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Monday, 16 December 2019

Spirits on the rise

The increase in Egypt’s tourism figures is giving new strength to the nation’s small but well-branded alcoholic drinks industry, reports Dina Ezzat

Dina Ezzat , Dina Ezzat , Dina Ezzat , Tuesday 22 Oct 2019
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At the Suez resort of Ain Sohkna, Maya is preparing for a long autumn holiday for her retired in-laws who come to visit each year from England.

The preparations include a few must-haves on the food and beverages menu, including mahshi platters (vegetables and vine leaves stuffed with rice), grilled pigeon, cold hibiscus and tamarind drinks, and, “of course, a good stock of beer, whisky and wine”.

Maya has always opted for the local beer Stella, which, she said, is well liked by her guests. For wine, she has a mix of Egyptian and foreign brands that she can get from duty-free or that visitors bring along. When it comes to whisky, a must-have for her husband and her father-in-law, it has always been a few bottles from Scotland in her dining room.

This year, however, Maya said that she was willing to introduce a single bottle of a relatively new Egyptian-made whisky that seems to be to the liking of her husband who tried it at a business event and reported that it was “good enough”.

“Clearly, one is not expecting the quality of the top whisky brands, but it would be nice for them to try some Egyptian whisky. This is not something they have done before during all the 10 years they have come to visit in October,” Maya said.   

Devlin is the new Egyptian-made whisky that was put on the market a little over a year ago by the Ahram Beverages Company (ABC) as part of an expanding business exercise that has come with the country’s improving economy and its refreshed tourism rates.

According to ABC Managing Director Hans Essadi, the company’s latest product has been brewed along with improving economic indicators and higher tourism rates.

Content with the stable market for its products and confident about a potential expansion of its higher-end consumers, ABC decided to get its new brand out of the box. And this year, ABC, whose range of alcoholic and non-alcoholic beverages has been making satisfactory profits, brought to the table its square 750ml premium whisky.

According to Essadi, the idea of producing a premium whisky to complement its successful Auld Stag brand was first considered four years ago with the early indicators of a stabilising and promising economy. The slow and steady increase in tourism figures was an added factor in the company’s decision to move on with its premium whisky plans.

The decision to act on the idea, Essadi said, was dependent on two parallel issues: establishing the right distillery and keeping a close eye on the development of the market to make sure that once the bottle was ready on the shelves of Drinkies, the company’s main outlet, and other stores it would be well received.

“This is a single malt premium whisky that we think is up to competition with some of the [better brands], and it sells for a little under half the price of the competition on the market,” Essadi said.

With a logo that brings together an eagle atop of a pyramid, the square bottle with its black cap will sell, as announced during the soft launch conducted in October, for LE450. The average price of competing brands imported from abroad is LE1,200.

It was in the second half of November 2018, “a few weeks before Christmas,” Essadi added, that the first Devlin bottles were available for sale.



OPINIONS: Earlier last year, Hamid, a 50-year-old banker with a definite taste for whisky, tried it in a bar in a Red Sea hotel where he was holidaying.

“Well, I cannot say it would be my whisky of choice, but I can certainly say that it got me interested,” he said.

The soft launch, Essadi said, was promising for the full introduction of Devlin to the market. Good initial reviews were forthcoming for a drink that is made in Egypt and that can be scaled up with the establishment of the right distillery. He argued that ABC’s new single malt drink is up to the standards of the brands from Scotland, the homeland of whisky.  

When Auld Stag, a grain whiskey, came out in 2004, it proved successful for cocktails and also as an on-the-rocks choice.

“It is not really the kind of whisky that will get lots of orders from upscale clients, but it is the kind of that you can use for whisky cocktails that involve oranges or pomegranates. But this is different with Devlin, which has been gaining quite some recognition, primarily from our Egyptian clients but also from Arab and European clients,” said Nader, an attendant at a bar in a five-star hotel in Alexandria.

Devlin is a more upscale product, Essadi argued, and this was why it was set to get more attention. The launch of Devlin was part of the company’s commitment to diversify its products, he said.

The distillation, the malt and the finish are all right, and the bottle is designed to be to the liking of Egyptian tastes, which ABC managing director is hoping will fully embrace the new bottle within three to five years.

