Oman Softdrinks 2006

GCC SOFT DRINKS 2006

OMAN

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June 2006

COPYRIGHT by IMES Consulting, June 2006

“Middle East Non-Alcoholic Beverages 2006 - Oman"

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IMES Consulting Group - Middle East Non-Alcoholic Beverages 2006 - Oman

June 2006 ©IMES Consulting i

TABLE OF CONTENTS Page

A1. MARKET OVERVIEW 1

A1.1 INTRODUCTION 1 A1.2 POPULATION 2 A1.3 KEY MACRO-ECONOMIC DRIVERS 4

A2. NON-ALCOHOLIC BEVERAGES 6

A2.1 BEVERAGE INDUSTRY DEVELOPMENT 6

A2.2 REGULATORY ENVIRONMENT 10 A2.3 CONSUMPTION OF NON-ALCOHOLIC BEVERAGES

- A SUMMARY 11 B1. CARBONATED SOFT DRINKS 20

B1.1 OVERALL DEMAND LEVELS 20

B1.2 KEY SEGMENTATIONS 24 B1.3 SOURCING 30

B1.4 BRAND/SUPPLIER SHARES 39 B1.5 PRICING AND DISTRIBUTION 41

B1.6 FIVE-YEAR FORECASTS 43 B2. JUICE PRODUCTS 44




B2.6 FIVE-YEAR FORECASTS 73 B3. PACKAGED WATER 74




B3.6 FIVE-YEAR FORECASTS 99


June 2006 ©IMES Consulting ii


B4. LIQUID DILUTE DRINKS 100


B4.2 KEY SEGMENTATIONS 103 B4.3 SOURCING 108 B4.4 BRAND/SUPPLIER SHARES 109

B4.5 PRICING AND DISTRIBUTION 110 B4.6 FIVE-YEAR FORECASTS 111

B5. POWDERED FRUIT DRINKS 112




B6. MALT BEVERAGES 122




B7. ENERGY DRINKS 136





June 2006 ©IMES Consulting iii


B8. SPORTS AND HEALTH DRINKS 145




B9. READY-TO-DRINK TEA 156




B10. DAIRY/JUICE BLENDS 167

B11 FLAVOURED WATER 168

Appendix: Directory of Importers and Local Beverage Producers, 2006 169


A1. MARKET OVERVIEW

June 2006 ©IMES Consulting

1

A1.1 INTRODUCTION The Sultanate of Oman is situated in the Southeast of the Arabian Peninsula bordering the UAE to

the North, Saudi Arabia to the West and Yemen to the Southwest. The main conurbations are the Capital Area, a long thin stretch of various municipalities (including Muscat, Matrah and Ruwi)

along the North coast, and Salalah in the extreme South, close to the border with Yemen. However, a considerable portion of the country’s population is dispersed in the rugged Interior.

The overall climate is dry and hot in the Interior but humid along the coastline. The far South of

the country is characterised by a summer monsoon. Government is a traditional monarchy, headed since 1970 by Sultan Qaboos bin Said Al Said, who

governs in consultation with his cabinet. Although Oman has been independent since the 17th century there has been a strong British influence which is still evident in various aspects of the country (e.g. the legal system) today.


A1. MARKET OVERVIEW


2

A1.2 POPULATION The table below examines the development of Omani population over the period 2001 to 2005 (historical) and forecast to 2010.

Table A1: Oman Population, 2001-2010

Million persons

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Nationals 1.66 1.72 1.78 1.84 1.90 1.97 2.03 2.10 2.17 2.24

Expatriates 0.65 0.60 0.55 0.53 0.50 0.48 0.45 0.43 0.41 0.39

Total 2.31 2.32 2.33 2.37 2.40 2.45 2.48 2.53 2.58 2.61

Key Points:

• The population of Omani nationals is growing at a rate of just under 3.5% per annum. Families tend to be large and

extended (an average of eight per household).


A1. MARKET OVERVIEW


3

• By contrast, the expatriate population, consisting largely of Indians, is in decline. Over recent years the Government has pursued a policy of Omanisation (referred to locally as SANAD), outlining quantitative goals aimed at increasing the

percentage of Omanis in the workforce. This has led to the departure of expatriate workers whose jobs have been “Omanised”. The expatriate population fell by 23% between 2001 and 2005, and is forecast to continue falling to 2010.

• Despite falling expatriate numbers, the total population continues to grow, reaching 2.40 million in 2005.

• The high birth rate among locals ensures that the population is relatively young, with around one-third under the age of 15 years.

• Only a little more than 50% of the population can be classified as being urbanised, with large numbers of people

dispersed in villages along the coast and in the Interior.


A1. MARKET OVERVIEW


4

A1.3 KEY MACRO-ECONOMIC DRIVERS The Omani economy is largely dependent on production of oil and gas, of which it has significant (if modest in regional terms)

reserves. These account for some 40% of Gross Domestic Product and over 75% of export earnings. However, the country has for some time been preparing for the depletion of these resources through seeking to diversify the economy in various ways under its

‘Vision 2020’ plan. Initiatives include:

• Investments in several heavy industrial projects including a planned aluminium smelter

• Incentives to encourage foreign investment, particula rly in light industry and tourism • Privatisation of several sectors of the economy

• Programmes to encourage tourism (positioning Oman as a relaxing accompaniment to a frenetic stay in Dubai).

Key economic indicators for Oman are shown below:

Table A2: Oman: Key Economic Indicators

2001 2002 2003 2004 2005 (E)

GDP (US $ billion) 19.9 20.1 21.7 22.4 25.4

GDP per capita (US$) 8,614 8,663 9,313 9,451 10,583

The Omani Riyal (OR) is fixed to the US dollar at a rate of US$ 1 = OR 0.385


A1. MARKET OVERVIEW


5

A key element of the Government’s programme is to integrate more Omanis into the economy and reduce reliance on expatriate workers. This policy is referred to locally as SANAD (loosely an acronym for “self employment and national development”) and has

achieved some success as evidenced by the population tables above. However, this has not been without consequences for the consumer goods business.

One sector chosen for Omanisation has been the operation of small groceries or bagalas. As a result, many experienced Indian store owners have been put out of business, and Omanis have taken over. Unfortunately, few of these new operators have any experience

of running a store and they make fundamental errors with stock ordering, misuse of credit facilities etc. Unsurprisingly, many have failed to make a success of their businesses, and large numbers of bagalas have closed – one estimate is that the number was down

by almost 25% between 2002 and 2004. Indeed, it is reported that some pockets of the country have been left with no stores at all, and that inhabitants are forced to make long journeys into towns to buy even basic items. Those bagalas that have survived are

prone to being out of stock on key items, due both to inadequate ordering and suppliers being forced to withdraw credit facilities. This has clear implications – if goods are simply unavailable, consumers cannot buy them. In 2005, recognising the problem, the government launched a training scheme for bagala owners on how to successfully run their stores. The impact this will have remains

to be seen, but one supplier estimated that only 40% of the number of bagalas that existed in 2002 would remain.

A positive development to come out of this, however, is that supermarkets are taking the opportunity to expand out of their core areas (e.g. the Capital Area) and open branches in secondary urban areas. At the same time, professionally operated convenience

store chains (e.g. on petrol station forecourts) are also growing. One leading FMCG distributor estimated that in 2004 this “modern trade” accounted for 45% of business, up from 36% in 2002.

In another step towards Omanisation, a law came into effect in late 2005 which required all drivers of commercial vehicles under 7 tonnes gross weight to be Omani. Suppliers have so far had mixed success in finding sufficient drivers with an appropriate work

ethic .


A2. NON-ALCOHOLIC BEVERAGES


6

A2.1 BEVERAGE INDUSTRY DEVELOPMENT There were few significant changes in the structure of the beverage industry in 2005. The key elements of this structure are

summarised below; more detailed profiles of key companies are provided in the relevant product sections.

Carbonated Soft Drinks:

There are four local producers and one significant importer of carbonates:

o Pepsi-Cola brands: Oman Refreshment Co. (Capital Area)

o Coca-Cola brands: Local sales subsidiary of Al Ahlia-Gulf Line General Trading Co. (UAE)

o Cott brands: National Beverages Co. (Capital Area)

o Own brands: Dhofar Beverage Co. (Salalah)

Ali Shaihani Juice Filling Industries (Capital Area)

A fifth local producer – Reem Beverage Industries – ceased production in late 2003. Local producers supply over 90% of market requirements.




7

Juice Products:

There are six significant local producers of juice products:

o National Beverage Co. (NBC) o Oman Refreshment Co. (ORC)

o Oman National Dairy Products (ONDP) o Dhofar Beverages

o Dhofar Cattle Feed o Ali Shaihani Juice Filling Industries.

Of these, ONDP and Dhofar Cattle Feed are primarily dairy companies, NBC, ORC and Dhofar Beverages are primarily beverage

companies, and Ali Shaihani is a snack foods company. Together, these local companies supplied around 55% of the market in 2005.

Note that Reem Beverage Industries ceased production in 2003, while Modern Dairy Factory only spasmodically produces tiny

volumes of an artificial cup drink under the AL KAMAYIL brand.

Imports account for 45% of the market. The most important suppliers are:

o Al Rawabi (UAE) o Aujan (Saudi Arabia) o Unikai (UAE)

o Almarai (Saudi Arabia)




8

Packaged Water:

In 2005 locally packaged water accounted for 69% of the market. There are four significant local suppliers:

o National Mineral Water (cups, bottles and dispensers) o Al Mazyona Mineral Water (cups, bottles and dispensers)

o Dhofar Beverages (cups and bottles) o Oasis Water Factory (dispensers, bottles)

Note that Al Mazyona contract packs its bottles for Dhofar Beverages.

In addition, there are a large number of other dispenser water suppliers, each being individually small.

Imports play a significant role in the market (indeed, one which has increased since 2004), the key participants being:

o Masafi (UAE) – distributed by National Beverages o Pepsi (AQUAFINA brand – UAE) – distributed by Oman Refreshments

o Coca-Cola (ARWA brand – UAE) – distributed by Al Ahlia

Liquid Dilute Drinks:

All liquid dilute drinks are imported, with Saudi Arabia (Aujan’s VIMTO plus others) being the main source.




9

Powdered Fruit Drinks

Although there is one local producer of powdered fruit drinks, its impact is negligible. To all intents the market can be regarded as

supplied entirely by imports with the USA (TANG) being the dominant source. Malt Beverages

Although Oman is the only GCC country where production of malt beverages is permitted, there is currently no local producer since

the only one established (Reem Beverage Industries) ceased production. The market is therefore entirely import dependent, with almost all products coming from Europe.

Energy Drinks

There is no longer any local production of energy drinks (Oman Refreshments having given up on PEPSI X) and the key source of imports is Austria.

Sports & Health Drinks

There is not now, nor has there ever been, any local production of sports or health drinks in Oman. Interestingly, there are not even

any regionally manufactured sports or health drinks. The main source of sports drinks is Indonesia, while the leading health drink is imported from Japan.

Ready-To-Drink Tea

There is no local production of RTD tea products in Oman; the market is totally dependent on imports. The two leading supplying countries are Saudi Arabia and Austria.




10

A2.2 REGULATORY ENVIRONMENT Oman is a member of the World Trade Organisation and the country enjoys an open trading environment.

Non-GCC imports are commonplace in the market for soft drinks in Oman, though they are far outweighed in market share terms by

GCC sourced goods. Since the GCC initiated full customs union in 2003 there are no import tariffs at all on internally (GCC) manufactured products, whilst the standard 5% is levied on all non-GCC products.

Note that sales of carbonated soft drinks in government schools are banned, as are juice products in cans and glass bottles.




11

A2.3 CONSUMPTION OF NON-ALCOHOLIC BEVERAGES – A SUMMARY Table A3: Oman: Estimated Total Consumption of Non-Alcoholic Beverages by VOLUME, 2001-2005 (Mn litres)

Sector 2001 2002 2003 2004 2005 CAGR (%)

Carbonates 137.7 119.8 123.2 130.6 141.9 0.8%

Juice products1 54.3 59.6 65.2 71.9 79.3 9.9%

Still bottled water2 90.5 98.4 106.0 111.7 127.7 9.0%

Sparkling bottled water 0.1 0.1 0.1 0.1 0.1 0.0%

Dispenser water 31.2 34.4 37.3 42.7 43.0 8.3%

Dilute drinks 3 6.4 6.7 7.0 8.0 9.3 9.8%

Powdered fruit drinks3 18.8 18.5 18.6 19.1 19.6 1.0%

Malt beverages 1.7 1.8 1.9 1.7 1.9 2.8%

Dairy/juice blends 0.0 0.0 0.0 0.0 0.0 0.0%

Energy drinks 0.1 0.1 0.2 0.4 0.5 51.0%

Sports/health drinks 0.4 0.5 0.7 0.9 1.0 23.4%

RTD tea products 0.3 0.3 0.3 0.4 0.3 2.9%

Flavoured water 0.0 0.0 0.0 0.0 0.0 0.0%

Grand total 341.5 340.3 360.6 385.2 424.6 5.6%

Volume growth 9.0% -0.4% 6.0% 6.8% 10.2%

1 Includes still juice drinks, nectars and juices 2 In packs up to 6 litres 3 In single-strength equivalent (ie in diluted form)




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Table A4: Oman: Estimated Total Consumption of Non-Alcoholic Beverages by VOLUME, 2001-2005 (Mn 8oz cs)

Sector 2001 2002 2003 2004 2005 CAGR (%)

Carbonates 24.3 21.1 21.7 23.0 25.0 0.8%

Juice products1 9.6 10.5 11.5 12.7 14.0 9.9%



Dispenser water 5.5 6.1 6.6 7.5 7.6 8.3%

Dilute drinks 3 1.1 1.2 1.2 1.4 1.6 9.8%

Powdered fruit drinks3 3.3 3.3 3.3 3.4 3.5 1.0%

Malt beverages 0.3 0.3 0.3 0.3 0.3 2.8%


Energy drinks 0.0 0.0 0.0 0.1 0.1 51.0


RTD tea products 0.1 0.1 0.1 0.1 0.1 2.9%

Flavoured water 0.0 0.0 0.0 0.0 0.0 0.0%

Grand total 60.2 60.0 63.6 67.9 74.8 5.6%

Volume growth 9.0% -0.4% 6.0% 6.8% 10.2%

1 Includes still juice drinks, nectars and juices 2 In packs up to 6 litres 3 In single-strength equivalent (ie in diluted form)




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Table A5: Oman: Estimated Total Consumption of Non-Alcoholic Beverages by RETAIL VALUE, 2001-2005 (Omani

Riyals)

Sector 2001 2002 2003 2004 2005 CAGR (%)

Carbonates 28.9 28.0 28.8 30.8 33.6 3.8%

Juice products1 16.0 17.7 19.5 21.4 23.8 10.5%



Dispenser water 1.4 1.7 1.7 1.8 1.8 6.8%

Dilute drinks 0.7 0.8 0.8 0.9 1.0 10.4%

Powdered fruit drinks 3.8 3.8 3.6 3.7 3.7 -0.4%

Malt beverages 0.9 1.0 1.0 0.9 1.0 3.7%


Energy drinks 0.2 0.3 0.4 0.7 0.9 47.2%


RTD tea products 0.2 0.2 0.2 0.2 0.2 -0.5%

Flavoured water 0.0 0.0 0.0 0.0 0.0 0.0%

Grand total 60.1 61.7 64.7 69.2 75.4 5.9%

Value growth 6.5% 2.7% 4.9% 7.0% 8.9%

1 Includes still juice drinks, nectars and juices 2 In packs up to 6 litres




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Table A6: Oman: Estimated Total Consumption of Non-Alcoholic Beverages by RETAIL VALUE, 2001-2005 (Mn US $)

Sector 2001 2002 2003 2004 2005 CAGR (%)

Carbonates 75.1 72.7 74.8 80.1 87.3 3.8%

Juice products1 41.6 46.0 50.7 55.6 61.9 10.5%



Dispenser water 3.7 4.3 4.5 4.7 4.7 6.8%

Dilute drinks 1.9 2.0 2.1 2.4 2.7 10.4%

Powdered fruit drinks 10.0 9.8 9.3 9.5 9.7 -0.4%

Malt beverages 2.3 2.5 2.6 2.3 2.7 3.7%


Energy drinks 0.5 0.7 1.2 1.8 2.4 47.2%


RTD tea products 0.5 0.5 0.5 0.6 0.5 -0.5%

Flavoured water 0.0 0.0 0.0 0.0 0.0 0.0%

Grand total 156.2 160.4 168.3 180.1 196.2 5.9%

Value growth 6.5% 2.7% 4.9% 7.0% 8.9%





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Table A7: Oman: Estimated Total Consumption of Non-Alcoholic Beverages, 2001-2005 (volume % of total)

Sector 2001 2002 2003 2004 2005

Carbonates 40.3 35.2 34.2 33.9 33.4

Juice products1 15.9 17.5 18.1 18.7 18.7

Still bottled water2 26.5 28.9 29.4 29.0 30.1

Sparkling bottled water 0.0 0.0 0.0 0.0 0.0

Dispenser water 9.1 10.1 10.3 11.1 10.1

Dilute drinks 1.9 2.0 1.9 2.1 2.2

Powdered fruit drinks 5.5 5.4 5.2 5.0 4.6

Malt beverages 0.5 0.5 0.5 0.4 0.4

Dairy/juice blends 0.0 0.0 0.0 0.0 0.0

Energy drinks 0.0 0.0 0.1 0.1 0.1

Sports/health drinks 0.1 0.2 0.2 0.2 0.2

RTD tea products 0.1 0.1 0.1 0.1 0.1

Flavoured water 0.0 0.0 0.0 0.0 0.0

Grand total 100.0 100.0 100.0 100.0 100.0





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Table A8: Oman: Estimated Total Consumption of Non-Alcoholic Beverages, 2001-2005 (value % of total)

Sector 2001 2002 2003 2004 2005

Carbonates 48.1 45.3 44.4 44.5 44.5

Juice products1 26.6 28.7 30.1 30.9 31.6

Still bottled water2 12.5 12.6 12.2 11.4 11.0

Sparkling bottled water 0.1 0.1 0.1 0.1 0.1

Dispenser water 2.4 2.7 2.7 2.6 2.4

Dilute drinks 1.2 1.2 1.2 1.3 1.4

Powdered fruit drinks 6.4 6.1 5.5 5.3 5.0

Malt beverages 1.5 1.6 1.5 1.3 1.4

Dairy/juice blends 0.0 0.0 0.0 0.0 0.0

Energy drinks 0.3 0.4 0.7 1.0 1.2

Sports/health drinks 0.7 1.0 1.2 1.3 1.4

RTD tea products 0.3 0.3 0.3 0.3 0.3

Flavoured water 0.0 0.0 0.0 0.0 0.0

Grand total 100.0 100.0 100.0 100.0 100.0





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Table A9: Oman: Estimated PER CAPITA CONSUMPTION of Non-Alcoholic Beverages, 2001-2005 (litres)

