It’s a good thing the fast-moving consumer goods (FMCG) industry is as quick as its name suggests, because Koshy Mathew wouldn’t have stayed in it for as long as he has otherwise. “I get an adrenaline rush from having to make decisions quickly and from seeing things change dramatically on a daily basis,” he reveals.
A veteran of the sector, the COO for FMCG distributor Enhance UAE has 26 years of experience under his belt, having worked with major FMCG multinationals such as Unilever and Ferrero.
But it’s also these rapid changes, compounded by the nature of the UAE market, that have given Koshy some of the biggest challenges in his career. According to the UN, expatriates in the UAE account for about 88% of the population, which means that Emiratis make up only a little more than 10%.
“This makes it very difficult to predict or estimate how the market will move,” Koshy points out. He goes on to explain that the expatriate population tends to grow or shrink with the economy.
This means that the market size can decrease dramatically during times of low economic activity and is unlike some of the UAE’s neighbours, such as Oman, where the locals comprise around 65% of the population.
In these markets, periods of economic instability do not coincide with a dramatic reduction in the market size for the FMCG industry and make for a much steadier base. “The variability is a lot less in markets with a high percentage of nationals,” says Koshy.
“In the UAE, when oil prices are high and there is a surge in global travel and tourism, business goes through the roof and there seems to be no limit to the opportunities that are available. On the other hand, when business is bad, you tend to hit rock bottom. The unpredictability of the UAE market is unique and challenging.”
Koshy experienced this firsthand in 2015. “The market was booming and our growth percentage was double digits year on year, so we invested a lot of resources and money on building our business for the next phase of growth,” he recalls.
“Suddenly, the market bottomed out. Nobody predicted that it was going to happen; nobody foresaw it.” But Enhance UAE didn’t go down; Koshy wouldn’t have allowed it. The difficult situation was right up his street – it provided him the adrenaline rush which he relishes.
“I thrive under pressure, and look at ways to turn things around by focusing on improved productivity, optimising costs and seeking new business opportunities,” he says.
The situation taught Koshy a hard lesson – never “Just because we’ve had three or four years of good growth doesn’t mean that it will continue. I’ve learned to always take the medium growth path now and to be cautious about how we invest,” Koshy says.
“It’s always necessary to have a contingency plan when it comes to investments; if things don’t go as planned, risk mitigation plans kick in, but if the market performs, then we have the capacity to scale up and cash in on the opportunity.”
As one of the leading multi-brand distributors in the UAE today, Enhance ensures that products it distributes reach consumers all across the country in the best condition.
Central to its daily operations are two custom-built, temperature-controlled logistics facilities in Dubai – one for food products and the other for non-food items.
The frozen foods section of the former utilises a state-of-the-art mobile racking system that takes up four times less space than that of a conventional shelving system.
“There’s only one aisle in the room at any one time. To bring a different aisle into reach, we simply press a button. This racking system optimises storage space where it counts – the frozen chambers can really rack up utility costs,” Koshy explains.
Although modern, the warehouses stop short of being fully automated. “That’s because manual labour is still more cost-effective than robots in the UAE,” Koshy explains.
Instead, the firm conducted a time and motion study to fully optimise human productivity.
Warehouse workers rely on picking slips that tell them the products they are to collect for delivery. “We found out that they were spending a lot of time walking from, for example, aisle one to 20, and then back to five to pick up items in different areas of the warehouse,” Koshy reveals.
“The solution was to re-engineer the system so that the picking slips are now generated in a sequence that takes into account the location of the products in the warehouse and allows the worker to use their time efficiently, thereby improving productivity.”
Besides the investment in technology at its facilities, Koshy believes that there’s another factor crucial to the firm’s growth. “We adapt to change quickly. Our flexibility is a cornerstone of our success, and it’s what keeps us ahead,” he says.
He describes a recent acquisition that was completed through a slightly different process from the one the firm regularly follows.
“Instead of a conventional takeover, which goes through extensive negotiations, causes sales disruptions and can prove to be a costly affair, we worked on integrating the business seamlessly into ours while continuing to retain the identity of the original company.
Key people were retained and business partners were aligned. It was business as usual, as if nothing had changed. We were ready to go from day one of the acquisition.” According to Koshy, Enhance UAE counts three different acquisition models in its repertoire – unusual for most companies.
From the three, it chooses the best model to suit the particular circumstances of an acquisition it is pursuing. “We are transparent with our partners,” says Koshy. “Success to us means joint ownership. We set up joint KPIs with our partners and bring the business to success together.”
Given that the FMCG industry deals mainly with essential, everyday products, Koshy believes that unlike the luxury sector, it fortunately enjoys some insulation from drastic changes in the economy.
However, customers of FMCG goods are also famously fickle, since the same products by different brands may appear interchangeable. One of the ways Enhance overcomes this is through brand activation strategies.
“It can be as simple as putting tags on the bottles to acknowledge special occasions, such as Father’s Day, Mother’s Day, or the national day of a particular country, which we have done with our edible oils. UAE is such a melting pot of different cultures and nationalities, there’s always a festival going on. When consumers see these tags acknowledging an occasion that means something to them, it helps them feel connected to the brand. It’s not even about directly marketing the brand, but about having communication and building trust with the customers.”
And this is, ultimately, what has kept Koshy in the FMCG business for so long. “FMCG is something that touches everyone’s lives every day. The ability to make a difference to our customers’ daily lives by making available the products they need and the brands they want gives me a lot of satisfaction.”
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