For now, ABC seems more focused on the local market, and its managing director was not willing to share any export plans for his company’s new premium whisky, however.

ABC’s point of strength and for that matter of exports is its premium beer.

As for Devlin, Essadi said it was bound to gain more room in a relatively fast-expanding local market, partially because of the increase of tourism, which he was hopeful would continue to pick up, and also because of the increased prices of imported counterparts due to the floating of the local currency and the increase of taxes on alcohol.

Taxes on imported alcohol are among the highest duties levied, and they make imported alcohol expensive for most clients. With the devaluation of the local currency in autumn 2016, the prices of imported alcohol soared.

This, according to Nader, prompted a change in the pattern of demand of many of his regular clients, who used to pop in regularly on weekends for a few drinks. The increased VAT on locally produced brands also made the local production more expensive, but “it remained more affordable for most people,” he said.

Taxes on the sales of imported and locally produced alcohol continue to bring high revenues into state coffers. In 2018, taxes on the sales of the local production of alcohol jumped by over 60 per cent. This quadrupled on imported items, of which whisky makes up over 50 per cent.

Whiskey, Essadi argued, is also one of the preferred drinks on the Egyptian market.

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To judge by his experience of close to 30 years in a business that brought him to Egypt in the second half of the 1990s, for many male consumers in the local market whisky probably comes a close second to beer as a favourite, the latter being the company’s most important brand in the iconic Stella with its many variations and the higher alcohol Sakara in its 330ml bottle with 10 per cent alcohol.

Both Stella and Sakara are on the company’s list of best-sellers that also includes some of its red wines, especially Grandville. However, a large part of its wine sales is to the tourist market.

Himself of joint Moroccan and Dutch origin, Essadi is well aware of the shared preference that the Middle East has for whisky and wine as second to beer, typically the first alcoholic drink for people across the region.



VINICULTURE: Rania Kallas, a senior sales and exports manager at the Egyptian International Beverages Company (EIBCO), which focuses on wine production, agrees that it has long been essentially beer and whisky that have dominated the market for alcoholic drinks in Egypt.

But this, she said was slowly changing with the concerted efforts of the EIBCO to encourage people to drink wine.

“Egypt is one of the oldest wine-producing countries in the world. We have drawings on Pharaonic monuments showing the process of wine production that goes back to almost 2,900 BCE. We thought there must be room to expand the wine industry in Egypt,” she said.

Unlike ABC, which is part of the Heineken Group, Egyptian tycoon Samih Sawiris owns EIBCO. The company’s start was with the creation of proper vineyards for wine production.

This was not an easy job because the soil has to be compatible with the requirements of grape cultivation in weather that is predominantly hot and where agriculture uses atypical irrigation methods, Kallas said.

Egypt lost the grapes that were cultivated for wine-making in the later 19th and earlier 20th centuries with the nationalisation of the company of Greek-Alexandrian Nestor Ginaclis, now ABC, which used to be the leading wine producer in pre-1952 Egypt.

The new Egyptian management failed to retain the proper know-how to keep the business on track. Upon its privatisation in the late 1990s ABC picked up, however.

With the expansion of the tourism industry in the early 2000s, enlarging the alcohol industry became attractive to many. And the idea of EIBCO, according to Kallas, “was not just to produce wine made of imported concentrated grape juice, but rather to make a truly Egyptian wine made of grapes cultivated in Egypt and produced in Egyptian vineyards.”

It took the team that Sawiris assembled of local, regional and international experts a couple of years to get the vineyards properly started, and by 2003 a plant was being built in El Gouna on the Red Sea. Two years down the road, the brand Shahrazade saw the light of day.

Produced in red, white and rosé varieties, Shahrazade was very well received. “It was a truly Egyptian wine made from Egyptian grapes by Egyptian hands, and it was also a quality, premium wine,” Kallas said.

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“It was a few years before the [2011] Revolution, and tourism was doing quite well. We had a limited number of bottles, and we were not sure how they would go. We also had our usual stock of imported wine, with prices depending on the label. Some other Egyptian wine was also doing well,” remembered Mahmoud, a waiter at an Italian restaurant in Alexandria.

Mahmoud said that in a matter of a few months Shahrazade found its rightful place, and his restaurant was ordering more bottles, “especially of the red that seemed to be particularly welcomed”.

