Demographics are region’s bright spot as its costs rise and new taxes target the sector
Uae Saudi Arabia’s Aujan Coca-Cola Beverages Company, one of the Middle East’s largest drink makers, believes the region’s demographics can enable it to double its revenue to $1.5 billion by 2020, according to a report in Gulf Newws.
TolgaSezer, who took over as chief executive last September, told the newspaper he sees the growing youth population is a “significant opportunity”.
Most of MENA’s population is under 30, with over 30% between 15 and 29, according to the Brookings Institute.
“All our brands are targeted to the youngsters and … we should … stay positive because youngsters are growing,” he said in an interview at Aujan Coca-Cola offices in Dubai on Sunday.
He said there has been a rise in discretionary income among the youth in the Middle East, whose spending habits are less conservative than other generations, especially during a downturn.
But he acknowledged that operational costs in the Gulf have risen after many governments cut energy subsidies last year as their oil revenues dwindled.
Economic and political turmoil has hit markets such as Egypt, Iraq, and Libya. But the company’s core Gulf market has held up, said Sezer. It plans to “accelerate” growth in the Gulf in light of a softer outlook elsewhere.
To manage rising costs, the stronger dollar, and weaker demand in non-core markets, Aujan Coca-Cola has trimmed its top management, achieving “quite a significant saving”.
Over the next two years, Aujan Coca-Cola will also face new taxes. Saudi Arabia plans a 50% tax on soft drinks and a 100% levy on energy drinks next year. Other Gulf States are expected to follow.