Mars adds a new star to its constellation
Mars plans to take another big bite out of the confectionery market after opening a US$40 million (Dh146.9m) chocolate bar factory in Jebel Ali yesterday. The world's third-biggest food manufacturer hopes to more than double the amount of sweet treats it produces in Dubai. It also aims to boost its sales across the Middle East and Africa from $450m last year to $1 billion in five years, said Ahmed Bayoumi, the general manager of Mars GCC.
He expected demand to grow steadily for its products, which include Mars bars, Snickers and Twix. "There has been some great economic development in the region, an increasing population, as well as very big investment that went into developing the retail industry in terms of hypermarket, supermarket, convenience stores," he said. The 6,000 square metre factory will produce Snickers and Mars bars and, combined with the existing factory in Dubai, will raise output to about 50,000 tonnes of sweets a year.
Chocolate bars began rolling off the new factory line yesterday at a time when retailers are beginning to recover from a difficult year. Sales of big-ticket items, such as cars and jewellery, have slumped but everyday items have been more resilient. In the UAE, confectionery sales were worth an estimated Dh1.1bn, with chocolate representing about Dh730m, figures from Euromonitor show. Overall confectionery sales are expected to increase by 10 per cent this year.
Mars GCC, which also produces Galaxy chocolates in Dubai, has seen "double digit" sales growth across its markets in the first quarter, although there has been a slight slow down in Dubai, according to Roula Kamhawi, the regional president of Mars for the Middle East, Africa and Asia. Sales continue grow in the emirate, but in single digits. "There is no doubt we were all fairly concerned about the economic downturn and from a macro point of view it affected markets specifically, like Dubai," she said. "As a result maybe of people leaving the country ? we actually saw less consumers and when you have less consumers you find the [growth] is a little less."
Ms Kamhawi said Mars was seeing stronger demand in Abu Dhabi, Saudi Arabia and Qatar as people relocated across the region. Gayatri Bhasin, the Euromonitor's research analyst for the Middle East and Africa, said demand for sweets in the UAE continued to be "buoyant". "People are generally cutting back and being price conscious but for confectionery it's generally an affordable treat more often than not," she said. "And the products that Mars makes are not in the premium categories of chocolate, so that makes a difference as well."
But sales could be hit as the UAE population becomes increasingly health-conscious amid governments' efforts to tackle childhood obesity in schools. "Parents are becoming more vigilant in watching what their children are eating, which is kind of counteracting the growth in confectionery," said Ms Bhasin. To combat this, Mars has introduced some smaller pack sizes of its products and has focused its marketing efforts on adults rather than children.
Despite the increase in healthy eating habits, the confectionery sector continues to grow in the region and Mars's goal of reaching $1bn in exports in five years is a feasible target, said Ms Bhasin. "A lot of these forecasts are based on the assumption that once the economy picks up again, which people see happening in 2011, tourists will get back on track, as well as immigration," she said. "So population levels are going to increase. That could be what they're basing it on as well."
The GCC is now the second-fastest growing market for Mars behind China. @Email:firstname.lastname@example.org
Published: May 26, 2010 04:00 AM