With two short honks from my car, I can roll out my window to gesture for a strong cup of freshly brewed karak.
Despite being surrounded by other, say, renowned and globally known coffee shops, there’s something about beloved local cafés in the Middle East – and its loyal stream of daily customers seem to feel the same too.
Research suggests that local brands have a powerful position to better respond to regional needs, prevent the market entry of global brands, and ultimately increase economic growth.
This is certainly true for FiLLi Café, which started as a hole-in-the-wall tea shop in Dubai and has grown to a chain of cafes across the UAE, UK, USA, Oman, Qatar, Nepal, Mauritius, and India. Founded by Rafih Filli, the brand focuses on customer service and product and is celebrated for its signature “zafran” tea – a unique saffron-infused chai blend.
Filli states that they take the time to understand what potential customers really want, and as a local brand, they have the upper hand in understanding and meeting customers’ needs.
“We believe that any local brand can compete with multinational brands if they excel in these two aspects – customer service and product — along with the necessary marketing support,” Filli says.
Following an age-old mantra reflecting the importance of customers, this is how some local homegrown brands are gaining the upper hand.
Launched in the UAE in 1976, Barakat Group is a supplier of fresh produce in the country, and an online grocer for fresh produce. “We are agile to learn and address the needs of our customers, every day,” says Kenneth D’Costa, Managing Director of Barakat Group.
He adds, “Approaching the strategy from a customer-first standpoint and designing activity systems that deliver better value to the customers at comparable or lower costs makes [the brand] the economic flywheel that can survive and grow exponentially, irrespective of the scale of the competition.”
For Mustafa Koita, founder of Koita, known for its range of organic dairy, lactose-free, and plant-based milk across the Middle East, Africa, US, and Asia, being consumer-driven is the backbone of its business.
“You’ll never have more money than [larger entities], but what you do have as an SME is you can listen and be agile ,” says Koita. “You can move faster; you can listen to the consumer and respond to them faster, whether it’s a product requirement or something on social media. That’s your main ingredient to success.”
This is also echoed by Kathy Johnston, Chief Chocolate Officer of Mirzam, a bean-to-bar craft chocolate company in Dubai, UAE. As a smaller operation, Johnston notes that it has allowed them to be flexible with product offerings and respond quickly to market feedback.
“Failing fast has been from day one, something we think is a great advantage to our business—we can try so many different things,” says Johnston.
THE STRENGTH OF THE LOCAL
For Barakat, immediacy is a distinct advantage as a local brand. The brand’s system ensures that they deliver fresh products, enabling the local enterprise to be in a position of strength.
As a parent who couldn’t find the right organic food and driven to create a healthy alternative in the market, Koita says the brand has an edge when it comes to making decisions, allowing it to gain trust from consumers: “I own 100% of the company, and so, I make decisions when producing my products.”
As for Mirzam, Johnston notes that their operations have allowed them to focus on product quality and creativity. “Being able to manufacture in smaller batches without stabilizers or preservatives is an advantage as we don’t need to compromise on taste.”
Meanwhile, Rihab Saab, founder of Lil ‘Tots, a ready-to-eat baby food provider in the UAE, is disrupting the status quo of conserved food – a $17.5 million industry in the UAE alone — by introducing better choices for young ones. “[We’re] much more than just baby food; we offer a learning experience for millennial parents and their children, helping them instill lifelong eating habits.” The startup is also taking it up a notch by focusing on the whole weaning journey by parents, inspired by the Montessori sensory learning method, to encourage healthy and varied eating habits for children.
However, being a niche entity in the market has its drawbacks too. For Lil’ Tots, Saab says that as a nascent concept, brand positioning was crucial. Initially, the products were placed in the fridge section as a regular listing and were not positioned within the baby products section, thus failing to gain customers’ attention within stores.
Though they are no longer listed today, Saab says they are working on a focused strategy with select food retailers. The company is also seeking capital investments, ideally from female angel investors who value the brand’s value proposition, which Saab plans to use to reach consumers through multiple channels and expand offerings and partnerships.
Many local brands face the challenge of reaching the proposition to a broader population. However, D’Costa notes that over the last two decades and especially since the COVID-19 pandemic, consumers have become increasingly supportive of locally manufactured products and healthier alternatives. “This shift has been a huge catalyst for Barakat’s growth.”
Pricing is also a factor when it comes to competing with global entities. “Larger entities have huge sales when they have the advantage of negotiating with suppliers and getting raw materials at a cheaper rate. This helps them price their product lower ,” Filli explains. He adds, “For a brand like us, it becomes difficult to set competitive pricing.” To compensate, the team goes back to ensuring the uniqueness of their product.
At the same time, logistics also come into play, as larger entities have a wider supply chain network that can reduce costs. Filli says they try to overcome this by expanding in one locality and then slowly expanding the business to other areas.
This strategy of growing slowly has also worked out for Koita. With cash flow as a constant issue for the SME, the founder says they solved this by investing in a good finance department and growing slowly.
Koita says that they had “reverse engineered” their growth around cash flow: “I would grow, then three months later, the cash would come in, and with that excess cash, I’d hire another salesperson or increase my product development.” He adds, “It’s all about managing growth and learning to say no a lot.” Being available in ten countries, including the US, plus a couple of accolades, such as being used as a business case study by Harvard Business School, the company has managed to scale without external funding and retain full equity.
IT’S NOT A COMPETITION (REALLY)
There’s a façade with large entities, says Koita, that just because they have a wider operation, they’re better. “That’s not true at all. We’re listening better, faster.” He says their strategy is not competing with larger brands. Instead, he advises, “Look for the niches or the cracks in the consumer market that the big companies are not addressing. This is where you could flourish.”
Talking about competing with larger, global entities, Saab says to stay passionate and focused on the problem you aim to solve. “Have grit and perseverance to sustain the constant blows and closed doors.”
On the other hand, Filli encourages fellow SMEs to be confident in pursuing their entrepreneurial dreams, and ultimately, gain global recognition. “Most importantly, never forget your inner child because that will let you live your dream.”
Johnston concludes, “Don’t compete – just do better. There’s space in the market for everyone.”
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