in-house programmes and the Mars Academy. And, we continuously export talent to the Middle East, Asia and Europe,” says Mr Seddik. In addition to these direct jobs, Mr Seddik estimates that the company has created some 1500 indirect jobs through its distribution and supply chain.
Sweetening the deal
Egypt is not only geographically well located, the country also has good transport links. It boasts a large number of sea ports, with the option of transshipment to ports on the Red Sea and the Mediterranean. Other advantages include Egypt’s unique basket of trade agreements, which include the Agadir Agreement with Libya, Morocco, Algeria and Tunisia; the Common Market for Eastern and Southern Africa; the EU-Egypt Association Agreement; the Greater Arab Free Trade Area trading bloc; the Egypt-Turkey Free Trade Agreement; as well as numerous free and preferential trade agreements with individual Arab countries.
Mars does not currently receive any incentives from the Egyptian government for its investment in the country, “but the government is in the process of launching a new investment law, which we expect should incorporate incentive programmes as part of its economic reforms”, says Mr Seddik. “These should not only be available to newcomers, but existing companies, such as Mars, who are increasing their investments and presence in Egypt.”
The current government is also looking at investments to improve its infrastructure. “This is a very welcome move, since it will allow us to distribute our fresh products more efficiently for more people to enjoy,” says Mr Seddik.