JEDDAH, 28 October — Say the word "oil" in Saudi Arabia and at once glossy black crude springs to mind together with the famous companies that extract and sell it. Its presence is felt directly in the fuel for vehicles to the less obvious but equally important manifestation of electrical power to drive domestic and industrial life.
Less easily associated with the Kingdom is a clear amber oil we use every day and has become so much part of our lives both directly and indirectly that we rarely give it a thought. Its unseen presence is essential in many prepared foods and more obviously as serried ranks of glowing bottles on supermarket shelves. Edible oils as a direct or indirect constituent of our diet are plentiful and inexpensive.
The Savola Group stands as the market leader in Saudi Arabia. Founded in 1978 and in the Top 20 of the Saudi Top l00 Companies, it produces edible oils for the home market where, despite severe competition during the year 2000 it has retained its market share. However, it neither limits its business to the Kingdom nor its area of interest to simply edible oils.
Internationally, Savola developed both its interest in foreign-based companies through a policy of conservative and rational investment. This included a leading edible oils producer in Pakistan where it now holds a 40 percent interest and the formation of the "Savola Jordan Company." Savola Sime Egypt is the local market leader in the soft oils and ghee market with its flagship brand "Rawaby" a clear market leader. Areas targeted for further expansion include other Arab and some African countries.
However, to form a wider base to its business structure and provide a greater commercial stability, Savola has an impressive sugar division. Already producing 500,000 metric tons, the group has raised the capital for a planned expansion to 885,000 metric tons by 2002. This optimistic future plan has been encouraged by a trade tariff on the importation of white sugar that was being "dumped" in the local market. The follow-on from this provides room for expansion within the local markets and revenue to further develop products that meet international quality standards, giving the group and the Kingdom an increased export potential.
Well-established in the region in terms of the production of basic foodstuffs, Savola Group also has a commanding presence at the retail end of the market. With its substantial capital base and purchasing power, the company invested in retail outlets. The success of the retail arm of the group over the last few years enabled the group to expand from 32 stores to 45 outlets in the last year. It makes perfect business sense to monitor both ends of the production to retail supply chain and so the retail division features its own market research unit, enabling the group to maintain an on-going study of consumer needs and trends and respond swiftly in an often rapidly changing marketplace.
With the constant presence of competition, there is no room to carry business that cannot justify a contribution to the group. With globalization of business and the development of increasingly aggressive multinationals, Savola has had to address the realities of global trade and become leaner to compete.
The group’s three core businesses — edible oil, sugar and retail — have been strengthened and the accessory snack food enterprises and small subsidiary oil production business sold off. Again, in the interests of keeping as much of the core production as possible "in house," the companion companies in the Savola Group support the core products with packaging, tinplate, cardboard and plastics.
Small, however, is not necessarily inefficient. With a corporate eye always on the future, Savola nurtures and cooperates with small innovative producers with a long-term view of widening its product base.
Adel Fakeih, chief executive of the group, has set out the targets. As one would expect from a modern and commercially aware company, they are both ambitious and achievable. Summed up as the "Triple Five Goal," he outlines the targets as "achieving a sales turnover of SR5 billion with a SR500 million profit by the year 2005."
With that dedication and focus and the track record that the group has established since its inception, it seems entirely achievable. In 2005, Saudi Arabia will still be known as a significant exporter of oil. Only by then, it will be "oils" — Savola is to make its mark.
