Middle East food and beverage giant sees 100% uptick in e-commerce use amid Covid-19

Abu Dhabi-based  Agthia Group, among the Middle East and North Africa's top food and beverage companies, registered a 100 per cent growth across its own e-commerce channels last year amid the coronavirus pandemic, according to its chief executive.

"E-commerce has exploded. We keep looking at the data and it continues to thrive even after people started going back to work," Alan Smith told The National.

The food and beverage giant derived a large chunk of its business from distribution to malls and hotels prior to the pandemic. In March, it reorganised its operations, introduced its own e-commerce platforms and mobilised 100 delivery trucks to begin home deliveries as shopping malls and hypermarkets shut down temporarily.

Agthia is majority owned by Abu Dhabi's ADQ, one of the region's largest holding companies with direct and indirect investments in more than 90 companies. The company, whose assets are located in the UAE, Oman, Kuwait, Saudi Arabia, Egypt and Turkey owns water brands such as Al Ain and Al Bayan. Founded in 2004 it also produces animal feed, processed fruits and vegetables, dairy and frozen products.

In the wake of the pandemic Agthia also started transacting through other e-commerce platforms such as Amazon and Noon, with sales growing 357 per cent last year.

Covid-19 "taught people the convenience of receiving things that help” but it also helped increase the share of e-commerce within the country’s food and beverage industry, Mr Smith said.

"Historically, here in the UAE, the penetration of food and beverage in home delivery was 1 to 2 per cent. If you look at more mature markets, such as China or the UK or Europe, I think the highest percentage is probably the UK at around 14 per cent. So there was obviously a big scope for doing e-commerce."

The coronavirus pandemic accelerated the pivot of retailers to digital channels to maintain business continuity as safety conscious shoppers flocked online.

Agthia saw its revenue rise 1.1 per cent in 2020, largely helped by its consumer business which include its flour, five-gallon home and office delivery (HOD) bottled water segments, among others in the UAE as well as food elements in the UAE, Egypt and Kuwait.

The company’s HOD bottled water business grew 10 per cent in the UAE last year, mainly driven by home deliveries.

The food and beverage behemoth, which recently completed its merger with dates processing firm Al Foah, has also been actively acquiring complementary businesses – a strategy it will continue to purse, Mr Smith said.

"We are interested in more targets but we're looking at this over a five year horizon. We want to make sure it's the right target that meets our investment criteria and also it's got to be right for shareholders … [and] investors," he said.

Agthia has diversified by acquiring Kuwait's Al Faysal Bakery and Sweets, which quadrupled its business size in the country. It also purchased a majority stake in Jordan’s Nabil Foods – its first transaction in the processed food industry.

"Al Faysal in Kuwait is a very well established brand [and] moves us into a snacking space. The distribution [industry] in Kuwait [offers] an opportunity to benefit our business as well."

Agthia's future deals outside the UAE will likely be in markets where the company can scale or enter a new segment.

The company’s "priority is to invest [in] the right opportunity," Mr Smith said.