A UAE company is making a foray into the global organic products market while trying to sidestep the challenges that have plagued similar businesses in developed economies.
Al Hosany Group, based in Sharjah, recently launched a company called Organic to offer more than 300 food-based and other products throughout the Emirates. The company will be marketing the goods as healthier alternatives to conventional products, which may include artificial ingredients or contain traces of pesticides and chemicals used during growing and processing.
Organic will also try to draw a clearer distinction between its organic products and other natural products, which do not always include certifications of where all of their ingredients come from or how they are prepared.
Organic's products, by contrast, will be certified, the company says. Its Pure Bio energy drink, for example, has been endorsed by Austria Bio Garantie, a leading inspection body for organic products in Austria. Other ranges of food will be approved by major European groups and government authorities that have created benchmarks for what foods may be described as organic.
"We are very selective about the business we get into, and Organic was conceived as an opportunity for the group to enter a niche but growing business with huge … potential," says Muhammad Ashiq Ariejeel, the chief executive of Organic.
The global organic food and beverages market was worth US$57.2 billion (Dh210.09bn) last year and is projected to grow to $104.5bn by 2015, according to a report from MarketsandMarkets, a research consultancy based in the US.
"As it is now, the organic market is a very niche segment, but over the last couple of years we have been watching this market growing rapidly from its small base," says Mr Ariejeel.
Amid rising concern about synthetic or unnatural ingredients and their long-term health implications, a small but growing number of shoppers in the Middle East is seeking products that are free of chemicals. Sales of organic cosmetics, for instance, are expected to rise by about 20 per cent this year, according to data from Organic Monitor, an industry consultancy.
But while the Middle East has a "sizeable" consumer market, the rate of adoption of organic cosmetics has been low because of limited distribution and inadequate consumer awareness about natural makeup, says Organic Monitor. Only about 0.1 per cent of cosmetics sold in the Middle East is organic, Mr Ariejeel acknowledges. The market's growth potential may be large, but the higher price of organic goods over conventional products has proved to be a big barrier for potential customers.
"Typically, the [price] difference between an organic product and conventional is so huge that consumers would not lay their hands on organic products even if they are aware of its health benefits," says Mr Ariejeel.
"The challenge is to convert consumers to the organic side of the market, and we are very confident on [being able to do] this."
To build buzz for organic goods, the company says it will reduce prices by cutting its own margins. Mr Ariejeel concedes this "may be a painful decision when viewed purely from a bottom-line view", but he hopes that increasing the volume of sales will make up for the slim margins.
That is why the company is also launching community initiatives as part of its efforts at ethical marketing, in order to "ensure that the market gets expanded across all walks of life", says Mr Ariejeel. "Our aim is to expand the volume of the organic products market by consumer conversion, and as such, we are looking at an expanded target audience which will go beyond the typical high-end organic consuming clientele."