Beverage Type 2001 2002 2003 2004 2005 CAGR 01-05

Total packaged beverages 147.8 146.7 154.8 162.5 175.2 4.6% Carbonates 59.6 51.6 52.9 55.1 59.1 -0.2% Juice products1 23.5 25.7 28.0 30.3 33.0 8.9% Still bottled water2 39.2 42.4 45.5 47.1 53.2 7.9% Sparkling bottled water 0.0 0.0 0.0 0.0 0.0 0.0%

Dispenser water 13.5 14.8 16.0 17.8 17.9 7.3% Dilute drinks3 2.8 2.9 3.0 3.4 3.9 8.5% Powdered fruit drinks 3 8.1 8.0 8.0 8.1 8.2 0.2% Malt beverages 0.7 0.8 0.8 0.7 0.8 3.1% Dairy/juice blends 0.0 0.0 0.0 0.0 0.0 0.0% Energy drinks 0.0 0.1 0.1 0.2 0.2 50.1%

Sports/health drinks 0.2 0.2 0.3 0.4 0.4 20.4% RTD tea products 0.1 0.1 0.1 0.2 0.1 8.8% Flavoured water 0.0 0.0 0.0 0.0 0.0 - Total other 205.4 210.2 214.5 219.4 222.8 2.1% Tea 117.5 120.0 122.1 124.0 125.9 1.7% Coffee 40.9 41.7 42.4 43.1 43.8 1.7%

Other hot beverages - - - - - - Liquid dairy products4 23.9 25.8 27.0 29.3 31.6 7.2% Retail milk powder4 23.0 22.8 22.9 23.0 21.5 -1.7%

Total liquid intake commercial Products

353.2 356.9 369.3 381.9 399.7 3.1%

Estimated Population (million) 2.31 2.32 2.33 2.37 2.40

1Includes still juice drinks, nectars and juices 2 In packs up to 6 litres 3 In single-strength equivalent (ie in diluted form) 4 Includes UHT milk, pasteurised milk, laban, concentrated milks




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Table A10: Oman: Forecast Total Consumption of Non-Alcoholic Beverages by VOLUME, 2005-2010 (million litres)

Sector 2005 2006 2007 2008 2009 2010 CAGR (%)

Carbonates 141.9 146.8 151.4 155.7 159.6 163.4 2.7%

Juice products1 79.3 85.0 90.5 95.9 101.3 106.7 5.8%

Still bottled water2 127.7 134.3 140.8 146.7 151.8 156.7 3.9%

Sparkling bottled water 0.1 0.1 0.1 0.1 0.1 0.2 10.0%

Dispenser water 43.0 45.6 48.8 52.3 55.7 59.1 6.7%

Dilute drinks 7.3 7.4 7.5 7.7 7.8 8.0 2.0%

Powdered fruit drinks 19.6 19.8 20.0 20.3 20.5 20.8 1.2%

Malt beverages 1.8 1.9 2.0 2.1 2.2 2.3 4.9%

Dairy/juice blends 0.0 0.1 0.2 0.3 0.4 0.5 49.5%

Energy drinks 0.5 0.7 0.9 1.0 1.1 1.2 13.5%

Sports/health drinks 1.0 1.2 1.3 1.6 1.6 1.7 10.3%

RTD tea products 0.4 0.5 0.5 0.5 0.5 0.5 4.7%

Flavoured water 0.0 0.1 0.1 0.1 0.1 0.2 18.9%

Grand total 424.7 446.6 467.8 488.3 507.3 526.2 4.2%

Volume growth 10.2% 5.2% 4.8% 4.4% 3.9% 3.7% -





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Table A11: Oman: Forecast PER CAPITA CONSUMPTION of Non-Alcoholic Beverages, 2005-2010 (litres)

Sector 2005 2006 2007 2008 2009 2010 CAGR (%)

Carbonates 59.1 59.9 61.0 61.5 61.9 62.1 0.9%

Juice products1 33.0 34.7 36.5 37.9 39.3 36.6 4.0%

Still bottled water2 53.2 54.8 56.8 58.0 58.9 59.6 2.1%

Sparkling bottled water 0.0 0.0 0.0 0.1 0.1 0.1 8.1%

Dispenser water 17.9 18.6 19.7 20.7 21.6 22.5 4.8%

Dilute drinks 3.9 4.3 4.6 4.7 4.8 3.0 3.6%

Powdered fruit drinks 8.2 8.1 8.1 8.0 8.0 7.9 -0.6%

Malt beverages 0.8 0.8 0.8 0.8 0.9 0.9 3.0%

Dairy/juice blends 0.0 0.0 0.1 0.1 0.2 0.2 46.9%

Energy drinks 0.2 0.3 0.4 0.4 0.4 0.4 11.6%

Sports/health drinks 0.4 0.5 0.5 0.6 0.6 0.6 6.7%

RTD tea products 0.1 0.1 0.2 0.2 0.2 0.2 7.0%

Flavoured water 0.0 0.0 0.0 0.0 0.0 0.1 16.8%

Grand total 176.9 182.3 188.6 193.0 196.6 200.1 2.4%

Volume growth 8.9% 3.0% 3.5% 2.3% 1.9% 1.7% -



B1. CARBONATED SOFT DRINKS B1.1 OVERALL DEMAND LEVELS


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Table B1 to B2 below summarise the development of the Oman carbonated soft drinks market during the period 2001-2005.

Table B1: Carbonated Soft Drinks, Million Litres, 2001-2005

Million litres Growth (%)

2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Consumption 137.7 119.8 123.2 130.6 141.9 (6.4) (13.0) 2.8 6.0 8.7

Litres per capita 59.6 51.6 52.9 55.1 59.1 (8.0) (13.4) 2.5 4.2 7.3

Table B2: Carbonated Soft Drinks, Retail Value, 2001-2005

US$ million Growth (%)

2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Market value 75.1 72.7 74.8 80.1 87.3 (6.5) (3.2) 2.9 7.1 9.0

Sales per capita $ 32.51 31.34 32.10 33.80 36.37 (8.1) (3.6) 2.4 5.3 7.6




21

105

110

115

120

125

130

135

140

145

2001 2002 2003 2004 2005

Mill

ion

Lit

res




22

Key Points:

• Carbonates consumption in Oman has grown by an average annual rate of almost 1% since 2001 to reach 141.9 million litres in 2005. However, this figure disguises the true picture of the market, where a decline of over 18% between 2000

and 2002 was followed by recovery of 9% in 2003 and 2004 in what might be considered a return to market stability. Consumption in 2005 is gradually approaching the levels registered in 2000. This pattern can be attributed to a number of factors:

o Both major producers were running very aggressive price promotions on MSPET bottles from 1999 until mid-2001.

The cessation of these promotions led to sudden price increases with a consequent decline in demand

o Coca-Cola spent particularly heavily on advertising and promotions in 2000 in order to go head-to-head with Pepsi, but cut back on this in 2001

o Anti-US sentiment resulting from the attack on Afghanistan in 2002 led to unofficial boycotts in some parts of the

Middle East, and the effects of this were noticeable in the Omani interior

o By 2003, interest in the boycott was waning and consumer interest in the market was rekindled by competition

between market leader MOUNTAIN DEW (Pepsi) and newly launched citrus carbonate QUWAT JABAL from Coca-Cola. Slight growth resulted

o Growth continued in 2004 and 2005 as Pepsi reasserted its market dominance and National Beverages performed well

with its lower priced 200 ml bottled carbonates – all underpinned by improved prosperity resulting from higher oil prices.




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• In value terms, the market is worth around US$ 87 million at retail level in 2005. However, market values have

developed in a very different pattern to market volumes due to shifts in the relative importance of different pack types. In 2001, nearly 40% of volume was in MSPET bottles whereas by 2005 this was down to 21%. Conversely, the share of

cans rose from 47% to 63% over the same period. As the retail price of cans is significantly higher on a per litre basis (32% higher in 2002), market value declined far less dramatically than market volume. The shift toward cans since 2003 has since resulted in market value growing ahead of volume.


B1. CARBONATED SOFT DRINKS B1.2 KEY SEGMENTATIONS


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B1.2.1 FLAVOUR

Table B3: Carbonated Soft Drinks, By Flavour, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Citrus 52.1 51.5 57.5 59.8 66.7 6.4 (19.6) (1.2) 11.7 4.0 11.5

Cola 48.9 39.5 37.2 35.3 36.4 (7.1) (2.2) (19.2) (5.8) (5.1) 3.1

Lemon/lime 10.0 8.4 9.9 11.4 12.3 5.3 (2.9) (16.0) 17.9 15.2 7.9

Orange 8.7 7.2 7.2 8.8 9.8 3.0 (26.3) (17.2) 0.0 22.2 11.4

“Red” 14.0 9.6 8.3 8.6 9.2 (10.0) 89.2 (31.4) (13.5) 3.6 7.0

Other 3.9 3.6 3.1 6.7 7.5 17.8 34.5 (7.7) (13.8) 116.1 11.9

Total 137.7 119.8 123.2 130.6 141.9 0.8% (6.4) (13.0) 2.8 6.0 8.7




25

Share of Total (%)

2001 2002 2003 2004 2005

Citrus 38 43 47 46 47

Cola 36 33 30 27 26

Lemon/lime 7 7 8 9 9

Orange 6 6 6 7 7

“Red” 10 8 7 7 6

Other 3 3 3 4 5

Total 100 100 100 100 100

Key Points:

• Perhaps uniquely, citrus is the dominant flavour in Oman, with a 47% market share in 2005. This is almost entirely due

to the almost iconic status of Pepsi’s MOUNTAIN DEW, which is by far the leading brand in the carbonates market. Stories abound of individuals who drink “at least six cans of DEW each day” while critics and admirers alike describe some people as treating it “almost like a drug”. Interestingly, attempts by competitors to emulate MOUNTAIN DEW, and

most notably Coca-Cola’s launch of QUWAT JABAL (literally ‘Mountain Force’) in July 2003, have not dented DEW’s dominance, suggesting that its leadership is far more about branding than simply flavour (in blind tastings, most

consumers cannot tell the difference between MOUNTAIN DEW and QUWAT JABAL).




26

• Cola is the second most important flavour, although it continues to decline in relative terms. It reached its highest

market share of recent years in 2001 when Coca-Cola was at its most aggressive, but perhaps suffered more than other flavours from the effects of the anti-US boycott. It remains popular among children (as demonstrated by the high

percentage of National Beverage’s low priced RC brand sales in cola flavour) and given this it may well recover share in the future.

• Lemon/lime has remained the same in importance (main brand: 7-UP).

• After something of a decline between 2000 and 2002, orange has recovered a little due to the resilience of MIRINDA and the success of RC in tangerine flavour.

• “Red” flavours (strawberry, blackcurrant, raspberry, mixed berry etc.) have declined sharply from their 2001 peak, which

seems to have represented something of a fad in the market. Sales have stabilised in the last two years. The leading brand is Pepsi’s SHANI.

• While still small, “other” flavours have grown strongly. The main contributors to this have been MIRINDA apple and sales

of mixers for use with alcoholic drinks as tourist numbers have grown.

• Diet variants of the major flavours (cola, lemon/lime) grew by 10%, but volumes still remain small.




27

B1.2.2 PACKAGING

Table B4: Carbonated Soft Drinks, by Pack Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Cans 64.5 66.5 70.7 79.1 88.9 8.4% 5.4 3.1 6.3 11.9 12.4

MSPET 53.2 33.2 31.3 31.0 29.7 (13.6) (17.0) (37.6) 5.7 (1.0) (4.2)

Non-ret. Glass 18.4 18.5 19.7 19.1 21.8 4.3% (8.5) 0.5 6.5 (3.0) 14.0

SSPET <0.1 <0.1 - - - - - - - -

PVC <0.1 <0.1 <0.1 <0.1 <0.1 - - - - -

Postmix/Premix 1.5 1.5 1.4 1.4 1.5 0.4 (11.7) - (6.6) - 8.7

Total 137.7 119.8 123.2 130.6 141.9 0.8 (6.4) (13.0) 2.8 6.0 8.7




28

Share of Total (%)

2001 2002 2003 2004 2005

Cans 47 55 56 60 63

MSPET 39 28 25 24 21

Non-ret. Glass 13 15 17 15 15

SSPET Neg Neg 0 0 0

PVC Neg Neg Neg Neg Neg

Postmix/Premix 1 1 1 1 1

Total 100 100 100 100 100

Key Points:

• The key feature of the last five years has been the decline in importance of MSPET and the growth in cans. From 1999 to

mid-2001, MSPET bottles were on heavy price promotion, and this doubtless distorted the “natural” shape of the market. Once these promotions were ended, sales of MSPET declined substantially. The beneficiary of this decline was cans, which while always the leading seller in unit terms are now clearly the dominant form of packaging in volume terms.

Retailers, and particularly smaller ones, are said to prefer the cans robustness while consumers like the “cold feel of a chilled can of DEW”.




29

• But for minor fluctuations, the market share of non-returnable glass has remained broadly stable over the period as a

whole. Sales remain healthy mainly due to the strong sales of National Beverages’ RC brands (RC COLA and ROYAL CROWN in various flavours), which are packed in 200 ml NRB that retail at 50 baiza (half the price of a canned

carbonate) and are thus popular with children. Pepsi and Coca-Cola also continue to offer NRB. • There are currently no carbonates packed in SSPET in the Omani market. Coca-Cola introduced this pack type in 2001

but sales were poor (possibly as much to do with Coca-Cola’s poor performance as any inherent dislike of the pack) and it was subsequently withdrawn.

• Juice Filling Industries markets two brands of carbonate (FIZZI and SHAMI) in PVC bottles of 200 ml and 296 ml. The

larger size scarcely sells at all since it retails at 100 baiza the same as a larger can of a major brand, while the smaller bottle achieves minor volumes due to its 50 baiza price. The overall impact on the market is negligible.

• Small but broadly steady volumes of carbonates are sold through post-mix dispensers in food service outlets and bars.

This may increase in coming years as Oman develops its tourism industry.


B1. CARBONATED SOFT DRINKS B1.3 SOURCING


30

Table B5: Carbonated Soft Drinks, Local vs Imports, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Local 108.9 102.0 111.4 118.0 128.0 4.1 4.8 (6.3) 9.2 5.9 8.5

Import 28.8 17.8 11.8 12.6 13.9 (16.7) (33.5) (38.2) (33.7) 6.8 10.3

Total 137.7 119.8 123.2 130.6 141.9 0.8 (6.4) (13.0) 2.8 6.0 8.7




31

0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005

Mill

ion

Litr

es

LocalImport

Key Points:

• Over 90% of the Omani market is supplied by local production. This percentage has gradually increased from just over

70% in 2000, as the fortunes of Coca-Cola have declined (all imported) and those of Pepsi (locally manufactured) have improved.




32

• By 2005, the main imports to Oman were:

o all Coca-Cola products, from Al Ahlia Gulf Line in the UAE o 150 ml cans of Pepsi products, from Kuwait National Bottling Co o VIMTO from Aujan in Saudi Arabia

o Other marginal products.

• The franchise structure of the Omani market for carbonated soft drinks is as follows:

o Pepsi-Cola brands: Oman Refreshment Co. (Capital Area)

o Coca-Cola brands: Local sales subsidiary of Al Ahlia-Gulf Line General Trading Co. (UAE)

o Cott brands: National Beverages Co. (Capital Area)

o Own brands: Dhofar Beverage Co. (Salalah)

Ali Shaihani Juice Filling Industries (Capital Area)




33

B1.3.1 LOCAL PRODUCTION – MAIN SUPPLIER PROFILES (i) Pepsi-Cola brands

Bottler: Oman Refreshment Co (ORC)

Brands: MOUNTAIN DEW, PEPSI, DIET PEPSI, 7-UP, DIET 7-UP, MIRINDA orange, apple, SHANI, EVERVESS club soda, ginger ale,

tonic water

Lines: cans: 150 ml, 355 ml NRB: 330 ml, 355 ml

PET: 2.25 litre

• ORC produces and markets all Pepsi brands available in Oman except 150 ml cans which are imported from Kuwait.

• PEPSI TWIST was discontinued in mid-2004 due to disappointing sales.

• In addition to its carbonates business, ORC also distributes Pepsi’s AQUAFINA water brand (see section B3) and its own

TOP FRUIT juice drink, which is not a Pepsi brand.




34

(ii) Cott Brands (Former Triarc Beverages Brands)

Bottler: National Beverages Co (NBC)

Brands: RC COLA, RC Q (citrus), ROYAL CROWN strawberry, tangerine, lemonade

Lines: NRB: 200 ml

• In 2000, RC COLA and ROYAL CROWN brands in NRB were downsized from 355 ml to 200 ml, to be sold at the new price

point of 50 baiza per unit or OR 1 per case (compared to double that for Pepsi-Cola and Coca-Cola products). This

downsizing exercise provided significant sales growth for NBC, and subsequently the company stopped filling cans. It now holds a unique niche with its 200 ml, 50 baiza products that appeal particularly to children.

• In early 2004, NBC launched RC Q, a citrus carbonate aimed at consumers of MOUNTAIN DEW seeking a lower priced

product.

• In November 2003 NBC launched a “red” flavoured carbonate, ROYAL CROWN vino, in an attempt to challenge the

market for VIMTO. However, the product was discontinued in 2004.




35

(iii) Other brands

(a) Reem Beverage Industries

Brands: LAIMUNI

Lines: Cans: 300 ml

• Part of the Omzest Group, Reem Beverage products were distributed by sister company Oman Agricultural Development, a major fresh dairy. However, the arrangement did not work well and Reem’s sales declined steadily, with various brands

discontinued along the way. By 2003 LAIMUNI was the only available brand, but sales were negligible and all production stopped before the end of the year. Reem stopped trading in 2004, although a spokesman claimed that

“recommencement is planned though no date is fixed”. At the time of research in early 2006, Reem had still not resumed trading.




36

(b) Dhofar Beverages Company (DBC)

Brands: AL KHALEEJ strawberry, lemon pineapple

Lines: NRB: 180 ml, 250 ml

• DBC is situated in Oman’s second largest conurbation Salalah/Dhofar in the South of the country. It produces its own-brand AL KHALEEJ carbonated soft drinks in 180 ml and 250 ml NRB in pineapple, strawberry, orange and lemon

flavours. Being unique, the pineapple flavour in 180 ml is the main seller while the company itself describes sales of its 250 ml bottles as “very small”.

• DBC’s main business is now DARBAT bottled water (see section B3). It also markets juice drinks under the AL KHALEEJ

brand.




37

(c) Ali Shaihani Juice Filling Industries (JFI)

Brand: FIZZI cola, lemon, orange, tango

SHAMI lemon, pineapple, mixed fruit, strawberry Lines: PVC 200 ml, 296 ml

• Despite its name, JFI is primarily now a snack foods company and the CHIPS OMAN snack foods business is the core

operation. However, it is also the soft drinks producing arm of the Ali Shaihani group with products including FIZZI and SHAMI carbonated soft drinks (filled in old-fashioned PVC bottles) as well as SHAMI, GIPSI and LULU juice drinks in

pouches and glass bottles. JFI’s involvement in the beverage market has been in decline for some time, and carbonates sales continue to be negligible. It is unclear why, and for how long, JFI will remain in the carbonates business.




