Big breweries buy into Mideast malt business


  • Business
  • Tuesday, 11 Feb 2003

CAIRO, Egypt (AP) - They've got the body and the head of beer, the taste of a fruity soft drink and - all-important in a part of the world where Islam's ban on drinking alcohol is taken seriously by many - some even have a clerical stamp of approval. 

No wonder big-name breweries are buying into the Middle East market for drinks that have the hip appeal of beer but without the alcohol. 

In the past few months, Heineken of the Netherlands has purchased Al-Ahram Beverages in Egypt and the much smaller Almaza brewery in Lebanon. 

Carlsberg of Denmark has bought the Moussy brand, a Swiss malt beverage that leads the market in Saudi Arabia. 

While Heineken has bought the Egyptian monopoly in order to brew its own beer locally, and avoid high import duties, the purchase also gives it Fayrouz and Birell, both brands that target the wide-open market between soft drinks and beer in the Arab world. 

"The growth trajectory is huge,'' said the head of Al-Ahram's marketing division, Steven Keefer. Fayrouz sales have grown by nearly 800 percent in the past five years and are forecast to expand 70 percent in 2003, he said. 

There are about 320 million people in north Africa and the Middle East, including Iran but not Turkey, and many of them do not drink alcohol for religious reasons. 

In some countries, such as Saudi Arabia, alcohol is outlawed. 

Al-Ahram's Fayrouz sells 450,000 hectoliters (11.8 million gallons) a year in Egypt. From a brewery in a small town in Switzerland, Moussy exports up to 300,000 hectoliters (7.9 million gallons) to Saudi Arabia a year. British-brewed Barbican sells roughly the same amount to Saudi Arabia's 20 million people. 

In Egypt, the most successful is Birell, a beer-flavored, nonalcoholic drink that, like Fayrouz, also is produced by Al-Ahram.  

Customers buy about 350,000 hectoliters (9.2 million gallons) of Birell a year. 

"Birell owns the nonalcoholic beer market in Egypt. Any retail audit will tell you that,'' Keefer said. 

This is principally because it sells at almost half the price of its cheapest rivals, which are imported and bear heavy import tariffs. 

The developing sector of the market is where brewers are producing malt beverages that are fruit flavored, produce a head of foam when poured into a glass, and contain no alcohol. 

Fayrouz, Moussy and Barbican are the leading brands. 

One can argue these do not deserve to be called nonalcoholic beers. A glass of Fayrouz may look like beer, but a beer drinker would squirm at its saccharin sweetness and flavor - raspberry, mango, apple or pineapple. 

The spokesman for Heineken at its head office in Amsterdam, Albert Holtzappel, said that malt drinks have found a gap in the spectrum of beverages. 

"They form their own category. You cannot compare them to soft drinks that are too sweet and don't have body ... (and you cannot) compare them to beer, either.'' 

The export brand manager of Moussy, Anders Rud Joergensen, said in a call from Copenhagen that when Saudis are asked why they like the brand, they reply: "It's the taste, and also the image of the brand - it's young and something different.'' 

Moussy plays on the image factor, but not the image of beer or a beer drinker. Its bottles invite drinkers to visit a Web site that features pictures of elegant Western women and drawings of young Westerners in bright clothes lounging around bars and Internet cafes. 

The site offers recipes for cocktails using the brand's lemon, strawberry, peach and apple flavors. 

Fayrouz drinkers "are going for the taste, for sure,'' said Keefer, a former New York investment banker who joined Al-Ahram after it was privatized in 1997. 

"They're going for the (health) benefits of malt, to a secondary degree. They're going for the fact that it is a religiously acceptable brand ... It represents values that connect with the consumer.'' 

One of these is sugar content, which Keefer acknowledges is way above what Westerners would find palatable. "People here love sugar.'' 

Moussy's flavored brands have a much lower level of sugar and also do well. In Saudi Arabia, Moussy outsells Fayrouz by about three to one. 

Fayrouz makes much of the fact that it has been certified "halal,'' or permissible in Islam, by Al-Azhar University in Cairo, the foremost theological college in the Muslim Sunni world. 

Fayrouz's production process avoids fermentation, so alcohol is never produced. 

With most other nonalcoholic beverages, the malt is fermented and the alcohol is removed. 

Joergensen says the lack of Al-Azhar approval is not a handicap for Moussy. 

"I don't see this as a threat. The people preferring Moussy know they won't get any alcohol at all, otherwise we wouldn't last in those (Muslim) countries,'' Joergensen said. - AP 

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