Change You Can Taste: Jordan’s F&B Industry
When you think of dynamic industries, tech is probably the first to come to mind. Food may be the oldest business around, but today there is no question that the industry is in flux. As tastes change in Jordan, food and beverage companies are beginning to adapt. New consumer demands do not just revolve around a product’s taste, but around its entire supply chain, from packaging to traceability and delivery.
A few of the companies BeyondCapital supports are prime examples of this change. JollyMan, Bilforon, SAVA Brands (Tchaba Tea), and Kama Local Gourmet are four F&B companies meeting these new consumer demands. We’ve asked the entrepreneurs behind each company to share their perspectives on key trends, challenges, and lessons about this dynamic industry. Before we share their answers, here is some brief context on what these companies do, and how they have set themselves apart:
JollyMan is the region’s first beef jerky producer. Its founder, Issa Dababneh says that besides being the first-mover in the Jordan, his company has set itself apart by providing products with only the highest quality natural ingredients. Dababneh believes in the adage, ‘you are what you eat’. “We want to make sure people are happy,” he says. “If we can help people eat well, we can help them feel happy.”
Bilforon’s founder, Mohammad Albattikhi, has approached the F&B industry from a different angle. Rather that producing products, he has created a platform to deliver home-cooked food. Bilforon’s success at differentiating itself is simple: “We are the only company that is trying to improve the F&B industry by providing new and interesting technologies for empowering home-based businesses,” says Albattikhi.
Tariq Aruri of Tchaba Tea has set his brand apart by catering to locals and promoting environmentally friendly consumption. According to Aruri, “We use blends that cater to the culture — mint, saffron, rose, spices, cardamon — this is not offered by competitors. We also have the World’s first fully biodegradable sachet, made of corn leaf and stitched with organic egyptian cotton.” The focus on locals doesn’t end there. Unlike many popular brands, all of Tchaba’s content “is written in English and Arabic separately, not translated,” says Aruri. “We cater directly to the arab consumer.”
Conversely, Kama, a producer of high quality, artisanal food products has found success in catering to international consumers. Founder, Jumana Jacir, explains that to carve its niche, Kama “tackled the consistency and scalability challenge by introducing a solid micro-franchising system. We also focused on internationally minded branding and premium packaging in order to promulgate our products into both local and international markets.
What trends do you see in the Food & Beverage industry?
Issa: “People are seeking healthy food and healthy snacks without chemicals. We call it, ‘food without guilt’. We are also seeing more products targeting higher-end demographics.”
Mohammad: “We’ve noticed the younger generation likes to order with apps unlike older generations that want to call in. Also, we see a preference among 18–25 year olds of wanting to order foods like burgers, pizza, fried chicken, or shawarma. Older people think of health more carefully and demand healthier food. We see a lot of catering orders usually done by older females for their kids or family gatherings.”
Tariq: “There is more demand for functional lifestyle foods and drinks. People are much more conscious of what they consume. They know the cause and effect of what they consume and how they feel and perform, so people are paying more attention to the origins of the products and the supply chain. This is driven by millennials and social media.”
Jumana: “We see consumers are shifting towards more locally sourced artisanal products that are produced from premium ingredients with clear traceability channels.”
Bottom-line: Companies are trending toward more health-conscious consumers. These consumers are increasingly interested in the quality of supply channels.
What are the challenges or threats facing Jordanian F&B companies?
Issa: “Accounts receivables are never paid on time and this causes companies to struggle with cash-flow and meeting demand because markets don’t settle debt in a timely manner. Every two months we pay sales tax on purchase orders we have not been compensated for. So we are shelling out funds on funds that have not been received. It’s a vicious cycle and its an extra load on an otherwise successful company.”
Mohammad: “Delivery is one of biggest challenges in the F&B industry. People want to order food, but the challenge is traffic. We don’t have to deal with the accounts receivable difficulty as much because for most of the home-cooks, we are the only channel for them to sell, so that reliance has eased this challenge.”
Tariq: “Buying power in Jordan is concentrated in the hands of the few, and everybody is targeting them. There isn’t strong invention that offers people special value. People copy and paste other people’s products. Government fees are too high for many companies to survive, and this must be considered for F&B to flourish in Jordan.”
Jumana: “Our biggest challenges are consistency and scalability while focusing on our mission of women empowerment.”
Bottom-line: F&B companies face scalability challenges due to issues such as accounts receivable, government fees, cash-flow, limited customer base, and product imitation as well as executional concerns like quality control and delivery.
What are advantages or disadvantages to attracting fundraising for F&B?
Issa: “Unlike software, everyone can understand food. Food is essential and it must be respected with the highest regard. Funding has opened up a little for F&B with organizations like Oasis500, and have offered some assistance with financial support.”
Mohammad: “One thing people always say is that the concept isn’t hard to understand. Infrastructure for investment in Jordan is good, so entrepreneurs should focus on building their value and quality and investors will come. We never felt that we had to go out and look for investment.”
Tariq: “We were always self-sufficient. There are a lot of opportunities in the F&B scene for fundraising. VCs will be attracted if you offer innovative products and if you offer a technological component like an online presence or subscription models.”
Jumana: “I believe investors are starting to tap into innovative F&B solutions and feel that there is interest and a market shift away from the saturated IT sector.”
Bottom-line: F&B concepts are often simple to understand and investors will show interest as long as companies offer innovative products and build value.
What are the biggest lessons you have learned or greatest challenge you have overcome in your business?
Issa: “We have learned to focus on the happiness of our employees along with our consumers in order to make a great food product and provide consistency. Building great teams and making sure the team is always taken care of. Also, when you want to start any kind of manufacturing business, you have to make sure you find ways to stay ahead of the demand. Markets will need you to restock their shelves without providing payments on prior orders. Selling to COD [cash on delivery], making strategic partnerships, and the extent of our demand kept us afloat and helped us overcome this.”
Mohammad: “We changed our mindset from a service company to a quality-control company. Uber has perfected is quality management. I’m trying to improve quality, for example, by implementing CRM [customer relationship management] systems and purchasing our own ATP [Adenosine triphosphate] testers to measure the hygiene levels of home-kitchens. We’re also developing our own bags for delivery.”
Tariq: “It’s good to be different, but it’s more important is to be relevant. Why will people come again and again? They must feel what your offering is relevant to their needs and desires. You must be willing to adapt to their demands and expectations. You must reinvent yourself. We took a commodity and are converting it to a lifestyle product and this is a great achievement.”
Jumana: “The biggest lesson learned is to be surrounded by a robust team that believes in the company’s vision. Also, allowing the company to pivot as it grows through its life cycle utilizing mistakes as a learning experience. Pivoting and finding innovative solutions to lower our COGS while maintaining the brand identity and mission.”
Bottom-line: One common theme is the importance of investing in your team to master consistency/quality control. Securing cash flow and adapting to stay relevant have also allowed these companies to overcome challenges and succeed.