38

B1.3.2 IMPORTS – MAIN SUPPLIER PROFILES

(i) Coca-Cola brands Distributor: Al Ahlia Gulf Line

Brands: COCA-COLA, COCA-COLA LIGHT, QUWAT JABAL, FANTA , SPRITE, SCHWEPPES

Lines: Cans 150 ml, 330 ml, 355 ml

NRB 250 ml PET 2.25 Litre

• Coca-Cola supplies the Oman market from its facility in the UAE, Al-Ahlia Gulf Line (AGL), and sales are handled by an

AGL subsidiary in Oman. • Despite considerable investment in marketing in the early part of the decade, Coca-Cola has struggled to retain its

position in Oman and is now number three in the market, although in real terms it did perform better in 2005 than in 2004.


B1. CARBONATED SOFT DRINKS B1.4 BRAND/SUPPLIER SHARES


39

Table B6: Carbonated Soft Drinks, Total Supplier Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

Pepsi Beverages 72 79 81 83 84

Cott (RC brands) 7 9 9 9 9

Coca-Cola 21 12 9 7 6

Other international

<1 <1 <1 <1 <1

Other local Neg Neg Neg Neg Neg

Total 100 100 100 100 100

Total (m litres) 137.7 119.8 123.2 130.6 141.9

Key Points: • Pepsi/ORC have gradually tightened their stranglehold

on the market. In large part this is due to the MOUNTAIN DEW phenomenon: this single brand holds

a 44% share of the CSD sector and over 95% of the citrus segment. However, Pepsi brands are also clear

leaders in every other major flavour segment.

• Coca-Cola meanwhile has declined precipitously. The

reasons for this include the withdrawal of major marketing subsidies from Coca-Cola International, the disproportionate effect of anti-US sentiment (Coca-

Cola being seen as more “American” than Pepsi), and the failure to significantly dent MOUNTAIN DEW and

the leverage it brings to other Pepsi brands. In addition, Coca-Cola has been caught in a classic

squeeze between the heavily marketed leader (Pepsi) and a cheaper fighting brand (RC), which has now

overtaken it.

• The RC brands, distributed by National Beverages, retail at half the price of the main CSD brands and

thus appeal to a different segment of consumers. They have displaced Coca-Cola brands in many

outlets and maintained their position as second in the market in 2005.


B1. CARBONATED SOFT DRINKS B1.4 BRAND/SUPPLIER SHARES


40

0

10

20

30

40

50

60

70

80

90

2001 2002 2003 2004 2005

Pepsi Beverages Coca-Cola Other


B1. CARBONATED SOFT DRINKS B1.5 PRICING AND DISTRIBUTION


41

Table B7: Carbonated Soft Drinks, Reference Brands Selected SKU Pricing, 2001-2005 (OR)

2001 2002 2003 2004 2005

Pepsi MOUNTAIN DEW 355 ml can

0.100 0.100 0.100 0.100 0.100

2.25 litre PET 0.300 0.400 0.400 0.400 0.400

NBC/Cott RC COLA 200 ml NRB 0.050 0.050 0.050 0.050 0.050

Key Points:

• The CSD market is subject to well established price points which are observed by most retail outlets. Thus a 355 ml can

of any brand typically retails at 100 baiza, while a 2.25 litre PET bottle retails at 400 baiza. However, the major hypermarkets are more inclined to move away from these points and it is not uncommon here to find a 355 ml can of

MOUNTAIN DEW at 90 baiza or a 2.25 L PET bottle at 350 baiza. • Because of these price points, retail prices have stayed pretty stable in the years since the end of heavy price discounting

on PET. However, producer margins are coming under pressure due to rising raw material costs and some suppliers have been forced to make slight increases to trade prices. Oman Refreshment Co. have increased the trade price of their cases

from OR 2.0 to OR 2.1.


B1. CARBONATED SOFT DRINKS B1.5 PRICING AND DISTRIBUTION


42

• Packed in 200 ml NRB, the RC brands can be retailed at a lower price point of 50 baiza, which is attractive to children and poorer consumers. This strategy has clearly paid dividends and NBC has gained market share.

• Carbonates are distributed through a wide range of channels from the largest hypermarket to the smallest bagala as well

as food service outlets. As a result, distribution of CSD’s has been affected more than most soft drinks by the changing retail environment and the decline in bagalas both in terms of numbers and quality of management (see section A). In 2005 the distribution pattern for carbonates was as follows:

o Around 25 – 30% of sales and rising were through the modern trade, particularly in the Capital Area where the

biggest hypermarkets and supermarkets are found.

o Some 60 – 65% of sales are still through the traditional trade, although there is little wholesaler involvement with the main players distributing direct even to small stores. However, this share is clearly declining.

o The remaining 5% of sales were mostly through food service outlets, with very small volumes sold in some private

schools (CSD sales are banned in public schools) and through vending machines.


B1. CARBONATED SOFT DRINKS B1.6 FIVE-YEAR FORECASTS


43

Table B8: Carbonated Soft Drinks, Five-Year Forecasts, 2005-2010


2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Total 141.9 146.8 151.4 155.7 159.6 163.4 3.4 3.1 2.8 2.5 2.4

Key Points:

• After several turbulent years (e.g. anti-US boycott, price hikes on PET bottles etc.) the market for carbonates is steadily approaching the consumption levels of 2000, where 147.2 million litres were consumed. Indeed with increased prosperity

in the country (high oil price) the market grew ahead of the population. To an extent this was a continued recovery from the low of 2002, and future growth is thus forecast to be more moderate at an average of just under 3% per annum to

2010. One factor hindering any faster growth will be the decline in numbers of small shops due to the policy of Omanisation. Increasing levels of health consciousness among the population may also slow down growth.


B2. JUICE PRODUCTS B2.1 OVERALL DEMAND LEVELS


44

Table B9 to B10 below summarise the development of the Oman juice products market during the period 2001-2005.

Table B9: Juice Products, Million Litres, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Consumption 54.3 59.6 65.2 71.91 79.3 38.9 9.8 9.4 10.3 10.3

Litres per capita 23.5 25.7 28.0 30.3 33.0 36.6 9.4 8.9 8.2 8.9

Table B10: Juice Products, Retail Value, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Market value 41.6 46.0 50.7 55.6 61.9 37.7 10.6 10.3 9.7 11.3

Sales per capita $ 18.01 19.83 21.76 23.46 25.80 35.4 10.2 9.7 7.8 10.0

1 2004 consumption figures have been revised in light of new information from one of the key suppliers.




45

0

10

20

30

40

50

60

70

80

90

2001 2002 2003 2004 2005

Mill

ion

Lit

res




46

Key Points:

• Juice products consumption in Oman has grown by an average annual rate of 9.9% since 2001 to reach 79.3 million litres in 2005. In value terms, this is worth around US$ 61.9 million at retail level. Per capita consumption has grown

from 23.5 litres in 2001 to 33.0 litres by 2005. • Given this strong market growth, market value has also naturally grown significantly. However, underlying this strong

growth are two conflicting pressures:

o There is a steady shift in consumer preference towards product with a higher juice content (i.e. juices and nectars) and away from juice drinks, with the former typically being more expensive for a similar pack size;

o However, sales of juices and nectars are more heavily biased towards larger pack sizes which offer a lower price per litre than the small packs in which drinks are primarily sold. Moreover, juices and nectars are largely imported

and priced or promoted very competitively (some local companies would say “dumped”) while most drinks are locally made.

The net result of these pressures has been that market value has actually grown very much in line with volume over the review period.

• As elsewhere, perceptions of juice products, and especially short-life juices, as being healthier than alternatives such as

carbonates are a key growth driver. Furthermore, trial and adoption of juice products has been encouraged by the narrowed price differential with carbonates as juice products have been promoted heavily. Of course, the ban on

carbonates sales in schools provides a significant underpinning to the juice drinks market.


B2. JUICE PRODUCTS B2.2 KEY SEGMENTATIONS


47

Long life Short life

B2.2.1 SHELF LIFE

Table B11: Juice Products, by Long-life and Short-life, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Long-life 43.9 46.7 45.8 49.8 53.8 5.2 37.2 6.4 -1.9 8.7 8.1

Short-life 10.4 12.9 19.4 22.1 25.5 25.1 46.5 24.0 50.4 13.9 15.4

Total 54.3 59.6 65.2 71.9 79.3 9.9 38.9 9.8 9.4 10.3 10.3

Share of Total (%)

2001 2002 2003 2004 2005

Long-life 80.8 78.4 70.2 69.2 67.8

Short-life 19.2 21.6 29.8 30.7 32.2

Total 100.0 100.0 100.0 100.0 100




48

Key Points:

• Long-life products continue to dominate the Oman market accounting for over two-thirds of juice product sales in 2005.

The mainstay of this sector is single-serve carton drinks, which are widely consumed by children and particularly at school (around 40% of single-serve aseptic cartons sales are in schools). More generally, however, long-life products have obvious advantages in terms of distribution in storage in a country where the cold chain is still not fully developed,

and particularly in the interior.

• The main growth, however, is coming from short-life products, which showed average annual growth of 25% over the review period. Consumers perceive short-life products to be healthier than long-life, and aggressive pricing and

promotions have encouraged their adoption.




49

Juices Nectars Fruit/flavoured drinks

B2.2.2 PRODUCT TYPE

Table B12: Juice Products, by Product Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Juices 8.0 10.2 13.5 15.2 16.0 18.9 66.7 27.5 32.3 12.6 5.3

Nectars 4.3 5.8 8.0 9.6 10.7 25.6 79.2 34.9 37.9 20.0 11.5

Fruit flavoured drinks 42.0 43.6 43.7 47.1 52.6 5.8 31.7 3.8 0.2 7.8 11.7

Total 54.3 59.6 65.2 71.9 79.3 9.9 38.9 9.8 9.4 10.3 10.3

Share of Total (%)

2001 2002 2003 2004 2005

Juices 14.7 17.1 20.7 21.1 20.2

Nectars 7.9 9.7 12.3 13.4 13.5

Fruit Flavoured drinks 77.3 73.2 67.0 65.5 66.3

Total 100 100 100 100 100




50

Key Points:

• All three product types enjoyed strong growth between 2001 and 2005. The industry regards 2001, which saw exceptional growth, as a year of “adjustment” in which consumption of juice products in Oman moved much more into line with that in other regional countries.

• Juice drinks dominate the market, accounting for 66% of consumption in 2005, although this dominance is steadily

diminishing. Juice drinks did however show a slight increase in their share of the market, due in no small part to the strong growth of Aujan’s RANI drink and RANI float.

• Juices and nectars combined have grown to 34% of the market; there is little evidence that consumers differentiate

between these two product types since different flavours under the same brand will vary between one and the other, the difference being largely down to production necessities rather than market needs. They have continued to enjoy strong

growth, although the rate has naturally slowed as the market base has increased.




51

B2.2.3 PACK TYPE AND SIZE

Table B13: Juice Products, by Pack Type and Size, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Single-serve 44.1 47.9 50.1 54.4 60.7 8.3 34.0 8.6 4.6 8.6 11.6

Aseptic carton 24.5 26.5 28.8 31.2 32.6 7.4 45.8 8.2 8.7 8.3 4.2

Cups 6.6 5.7 4.5 2.6 2.7 (20.0) 3.1 -24.2 -21.0 -42.2 3.8

NRB 4.0 4.2 3.6 2.8 2.9 (7.7) 14.3 5.0 -14.3 -22.2 -17.1

Cans 1.9 2.1 1.9 5.1 7.0 38.5 18.8 10.5 -9.5 168.4 37.3

HDPE 2.4 2.2 2.8 3.9 3.7 11.4 118.2 -9.3 27.3 39.3 -5.1

PET 0.7 3.3 4.3 5.3 6.6 75.2 NA 371.4 30.3 23.3 24.5

Pouches 0.4 0.5 0.8 0.8 0.8 18.9 - 25.0 60.0 0.0 0.0

Short-life carton 3.6 3.4 3.4 2.7 4.3 4.5 16.1 -5.5 - 20.6 59.3

Take-home 10.2 11.7 15.1 17.5 18.6 16.2 64.5 14.7 29.1 15.9 6.3

Aseptic carton 4.0 4.7 3.2 4.4 4.1 0.6 42.9 17.5 -32.0 37.5 (6.8)

HDPE 3.4 4.4 8.8 10.6 9.6 29.6 54.5 29.4 100.0 20.5 9.4

PET 1.8 2.2 2.3 2.4 4.8 27.8 260.0 22.2 4.5 4.3 100.0

NRB - - - Neg Neg Neg - - - - -

Short-life carton 1.0 0.4 0.8 0.1 0.1 (43.8) 42.9 -60.0 100.0 -87.5 0.0

Total 54.3 59.6 65.2 71.9 79.3 9.9 38.9 9.8 9.4 10.3 10.3




52

Share of Total (%)

2001 2002 2003 2004 2005

Single-serve 81.2 80.4 76.8 75.7 76.5

Aseptic carton 45.1 44.5 44.2 43.4 41.2

Cups 12.2 9.6 6.9 3.6 3.4

NRB 7.4 7.0 5.5 3.9 3.7

Cans 3.5 3.5 2.9 7.1 8.8

HDPE 4.4 3.7 4.3 5.4 4.7

PET 1.3 5.5 6.6 7.4 8.3

Pouches 0.7 0.8 1.2 1.1 1.0

Short-life carton 6.6 5.7 5.2 3.8 5.4

Take-home 18.8 19.6 23.2 24.3 23.5

Aseptic carton 7.4 7.9 4.9 6.1 5.2

HDPE 6.3 7.4 13.5 14.7 12.1

PET 3.3 3.7 3.5 3.3 6.1

NRB - - - - -

Short-life carton 1.8 0.7 1.2 0.1 0.1

Total 100 100 100 100 100




53

Key Points:

• Single serve packs (i.e. 500 ml or below) account for over 76% of the volume sold. However, until 2004 the market

share of take home packs had been growing steadily, and reached 24.3% in 2004 as compared to 19% in 2001. Although having grown in real terms, the share of take home products did decline slightly in 2005. This was due to the strong growth of Aujan’s single serve drink products (RANI drink, RANI float, HANI)

• The single serve aseptic carton remains by far the most important pack type with a market share of just over 41%. This

is of course the key pack for juice drinks and is used by several key local manufacturers as well as being supplied by importers. When take home sizes are added to this, aseptic cartons account for 46% of the total market.

• The second most important packaging material is HDPE plastic which makes up 17% market share. Some 52% of take

home volume is packed in HDPE, although it is much less important for single serve sales, with just over 6% of single serve juice products being in HDPE. Usage of HDPE has grown by over 23% per year on average over the review period.

• Interestingly, however, usage of PET packaging is growing still quicker, albeit from a smaller base. Key local supplier

Oman National Dairy Products (ONDP) began a move into PET in 2004, while several imported brands (both long and

short-life) are also packed in it. The total market share of PET was 14.4% in 2005. The difference between PET and HDPE and aseptic cartons seems to be reducing.




54

• Obviously while these pack types are increasing their share, other pack types must be in decline. The biggest loser has

been plastic cups, volumes in which have declined in real terms by over 20% per year on average. Two previously significant suppliers have disappeared from the market entirely (Allied Beverages and Reem Beverages) and only Dhofar

Beverages (KHALEEJ) continues to sell significant volumes in this pack type. • Short-life cartons have also declined in absolute terms, mainly owing to ONDP withdrawing its 1 litre gable top carton in

2003. Non-returnable glass bottles and cans have both declined in relative terms, with volumes broadly steady in a growing market.


B2. JUICE PRODUCTS B2.3 SOURCING


55

B2.3.1 LOCAL V. IMPORTS Table B14: Juice Products, Local vs Imports, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Local 33.4 35.1 36.8 37.4 43.4 6.8 35.8 5.1 4.8 1.6 16.0

Import 20.9 24.5 28.4 34.5 36.0 14.5 44.1 17.2 15.9 21.4 4.3

Total 54.3 59.6 65.2 71.9 79.3 9.9 38.9 9.8 9.4 10.3 10.3

Key Points: • The period 1999 to 2001 saw rapid expansion in local production of juice products and in particular from Oman National

Dairy Products. At this time, self-sufficiency in the market exceeded 60%. Subsequently, however, suppliers from Saudi Arabia and the UAE have targeted the Omani market increasingly aggressively, and growth in imports has outstripped

that in local supply. Local production did grow faster than imports in 2005 however, largely due to the continued expansion of Oman National Dairy and Dhofar Cattle Feed. By 2005, local products made up 55% of the ma rket.




56

• Somewhat paradoxically, imports are most important for short-life products, with leading regional dairies such as

Almarai, Al Rawabi and Unikai all significant suppliers of short-life juices in HDPE bottles. The local companies, notably ONDP, National Beverages and Oman Refreshments are the major suppliers of long-life drinks in aseptic packs. Of

course, this is not to say that local suppliers do not supply short-life juices and there are no imports of long-life products; on the contrary, ONDP is very important in short-life juice, for example, and Aujan is a key supplier of long-life drinks (RANI) from both Dubai and Saudi Arabia.




57

B2.3.2 LOCAL PRODUCTION – MAIN SUPPLIER PROFILES (i) National Beverages Co Ltd (NBC), Ruwi

Brands: SUNTOP, ROYAL MANGO

Lines: Aseptic cartons: 125 ml, 250 ml

NRB: 200 ml

• NBC produces SUNTOP drinks in single-serve aseptic cartons under licence from Co-Ro Foods, Denmark, and holds the franchise for the Omani and UAE markets. SUNTOP is market leader in the important drinks segment. SUNTOP was

unavailable in the market during the first quarter of 2006 due to the boycott on Danish products. It was however re-introduced in April 2006.

• The smaller sized 125 ml aseptic cartons of SUNTOP were launched in April 2003. The cartons retail at an attractive 50 baizas, compared with a usual price point of 100 baizas for the standard 250 ml size. The 125 ml carton accounts for

around 30% of SUNTOP unit sales.

• Schools remain one of the most important channels for NBC, with around 25% of their SUNTOP sales derived from school contracts. This area of business has been helped by the Ministry of Health initiative that targets schools and discourages

carbonates consumption.




58

• In September 2004, NBC re-introduced ROYAL MANGO drink in a 200 ml glass bottle selling at 50 baiza, a brand which

had been discontinued some years previously. This product replaced NBC’s own brand of mango drink (GOGO) which was itself only launched in October 2003. Apparently, NBC found the manufacturing cost of GOGO to be too high to retail at

the key 50 baiza price point. • In addition to their manufacturing interests in juices and carbonates (RC COLA and ROYAL CROWN), NBC is also the

distributor for SUNQUICK squashes and until March 2005 was the distributor for MASAFI bottled water. NBC launched its own brand of water, DIMA, in July 2005.




59

(ii) Oman National Dairy Products Co (ONDP), Ruwi

Brands: FUN NAN, TAMAM long-life drinks ZAIN long-life juices

ZAIN short-life juices ZINGO short-life drinks

Lines: aseptic cartons: 125 ml, 200 ml, 250 ml, 1 litre gabletop cartons:225 ml

PET: 250 ml, 500ml, 1 litre, 2 litre

• ONDP has one of Oman’s largest distribution networks for chilled products, reaching over 5,000 outlets across the country, in a range of channels in retail and food service. While ONDP distributes its short-life products itself, the

distribution of its long-life products is handled by Al Ahlia Gulf Line.

