"Made in Egypt" brands are booming as boycott campaings continue and production costs drop

Ahmed El-Mahdi , Thursday 6 Jun 2024

In the dynamic commerce arena, the convergence of boycott movements against Israeli-backed products and the decrease in production costs resulting from the devaluation of the Egyptian pound has ignited a remarkable surge in the local industry.

Egyptian brands
File Photo: Egyptian brands


Egyptian brands have become formidable contenders within the domestic market in just a few months, swiftly transcending geographical boundaries to conquer international arenas. This meteoric rise signifies a shift in consumer preferences, and it heralds a new era of industrial prowess, where "Made in Egypt" stands tall against global giants in ways that foster an environment of innovation and competition.


"Spiro Spathis" grows by 350 percent in the local market


The recent boycott of certain carbonated drinks has significantly propelled Spiro Spathiss' sales in the local market. From 19 October, when the boycott began, until mid-January, production capacity has surged by 100 percent, according to Youssef Talaat, Commercial Manager & Partner at the company.

"We're running operations around the clock to keep up with market demand. We've expanded our production lines to meet the growing needs, and our growth has skyrocketed to 350 percent after we diversified our product range and began producing litre bottles for the first time last January," Talaat told Ahram Online.

He added that his company has ambitious plans to establish its dedicated factory, as it currently rents production lines from another facility.

Speaking to Ahram Online, Talaat noted that with the boycott and the surge in sales, the company is fast-tracking investments to build a state-of-the-art factory that represents the quality of Egyptian products.

SPIRO SPATHIS prides itself on using 100 percent locally sourced raw materials and exports to several markets, including the UAE, Kuwait, and Lebanon.

The Egyptian public has voiced their frustration over the price hikes of local products during the boycott, accusing companies of taking advantage of the situation. However, Talaat explained that the company adjusted prices at the end of March, raising them by 20 percent to EGP 10 from the previous EGP 8 per small unit.


A Golden Opportunity

Despite the unexpected and significant surge in sales for Spiro Spathis over a short period, there is a shortage in several stores in the market, a situation that presents a golden opportunity to achieve further growth this year.

Simultaneously, the Egyptian public strongly disapproved of Pepsi's advertisement campaign, "Stay Thirsty", as an attempt to lure people away from boycotting the company.

In response, Egyptians launched the "Stay Losing" campaign on social media platforms, renewing their call for the boycott and urging its continuation.

A 30 percent growth in the local coffee market

Similarly, the sales of local instant coffee have skyrocketed by an impressive 25 to 30 percent since the onset of the boycott campaign against products from companies backing Israel in its conflict with Gaza, Ahmed Auf CEO of the local brand “Auf Egypt” told Ahram Online.

Auf emphasized that this development presents a golden opportunity for local industries to meet the demands of the local market and bolster consumer confidence in local-made products across various sectors.

The instant coffee and green coffee sector, which traditionally depend on imports of around 70,000 tons of raw materials annually, is witnessing a promising shift as efforts to cultivate coffee locally gain traction to reduce, however slightly, the hefty import bill.

Global coffee prices have soared by 25 percent, climbing from $3,200 per ton to a staggering $5,200 per ton, driven by a supply shortfall due to the harsh impact of climate change on the related crop.

Auf explained that this surge in global raw material prices pushed coffee prices by 15 percent since the start of the year.

All eyes are on the upcoming September harvest, which could herald an increase in production for the new season. Such an uptick may force global prices down, potentially slashing local product prices by no less than 30 percent, he explained.

He added that the sector has recently opened new export channels to break the local market's stagnation and generate vital foreign currency revenues. With Egyptian consumers increasingly favouring locally-made products amidst the boycott campaign, production capacity has surged to 100 percent.

In light of the booming production, numerous factories are expanding their production lines to meet the growing demands of both domestic and international markets. This is happening despite the challenge of high current interest rates, which producers are optimistic will decrease shortly.

However, Auf noted that importing new production lines takes about six months to a year and a half, adding another layer of complexity to the industry’s rapid expansion efforts.


A booming local Ice cream brand


The local ice cream brand “Friday” took the market by storm, leveraging the boycott of similar products to secure a substantial local market share. The brand has quickly become popular among Egyptian consumers, especially amid the current boycott campaign.

According to the company's LinkedIn page, the company, which has a portfolio of 30 products, plans to build a state-of-the-art factory spanning 26,000 square metres, complete with 12 advanced production lines.

Looking ahead, the company is eyeing export opportunities to bring its delightful treats to the global stage and secure the foreign currency needed for importing top-quality raw materials.


Dollar glut attracts global appliance companies

The devaluation of the Egyptian pound against the US dollar has not only limited the share of locally produced electrical appliances to just five percent but has also sparked a boom in the local industry, Hassan Mabrouk, Chairman of the Electrical Appliances Division at the Chamber of Engineering Industries, Federation of Egyptian Industries, told Ahram Online.

This shift has drawn major global companies to set up factories in Egypt.

"Within the next two years, all foreign companies will have completed the construction of their factories. Industry giants like Bosch, Beko, and Haier will join the production landscape, alongside current players like Midea, Samsung, and LG," Mabrouk highlighted.

Egypt applied the fourth wave of EGP devaluation against the US dollar in March, allowing the local currency to lose over 60 percent of its value against the greenback in a bid to unify the US dollar rate in the local market on the back of the significant activity of the currency parallel market.

The current average exchange rate for the dollar against the EGP is approximately 47.4/ 1 USD.

Mabrouk also predicted a decline in local product prices in about two months, provided the dollar doesn't surge further against the pound. Furthermore, he noted that banks are expected to continue opening credit lines for factories to import essential raw materials, further stabilizing the market.

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