Making the list

Niveen Wahish , Nesmahar Sayed , Sunday 12 Nov 2023

Will Egypt’s manufacturing sector be able to scale up production to meet growing demand, ask Niveen Wahish and Nesmahar Sayed

Egyptian brands are in high demand
Egyptian brands are in high demand

 

Standing in front of a coffee kiosk in Cairo recently, Ahmed tried to read the fine print on a package. He wanted to make sure it was made in Egypt, as he is boycotting US and European brands because of their countries’ support for Israel in its aggression against Gaza. 

Likewise, Amal asked on a WhatsApp group among her neighbours if a certain brand of cheese is Egyptian. She also wants to boycott brands made in countries associated with supporting Israel. Social media platforms such as Facebook and WhatsApp are rife with calls to buy “Made in Egypt” products. There are now pages that list the Egyptian products that customers can buy instead of foreign brands.

According to a marketing manager for imported products who preferred to remain anonymous, customers at supermarkets in Cairo now often do an Internet search on a product to find out if it is a local brand while standing in front of the shelves.  

One of the names that has shone in the past couple of weeks is that of Spiro Spathis, an Egyptian drink manufacturer originally established in 1920 by a Greek investor. The company has seen demand shoot up, according to Youssef Talaat, partner and commercial and administrative director of Spiro Spathis. 

“We have always been around, but customers used to prefer international brands instead,” he said. Now, however, that is not necessarily the case, and to meet the sudden demand, the company has increased production more than threefold, he told Al-Ahram Weekly

Its factories now operate for 24 hours, he said, which has not happened since the company’s establishment. It has hired additional staff, around 20 people, to oversee the booming business. And it has rented transport vehicles to help with distribution. 

Talaat is happy to see demand spike for his products and is sure they will be able to meet the needs of the market. 

Another brand that has been around for years but to which few were paying attention is the Kaha Company for Preserved Foods. Established in 1940, Kaha, a subsidiary of the Holding Company for Food Industries, was the first company in Egypt to manufacture canned food products, including tomato sauce, juices, and vegetables. 

Mohamed Al-Sanhouri, a quality engineer at the Kaha Company, said demand for its products was on the rise because customers were looking for Egyptian alternatives to international brands. 

The boycott of many of these had showed people’s awareness of the Palestinian cause and their keenness to send a message in support of the Palestinians. “Egyptian producers must take advantage of this situation and develop their products and improve their quality,” Al-Sanhouri told the Weekly, adding that they must also price their products to suit the local market. 

Yasser Yassin, the owner of a grocery shop that has been operating since the 1960s, is happy to see the solidarity of the Egyptian public with the Palestinian cause. He said that customers are looking for Egyptian brands, but not all of them are available. 

Abdel-Rahman Farag, responsible for reservations for an events’ organiser, said it was now only offering Egyptian brands. However, besides the fact that many of their guests were unfamiliar with the brands and were unsure about their quality, Farag said that his company was also having problems finding the needed quantities.

For Yassin, the boycott of some international brands has slowed down business that was already slow because of inflation. Egypt’s annual urban consumer price inflation rose for the fourth consecutive month to a record high of 38 per cent in September, up from 37.4 per cent the month before and led by rises in the prices of food and beverages. 

“People’s purchasing power is at an all-time low,” he said, with business only picking up at the start of each month when people get their salaries. With the boycott, he has seen his inventory sitting on racks with not enough turnover to enable him to purchase new goods. 

The calls for a boycott are not in anybody’s interest, said Hani Berzi, chairman and CEO of snack-maker Edita. He said the brands that people are being called to boycott are in fact manufactured on Egyptian soil by Egyptian employees and the brands are paying taxes to the Egyptian government. Their exports help to bring in much-needed hard currency. 

He criticised the fact that some people are making lists of products to boycott, questioning whether they have the right to do so. He said he understood that people feel a moral obligation towards the Palestinians.

“We are all upset about what is happening in Gaza. But what is the solution,” he asked. “The calls for a boycott are harming the Egyptian economy at a time when it is already under severe pressure.”

Since the war in Ukraine started and with the Covid-19 pandemic before it, the Egyptian economy has been suffering from severe shocks, with the local currency losing more than half of its value, inflation at record highs, and hard currency inflows slow.  

This is a temporary issue related to a regional crisis, said Mohamed Hanafi, managing director at Lynx Strategic Business Advisors. But, he added to the Weekly, “it is also an opportunity for companies that have been below the radar of consumers to enhance their quality, compete, export, contribute to GDP, and expand their market size.”

Hanafi believes that the local manufacturing sector, if provided with an enabling environment, has the potential to grow. That environment includes an enhanced role for the private sector, the ability to import production inputs, and the possibility of finding skilled labour. 

He said that various industries have the capacity to take off, including the food and beverages sector, automotives, chemicals, and textiles. That potential exists whether among local or international brands, he added. 

Companies that have not been able to prove themselves to date could have been hampered by reasons including the enabling environment, bureaucracy, or their own inability to build capacity and take export opportunities, Hanafi said.

Nihal Al-Megharbel, a member of the Egyptian Senate and a member of the Housing, Local Administration, and Transportation Committee, agreed. She said that besides the role of the government to provide an enabling environment and to resolve issues related to land availability and energy, the private sector needs to work for itself also. 

Regardless of the boycott calls, there are also many other reasons that necessitate the local manufacturing sector to level up. These include geopolitical crises, pandemics like Covid-19, and climate change. The private sector is not ready to meet existing demand in the short term, she told the Weekly, but it could do so in the medium and long terms if it made the necessary changes.

 The private sector must have resilience, flexibility, and be up to date in order to be able to survive and grow, she said. It needs to break down its operations across various small production lines, possibly subcontract production, and work with small and medium-sized enterprises (SMEs).

This would enable it to scale up or scale down as needed. 

There also needs to be more work done on providing skilled labour to meet the needs of manufacturers, Al-Megharbel said. “There are opportunities in the present challenge that the private sector must grasp,” she concluded.


* A version of this article appears in print in the 9 November, 2023 edition of Al-Ahram Weekly

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