• The company uses a wide variety of pack types, including aseptic cartons from both Tetra Pak and Combibloc, and gable top cartons from Elopak. It launched a long-life PET pack in July 2004 (long-life drinks) and converted its 250 ml short-life juice from HDPE to PET in November 2004.

• The combined sales of TAMAM and FUNNAN drinks in aseptic cartons, plus ZAIN long-life drinks and ZINGO short-life

drinks make ONDP number two in the juice drinks market, narrowly behind SUNTOP.

• ONDP is the leading local manufacturer of short-life juices, although outsold in the market by Al Rawabi.

• ONDP remains an export focused company with more than half of their total production sold outside their domestic market.




60

(iii) Dhofar Beverages Co (DBC), Salalah

Brands: AL KHALEEJ

Lines: Aseptic cartons: 250 ml NRB: 200 ml

Cups: 200 ml

• DBC markets its own AL KHALEEJ brand of juice drinks in three pack types (the brand is also used for a carbonates range). The product comes in several unusual flavours including guava and kiwi-lime.

• The brand was originally available only in cups, and this remains the most important pack type despite the subsequent

introduction of aseptic cartons and glass bottles. Indeed, AL KHALEEJ is the clear leader in the dwindling cups market.

• The company also produced MAAZA brand juice drinks under a franchise agreement until late 2003, but volumes had been in decline for several years and this agreement was ended.

• Bottled water is a far more important aspect of DBC’s business in volume terms and the company have aggressively developed their DARBAT brand. DBC also distribute several other beverage brands, including SHARK energy drinks, but

volumes are small.




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(iv) Dhofar Cattle Feed Co, Salalah (DCF)

Brand: A'SAFWAH

Line: HDPE: 250 ml, 2 litre

• In August 2001, the fresh dairy operation DCF started production of short-life juice in 250 ml, 1 litre and 2 litre HDPE bottles under its main brand A'SAFWAH. Although strongest in Salalah itself, the new brand also quickly penetrated the

Capital Area through the already existing short-life dairy distribution network of DCF.

• Sales of the A’SAFWAH brand have grown strongly since 2001 and it is second only to ONDP as a local producer of short-

life juices and nectars.

• Take-home packs account for around 60% of sales.




62

(v) Oman Refreshment Co (ORC), Ruwi

Brand: TOP FRUIT

Line: aseptic cartons: 250 ml

• ORC is primarily known as the Pepsi bottler, but since 1997 it has also produced a range of juice drinks in three flavours under the TOP FRUIT brand, filled in 250 ml International Paper aseptic cartons.

• TOPFRUIT is distributed alongside Pepsi Beverages carbonates and bottled water. Pepsi Beverages allows ORC to display

TOPFRUIT in Pepsi-branded vizicoolers.

• However, TOP FRUIT is not primarily a retail brand but is orientated more to sales through schools, allowing ORC to take a share of this market where carbonates are banned.




63

(vi) Ali Shaihani Juice Filling Industries (JFI), Ruwi

Brands: LULU, SHAMI, GIPSI, BARAD BARAD

Lines: cups: 200 ml NRB: 250 ml

pouch: 200 ml

• JFI is primarily a snack foods business focused on its CHIPS OMAN range and its beverage range remains very much a

sideline. Indeed, it would be no surprise to see JFI withdraw from the beverage market completely.

• The cup drinks LULU and BARAD BARAD are in fact artificial fruit flavoured drinks and have no fruit juice content, which rules them out of school sales. They have mainly sold through bagalas, a retail sector that is declining in Oman, so

distribution is increasingly problematic. • GIPSI pouch drink does contain juice and is approved for school sale. It sells at the key 50 baize price point. SHAMI is a

mango flavoured drink in NRB.




64

(vii) Reem Beverage Industries

Brands: NAKHAL, SUN UP

Lines: HDPE: 250 ml, 2 litre Cups: 200 ml

• Part of the Omzest Group, Reem Beverage products were distributed by sister company Oman Agricultural Development,

a major fresh dairy. However, the arrangement did not work well and Reem’s sales declined steadily, with various brands discontinued along the way. Reem ceased trading in 2004, although a spokesman did claim at the time that

“recommencement is planned though no date is fixed.” At the time of research in early 2006, Reem had still not resumed trading.




65

B2.3.3 IMPORTS – MAIN SUPPLIER PROFILES (i) Aujan Industries Company

(Production in Saudi Arabia and Dubai)

Brands: RANI drink, RANI float, HANI drink

Lines: Aseptic cartons: 250 ml Cans: 180 ml, 240 ml

NRB: 200 ml PET: 250 ml, 1.5 litres

• Aujan produces and markets five branded ranges of juice products in Saudi Arabia, but RANI is clearly the key product in

the Oman market. It is available in two forms: RANI drink and RANI float, the former being imported from Saudi Arabia and the latter from Dubai.

• RANI is available in three can sizes, aseptic cartons, non-returnable glass bottles and PET bottles in orange, pineapple

and peach flavours.

• HANI is targeted at 6-12 year old children and has a boy hero theme. It is available only in 250 ml PET bottles and is imported from Saudi Arabia.




66

(ii) Almarai Company Limited

(Production in Saudi Arabia)

Brand: ALMARAI juice/nectar/drink Lines: Aseptic cartons: 200 ml, 1 litre

HDPE: 200 ml, 2 litres

• ALMARAI produce both long-life and short-life juice products but are best known in the Oman market for their short-life range of juices and nectars sold in HDPE.




67

(iii) National Food Products Company, Sharjah and Abu Dhabi (NFPC)

Brands: long-life: LACNOR (aseptic juice/nectar), SUNY (aseptic drink), MILCO (aseptic drink), GUMBA (aseptic nectar)

Lines: aseptic cartons: 200 ml, 250 ml, 1 litre FT

• NFPC is a holding company with five separate divisions, two of which supply juice products:

- Milco (Abu Dhabi) for short-life dairy and juice products - Al Buheira Lacnor (Sharjah) for long-life dairy and juice products

• NFPC remains the largest producer of juice products in volume terms in the UAE.

• NFPC has a substantial distribution operation established in Oman, and is significant in both long and short-life juices.




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(iv) Arab Beverages, Dubai

Brands: long-life: CAPRI SONNE (two versions: 12% fruit content drinks for retail, 30% nectars for school sales only)

Lines: 200 ml aluminum pouches

• Arab Beverages manufactures CAPRI SONNE juice drinks in Dubai under licence of the flavourings company Rudolf Wild of Germany.

• CAPRI SONNE nectars continue to be sold exclusively in schools while CAPRI SONNE fruit drinks are distributed through

retail channels (primarily in A class supermarkets).

• In 2004, Arab Beverages ended its distribution arrangement with WJ Towell, and opted to establish its own distribution company Al Accad Trading (Accad being the family name of Arab Beverage’s owners).




69

(v) United Kaipara Dairies Co (Unikai), Dubai

Brands: long-life: UNIKAI (aseptic juice/nectar/drink)

short-life: MOROUJ (HDPE juice/nectar), AREEJ (gabletop drink) Lines: Aseptic cartons: 250 ml, 1 litre resealable

Gabletop cartons: 225 ml HDPE: 250 ml, 2 litre

Cups: 225 ml

• In the juice sector, the artificially flavoured AREEJ short-life drink in single-serve gabletop cartons continues to be Unikai’s top brand in the Oman market. However, the company is also significant in short-life juices and nectars under

the MOROUJ brand.

(vi) Al Rawabi Dairy, Dubai Brands: short-life: AL RAWABI (HDPE/PP and PET juice/nectar/drink),

Lines: HDPE: 200 ml, 1 litre, 2 litre

PET: 200 ml, 250 ml, 500 ml

• Al Rawabi Dairy has a significant presence in short-life juices packed in HDPE, being the first to introduce the product and pack type. The company did experience some problems with its distribution arrangements in 2005 and these led to a

decline in sales. These problems have now been resolved however, and sales are expected to recover in 2006. SAMBA a fighting brand was discontinued in 2005 due to disappointing sales.


B2. JUICE PRODUCTS B2.4 BRAND/SUPPLIER SHARES


70

Table B15: Juice Products, Total Supplier Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

ONDP 24 22 20 20 22

NBC 19 18 18 17 17

Aujan 9 8 7 10 13

Al Rawabi 4 6 8 9 7

Unikai 7 7 8 7 7

ORC 6 6 5 6 6

Almarai 4 4 4 5 6

Dhofar Beverages 7 6 5 4 4

DCF Neg 2 3 3 3

Other local 6 5 5 2 2

Other imports 14 16 17 17 13

Total 100 100 100 100 100

Total (m litres) 54.3 59.6 65.2 71.9 79.3

Key Points:

• With its broad product range (juices, nectars, drinks; short and long-life) ONDP has retained market

leadership since 2001 with its ZAIN, FUNNAN, TAMAM and ZINGO brands.

• NBC’s position is essentially based on a single product, SUNTOP, which is the leader in juice drinks. As the importance of drinks declines in relative terms,

NBC will struggle to retain overall market share. Its share is expected to decline significantly in 2006

because of the boycott on Danish products.

• Al Rawabi is the leading imported brand, and clear

leader in short-life juices and nectars segment, outselling ONDP in these products. Its market share

declined in 2005 due to distribution related problems. Almarai, another importer of premium juice products is showing steady growth.

• Aujan’s RANI drink comes in a wide variety of pack types (PET, NRB, can, carton) doubtless contributing

to its success.


B2. JUICE PRODUCTS B2.5 PRICING AND DISTRIBUTION


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Table B16: Juice Products, Reference Brands Selected SKU Pricing, 2001-2005 (OR)

2001 2002 2003 2004 2005

SUNTOP drink 250 ml aseptic carton 0.100 0.070 0.095 0.090 0.090

ZAIN l/l juice 1 L aseptic carton 0.500 0.390 0.390 0.390 0.390

MOROUJ s/l juice 250 ml HDPE 0.120 0.110 0.110 0.110 0.110

Al Rawabi s/l juice 2 L HDPE 0.800 0.790 0.850 0.850 0.850

RANI drink 180 ml can 0.100 0.090 0.095 0.095 0.095

RANI drink 200 ml NRB 0.090 0.090 0.080 0.090 0.090

CAPRI SONNE

drink

200 ml pouch

(10 x pack) 0.850 0.850 0.850 0.850 0.900

ZAIN s/l juice 250 ml PET - - - - 0.090-0.100

ZAIN s/l juice 2L PET - - - - 0.520-0.530


B2. JUICE PRODUCTS B2.5 PRICING AND DISTRIBUTION


72

Key Points:

• As is evident from the table, base prices have generally seen little variation over the last five years. However, there have been periods of intensive price promotions, band on offers and BOGOFs1 reducing the price per litre for some juice

products very dramatically. • For example, at one point in 2004 ONDP’s ZAIN short-life juice was selling at OR 0.850 for 2 x 2 litre HDPE packs, with

competitors such as A’SAFWAH and AL RAWABI priced broadly similarly.

• It is now understood that the major juice product producers and importers have reached an informal agreement to control pricing, and that this brought an element of stability to the market in the latter part of 2004 and through 2005.

• Distribution of short-life products clearly requires a developed cold chain, and this to some extent restricts them to the

major urban areas. However, with the rapidly increasing strength of the hypermarkets and supermarkets this limitation on growth is rapidly disappearing.

• Sales of multi-serve (or take home) packs are also largely limited to the largest outlets and similar comments on their

increasing availability apply.

• Single serve items are distributed much more widely, and are available in bagalas and other small outlets throughout the

country including in the Interior. A further significant channel is school sales, which account for around 40% of single serve aseptic carton sales (carbonates, and juice products in cans and glass bottles all being banned). School contracts

are tendered and usually specify cartons.

1 Buy One Get One Free


B2. JUICE PRODUCTS B2.6 FIVE-YEAR FORECASTS


73

Table B17: Juice Products, Five-Year Detailed Forecasts, 2005-2010


2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Single-serve 60.7 64.7 68.6 72.2 75.9 78.6 6.7 6.0 5.3 5.1 3.6

Multi-serve 18.6 20.2 21.8 23.5 25.3 26.9 8.4 8.1 8.0 7.4 6.5

Total 79.3 84.9 90.4 95.8 101.2 105.5 7.1 6.5 5.9 5.7 4.3

Key Points:

• Juice products are expected to continue to grow strongly as consumer awareness of health issues grows and the

distribution of a wider range of juice products increases. The rate of growth will, however, slow a little as the market base becomes larger.

• Take home products are expected to grow more quickly than the single serve sector,, with juices and nectars the key

growth drivers for the larger packs. However, even by 2010 take home packs are only forecast to reach 26% of the

market as compared to 25% in 2005.


B3. PACKAGED WATER B3.1 OVERALL DEMAND LEVELS


74

Table B18 to B19 below summarise the development of the Oman packaged water market during the period 2001-2005.

Table B18: Packaged Water, Million Litres, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Consumption 121.8 132.9 143.4 154.5 170.8 21.7 9.1 7.9 7.7 10.6


Table B19: Packaged Water, Retail Value, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Market value 23.3 24.6 25.1 25.4 26.2 8.8 5.6 2.0 1.2 3.1

Sales per capita $ 10.08 10.60 10.77 10.72 10.92 6.9 5.1 1.6 (0.5) 1.9




75

0

20

40

60

80

100

120

140

160

180

2001 2002 2003 2004 2005

Mill

ion L

itres




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Key Points:

• Packaged water consumption in Oman has grown by an average annual rate of 8.8% since 2001 to reach 170.8 million litres in 2005. In value terms, this is worth around US$ 26.2 million at retail level. Per capita consumption has grown

from 52.7 litres in 2001 to 71.2 litres by 2005. • Market value, however, has grown by an average of just 3.0% per annum over this period. This reflects a number of

factors:

o The growing importance of dispenser water with its lower value per litre o A gradual shift to larger sizes within the bottled water segment

o Downward pressure on prices due to increased competition between local and imported brands o The impact of the Aquafina launch in 2004 (see below).

• Lower prices have encouraged marginal consumers to enter the market, and existing users of packaged water to increase

their consumption, so that per capita consumption levels have grown steadily.


B3. PACKAGED WATER B.3.2 KEY SEGMENTATIONS


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B3.2.1 BOTTLED V. DISPENSER

Table B20: Packaged Water, Bottled v. Dispenser, Million Litres, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Bottles 90.6 98.5 106.1 111.8 127.8 21.0 8.7 7.7 5.4 14.3

Dispenser 31.2 34.4 37.3 42.7 43.0 23.8 10.3 8.4 14.5 0.7

Total 121.8 132.9 143.4 154.5 170.8 21.7 9.1 7.9 7.7 10.6

Key Points: • Bottled water consumption has grown at an average of 9.0% per annum over the period, while growth in dispenser water

has slowed to 8.3% per annum.

• After years of a decline in the growth rate of bottled water, there was an increase in 2005. The growth rate of dispenser water showed a significant decline, which is discussed below.




78

• From its origins in the mid-1990s, dispenser water grew gradually to 2000. Until then offices and other businesses were really the only users, but the only two suppliers (National Mineral Water and Oasis Water Company) then began to target

household consumption providing a fillip to growth. Although these companies started to deliver directly to private residences, sales via neighbourhood bagalas, who also delivered dispenser containers as a customer service, became an

important secondary channel. • However, dispenser water’s share of the market declined in 2005. This was due to a number of reasons:

• Al Mazyona’s MAJAN brand, which made up a significant share of the dispenser water market was out of

production for the first five months of the year.

• Many of the imported bottled water brands such as AQUAFINA and ARWA promoted their products heavily by offering free bottles of water (e.g. 12 bottles plus 4 free). These offers provoked National Mineral Water into

offering similarly competitive responses.

• Many retail outlets such as Carrefour, Sultan Centre and Lulu, entered the market with their own brand bottled waters, often selling at a discount price.

• Also in 2000, the Government issued only its third licence for local water production to Al Mazyona Mineral Water Company (AMW). The entry of a third producer stirred up the ma rket and generated additional growth. By 2004, at least 10 other companies had entered the market (some of which have since left) although the quality of their water is

reportedly suspect. The major companies have made representations on this point to the authorities, but feel that Government is more concerned with the job creation prospects of these companies than a perceived but unproven health

risk.




79

B3.2.2 STILL V. SPARKLING

Table B21: Packaged Water, Still v. Sparkling, Million Litres, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Still 121.7 132.8 143.3 154.5 170.7 21.7 9.1 7.9 7.7 10.5

Sparkling 0.1 0.1 0.1 0.1 0.1 - - - - -

Total 121.8 132.9 143.4 154.5 170.8 21.7 9.1 7.9 7.7 10.6

Key Points:

• As is evident from the table, sparkling water is a marginal product in Oman. Demand is essentially restricted to Western

expatriates and food service outlets (hotels and better quality restaurants) catering to tourists. Even in Muscat, only the few largest supermarkets stock sparkling water, while the product is rarely found outside the Capital Area.

• Producers of still water believe that taste is of fundamental concern to consumers. It is felt that there is a clear

preference for genuine spring waters. Indeed, leading brands such as EL JABAL AL AKHDAR do have a slightly sweet taste as a result of their mineral content. Nevertheless, it is also clear that this preference is insufficient to command a significant price premium, as is evident from the long term decline in supplier share of National Mineral Water brands.




80

B3.2.3 PACKAGING Table B22: Packaged Water, by Pack Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Plastic:

< 1.5 litre 28.5 31.0 37.9 33.2 33.8 4.4 (7.5) 8.8 22.2 (12.4) 1.8

1.5 – 5 litre 62.0 67.4 68.1 78.5 93.9 10.9 40.9 8.7 1.0 15.3 19.6

5 + litres (inc. dispenser)

31.2 34.4 37.3 42.7 43.0 8.3

23.8 10.3 8.4 14.5 0.7

Glass 0.1 0.1 0.1 0.1 0.1 - - - - - -

Total 121.8 132.9 143.4 154.5 170.8 8.8 21.7 9.1 7.9 7.7 10.6




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Share of Total (%)

2001 2002 2003 2004 2005

Plastic:

< 1.5 litre 23.4 23.3 26.4 21.5 19.8

1.5 – 5 litre 50.9 50.7 47.5 50.8 55.0

5 + litres (incl.

dispenser) 25.6 25.9 26.0 27.6 25.2

Glass 0.1 0.1 0.1 0.1 0.1

Total 100 100 100 100 100

Key Points:

• The main pack type for water is the 1.5 litre PET bottle which accounts for over half of all water sold, equating to over 61

million bottles. Note that the 55.0% includes NMW’s 2 litre pack, although this represents just a fraction of the total. • Dispenser water (including small volumes of NMW’s 6 litre pack) has steadily been increasing in importance, reaching

43.0 million litres in 2005. However, as discussed previously, dispenser water only registered marginal growth in 2005 (0.7%).




