Supplier Survey 2017: Looking ahead
While 2016 was a challenging year for the hospitality industry, suppliers are looking forward to a positive year ahead in 2017
Last year, the Hotelier Middle East Supplier Survey went beyond the long-discussed issues of bribery and focused on delayed projects causing concern to suppliers, as well as clients thinking more about pricing instead of product quality.
This year followed a similar trend whereby most of the respondent suppliers did business in the UAE (92%), followed by Oman (75%), Qatar (71%), Bahrain and Saudi Arabia (67% each), and Kuwait (62.5%). Turkey was also a place of business, with 37.5% of our respondents supplying to that country, while African countries also got a nod, with Egypt (33%), Tunisia (21%), Algeria (17%), Morocco (17%),
Interestingly enough, Jordan and Lebanon are attractives place of business for our suppliers with 46% each supplying to those countries’ hospitality industry, with Iran being favoured by 12.5% of our respondents (this shows an increase from last year, when 7.4% said they work in Iran).
In 2016, just over a quarter of our participants said their annual turnover was between us $1 million to $5 million. Going back a few years, in 2014, a quarter said their annual turnover was between US $5 million to $10 million, while nearly 40% said this was their turnover in 2015.
However, nearly 71% of the suppliers who answered our survey said they expect higher profits and revenue in 2017.
Monin MEIA trade marketing manager Pierre Fraboulet told Hotelier Middle East: “In the GCC it has been in a difficult year for everyone, and I definitely see a lot of compression in the market but we still managed to work with our budgets. Compared to our expectations it was a difficult year.”
However, he’s optimistic for the next year, matching the results of the survey. He revealed: “As for this year, what I can say is we are used to 2016, and now it’s all about moving forward. 2017 will be a year on the up for us, no doubt. Eventually things will sort themselves out.”
“Properties are opening and we are not denying reality but then we have some good new products, lot of investment and opened a new office. We have also invested in people, we have hired a new bartender, and few other senior personnel,” Fraboulet added.
This mirrors the data mined from the survey, which has revealed that 77% of respondents did not make any redundancies in 2016, while 69% plan to recruit in the coming year.
James Le Gassick, general manager, Intelligent Foods, also agreed with Fraboulet’s thoughts when it came to business increasing in 2017, but said that the firm’s business in the last year actually grew. He revealed: “We had more business in 2016 as compared to 2015; it wasn’t huge though, but we grew. That’s to say something in the food market because things were tough in 2016.
“In 2017, we are expecting a jump and it’s based on a strategic plan to get us there rather than being hopeful.”
Le Gassick added that his company will achieve this by growing the horeca side of the business and by also launching a few new retail concepts. The company will launch another boutique café brand, in addition to More, called Pause. While Intelligent Foods will also launch its proprietary ice cream brand called Glow.
Highland Spring Group head of export Miranda Clegg told Hotelier that she is not seeing any reduction in profits in the coming year, and added: “All our distributors are forecasting growth so in this region in the last four years we’ve doubled our volume and we’re looking for at least single and sometimes double-digit growth.”
The reason behind this, she revealed was having good distributors in the region. “The market is definitely there. It’s getting more competitive, it always is. I think the economies in a lot of these countries are certainly going through some changes and there’s a lot that’s affecting the household’s income but I think those who actually want the quality water from a known source will still buy the premium imported waters rather than the local waters. There’s a market for it. We’re not the mass market but we’re a good market,” she added.
Eusebio Gonzalez, DMK managing director of MENA/Africa/India/Pakistan, and Daniel Deliano, DMK marketing manager, also agreed that profits and revenues look higher for 2017. They commented: “Speaking from the angle of DMK, we have been working in this area for more than 35 years. During the past year, we have changed our strategy, to be much closer, much nearer to our market. We are investing in the market, developing branding, go-to-market, different channels. Most importantly, we have opened an office in Dubai, a holding company to be responsible for the region, so we are much nearer to the market. So, the outcome from all these efforts is to grow — grow in revenue and grow in profits.”
A similar situation, however, has been revealed this year with the expectations for higher profits not pinned on increased sales prices, with 61% saying prices will stay the same, and 33% predicting a rise in sales prices.
DMK’s Gonzalez said some prices might actually increase. He commented: “We expect that prices from the consumer side on some product categories are set to increase. One major reason for this is that the cost for operations in this area is getting expensive. Prices of raw material right now is flat but my expectation is that prices this year are set to increase. This is just my gut feeling, from so many years of working in this sector.”
Clegg noted: “We’ve been consistent and we will be. It’s more about expanding the sales outlets and the opportunities. We would prefer to maintain consistency as far as we can and just make it more available.”
So while suppliers seem to have moved on from previous years’ challenges somewhat, they are definitely looking at devising new ideas and methods in which to attract the market — whether it’s new products and concepts, or creative communcation methods. We shall find out in the next survey what the results were!