UAE’s Bottled Water Industry Set to Sustain Growth by Boosting Capacity

Yet this growth in the water business hasn’t kept Al Ain Water Co. from diversifying into other, man-made beverages. The company opened its first juice factory last month, with a daily production capacity of 240,000 single-serving pouches of Capri-Sun branded fruit drinks.

“Our foray into the juice market represents a first step into becoming a more broader-based beverage company,” Beg said in an interview. “The company is looking to enter into consumer-relevant, margin-enhancing categories which will offer not only long-term growth opportunities but also strong operational synergies with our existing water business.”

Al Ain Water Co. entered into a strategic alliance with Germany’s Wild Group in February 2008 to manufacture and distribute Wild Group’s Capri-Sun juices in the UAE, Oman, Qatar, Kuwait and Bahrain. The tie-up marked the beginning of a new journey for the company, Beg said. “We are proud to be joining the beverage giants like Coca-Cola and Kraft, who have been manufacturing and distributing Capri-Sun in the UK, France and the USA.”

He believes partnership with the Wild Group is a milestone for the mineral water company’s parent, the Abu Dhabi-based AGTHIA Group. “Capri-Sun is the world’s leading children’s juice, and we are delighted to be a part of this offering that embodies a heritage of trust and health,” Beg said. But water remains Al Ain Water Co.’s mainstay. UAE residents, who consume water at a per capita rate of 550 litres per day, also drink more bottled water than any other nation — an annual 275 litres per capita. Sales of bottled water, including so-called bulk water, have shown significant growth in the Middle East, due to the region’s hot climate and fast-growing population. The total water market in the UAE stands at around 1.2 billion litres, worth Dh1 billion.

Bottled water alone accounts for 40 per cent of that volume, for a value of Dh570 million, Beg said. The UAE’s water demand is rising year to year due to growth in the country’s population and tourism. Al Ain is expanding its water business within the UAE and in other Gulf countries to meet this rising demand.With the 2007 acquisition of the Ice Crystal water brand in Abu Dhabi, Al Ain made a strategic foray into bulk water for delivery to homes and offices. Ice Crystal is sold in five gallon plastic containers; home and office deliveries account for about 60 per cent of the UAE’s water market.

“It is a growing segment and one in which we feel we can compete effectively given our strong, established brand position in the UAE bottled water segment. Our consumers have historically asked for a five-gallon Al Ain Mineral Water option, and we are now pleased to offer a new Al Ain [home and office delivery] format which effectively completes our product portfolio,” he said. The company claims 23 per cent of the potable water market in the UAE.

Together with rival Masafi Mineral Water Co., Al Ain Water Co. controls half of the domestic market, Beg said.

The company’s manufacturing and bottling facilities in Al Ain employ over 400 people at five locations in the UAE. Total production capacity is 35,000 cups and bottles of water per hour.

The AGTHIA Group also owns and operates Grand Mills for Flour and Feed Company and Al Ain Vegetable Processing and Canning Factory. Al Ain Water Co.’s strategy for this year will focus on building health and brand awareness in both the water and juice businesses, Beg said.

“We aim to strengthen our platform of health and wellness across the market and are confident of continuing the growth momentum, which has seen the company’s top-line grow from Dh 74 million in 2006 to just over Dh138 million in 2008.” Beg maintains that product innovation has driven the company’s growth. Aside from Capri Sun, new products such as “Water” and Al Ain Flavored Water have been well received, he said.

· issacjohn@khaleejtimes.com