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• While sales of smaller plastic pack sizes (<1.5 litres) have held broadly steady in volume terms over the period, they

have clearly declined in relative importance over the past year. Closer examination of the data shows that it is in fact the smallest sizes (200 and 250 ml cups) that have declined, while 500 ml PET bottles have shown some slight growth. This

appears to have two main reasons:

- the relatively high price per litre of water packed in these small sizes

- supply-side issues, notably the loss of distribution by major suppliers of imported water cups (e.g. GULFA)

• Glass bottles are used almost exclusively for sparkling water, all brands of which are imported.


B3. PACKAGED WATER B3.3 SOURCING


83

Table B23: Packaged Water, Local v Imports, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Local – bottles 50.8 64.0 75.0 70.5 75.1 10.3 93.2 26.0 17.2 (6.0) 6.5

Import – bottles 39.8 34.5 31.1 41.3 52.7 7.3 (18.1) (10.8) (9.9) 32.8 27.7

Dispenser (local) 31.2 34.4 37.3 42.7 43.0 8.3 23.8 10.3 8.4 14.5 0.6

Total 121.8 132.9 143.4 154.5 170.8 8.8 21.7 9.1 7.9 7.7 10.6

Key Points:

• Historically, the Government’s reluctance to issue additional local production licences encouraged suppliers from outside Oman, and most notably in the UAE, to develop their sales in the Omani market, so that imported brands dominated the

market. Only once a second local licence was granted did the share of the market held by local production overtake imports in 2001.

• By 2005, locally packaged water had a 69% market share in total (i.e. including dispenser water, all of which is local). Locally bottled water had a 59% share of the bottled water market, which is down from a peak of 71% in 2003.




84

• There are two main reasons for the loss in share of locally bottled water:

o Pepsi’s AQUAFINA has been expanding its distribution and presence in the market, particularly in the foodservice

sector. It is imported to Oman from Dubai. o In mid 2004, Coca-Cola switched sourcing of its bottled water from contract packing locally by National Mineral Water

to imports (this tied in with a re-branding exercise from RIWA to ARWA).

• Other imported brands lost ground, but their decline in importance was more than offset by the additional imported volumes from AQUAFINA and ARWA.




85

B3.3.1 LOCAL PRODUCTION – MAIN SUPPLIER PROFILES (i) National Mineral Water Company (NMW)

Brands: TANUF, EL JABAL EL AKHDAR, ASSAHA (bottled water and cups)

SALSABEEL (5 gallon water, 2 litre and 6 litre PET)

Lines: PET: 500 ml, 1.5 litre, 2 litre, 6 litre cups: 250 ml (PET cups)

5 gallon polycarbonate • NMW is by far the largest, and longest established, producer of drinking water in the country, supplying over 40% of all

packaged water consumed in Oman in 2004. The company relocated to new premises in the Ghala area of Muscat in August 2004.

• NMW markets water under four separate brands.

• Its leading brand, indeed still overall market leader in bottled water, is EL JABAL EL AKHDAR. This is a natural spring

water with a slightly sweet taste which is liked by Omani consumers. It is available in 250 ml cups and 500 ml and 1.5 L PET bottles. EL JABAL EL AKHDAR also has the contract to supply all international airlines departing from Muscat.




86

• ASSAHA (500 ml and 1.5 L PET bottles only) is a fighting brand and is sold predominantly in the Omani interior. Due to its focus on the interior, ASSAHA has become NMW’s fastest growing brand, although this has been at the expense of a

squeeze on profit margins. • The flagship TANUF water is positioned as a ‘premium’ brand, and is concentrated on the urban markets of the Capital

Area and Salalah but is also used for exports. It is claimed that TANUF is the preferred choice of brand for the Royal

Palace. Like EL JABAL EL AKHDAR, it is a natural spring water and is packed in 250 ml cups, 500 ml and 1.5 L PET bottles. However, in the price competitive environment of 2005 TANUF has seen a slight loss in market share.

• SALSABEEL was NMW’s brand for dispenser water only until January 2001, when a 5 litre PET pack was introduced. In July 2003 this product was upsized to 6 litres and a new 2 litre line of the brand was also introduced. NMW believes that

these larger sizes hold the greatest potential for increasing future sales and is increasingly switching its emphasis to them.

• Until mid-2004, NMW were packing RIWA, Coca-Cola’s own brand of water, under contract. However, Coca-Cola decided

to re-brand this product as ARWA and in tandem with this switched to importing the product. Al Ahlia, Coca-Cola’s sales distributor in Oman, handles the distribution and promotion of ARWA.




87

(ii) Oasis Water Co

Brand: OASIS

Line: 6 litre PET, 5 gallon polycarbonate

• Oasis Water Company, a subsidiary of Zubair Corporation, is not linked to the company of the same name which forms part of NFPC/Lacnor in the UAE. It is understood that there was an earlier agreement between the two companies in

place, but that there is no longer any tie-up.

• OASIS water is purified water, as opposed to NMW’s SALSABEEL, which is marketed as spring water. Nevertheless, the fact that OASIS purifies water has provided the company with a cost advantage over its main competitors.

• Since 1999, Oasis has pursued an aggressive sales strategy. By 2001, OASIS was firmly established as the market leader

in the 5 gallon segment, and the brand has retained that position. • After being only involved in dispenser water for many years, the company made an entrance into the bottled water

segment with a 6 litre pack.




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(iii) Al Mazyona Mineral Water Co (AMW)

Brand: MAJAN

DARBAT (for Dhofar Beverages) DIMA (for National Beverage Co.) SULTAN, MADINA (for W. J. Towell; discontinued May 2005)

Lines: PET: 330 ml, 500 ml, 625 ml, 1.5 litre cups: 100 ml (airlines only), 125 ml, 200 ml

5 gallon polycarbonate

• The independent AMW was established in November 2000 after having been granted the second licence to bottle spring water in Oman (the first one is held by NMW).

• AMW started production of its MAJAN brand in 1.5 L and 500 ml PET bottles, and while other sizes have been added (e.g.

330 ml, cups) these two sizes still account for the bulk of sales.

• MAJAN is also used for 5 gallon containers. However, production of this product was halted for several months in 2005

and was only recommenced (at significantly reduced volumes) late in the year. A second smaller brand, WADI AL ZORDI, was discontinued in 2005.

• DARBAT 500 ml and 1.5 L PET bottles are packed for Dhofar Beverages (which produces its own 200 ml cups – see

below).




89

• DIMA 500 ml and 1.5 L PET bottles are packed for National Beverages.

• SULTAN (500 ml and 1.5 L) and MADINA in (1.5 L) bottles were packed for WJ Towell, but AMW discontinued production of these products in May 2005 due to capacity constraints.

(iv) Dhofar Beverage Company (DBC)

Brand: DARBAT, JARZEEZ

Line: Cups: 200 ml

• DBC, the only soft drinks company situated in the Salalah area, is primarily a producer of juice drinks and, less

importantly, carbonated soft drinks under the AL KHALEEJ brand.

• Through those ventures, DBC are in the possession of a water production licence as water treatment is one of the production stages for beverages. DBC therefore decided to introduce their own water brand in cups, which was launched under the DARBAT brand (the name of a local waterfall) in 200 ml cups in October 1999. In 2004 a further brand of cup

water (JARZEEZ) was introduced.

• Since April 2003, DARBAT has also been bottled in 1.5 litre PET, and later 500 ml PET, under contract by AMW.

• DBC used to be the official distributor for GULFA bottled water from the UAE until mid 2003. The company decided to stop importing GULFA in order to focus on the development of their own brand, DARBAT, a move which significantly

boosted the latter while the former declined sharply. After negotiations about the future of GULFA in early 2005, DBC have decided not to resume imports and will remain focused on their own water brands.




90

(v) National Beverages Company (NBC)

Brand: DIMA

Lines: 500 ml and 1.5 L PET

• NBC was the distributor for MASAFI (imported from the UAE) until March 2005. It launched DIMA in May 2005 which is packed by AMW.

• NBC bottles and distributes carbonates (ROYAL CROWN) and juice drinks (SUNTOP) and its primary focus is on these.

However, the distribution strength that results, alongside its previous experience in distributing MASAFI, led it to launch its own brand DIMA.

(vi) Other Suppliers • There are at least 10 new suppliers of dispenser water in the market, although none has built a significant market share,

and indeed some entrants have subsequently disappeared again. They are very much concentrated in the Capital Area. As previously noted, the major producers claim that the quality of their water is suspect but that representations on this

point to the authorities have been ignored because Government is more concerned with the job creation prospects of these companies than a perceived but unproven health risk.




91

B3.3.2 IMPORTS – MAIN SUPPLIER PROFILES (i) Pepsi Beverages/ Oman Refreshment Company

Brand: AQUAFINA

Lines: 600 ml, 1.5 L PET

• In January 2004 Pepsi launched its AQUAFINA bottled water via its local partner Oman Refreshment Company (ORC).

• For three years prior to this, ORC had distributed JEEMA water imported from the UAE and the loss of this arrangement

has hit JEEMA volumes very substantially. • Given ORC’s distribution strength it is no surprise that AQUAFINA initially did well, although competitors claim that

consumers do not like its taste, preferring natural mineral water. Then in April 2004 a malicious text message was circulated in Oman claiming that AQUAFINA was produced from recycled water. ORC claim to know that the origin of this

was a competitor (unnamed).

• Pepsi and ORC decided that there was little point in seeking legal redress for this libel (although they did get the Ministry of Health to support them in refuting the claims) and focused instead on a commercial response. This took the form of

giving AQUAFINA away to the trade as a bonus on purchases of Pepsi carbonates on a 10 + 2 basis (buy 10 cases of Pepsi carbonates get two cases of AQUAFINA free). Given Pepsi’s dominance in the carbonates market, this meant that the trade was quickly loaded up with AQUAFINA which began to be sold on to consumers at much reduced prices. This

naturally squeezed competitors’ sales very hard and they were forced to also cut prices.




92

• In 2005, AQUAFINA was given strong promotional support, leading it to increase its market share of the bottled water

market from 13% to nearly 17%.

(ii) Masafi Mineral Water/ Matrah Cold Stores

Brand: MASAFI

Lines: Cups: 125 ml, 200 ml, 250 ml PET: 330 ml, 500 ml, 1,5 Litre

• Imported from the UAE, MASAFI is premium positioned natural mineral water, and volumes are in decline under price

pressure and increased competition from local brands. Until recently it had been the leading imported brand in Oman, but has now been overtaken by Pepsi’s AQUAFINA.

• Matrah Cold Stores took over the distribution of MASAFI from National Beverages Company in March 2005.




93

(iii) Coca-Cola/Al Ahlia Gulf Line

Brand: ARWA (formerly RIWA)

Sizes: 500 ml, 1.5 L PET

• Coca-Cola was ahead of rival Pepsi in launching its water brand RIWA into the Omani market. The product was originally packed under contract by National Mineral Water, but in mid-2004 Coca-Cola re-branded the product as ARWA and at the

same time moved production to the UAE. Despite some disruption caused by this, the brand retains a significant market share.


B3. PACKAGED WATER B3.4 BRAND/SUPPLIER SHARES


94

Table B24: Packaged Water, Total Supplier Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

National Mineral Water

42.4 44.3 45.5 40.3 39.2

Al Mazyona 5.5 9.8 12.5 16.3 15.0

Pepsi/ORC 0.0 0.0 0.0 9.6 12.6

Oasis 15.5 14.2 12.8 12.3 12.6

Masafi/MCS 14.9 13.2 12.8 10.7 8.3

Coke/Al Ahlia 3.8 5.6 7.3 6.5 7.0

Other imports 17.8 12.8 9.0 3.1 3.0

Other local 0.1 0.1 0.1 1.2 2.3

Total 100 100 100 100 100

Total (m litres) 121.8 132.9 143.4 154.5 170.8

Key Points:

• National Mineral Water has been for many years the

dominant force in the market. It reached a peak market share in 2003, but with such a large share it is unsurprising that new entrants have taken from it in

2004. Its EL JEBAL EL AKHDAR is the leading brand in the bottled market while SALSABEEL is number two in

dispensers.

• Oasis is the clear leader in dispenser water and decided to

enter the bottled water market in early 2006 with a 6L pack.

• Al Mazyona has lost some share to Pepsi’s AQUAFINA and Coke’s ARWA over the year. Previous growth in 2003 and 2004 was spurred by the growth of DARBAT, packed for

Dhofar Beverages.

• Masafi – until recently the leading imported water –

changed distributor in early 2005. Its position as a premium product is inevitably being eroded by cheaper

local competitors.

• The introduction of own brands from the large retail

outlets has caused a slight increase in other imports.




95

Table B25: Bottled Water, Brand Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

NMW brands 43.4 46.3 48.2 43.3 39.4

AQUAFINA 0.0 0.0 0.0 13.3 16.8

DARBAT 0.1 0.1 3.7 10.7 10.4

MASAFI 20.0 17.8 17.3 14.8 11.1

ARWA 5.1 7.6 9.9 8.9 9.4

DIMA - - - - 4.5

MAJAN 7.2 10.6 8.3 4.1 4.3

Other imports 23.9 17.3 12.2 4.3 3.9

Other local 0.3 0.3 0.4 0.6 0.2

Total 100 100 100 100 100

Total (m litres) 90.6 98.5 106.1 111.8 127.8

Key Points: • Although exact splits between the NMW brands are

not available, it is clear that EL JEBEL EL AKHDAR was the leading single brand in the Oman market with a share exceeding 20% in 2005.

• AQUAFINA moved up to second place, and is competing strongly with EL JEBEL EL AKDHAR to be

the leading single brand. • Despite having a slightly lower share that last year,

DARBAT moved up to third place, capitalising on the decline in sales of MASAFI. MASAFI’s change in

distributor had a significant impact on sales, and is in decline due to its premium price.

• ARWA has recorded a slight gain in share for 2005, helped by its promotional activity.

• MAJAN has declined from its peak, although Al Mazyona has benefited from the success of DARBAT

which it fills under contract. • Launched in May 2005, DIMA has captured a

significant share of the market, benefiting from NBC’s previous experience in distributing MASAFI.

• Other imports saw a slight rise as many of the large retail outlets (e.g. Carrefour, Lulu) started offering

their own brands at very low prices.




96

Table B26: Dispenser Water, Brand Shares, 2001-2005

Brand Shares (%)

2001 2002 2003 2004 2005

OASIS 60.6 55.7 50.3 44.3 50.0

SALSABEEL 39.4 38.5 37.6 33.5 38.6

MAJAN 0.0 5.8 11.8 17.7 2.2

Other local 0.0 0.0 0.2 4.4 9.3

Total 100 100 100 100 100

Total (m litres) 31.2 34.4 37.3 42.7 43.0

Key Points

• OASIS replaced SALSABEEL as the leading dispenser

brand in 2000 and has retained that position ever

since.

• MAJAN saw a significant decline in its shares due to a temporary stop in production for the first five months

of the year.

• Other local brands have seen a significant increase their market share. Some of these brands do not have their own production facility and are simply

collecting empty carboys from the larger brands and refilling them with tap water and selling them at a

cheap price.


B3.5 PACKAGED WATER B3.5 PRICING AND DISTRIBUTION


97

Table B27: Bottled Water, Reference Brands Selected SKU Pricing, 2001-2005 (OR)

2001 2002 2003 2004 2005

EL JEBEL AL 1.5 L bottle 0.100 0.100 0.100 0.100 0.100

AKHDAR 500 ml bottle 0.060 0.060 0.060 0.060 0.060

MASAFI 1.5 L bottle 0.150 0.125 0.125 0.125 0.125

500 ml 0.080 0.080 0.080 0.080 0.080

AQUAFINA 1.5 L bottle - - - - 0.100

24 x 600 ml case - - - - 1.275

various 250 ml cups 0.050 0.050 0.050 0.050 0.050

SALSABEEL 6 L bottle - - - - 0.280

OASIS 5 gallon 0.850-0.900 0.900 0.900 0.900 0.900


B3.5 PACKAGED WATER B3.5 PRICING AND DISTRIBUTION


98

Key Points:

• The above prices are based on two major retailers (Carrefour and Lulu hypermarkets) in the Capital Area.

• The retail prices of water, particularly 1.5 litre bottles, have been under significant pressure as Pepsi’s tactic of offering

free bottles of AQUAFINA as a bonus on sales of carbonates caused the trade to become stocked up with the product.

The retail case price fell accordingly, reportedly as low as OR 0.450 for a 12 x 1.5 litre case in some outlets at Salalah.

• Prices of smaller sizes were less affected, although as price differentials narrowed sales of these smaller sizes came under pressure.

• Bottled water is very widely distributed throughout the country, even into the Interior, and can be found even in the

smallest bagalas. It is naturally the cheaper brands that tend to be favoured outside the Capital Area, while premium brands tend to be more limited to it.

• Dispenser water is either distributed by the suppliers’ trucks directly to users, or via local shops which provide home

delivery as a customer service. At present, dispenser water is very much focused in the main urban areas (Capital Area

and to a lesser extent Salalah) and has yet to penetrate the interior.


B3. PACKAGED WATER B3.6 FIVE-YEAR FORECASTS


99

Table B28: Packaged Water, Five-Year Forecasts, 2005-2010


2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Bottled still 127.7 134.3 140.8 146.7 151.8 156.7 5.2 4.8 4.2 3.5 3.2

Bottled sparkling 0.1 0.1 0.1 0.1 0.1 0.2 10.0 10.0 10.0 10.0 10.0

Dispenser 43.0 45.6 48.8 52.3 55.7 59.1 6.2 7.0 7.2 6.4 6.2

Total 170.8 180.1 189.7 199.1 207.5 216.0 5.4 5.4 5.0 4.3 4.0

Key Points:

• Sales of water will continue to grow ahead of the population, although rates of growth will slow as the market matures.

There are two main drivers behind this:

o intense competition between heavily supported imported brands (e.g. AQUAFINA) and local suppliers will hold down prices

o the wider availability of larger pack sizes, and particularly 5 gallon containers, will cause average prices per litre to fall and thus makes the product more attractive to marginal consumers.

• Growth will be strongest in larger pack sizes, and particularly 5 gallon containers.

• As tourist numbers grow then so will consumption of sparkling water, but volumes are and will remain very small in total.


B4. LIQUID DILUTE DRINKS B4.1 OVERALL DEMAND LEVELS


100

Table B29 to B30 below summarise the development of the Oman liquid dilute drinks market during the period 2001-2005.

Table B29: Liquid Dilute Drinks, Million Litres, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Consumption 1.0 1.0 1.1 1.31 1.5 - - 10.0 18.2 15.4

Consumption SSE 6.4 6.7 7.0 8.0 9.3 (4.5) 4.6 4.5 14.3 16.3

Litres per capita 2.77 2.89 3.00 3.38 3.88 (6.1) 4.3 3.8 12.7 14.8

Table B30: Liquid Dilute Drinks, Retail Value, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Market value 1.9 2.0 2.1 2.4 2.7 (5.0) 5.3 5.0 14.3 12.5

Sales per capita 0.82 0.86 0.90 1.01 1.13 (6.8) 4.9 4.7 12.2 11.9

1 2004 consumption figures have been revised in light of new information from one of the key suppliers.




