Agthia targets move into Saudi Arabia as part of expansion bid

Above, the Al Ain bottled water factory which can produce up to 72,000 bottles of water an hour, up from 5,000 to 10,000 previously. Delores Johnson / The National

Agthia, the maker of Al Ain bottled water and Agrivita animal feed, has set its sights on entering the Saudi market this year.

The kingdom is the only country in the GCC where Agthia has no presence.

“We need to be in Saudi Arabia,” said Fasahat Beg, the executive vice president of the consumer business division at Agthia. “We were a half-billion dollar company in 2014 and we intend to be a billion-dollar company by 2020. We have a sizeable war chest for acquisitions. We are cash-rich, and we are actively looking for targets.”

He said the entry into Saudi Arabia might not necessarily be through an acquisition. It could be via a distribution agreement or joint venture, and Agthia was looking at what model might suit it the best.

“Agthia is implementing a new strategy which envisions a wider geographical footprint and expansion of production facilities,” said Asjad Yahya, a research analyst at Shuaa Capital. “Moving into Saudi Arabia makes total sense because of the size of the country and the geographical proximity.”

Mr Yahya said that Agthia’s plan to be a US$1bn company by 2020 is an ambitious target. “But it is achievable as it will see organic growth in the UAE alongside other acquisitions and expansions in other target markets, such as KSA and Egypt.”

The Abu Dhabi-listed com­pany also said that it planned to invest Dh500 million in manufacturing plants and warehousing across the UAE over the next three years as it bids to improve its market share in categories where it has a presence.

The group is following a new strategy that markets the parent company alongside its products, so its Capri Sun fruit drinks will carry Agthia branding as will Al Ain Water and Yoplait fruit yogurts. It bought a Turkish mineral water source in 2011 and developed the brand Alpin, in Turkey.

Alpin is now available to buy in the UAE unhindered by government price controls because it is an imported water brand.

The company said that as a large part of its water business was linked to distribution, the low oil price has helped the group as diesel prices have fallen as a result.

Retailers of Agthia products have experienced a slackening in real spending in the last quarter, but shopkeepers have reported that customers are now buying in bulk and staying with brands that they trust.

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