The success of Shahrazade encouraged EIBCO to move forward with its plans to expand. In subsequent years, it produced its Chateau Jardin du nil wine, then its Beau soleil, followed by a sparkling wine made by the champagnoise method Le Baron.

Today, EIBCO is also producing a premium cognac, a grappa and an arak.  

According to Hala, a member of a wedding and party-planning business, demand for the locally produced premium wine is “on the increase”.

“On the one hand, there are more people who are willing to serve alcohol at their weddings and parties, and on the other hand the variety and quality of the local products has increased enough to entice consumers, even those who are not budget-bound and who opt for a mix of imported and local drinks.”

Kallas is seeing an expansion of the consumption of wine on the Egyptian market compared to other products. This, she said, was not only a function of remarkably improving tourism figures, but also of the growing number of Egyptians who consume wine.

She would not contest the fact that beer is still the queen of alcoholic drinks in Egypt, but she insists that wine is gaining ground as more and more people are willing to be introduced to drinking wine.

She said that the local market was the focus of the EIBCO production and marketing scheme. That said, she added, there was room for growing exports too. “This would be essentially to Africa, Japan and China, but we are also finding our way to Canada and some of the Scandinavian countries,” she added.

According to Kallas, with around 12 medals won in international wine contests, EIBCO has “proudly managed to get its products to France” as well.

Beau Soleil, a white wine made of einab banatti, Egypt’s white and seedless small grapes, is perhaps the most successful of the EIBCO products overseas. However, the ultimate destination of the exports is not the major premium wine-producing countries of France and Italy but “essentially countries with smaller markets where clients are willing to experiment,” she said.

The local market is also a top interest for EIBCO, as it is for ABC, both of which are closely monitoring the growing figures for tourism.

Ultimately, the makers of Egypt’s alcoholic drinks realise that in a Muslim-majority country with unmistakable economic challenges the expansion of the local market depends a great deal on growing tourism figures.



TOURISM: Tarek, a tour-guide, said that “continued political stability and security are essential to keep the curve of tourism going up.”

He is expecting that for the coming few years most tourism will continue to be around the Red Sea resorts, along with desert tourism and group tours to Luxor and Aswan.

In all these cases and in the more traditional tours to stops in Cairo, Giza and Alexandria, Tarek finds that most tourists, irrespective of their budgets, are curious to try local food and beverage brands.

“Obviously, when a tourist visits a monument and finds a drawing of wine or beer and bread making, he or she will wish to try the local Egyptian bread or alcohol. We see this all the time,” he said.

However, according to Tarek there is also room for Egypt to expand its culinary tourism. “Egypt has enough capital to have food and drinks festive seasons that could certainly attract keen tourists,” he said.

Meanwhile, he added, the producers of Egypt’s premium alcohol brands could also reach out to tourists with more treats to get them introduced to their products.

Producing alcohol in a country where there are strict restrictions on the promotion of it, let alone the unfavourable perceptions of its consumption among large parts of society, has led ABC and EIBCO to carefully consider their marketing and promotion plans.

Respectful of cultural norms about the consumption of alcohol and the restrictions that ban advertisements in the press or on radio and television, especially since the 1970s, Essadi and Kallas talk about special events, food-and-drink pairing spots in cooperation with upscale restaurants, and hosting tours by members of the food, drinks and tourism industries to their plants in Cairo, Alexandria and El Gouna.

Age-restricted online campaigning is also part of the campaigns.

However, Essadi said that the online campaigning that has worked very well with Stella is not necessarily the best option for Devlin. Whisky, he acknowledged, is not as soft as beer, and “we don’t want to prompt interest on the wrong front.”

Kallas and Essadi said that they would take their products to interested consumers while respecting the law and the wider culture. The faster the tourism industry keeps growing, the easier it will be for them to do so.

Towards the end of this year, Egypt will likely celebrate an increase in its tourism figures of well over 50 per cent, similar to the same rise that was secured in 2018 over 2017. A source at the Ministry of Tourism said that this year’s increase might even go up to 60 per cent, given the increase in the first two quarters compared to the rates in 2018 for these same quarters.  

This can only be good news for the country’s beverages industries.

 

*A version of this article appears in print in the 24 October, 2019 edition of Al-Ahram Weekly.

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