Procter & Gamble: UAE consumer spending double that of Saudi

Procter & Gamble (P&G) is one of the world's largest consumer products companies and manufactures a wide range of familiar household brands. The US-based multinational serves a huge market of 55 million customers in the Arabian Peninsula and Pakistan market. In this exclusive interview with Emirates Business, Rajwani speaks about the company's performance in the region.

Can you give an overview of P&G and its activities?

P&G had annual sales of $76 billion (Dh279bn) in 2007. Sales grew from $39bn to $76bn in 2007. Our brands have been in consumers' homes for generations. They are part of everyday life for millions of families worldwide. We are a 170-year-old company headquartered in Cincinnati, Ohio, in the US. P&G is now a global company with strong local roots in 180 countries and a ground presence in 80 countries. More than half the company's sales come from outside North America. The company has 23 brands – ones that generate from $1bn to $7bn each year in sales. Another 18 brands generate from $500 million to $1bn a year. These top 41 brands together generate about 80 per cent of our sales and even more of our profit. About 138,000 employees work for us, and worldwide we have manufacturing plants in 40 countries, including Saudi Arabia.

What are your most popular brands in the Arabian Peninsula market and how well are they performing?

P&G started in Saudi Arabia in 1956 by importing the detergent brand Tide to the GCC countries and Yemen. Tide has since grown into a household name. It is the largest and most-trusted detergent brand in the Arabian Peninsula (AP). Since its introduction as the first detergent in the region Tide has maintained its position as the market leader.

P&G set up in Saudi Arabia through a joint venture with the Abu Dawood company. From our single brand in 1956 we developed a broad portfolio of more than 25 top brands, covering multiple categories including fabric and home care, hair care, health and beauty care, paper products and home appliances. These have become preferred household names for the 55 million consumers in the Arabian Peninsula. P&G brands such as Tide, Pampers, Ariel, Olay, Crest, Downy, Fairy, Head & Shoulders, Pantene, Pringles, Gillette, Duracell and Oral B are all popular here. We have manufacturing plants in Dammam and Jeddah and our Gulf office is in Jebel Ali.

We have general offices in Jeddah and Dammam. Our modern high-tech production facilities are the largest of their kind in the Middle East and produce quality products, shampoos and detergents. We employ more than 1,100 people across our AP sites, including our plant workforce, 60 per cent of whom are from the local population. Around 240 employees work for P&G in the UAE. We export to more than 50 countries from the Saudi plant.

How do you see the market for consumer products developing? Do you think the high inflation in the AP region and the US economic slowdown will affect consumer spending?

With the oil price at more than $140 a barrel there is a lot of liquidity in the AP market and our sales growth has been very good. Egypt, Saudi Arabia and Pakistan are the big markets in terms of size but the per capita consumption on consumer goods is high in the UAE, Qatar and Kuwait. Saudi Arabia is a big country but the average spending capacity is less than in the UAE, Qatar and Kuwait. Per capita consumer spending in the UAE is almost double the figure in Saudi Arabia.

So far our sales in the US market have been on the right track. The kind of products that we sell in the US and other countries are needed for day-to-day life. Soaps, detergents, shaving products, Pampers and shampoos are all needed for daily use. In the Middle East the sales growth has been satisfactory. Despite high inflation our sales are normal because people have received salary hikes. The salary increases have left employees with more purchasing power.

As a consumer product company P&G is using chemicals, food products, metals and other raw materials. How are you coping with high commodity prices and escalating transport costs?

The cost of most of our raw materials have gone up substantially due to the ongoing boom in the commodity markets. Another reason for high raw material costs is the strengthening of the euro and high oil prices. We have introduced a price increase to meet the high raw material costs and our customers reacted to it very well. We will be following a slow and ongoing price increase policy for all our product ranges.

 

PROFILE: Alkarim A Rajwani, General Manager and Vice-President, Arabian Peninsula, Procter & Gamble

Born in Tanzania, East Africa, to an Indian family, Rajwani has a degree in chemical engineering from the University of Calgary in Canada. He joined P&G in 1981 where he has occupied various positions. Currently Rajwani is based in Jeddah, but spends time at the P&G Gulf head office in Dubai.

He was the Vice-President of the American Chamber of Korea and Member of the International Advisory Board of Sejong University. He was also member of the Foreign Investment Advisory Council, United Service Organisation and Partners of the Future Foundation. He is the Executive Committee Member of the American Businessmen of Jeddah.