101

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

2001 2002 2003 2004 2005

Mill

ion

Lit

res




102

Key Points:

• Liquid dilutes consumption in Oman has shown high levels of growth in the last two years, although from a very low base remains small. The sector has grown by an average annual rate of 9.8% since 2001 to reach 9.3 million litres in 2005

in SSE terms. This assumes a dilution factor of 1:9 for squashes and syrups and 1:5 for cordials. • In value terms, this is worth around US$ 2.7 million at retail level.

• Market volume has grown faster than market value because of the downward pressure on prices in this category.

• The category essentially survives because liquid dilutes are a traditional product around Ramadan, when around two-

thirds of annual sales occur. The only significant driver for growth is marketing activity by Aujan, supplier of the leading cordial brand VIMTO and this is insufficient to stir an essentially torpid market.


B4. LIQUID DILUTE DRINKS B4.2 KEY SEGMENTATIONS


103

B4.2.1 CORDIALS v SQUASHES v SYRUPS

Table B31: Liquid Dilute Drinks, by Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Cordials – retail

form 0.9 0.9 1.0 1.2 1.4 11.5

- - 11.1 17.6 18.4

Cordials – SSE 5.4 5.6 6.0 7.0 8.4 11.5 (5.3) 3.7 7.1 16.7 19.3

Squashes – retail form

0.1 0.1 0.1 0.1 0.1 (0.3)

- - - - (1.0)

Squashes – SSE 1.0 1.0 1.0 1.0 1.0 (0.3) - - - -- (1.0)

Syrups – retail

form <0.1 <0.1 <0.1 <0.1 <0.1 -

- - - - -

Syrups - SSE <0.1 <0.1 <0.1 <0.1 <0.1 - - - - - -

Total – retail

form 1.0 1.0 1.1 1.3 1.5 10.7

- - 10.0 18.2 15.4

Total – SSE 6.4 6.7 7.0 8.0 9.3 9.8 (4.5) 4.7 4.5 1.4 16.3




104

Share of Total (%)

2001 2002 2003 2004 2005

Cordials – retail form 90 90 91 92 93

Cordials – SSE 84 84 86 88 89

Squashes – retail form 10 10 9 8 7

Squashes – SSE 16 16 14 13 11

Syrups – retail form neg neg neg neg neg

Syrups - SSE neg neg neg neg neg

Total 100 100 100 100 100

Key Points:

• Cordials dominate the sector. This is largely due to the long-standing importance of VIMTO, an old English brand with a

70 year presence in the region. Manufactured and distributed by Aujan, and enjoying considerable marketing support, VIMTO is the only brand with a significant year round presence in the market and consumption outside the Ramadan period.




105

• Unlike in other countries of the region, squashes have never become as strongly established in Oman as cordials. Volumes remain comparatively small and consumption is very much limited to Ramadan. The leading squash brand

elsewhere in the region (Co-Ro’s SUNQUICK) is handled in Oman by National Beverages, which is a very important player in several other sectors and has never really placed any emphasis on developing squash sales.

• Syrups are very marginal in importance, although both South Asian and French/Lebanese brands are seen in the market.




106

B4.2.2 PACKAGING

Table B32: Liquid Dilute Drinks, by Pack Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

NRB 0.97 0.97 1.05 1.20 1.40 9.6 -1.0 - 8.2 14.3 16.7

Other 0.03 0.03 0.05 0.10 0.10 35.1 50.0 - 66.7 100.0 0.0

Total 1.0 1.0 1.1 1.3 1.5 10.7 - - 10.0 18.2 15.4

Share of Total (%)

2001 2002 2003 2004 2005

NRB 97 97 95 92 93

Other 3 3 5 8 7

Total 100 100 100 100 100




107

Key Points:

• This sector is dominated by non-returnable glass bottles. These are mostly of 710 ml size (e.g. VIMTO), although some

syrups come in a slightly smaller size (600 – 640 ml) and SUNQUICK squash is in 840 ml. • The only other packaging found is PET bottles. BRAVO, the leading squash brand from Malaysia uses a 750 ml PET bottle,

while ROBINSON’S from the UK offers a 1 litre PET option. RIBENA also comes in two PET sizes (600 ml and 1 litre) alongside its traditional non-returnable glass bottle.


B4. LIQUID DILUTE DRINKS B4.3 SOURCING


108

Table B33: Liquid Dilute Drinks, Local vs Imports, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Local 0.0 0.0 0.0 0.0 0.0 0.0 - - - - -

Import 1.0 1.0 1.1 1.3 1.5 10.7 - - 10.0 18.2 15.4

Total 1.0 1.0 1.1 1.3 1.5 10.7 - - 10.0 18.2 15.4

Key Points:

• There is no local production of dilute drinks in Oman.

• The main source of imported products is Saudi Arabia for VIMTO and several lesser brands of cordial such as TONO. The

UK supplies RIBENA. • Squashes come from a variety of sources including Malaysia (BRAVO), Denmark (SUNQUICK) and the UK (ROBINSON’S).

• Syrups come mainly from South Asia (ROO HAFZA ex Pakistan, RASNA ex India) or Lebanon.


B4. LIQUID DILUTE DRINKS B4.4 BRAND/SUPPLIER SHARES


109

Table B34: Liquid Dilute Drinks, Total Supplier Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

Aujan VIMTO 45 48 49 59 64

Other cordials 45 42 42 34 29

BRAVO 3 3 3 3 3

Other squashes 7 7 6 5 4

Syrups Neg Neg Neg Neg Neg

Total 100 100 100 100 100

Total (m litres) 1.0 1.0 1.1 1.3 1.5

Key Points:

• While it has long been the leading brand in the market, Aujan’s VIMTO has grown strongly over the last four years as Aujan has committed more

resources (notably advertising spend) to its development. It is the only brand that enjoys

significant year-round sales.

• Most other cordial brands are essentially cheaper

imitations of VIMTO, adopting a similar fruit flavour and packaging. The most prominent of these is TONO,

sourced from Arrow Foods in Saudi Arabia and distributed by Khimji Ramdas. Glaxo SmithKline’s RIBENA is also well distributed.

• The much smaller squashes segment is led by BRAVO, manufactured in Malaysia for Bytco

International in the UAE. Co-Ro’s SUNQUICK, which is a market leader elsewhere in the region, is small in

Oman.


B4. LIQUID DILUTE DRINKS B4.5 PRICING AND DISTRIBUTION


110

Table B35: Liquid Dilute Drinks, Reference Brands Selected SKU Pricing, 2001-2005 (OR)

2001 2002 2003 2004 2005

VIMTO 710 ml NRB 0.825 0.825 0.750 0.720 0.720

TONO 710 ml NRB 0.600 0.600 0.600 0.600 0.600

BRAVO 710 ml NRB 0.800 0.450 0.450 0.420 0.380 (750ml

PET)

ROO HAFZA 740 ml NRB 0.600 0.640 0.650 0.650 0.600

ROBINSONS 1 L PET - - - - 0.600

Key Points:

• Retail prices remained broadly stable in 2005. Previous years had seen some downward pressure on prices due to competition from cheaper alternatives but VIMTO seeks to stay above the fray and maintain its price differential while

weaker brands are forced to compete on price. • VIMTO enjoys broad year-round distribution throughout most of the trade. But for most of the year, distribution of other

dilutes is largely limited to larger outlets which have sufficient space to dedicate to them. These outlets tend to focus on more strongly branded products such as RIBENA and ROBINSON’S. However, in the period around Ramadan smaller

outlets take to stocking dilutes and it is during this period that the VIMTO imitations achieve their greatest penetration. Once Ramadan is over, they tend to disappear from the market for the next ten months.


B4. LIQUID DILUTE DRINKS B4.6 FIVE-YEAR FORECASTS


111

Table B36: Liquid Dilute Drinks, Five-Year Forecasts, 2005-2010


2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Consumption 1.5 1.7 1.8 1.9 2.0 2.1 13.3 5.9 5.6 5.3 5.0

Consumption SSE 9.3 10.6 11.3 11.9 12.5 13.1 13.5 6.6 5.3 5.0 4.8

Key Points:

• Dilute drinks are traditionally consumed at Ramadan and it is thought that the growth of this category will be largely

dictated by the performance of Aujan’s VIMTO. The high growth rate is expected to continue in 2006, gradually slowing

down as the competitive pressure from alternative beverages (particularly ready to drink juices) increases.


B5. POWDERED FRUIT DRINKS B5.1 OVERALL DEMAND LEVELS


112

Table B37 to B38 below summarise the development of the Oman powdered fruit drinks market during the period 2001-2005.

Table B37: Powdered Fruit Drinks, Tonnes and Million Litres SSE, 2001-2005

Growth (%)

2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Tonnes 2,350 2,310 2,330 2,385 2,445 3.5 (2.0) 0.8 2.3 2.5

Million Litres SSE 18.8 18.5 18.6 19.1 19.6 3.5 (2.0) 0.8 2.3 2.5

Litres per capita 8.1 8.0 8.0 8.1 8.1 - - - - -

Table B38: Powdered Fruit Drinks, Retail Value, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Market value 10.0 9.8 9.3 9.5 9.7 3.1 (2.0) (5.1) 2.2 2.5

Sales per capita $ 4.33 4.22 3.99 4.00 4.06 1.4 (2.5) (5.4) 0.3 1.4




113

380

400

420

440

460

480

500

520

2001 2002 2003 2004 2005

Mill

ion

To

nn

es




114

Key Points:

• Consumption of powdered fruit drinks in Oman has grown by an average annual rate of 1.0% since 2001 to reach 19.6

million litres in 2005. This equates to 2,445 tonnes of product assuming that one kilo of powder makes eight litres of liquid. In value terms, this is worth around US$ 9.7 million at retail level.

• Per capita consumption is almost unchanged at eight litres throughout the period.

• Market value has declined over the period, as is most clearly seen from the per capita sales value. This decline was particularly marked in 2003 and reflected two key factors:

o An influx of new low priced brands to the market, often imported on a casual basis, which forced an all round

reduction in prices. o A large volume of parallel imports of market leader TANG which placed further pressure on that brand’s premium

prices. • The apparent stability of the market in volume terms seen in the figures in fact hides a significant conflict between

opposing forces:

o There is a general market trend, seen throughout the region, towards fresh short-life juice products and away from long-life products and less convenient products such as powdered fruit drinks

o Kraft, owner of TANG, supports its brand vigorously in order to prevent or delay any significant decline. As TANG holds such a large market share, this activity benefits the entire category.


B5. POWDERED FRUIT DRINKS B5.2 KEY SEGMENTATIONS


115

B5.2.1 PACK TYPE

Table B39: Powdered Fruit Drinks, By Pack Type and Size, 2001-2005

Tonnes Growth (%)

2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Jar < 750g 940 785 720 715 720 (6.4) (7.8) (16.5) (8.3) (0.7) 0.7

Pouch < 750 g 50 70 115 120 120 24.5 - 40.0 64.3 4.4 0.0

Can 1.5 kg 190 185 190 190 195 0.7 (17.4) (2.6) (2.7) 0.0 2.6

Can 2.5 kg 1,170 1,270 1,305 1,360 1,410 4.8 14.7 8.5 2.8 4.2 3.7

Other Neg Neg Neg Neg Neg N/A - - - - -

Total 2,350 2,310 2,330 2,385 2,445 1.0 3.5 (2.0) 0.8 2.3 2.5


B5. POWDERED FRUIT DRINKS B5.2 KEY SEGMENTATIONS


116

Share of Total (%)

2001 2002 2003 2004 2005

Jar < 750g 40 34 31 30 29

Pouch < 750 g 2 3 5 5 5

Can 1.5 kg 8 8 8 8 8

Can 2.5 kg 50 55 56 57 58

Other Neg Neg Neg Neg Neg

Total 100 100 100 100 100

Key Points:

• Consumer preference has steadily shifted away from the smaller sizes (750g jar and below) in favour of the 2.5 kg can,

which of course offers the lowest price per litre of diluted product. The dominance of the 2.5 kg can is largely due to the high sales it enjoys during the Ramadan period. In the other months of the year, it is the 750g jar which is the most

dominant. • Foil pouches were launched into Oman by Kraft in 2001. Given their slightly lower price it might be expected that they

would attract considerable usage, but in fact they remain comparatively marginal.


B5. POWDERED FRUIT DRINKS B5.3 SOURCING


117

Table B40: Powdered Fruit Drinks, Local v Imports, 2001-2005

Tonnes Growth (%)

2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Local 5 5 5 5 5 0.0 0.0 0.0 0.0 0.0 0.0

Import 2,345 2,305 2,325 2,380 2,440 1.0 3.5 (2.0) 0.8 2.3 2.5

Total 2,350 2,310 2,330 2,385 2,445 1.0 3.5 (2.0) 0.8 2.3 2.5

Key Points:

• As is evident, the market is totally dependent on imports. The primary source of these is the USA where TANG originates.

• Other sources of significant volumes include Malta (FOSTER CLARK’S), Turkey (MAK-C and TRI-C) and India (RASNA).

• There is one locally made brand, ZAMZAM, produced by Alliance Foods and distributed by Muscat Pharmacy. However,

sales volumes are tiny and its impact on the market is negligible.


B5. POWDERED FRUIT DRINKS B5.4 BRAND/SUPPLIER SHARES


118

Table B41: Powdered Fruit Drinks, Total Supplier Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

Kraft TANG 78 75 71 68 68

FOSTER CLARK’S 11 11 12 12 12

Other 11 14 17 20 20

Total 100 100 100 100 100

Total (tonnes) 2,350 2,310 2,330 2,385 2,445

Key Points:

• Kraft’s TANG dominates the market. However, as a premium priced product it has come under pressure from cheaper rivals and its share has steadily slipped since 2001. To add to its problems, official distributor Fairtrade has faced competition from parallel imports of TANG reaching Oman via Dubai, having been originally bound elsewhere.

• In 2004, however, Kraft made a key change in its distribution by establishing its own sales team in Oman (although remaining under the banner of Fa irtrade for sponsorship). This team works exclusively on Kraft products including TANG and places greater emphasis on key accounts, and taking a more structured approach to reaching all distribution channels, than previously.

• More broadly, TANG’s share remains so high that its marketing efforts go some way to supporting the whole category.

• FOSTER CLARK’S, distributed by Khimji Ramdas, remains the clear if distant number two at a steady market share.

• There are at least 25 other brands now found in the market sporadically, the most established of which are MAK-C from Turkey and RASNA from India. These achieve good distribution (e.g. being available in hypermarkets) and sell on price against the leading brands. Their combined sales are estimated to have grown by 5% during 2005, which is double the growth rate of the overall market.


B5. POWDERED FRUIT DRINKS B5.5 PRICING AND DISTRIBUTION


119

Table B42: Powdered Fruit Drinks, Reference Brands Selected SKU Pricing, 2001-2005

2001 2002 2003 2004 2005

TANG 750g jar 1.200 1.300 1.200 1.100 1.160-1.200

(by flavour)

2.5 kg can 3.600 3.700 3.600 3.400 3.500

FOSTER CLARK’S 750g jar 1.000 1.100-1.175 1.000 1.000 1.000

2.5 kg can 3.195 3.195 3.100 3.100 3.100

MAK-C 2.5 kg can 2.200 2.200 2.300 2.300 2.200


B5. POWDERED FRUIT DRINKS B5.5 PRICING AND DISTRIBUTION


120

Key Points:

• In recent years there had been continued downward pressure on prices, although in 2004 this was caused as much by

the discounting practices of the hypermarkets as by any competitive pressure. For example, in December 2004 a 750g jar of TANG orange flavour was retailing at OR 0.990 in Carrefour, whereas the benchmark price for that product was OR 1.100. The retail price of TANG did increase in 2005 however.

• One impact of price pressure has been that packs which started out as promotional items (e.g. 15% extra free) have

become standard SKUs for some brands (e.g. FOSTER CLARK’S).

• As the Omani retail scene changes as previously described (growth of hypermarkets, decline of bagalas) the importance of these outlets for sales of powdered fruit drinks is naturally also changing. However, in order to ensure that no sector is

neglected Kraft has structured its sales force to address six specific channels: supermarkets (includes hypermarkets), convenience stores, large grocers, small grocers, wholesale and institutional.

• Institutional sales, including the food service sector, account for at least 15% of sales of powdered drinks as the more

cost conscious outlets favour them over more expensive ready-to-drink juices. Historically, the cheaper brands have

faired well in this sector since price is crucial and the ultimate consumer is not aware of the brand, but Kraft has specifically targeted it (e.g. hospitals, schools) with some success.


B5. POWDERED FRUIT DRINKS B5.6 FIVE-YEAR FORECASTS


121

Table B43: Powdered Fruit Drinks, Five-Year Forecasts, 2005-2010


2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Tonnes 2,445 2,475 2,505 2,535 2,565 2,595 1.2 1.2 1.2 1.2 1.2

Million Litres (SSE) 19.6 19.8 20.0 20.3 20.5 20.8 1.2 1.2 1.2 1.2 1.2

Key Points: • The future of the powdered fruit drink market seems likely to follow much the same pattern as the recent past. On the

one hand, the growth in population and the marketing efforts of Kraft and its competitors will both work to grow the market, but on the other hand there is the inexorable pressure of convenience and superior alternatives (i.e. real ready

to drink juice) working against them.

• On balance, we feel that further slight growth will yet be achieved before the market eventually goes into inevitable decline. Compound annual growth of 1.2% is forecast for the next five years.


B6 MALT BEVERAGES B6.1 OVERALL DEMAND LEVELS


122

Table B44 to B45 below summarise the development of the Oman malt beverages market during the period 2001-2005.

Table B44: Malt Beverages, Million Litres, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Consumption 1.7 1.8 1.9 1.7 1.9 6.2 5.9 5.6 (10.5) 11.8

Litres per capita 0.74 0.78 0.82 0.72 0.83 5.7 5.4 5.1 (12.2) 10.4

Table B45: Malt Beverages, Retail Value, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Market value 2.3 2.5 2.6 2.3 2.7 4.5 8.6 4.0 (11.5) 17.4

Sales per capita $ 1.00 1.08 1.12 0.97 1.05 3.1 8.0 3.7 (13.4) 16.5




123

1.46

1.60

1.75

1.89

2.04

2001 2002 2003 2004 2005

Mill

ion

Lit

res




124

Key Points:

• Malt beverage consumption in Oman has grown at an average annual rate of 2.8% since 2001 to reach 1.9 million litres

in 2005. In value terms, this is worth around US$ 2.7 million at retail level. There was a sharp drop in consumption in 2004, as supply was disrupted:

o The local brands FALAJ and COLT disappeared from the market as Reem Beverages ceased all beverage production

o As the Euro strengthened dramatically against the dollar, the price of imported brands rose steeply, either

squeezing distributors’ margins or feeding through to trade or retail price rises.

• With leading brands unavailable, some consumers of malt beverages turned to alternative soft drinks rather than just alternative brands. The market therefore declined by over 10% in 2004. However, the market recovered strongly in

2005, and reached the consumption levels recorded in 2003.

• To place this into context, the malt beverage market is less than 1.5% of the size of the carbonates market. Since alcoholic beer is available in Oman, consumption of non-alcoholic beer is naturally limited. The main consumers are those looking for a less sweet alternative to carbonates, as evidenced by the significant sales of flavoured malt beverages (see

below). But the higher prices of malt beverages (at least 50% higher than carbonates) restrict even this market.


B6. MALT BEVERAGES B6.2 KEY SEGMENTATIONS


125

B6.2.1 FLAVOUR

Table B46: Malt Beverages, By Flavour, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Regular 1.19 1.22 1.24 1.16 1.27 1.6 3.5 2.5 1.6 (6.5) 9.5

Flavoured 0.51 0.58 0.66 0.54 0.63 5.4 13.3 13.7 13.8 (18.2) 16.7

Total 1.7 1.8 1.9 1.7 1.9 2.8 6.2 5.9 5.6 (10.5) 11.8

Share of Total (%)

2001 2002 2003 2004 2005

Regular 70 68 65 68 67

Flavoured 30 32 35 32 33

Total 100 100 100 100 100




126

Key Points:

• While the original “near beer” flavour still accounts for over two-thirds of malt beverage sales, other flavours now hold

around one-third of the market. • There is a broad range of flavours available including lemon, apple, strawberry, peach, raspberry and cherry.

• The two leading brands, BARBICAN and MOUSSY, are particularly strong in the flavoured segment and have been central

to its development. Most other brands offer a much smaller range of flavours (e.g. lemon only).




127

B6.2.2 PACKAGING

Table B47: Malt Beverages, by Pack Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Cans 0.68 0.67 0.67 0.60 0.48 (8.3) (39.3) (1.5) - (10.4) (19.8)

Non-ret. glass 1.02 1.13 1.23 1.10 1.42 8.6 112.5 10.8 8.8 (10.6) 29.1

Total 1.7 1.8 1.9 1.7 1.9 2.8 6.2 5.9 5.6 (10.5) 11.8

Share of Total (%)

2001 2002 2003 2004 2005

Cans 40 37 35 35 25

Non-ret glass 60 63 65 65 75

Total 100 100 100 100 100




128

Key Points:

• Non-returnable glass bottles dominate the market. The main reasons for this are:

o Under Omani food regulations, malt beverages in NRB have a 12 month expiry while cans have just 9 months. Clearly

for relatively slow moving products the longer shelf life is preferred by the trade

o Brand leader BARBICAN is not available in cans

o Former brand leader MOUSSY is no longer available in cans.


B6. MALT BEVERAGES B6.3 SOURCING


129

Table B48: Malt Beverages, Local vs Imports, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Local 0.24 0.26 0.29 0.06 0.00 (100) (70.0) 8.3 11.5 (79.3) (100)

Import 1.46 1.54 1.61 1.64 1.90 6.8 82.5 5.6 4.5 1.9 15.9

Total 1.7 1.8 1.9 1.7 1.90 2.8 6.2 5.9 5.6 (10.5) 11.8

Key Points:

• Oman is the only GCC country in which a licence for local production of malt beverages has been granted, since

production usually requires brewing an alcoholic beer and then removing the alcohol. The licence was granted in 1985 but production only began in 1993. To protect this local industry, imports of malt beverages were banned between 1985

and the ban’s lifting in 1997. • The local producer, Reem Beverages, got into increasing difficulties in the late 1990s, mainly due to competitive

pressures on its other products (carbonates, juices). It scaled back its activities in all sectors and further opened the door to malt beverage imports which took an 85% share in 2001. Reem Beverages halted all beverage production in 2003 and

despite claims that it will resume has not yet done so. No other local companies produce malt beverages in Oman and therefore the market is completely made up of imports.




130

• Almost all imported brands come from Europe, with the Netherlands (BARBICAN, 3 HORSES) and Switzerland (MOUSSY)

being particularly significant sources.

• Aujan are expected to start producing BARBICAN in their new factory in Dubai in mid 2006. It is thought that the product will be exported to Oman from this factory.




131

B6.3.1 LOCAL PRODUCTION – MAIN SUPPLIER PROFILES (i) Reem Beverages

• Reem Beverages (formerly Gulf Beverage Industries) is part of the Omzest Group along with Oman Agricultural Development Co, a major fresh dairy, the two companies sharing distribution.

• From 1993 to 2003, Reem Beverages produced malt beverages under the FALAJ and COLT brands, as well as carbonates

and juice drinks. The products were packed in 330 ml cans, with FALAJ being primarily for the domestic market and COLT for export (although COLT was launched domestically in 2001).

• In the late 1990s, Reem’s other products came under increasing competitive pressure, so that in 2001 the entire business was scaled back, and in 2003 production was ended. The company claims that it intends to recommence

production in the future although no date has been set. At the present, therefore there is no production of malt beverages in Oman.




132

B6.3.2 IMPORTED BRANDS – MAIN SUPPLIER PROFILES There are two main importers of malt beverages:

(i) Aujan Industries

Brand: BARBICAN

Lines: 330 ml NRB in regular, lemon, apple, raspberry, peach flavours

• Aujan purchased BARBICAN in 1999 from its former owners UK brewers Bass who continue to contract pack it in the

Netherlands. Through steady marketing it has grown to become the leading brand in the market, displacing MOUSSY for the first time in 2004.

(ii) WJ Towell

Brand: MOUSSY

Range: 330 ml NRB in classic (regular), apple, peach, strawberry, raspberry, cherry flavours 330 ml can in classic only (discontinued in the course of 2005)

• MOUSSY (part of the Carlsberg Group) is imported to Oman by WJ Towell, which handles leading companies such as

Mars. The company did well to grow the brand to market leadership between 2000 and 2003, but pricing problems due to

the appreciation of the Euro against the dollar caused volumes to fall back and leadership be lost in 2004.


B6. MALT BEVERAGES B6.4 BRAND/SUPPLIER SHARES


133

Table B49: Malt Beverages, Total Supplier Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

BARBICAN 12 14 16 23 31

MOUSSY 18 18 18 13 13

3 HORSES 6 6 6 9 9

FALAJ/COLT 14 14 15 4 0

Other 50 48 45 51 47

Total 100 100 100 100 100

Total (m litres) 1.7 1.8 1.9 1.7 1.8

Key Points:

• Having been one of the first brands launched after the import ban was lifted in 1997, BARBICAN attained market leadership for the first time in 2004 having

steadily strengthened its position year on year since 2001. AUJAN have invested in promoting the

BARBICAN brand through mass media advertising and are increasingly targeting females.

• Both BARBICAN and MOUSSY gained share at the

expense of the FALAJ/COLT brands which ceased production.

• 3 HORSES, imported by Al Fair Trading, has maintained its position. It is priced slightly below the

two leading brands.

• FALAJ and COLT, who used to be the market leaders, did not resume trading in 2005, and are probably

unlikely to do so in future.


B6. MALT BEVERAGES DRINKS B6.5 PRICING AND DISTRIBUTION


134

Table B50: Malt Beverages, Reference Brands Selected SKU Pricing, 2001-2005 (OR)

2001 2002 2003 2004 2005

BARBICAN 330 ml NRB 0.190 0.175-0.185 0.180 0.180 0.180

MOUSSY 330 ml NRB 0.175 0.175 0.175 0.180 0.220

330 ml can 0.175 0.180 0.180 0.150 -

3 HORSES 330 ml NRB 0.130 1.130-0.150 0.140 0.140 0.170

330 ml can 0.130 0.130-0.150 0.130 0.130 0.140

Key Points:

• The rise of the Euro against the dollar has forced all the brands – most of which are imported from Europe – to raise their

prices.

• It is notable that malt beverages retail at around OR 0.150 to 0.220 for a 330 ml unit, which compares to OR 0.100 for a similar sized carbonate. This price differential is a clear constraint on malt beverage sales.

• Considering the limited level of sales, it is surprising to find malt beverages distributed well down the trade (e.g. in wholesalers) and into the Interior. However, the bulk of sales continue to be through the modern trade in the Capital

Area.


B6. MALT BEVERAGES B6.6 FIVE-YEAR FORECASTS


135

Table B51: Malt Beverages, Five-Year Forecasts, 2005-2010


2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Total 1.9 2.0 2.1 2.2 2.3 2.4 5.3 5.0 4.8 4.5 4.3

Key Points:

• The 2004 decline in the market was driven by supply factors rather than demand. The market recovered strongly in 2005 and consumption levels reached 2003 levels. Future consumption is forecast to continue above population growth as new

consumers experiment with the product (the fact remains that the vast majority of consumers do not currently drink malt beverages at all). However, in overall terms the market will remain small.


B7. ENERGY DRINKS B7.1 OVERALL DEMAND LEVELS


136

Table B52 to B53 below summarise the development of the Oman energy drinks market during the period 2001-2005.

Table B52: Energy Drinks, Million Litres, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Consumption 0.100 0.140 0.245 0.375 0.520 333.0 40.0 75.0 53.0 38.7


Table B53: Energy Drinks, Retail Value, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Market value 0.47 0.66 1.15 1.76 2.44 671.0 40.0 75.0 53.0 38.7

Sales per capita $ 0.20 0.28 0.49 0.74 1.02 666.0 39.7 74.2 50.5 36.9




137

0.00

0.10

0.21

0.31

0.42

0.52

0.63

2001 2002 2003 2004 2005

Mill

ion

Lit

res




138

Key Points:

• Energy drinks were introduced to Oman in 1999 but only really began to take off with the 2001 launch of RED BULL.

Consumption has grown by an average annual rate of 51% since 2001 to reach 520,000 litres in 2005. In value terms, this is worth around US$ 2.44 million at retail level, reflecting the high price per unit achieved for these products.

• Per capita consumption remains tiny at just 220 ml per year in 2005 (i.e. a little less than a 250 ml can per head) as energy drinks remain very much niche products.

• Market value, however, is extremely robust. RED BULL has established a price point of 500 baiza per can, which is five

times the price of a can of a carbonated soft drink. Its competitors are generally priced below this but price is not a key sensitivity in this niche market and market value has been growing in line with volume.

• Energy drinks are marketed as edgy, individualistic products with stimulant properties, which is an attractive positioning

to young adults especially in a country where there is no access to alcohol for locals. It is this appeal that is driving growth at present, although in Oman there is a limited number of people who can afford the premium price. There is also some consumption by tourists as a mixer with alcoholic drinks (e.g. Vodka and RED BULL) and this will expand as tourist

numbers grow.


B7. ENERGY DRINKS B7.2 KEY SEGMENTATIONS


139

B7.2.1 PACKAGING

Table B54: Energy Drinks, by Pack Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

250 ml slimline

cans 0.095 0.136 0.243 0.375 0.520 53.0

351.9 43.2 78.7 54.3 38.7

Other 0.005 0.004 0.002 Neg Neg (100.0) 66.7 (20.0) (50.0) (90.0) -

Total 0.100 0.140 0.245 0.375 0.520 51.0 333.0 40.0 75.0 53.0 38.7

Share of Total (%)

2001 2002 2003 2004 2005

250 ml slimline cans

95 97 99 100 100

Other 5 3 1 Neg Neg

Total 100 100 100 100 100


B7. ENERGY DRINKS B7.2 KEY SEGMENTATIONS


140

Key Points:

• The 250 ml slim line can has become almost synonymous with the energy drink category with all leading brands adopting it.

• The only significant brand to use another pack type has been SHARK, which in addition to a 250 ml can has also been available in a 150 ml glass bottle. This pack type was of measurable significance when SHARK was the main brand in the

market in 2000, but as other brands have overtaken it the 150 ml bottle has declined dramatically in relative importance.


B7. ENERGY DRINKS B7.3 SOURCING


141

Table B55: Energy Drinks, Local vs Imports, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Local 0.0 0.0 0.010 0.010 0.0 - 0.0 - 0.0 0.0 (100.0)

Import 0.100 0.140 0.235 0.365 0.510 51.0 333.0 40.0 75.0 53.0 42.5

Total 0.100 0.140 0.245 0.375 0.520 51.0 333.0 40.0 75.0 53.0 38.7

Key Points:

• There has not been any local production of energy drinks in Oman since early 2004. There had previously been small

volumes of PEPSI X manufactured by Oman Refreshment Company during 2003 and early 2004 but the product failed to find a market and was withdrawn.

• The main source of imports by far is Austria, the origin of RED BULL as well as competitors such as RED BAT, which

supplies in excess of 75% of the market. Other less important sources include Thailand, Saudi Arabia and the UK.


B7. ENERGY DRINKS B7.4 BRAND/SUPPLIER SHARES


142

Table B56: Energy Drinks, Total Supplier Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

RED BULL 50 61 67 70 71

SHARK 43 31 23 12 12

Other 7 8 10 18 17

Total 100 100 100 100 100

Total (m litres) 0.100 0.140 0.245 0.375 0.520

Key Points:

• Since its launch in 2001 RED BULL has quickly come to dominate the sector. As global market leader it has the strongest brand and enjoys heavy marketing

support. Distribution is handled by National Mineral Water, the leading company in bottled water, which

has great distribution strength. The 2003 launch of a sugar free variant provided an additional boost, as did

a 2004 campaign to place chiller cabinets in selected outlets.

• Osotspa’s SHARK was the first energy drink with regular distribution in the market through Dhofar Beverages. However it has been unable to respond to

the competition from RED BULL despite a lower selling price and its distributor is now increasingly

focused on other products such as its water and juice ranges.

• A wide variety of other brands is now found in the market sporadically, and their combined sales are

now comfortably greater than SHARK, but it is unlikely that any individual brand reaches a market share of 5%.


B7. ENERGY DRINKS B7.5 PRICING AND DISTRIBUTION


143

Table B57: Energy Drinks, Reference Brands Selected SKU Pricing, 2001-2005 (OR)

2001 2002 2003 2004 2005

RED BULL 250 ml can - 0.520 0.500 0.500 0.500

RED BAT + others 250 ml can - - - 0.400-0.450 0.400-0.450

SHARK 250 ml can 0.250 0.240 0.250 0.250 0.250

Key Points:

• As the dominant brand, RED BULL has set and maintained a premium price of 500 baiza, although hypermarkets may

discount from this (e.g. OR 0.440). Other sporadically imported brands clearly have to sell at below this price, and tend to be retailed at around 400 baiza or a little higher. SHARK has always been priced quite distinctly from other energy

drinks.

• As premium products, most distribution is in the wealthier Capital Area. Distribution of energy drinks is focused at the top of the retail trade, with hypermarkets and supermarkets being the key outlets. Convenience stores, especially those attached to roadside petrol stations such as SHELL SELECT, have also become an important channel as drivers may buy

a stimulant drink. In addition, sales through hotel bars are significant.


B7. ENERGY DRINKS B7.6 FIVE-YEAR FORECASTS


144

Table B58: Energy Drinks, Forecasts, 2005-2010


2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Total 0.520 0.702 0.878 1.010 1.111 1.167 35 25 15 10 5

Key Points:

• This is a young and still immature market sector which has been exhibiting very high growth rates since its inception. It

is subject to high levels of marketing support, and new consumers continue to adopt the product. However, this state of affairs cannot continue indefinitely, and growth will inevitably slow as the sector gradually matures. We are therefore

forecasting average annual volume growth of 25% over the next five years, but this will be heavily skewed towards the early part of the period.


B8. SPORTS AND HEALTH DRINKS B8.1 OVERALL DEMAND LEVELS


145

Table B59 to B60 below summarise the development of the Oman sports and health drinks market during the period 2001-2005.

Table B59: Sports and Health Drinks, Million Litres, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Consumption 0.44 0.54 0.72 0.91 1.02 120.0 22.7 33.3 26.4 12.1


Table B60: Sports and Health Drinks, Retail Value, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Market value 1.11 1.65 2.03 2.41 2.70 226.5 48.6 23.0 18.7 11.6

Sales per capita $ 0.48 0.71 0.87 1.02 1.12 220.0 47.9 22.5 17.2 9.8




146

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2001 2002 2003 2004 2005

Mill

ion

Litr

es




147

Key Points:

• Sports and health drinks consumption in Oman has grown by an average annual rate of 23% since 2001 to reach 1.02

million litres in 2005. In value terms, this is worth around US$ 2.70 million at retail level. Per capita consumption has grown from 0.19 litres in 2000 to 0.42 litres by 2005.

• It is clear from these figures that demand for these products is still very small. Omani consumers are generally less well off than those in neighbouring countries and the high price of sports and health drinks limits them to a niche market (see

section B8.5).

• Nevertheless, Omani society is quite sports oriented, with football in particular widely played by boys and young men after school and in the evenings. With 80% of sports drink sales taking the form of multi-packs sold through retail

channels, it is evident that this audience is being reached, albeit at very low levels of penetration due to the product’s relatively high price.

• Health drinks reaches an entirely different audience being widely fed to young children as a health booster. This ma rket

is felt to be more mature.


B8. SPORTS AND HEALTH DRINKS B8.2 KEY SEGMENTATIONS


148

B8.2.1 SPORTS v HEALTH DRINKS

Table B61: Sports and Health Drinks, By Product Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Sports 0.34 0.34 0.50 0.67 0.75 21.9 70.0 0.0 47.1 33.0 11.9

Health 0.1 0.2 0.22 0.24 0.27 28.2 - 100.0 10.0 9.1 12.5

Total 0.44 0.54 0.72 0.91 1.02 23.4 120.0 22.7 33.3 26.4 12.1

Share of Total (%)

2001 2002 2003 2004 2005

Sports 77 63 69 73 74

Health 23 27 21 27 26

Total 100 100 100 100 100




149

Key Points:

• In volume terms, sports drinks outsell health drinks by a factor of nearly 3:1. However, while sports drinks are primarily

sold in 330 ml cans, health drinks are sold in 120 ml glass bottles. It can thus be calculated that in unit terms, sales of sports and health drinks are very similar.

• If value is considered, the much higher price of health drinks on a per litre basis means that they actually marginally outsell sports drinks overall.




150

B8.2.2 PACKAGING

Table B62: Sports and Health Drinks, by Pack Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Cans 0.3 0.3 0.45 0.6 0.66 21.8 50.0 0.0 50.0 33.3 10.0

PET bottles 0.04 0.04 0.05 0.07 0.08 18.9 - 0.0 25.0 40.0 14.3

Non-ret. Glass 0.1 0.2 0.22 0.24 0.27 28.2 - 100.0 10.0 9.1 12.5

Plastic pouch (powder) 0.01 0.01 0.01 0.01 0.01 - - 0.0 0.0 0.0 0.0

Total 0.44 0.54 0.72 0.91 1.02 23.4 120.0 22.7 33.3 26.4 12.1

Share of Total (%)

2001 2002 2003 2004 2005

Cans 68 55 62 66 65

PET bottles 9 7 7 8 8

Non-ret. Glass 22 37 31 26 26

Plastic pouch (powder) 1 1 <1 <1 1

Total 100 100 100 100 100




151

Key Points:

• Sports and health drinks are packaged in distinctly different ways.

• Ready to drink sports drinks are packed in either 330 ml cans or 500 ml PET bottles (there are also very small volumes of

powders which require mixing with water before consumption). Cans have been established in the market for longer and

are far more popular than PET bottles, despite the latter’s obvious advantage of being re-sealable. This appears to be due to the differential in selling price, with the 330 ml can typically retailing at 200 baiza as compared to 300 baiza for

the larger PET bottle.

• Health drinks have semi-medicinal image which is bolstered by their packaging – a 120 ml brown glass bottle.


B8. SPORTS AND HEALTH DRINKS B8.3 SOURCING


152

Table B63: Sports and Health Drinks, Local vs Imports, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Local 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0

Import 0.44 0.54 0.72 0.91 1.02 23.4 120.0 22.7 33.3 26.4 12.1

Total 0.44 0.54 0.72 0.91 1.02 23.4 120.0 22.7 33.3 26.4 12.1

Key Points:

• There is not now, nor has there ever been, any local production of sports or health drinks in Oman.

• Interestingly, there are not even any regionally manufactured sports or health drinks. The main source of sports drinks is

Indonesia, where brand leader POCARI SWEAT is packed in cans, while the leading health drink ORONAMIN C is imported from Japan.


B8. SPORTS AND HEALTH DRINKS B8.4 BRAND/SUPPLIER SHARES


153

Table B64: Sports and Health Drinks, Total Supplier Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

POCARI SWEAT 33 36 52 54 56

ISOSTAR 23 14 12 14 12

Other sports 21 13 6 5 5

ORONAMIN C 20 33 27 25 25

Other health 3 4 3 2 2

Total 100 100 100 100 100

Total (m litres) 0.44 0.54 0.72 0.91 1.02

Key Points:

• Otsuka’s POCARI SWEAT is the clear leader in sports

drinks, with around 77% of that segment. It is distributed by Muscat Pharmacy and is available in three formats – 330 ml can, 500 ml PET bottle and

powder. Sales to families in multi-packs are strong (80% of volume is sold this way) and it is widely

available throughout the retail trade. In addition to its intended use as a sports drink, it is also reportedly

prescribed by doctors to remedy fatigue and stomach upsets.

• The only real competition to SWEAT comes from ISOSTAR, distributed by Matrah Cold Stores. The gap between ISOSTAR and SWEAT continues to grow

however, as ISOSTAR is consumed mainly by European expatriates, whose population in Oman is

steadily declining.

• In earlier years of the review period, there was

greater competition from brands such as POWERADE and GATORADE. However, this has faded.

• Another Otsuka brand distributed by Muscat Pharmacy, ORONAMIN C, dominates the health drink segment, where it faces little serious competition.


B8. SPORTS AND HEALTH DRINKS B8.5 PRICING AND DISTRIBUTION


154

Table B65: Sports and Health Drinks, Reference Brands Selected SKU Pricing, 2001-2005 (OR)

2001 2002 2003 2004 2005

POCARI SWEAT 330 ml can 0.200 0.200 0.200 0.200 0.200

500 ml PET - - - 0.300 0.300

ORONAMIN C 120 ml NRB 0.250 0.240 0.250 0.250 0.250

Key Points:

• It can be calculated from the above that ORONAMIN C typically retails at the equivalent of OR 2.080 per litre and POCARI SWEAT at OR 0.606 per litre. By comparison, the leading carbonate MOUNTAIN DEW retails at the equivalent of under

OR 0.300 per litre. Thus sports and health drinks are priced at a very substantial premium to mainstream alternatives.

• As niche products, sports and health drinks are less prone to price competition than more mainstream sectors, prices have remained stable over the last two years.

• Outlets at the upper end of the market naturally stock both sports and health drinks. Given their small market, however,

it is a surprise to find both sports and health drinks in the wholesale sector and smaller stores. It seems that there are

hardcore consumers who favour these products at all levels of society.

• A significant development in the last couple of years has been the expansion in the base of branded chiller cabinets in both retail stores and sports/health clubs, primarily for POCARI SWEAT. Although volumes sold in this way are currently

sma ll, the distributor hopes to encourage trial and uptake in this way.


B8. SPORTS AND HEALTH DRINKS B8.6 FIVE-YEAR FORECASTS


155

Table B66: Sports and Health Drinks, Five-Year Forecasts, 2005-2010


2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Sports 0.75 0.83 0.92 1.01 1.07 1.13 10.7 10.8 9.8 5.9 5.6

Health 0.27 0.29 0.31 0.33 0.35 0.37 7.4 6.9 6.5 6.1 5.7

Total 1.02 1.12 1.23 1.34 1.42 1.50 9.8 9.8 8.9 6.0 5.6

Key Points:

• Overall, the sports and health drink sector is forecast to experience average annual growth of 7.6% over the five year forecast period. In this relatively immature market, growth will be greatest in the early years, with the growth rate

slowing steadily. However, this overall position disguises quite distinct patterns forecast for sports and health drinks.

• The main growth is likely to come from sports drinks. There is a large base of potential users (young men playing sport) who are not currently consuming the product, and recent marketing efforts from the main distributors (e.g. placing chiller cabinets) should encourage take up. As the market expands, growth will naturally slow.

• Health drinks are mainly consumed by children. Given their very high price they are always likely to remain a niche

product, and growth will therefore be driven by a combination of population growth and some new adopters entering the market. Growth in the sector has already slowed dramatically from earlier rates and is driven mainly by ORONAMIN C,

which was being advertised in the Omani mass media in 2005.


B9. READY-TO-DRINK TEA B9.1 OVERALL DEMAND LEVELS


156

Table B67 to B68 below summarise the development of the Oman ready-to-drink (RTD) tea market during the period 2001-2005.

Table B67: RTD Tea, Million Litres, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Consumption 0.290 0.320 0.345 0.400 0.325 16.0 10.3 7.8 15.9 (18.8)

Litres per capita 0.13 0.14 0.15 0.17 0.14 14.1 10.2 7.2 14.0 (20.3)

Table B68: RTD Tea, Retail Value, 2001-2005


2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Market value 0.45 0.50 0.54 0.62 0.51 15.4 11.1 8.0 14.8 (17.7)

Sales per capita $ 0.19 0.22 0.23 0.26 0.21 14.6 10.6 7.5 12.9 18.8




157

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

2001 2002 2003 2004 2005

Mill

ion

Litr

es




158

Key Points:

• Consumption of RTD tea in Oman remains at very low levels, with an average annual growth rate of nearly 3% since

2001 to reach 0.325 million litres in 2005. In value terms, this is worth around US$ 0.51 million at retail level. Per capita consumption has grown from 0.13 litres in 2001 to 0.14 litres by 2005.

• The market declined by nearly 19% in 2005. The one brand that dominates the market – LIPTON ICE TEA – switched distributor from Aujan to Oman Refreshment Company in January 2006. The probable reason for the decline in the

market size is that Aujan did not give sufficient importance to the product as they knew they would no longer be its distributor in 2006.

• Awareness and consumption of these products among Omani consumers is at very low levels. Indeed, a significant

proportion of existing consumption is among Western expatriates and visitors. It seems that from the Omani perspective, RTD teas do not offer the familiarity of carbonates, the health benefits of juices or the functionality and imagery of

energy or sports drinks.


B9. READY-TO-DRINK TEA B9.2 KEY SEGMENTATIONS


159

B9.2.1 FLAVOUR

Table B69: RTD Tea, By Flavour, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Peach 0.128 0.148 0.165 0.200 0.158 5.4 21.9 15.6 11.5 21.2 (21.0)

Lemon 0.140 0.150 0.160 0.180 0.151 1.9 13.8 7.1 6.7 12.5 (16.1)

Other 0.022 0.022 0.020 0.020 0.016 (7.7) - - (9.0) - (20.0)

Total 0.290 0.320 0.345 0.400 0.325 2.9 16.0 10.3 7.8 15.9 (18.8)

Share of Total (%)

2001 2002 2003 2004 2005

Peach 44 46 48 50 49

Lemon 48 47 46 45 46

Other 8 7 6 5 5

Total 100 100 100 100 100




160

Key Points:

• As in most Gulf countries, the two flavours that were first introduced lead the market by a substantial margin. Unlike

elsewhere, however, peach is slightly more popular than lemon in Oman as it tastes slightly sweeter and is relatively more popular with younger local consumers.




161

B9.2.2 PACKAGING

Table B70: RTD Tea, by Pack Type, 2001-2005


2001 2002 2003 2004 2005 CAGR 2001 2002 2003 2004 2005

Cans 0.212 0.192 0.165 0.184 0.303 9.3 (13.5) (9.5) (14.0) 11.5 64.7

NRB 0.073 0.122 0.152 0.176 0.006 (46.5) - 67.1 24.6 15.8 (96.6)

PET - - 0.02 0.040 0.006 - - - - 100.0 (85.0)

Other 0.006 0.006 0.007 0.008 0.010 13.6 20.0 - 16.7 14.3 25.0

Total 0.290 0.320 0.345 0.400 0.325 2.9 16.0 10.3 7.8 15.9 (18.8)

Share of Total (%)

2001 2002 2003 2004 2005

Cans 73 60 48 46 93

NRB 25 38 44 42 2

PET - - 6 10 2

Others 2 2 2 2 3

Total 100 100 100 100 100




162

Key Points:

• Approximately 93% of the market is in single serve cans, dominated by LIPTON ICE TEA. Lipton’s 1.5 litre PET and 330

ml NRB have both been discontinued due to disappointing volumes.


B9. READY-TO-DRINK TEA B9.3 SOURCING


163

Key Points:

• There is no local production of RTD tea products in Oman; the market is totally dependent on imports. • The two leading supplying countries are Saudi Arabia for LIPTON ICE TEA and Austria for RAUCH EISTEE.


B9. READY-TO-DRINK TEA B9.4 BRAND/SUPPLIER SHARES


164

Table B71: Ready To Drink Tea, Total Supplier Shares, 2001-2005

Supplier Shares (%)

2001 2002 2003 2004 2005

LIPTON ICE TEA 90 91 93 94 91

RAUCH EISTEE 8 7 5 4 6

Other 2 2 2 2 3

Total 100 100 100 100 100

Total (m litres) 0.290 0.320 0.345 0.400 0.325

Key Points:

• This sector was largely created by the launch of LIPTON ICE TEA and that brand continues to totally dominate it. The brand was manufactured and

distributed by Aujan in 2005. Oman Refreshment Company took over the distribution of the product in

January 2006.

• The only other brand of any standing is RAUCH EISTEE distributed by Khimji Ramdas, which is

available only in a 330 ml can. As the second brand in the market, RAUCH is particularly affected by marketing efforts on behalf of LIPTON. In real terms,

its growth was marginal, but it has nevertheless increased its market share due to the poor

performance of LIPTON.

• Other RTD tea products are imported on a casual basis and may appear in the market temporarily

before disappearing again.


B9. READY-TO-DRINK TEA B9.5 PRICING AND DISTRIBUTION


165

Table B72: RTD Tea, Reference Brands Selected SKU Pricing, 2001-2005 (OR)

2001 2002 2003 2004 2005

LIPTON 330 ml can 0.140 0.130 0.130 0.125 0.190

250 ml NRB - - 0.150 0.150 -

1.5 litre PET - - 0.425 0.425 -

RAUCH 330 ml can 0.230 0.195 0.190 0.190 0.190

Key Points:

• RTD tea sells at a higher price point of 190 baiza per 330 ml can than a similar size carbonate which sells at 100 baiza. Thus a consumer must make a positive choice to drink an RTD tea rather than simply trying a straight substitute for a

carbonate.

• Lipton’s 1.5 litre PET bottle and 250 ml NRB are no longer available in the market. LIPTON ICE TEA is now only available in a 330 ml can.

• Being very much niche products, RTD teas are little seen outside the top-end retail outlets in the Capital Area.


B9. READY-TO-DRINK TEA B9.6 FIVE-YEAR FORECASTS


166

Table B73: RTD Tea, Five-Year Forecast, 2005-2010


2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Total 0.325 0.365 0.405 0.442 0.478 0.514 12.3 11.0 9.1 8.9 7.5

Key Points:

• In such a small and immature market suppliers activities can have a majo r impact on market size. In 2005, the

distribution of leading brand LIPTON was transferred to Oman Refreshment Company and this change is thought to have been the reason behind the decline in the ready to drink tea market. It is anticipated that high levels of activity will

resume in 2006, but the market is not expected to reach 2004 levels until 2007. Unless very much greater growth can be generated (which we doubt) then the market will remain too small to sustain high levels of investment. We therefore

expect growth to slow as marketing is scaled back later in the forecast period.


B10. DAIRY/JUICE BLENDS


167

Key Points:

• Juice/milk blends contain real fruit juice (in some cases up to 80-90% of the contents may be fruit juice), with a small

amount of milk added. In this respect, they are distinct from fruit-flavoured milks, which are primarily milk and normally

contain artificial fruit flavouring with no real fruit content.

• Juice/milk blends are already well established in neighbouring Saudi Arabia, where they have been amongst the fastest growing category in recent years. However, juice/milk blends are not yet a regular feature of the Omani market,

although given the open nature of the Omani market it seems likely that sporadic unofficial imports in very small volumes may occur.

• As these products are showing good growth in the markets where they are present, it seems likely to be only a matter of

time before their formal appearance in Oman.


B11. FLAVOURED WATER


168

Key Points:

• Flavoured water is currently a negligible market in Oman, and such volumes as there are have been included within the

main water section.

• Despite this, two distinct segments can be defined:

Sparkling flavoured water, in flavours such as apple, lemon and peach, characterised by imported brands such as

APOLLINARIS and CLEARLY CANADIAN. These are normally packed in glass bottles and sold through A class outlets and the up-market food service sector

Still flavoured water, in traditional local flavours such as rose and palm tree pollen, characterised by local brands such as Al Mazyona’s MAJAN.

• In view of international developments in flavoured water, however, we will continue to monitor this sector.


Appendix: Directory of Importers and Local Beverage Producers, 2006


169

Note: Imported brands are shown with country of origin

Company

Carbonated Soft Drinks

Fruit Juices and Drinks

Bottled Water

Dilute Drinks


Malt Beverages

Other

Al Accad Trading Co PO Box 450 Al Wadi Al Kabir Tel: 24771047

CAPRI SONNE (UAE)

Al Ahlia Gulf Line (Oman) PO Box 3024 Ruwi Tel: 24590588

COCA-COLA COCA-COLA LIGHT SPRITE FANTA QUWAT JABAL SCHWEPPES (UAE)

ARWA (UAE)

Al Fair - Technical & Consumer Services Co Ltd PO Box 418 Madinat Al-Sultan Qaboos 115 Tel: 24503469

BLUEBIRD (UAE)

BRAVO (Malaysia)

3 HORSES (Netherlands)

Al Mazyona Mineral Water Co PO Box 800 Barka Postal Code 320 Tel: 884414

MAJAN (distributed by Khimji Ramdas) MAJAN 5 gallon Various brands contract packed




170

Company



Bottled Water

Dilute Drinks


Malt Beverages

Other

Al Rawabi PO Box 402 Ruwi 117 Tel: 24561844

AL RAWABI SAMBA (UAE)

Ali Shaihani Juice Filling Industries PO Box 1842 Ruwi Tel: 24813010

FIZZI SHAMI

LULU SHAMI GIPSI

Alliance Food Industries LLC PO Box 1711 Seeb Tel: 24816680

ZAMZAM (distributed by W J Towell)

Bahwan Foods (Khalijana) Co PO Box 711 Ruwi Tel: 24592492

KDD, FRESCO (Kuwait) JOOS/TIFFANY (UAE)

Dhofar Beverages Co PO Box 18390 Salalah Tel: 23225705

AL KHALEEJ AL KHALEEJ DARBAT JARZEEZ GULFA (UAE)

SHARK (Thailand)




171

Company



Bottled Water

Dilute Drinks


Malt Beverages

Other

Dhofar Cattle Feed Company PO Box 19220 Salalah Tel: 23225793

A'SAFWAH

Fairtrade PO Box 2636 Ruwi 112 Tel: 24701767

STAR (UAE)

TANG (USA)

Far East Agency Co PO Box 180 Sultanate of Oman 115 Tel: 24597756

ALMARAI (Saudi Arabia)

Khimji Ramdas PO Box 19 Muscat 113 Tel: 24592123

RAUCH (Austria) ARROW (KSA) FRUTTO/WOW (KSA)

EMIRATES (UAE)

TONO (KSA) FOSTER CLARK’S (Malta)

RAUCH (Austria)

Matrah Cold Stores PO Box 1158 Ruwi 112 Tel: 24707698

MASAFI (UAE) PERRIER (France)

ISOSTAR (Germany/ Netherlands)




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Company



Bottled Water

Dilute Drinks Powdered Fruit Drinks

Malt Beverages

Other

Modern Dairy Factory PO Box 123 Muttrah 114 Tel: 24810753

AL KAMAYIL

Muscat Pharmacy PO Box 438 Muscat 113 Sultanate of Oman Tel: 24813263

POCARI SWEAT (Indonesia) ORONAMIN C (Japan)

National Beverages Co PO Box 84 Muscat 113 Tel: 24482607

RC COLA RC Q ROYAL CROWN

SUNTOP ROYAL MANGO

SUNQUICK Denmark)

National Food Products Co LLC PO Box 669 Ruwi 112 Tel: 24501160

LACNOR GUMBA MILCO, ABEER (all UAE)

OASIS (UAE)




173

Company



Bottled Water

Dilute Drinks


Malt Beverages

Other

National Mineral Water Co PO Box 2740 Ruwi 112 Tel: 24590095

TANUF ASSAHA EL JABAL AL AKHDAR, SALSABEEL SALSABEEL 5 gallon

RED BULL (Austria)

Oasis Water Co PO Box 87 Code 124 Rusal Industrial Area Tel: 24446778

OASIS 5 gallon

Oman Marketing Centre PO Box 670 Muscat 117 Tel: 24811963

UNIKAI AL MOROUJ AREEJ (all UAE)

Oman National Dairy Products Co PO Box 610 Ruwi 112 Tel: 24591125

ZAIN TAMAM FUN NAN ZINGO




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Company



Bottled Water

Dilute Drinks


Malt Beverages

Other

Oman Refreshment Co PO Box 30 Seeb 111 Tel: 24589100

PEPSI DIET PEPSI 7-UP DIET 7-UP MOUNTAIN DEW MIRINDA SHANI EVERVESS

TOP FRUIT AQUAFINA (UAE)

Oman United Agencies PO Box 3985 Ruwi Tel: 24703034

RIBENA (Saudi Arabia)

RIBENA (UK), ROBINSON’S (Jordan, UK)

PURDEY’S, AMÈ, AQUALIBRA (all UK)

Teejan & Aujan Marketing Co LLC PO Box 1829 Ruwi 112 Tel: 24594641

VIMTO DIET VIMTO (Saudi Arabia)

RANI VIMTO (all Saudi Arabia)

VIMTO (Saudi Arabia)

BARBICAN (Netherlands)

LIPTON ICE TEA (Oman Refreshment took over distribution in January 2006)

W J Towell & Co PO Box 678 Wadi Kabir Tel:24815224

MOUSSY (Switzerland)

Source: IMES research.

Oman Softdrinks 2006

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