While the devaluation of the Egyptian pound has given this Cairo-based business a regional advantage, it offers a lot more to the packaging customer than just competitive pricing, as MD Youssef R Makkar tells Packaging MEA
Packaging MEA (PMEA): Te
ll us a bit about your company. When did you start, and how did you come up with your unique name?
Youssef R Makkar (YRM): We call ourselves Grace Team as we believe in the grace of God, and it is surely by God’s grace that we have this factory. We started in 1993 in a small print shop downtown and then from there we moved to El Obour in 1996. In 1998 we took up a 1,000 sq m factory space, and in 2010 we moved up to 5,000 sq m. That was when we started our services
here in this new facility with digital printing, large format printing and offset printing, all under one roof. In 2012 we started our carton factory offering corrugated carton lines and all categories of fluting. The F flute is a specialty in our factory as there is a strong market for micro flute for display boxes (high-graphic, shelf-ready fluted cartons). The F flute is thin and rigid, so is more suitable
for display boxes than the E flute. In the same factory, we have a cup manufacturing factory capable of producing sizes starting from 4 to 8 all the way up to 10 to 12. Also, we have entered a new contract for a paper bag machine and we will start production next year.
PMEA: What proportion of your business is made up of flexible print for packaging?
YRM: Approximately 20%.
PMEA: Do you expect this to grow?
YRM: Yes. Corrugated sheets involve a lot of money but the profit margin in comparatively lower. It is not fair to compare corrugated with flexible. If we print one tonne of 12-micron polyester,
we cannot compare it with 200 tonnes of corrugated, neither moneywise nor volume wise.
PMEA: Why did you decide to stick to letterpress for printing labels, when many in the industry have moved to flexography?
YRM: Flexo is cheaper, even the ink, because we use UV ink whereas in flexo the ink is water- or solvent-based. There is a huge difference in cost. The print quality is very good with letterpress and I have not faced any problems running these machines. To introduce flexo would involve a lot of investment. We may consider adding a flexo line in the future, but as of now we have four letterpress lines and the quality is good. We have a well-equipped pre-press department where we image Flint Nylo print plates. With this technology, we can produce multi-layer labels so you can
incorporate your logo, your slogan. Multilayer labels add value and therefore it is a good USP for us.
PMEA: This aluminum strip foil you are printing, is it with rotogravure?
YRM: Yes. We print some specialised substrates for the pharmaceutical industry. We can print aluminium with ready-made lacquer. We have some reputed pharma brand owners working with us.
Now we have ISO 22000 specially certified for the pharmaceutical and F&B industries. As we print for food packaging such as ice cream cones and the lids, it becomes imperative for us to be food-safe. These companies need a food-safe and highly hygienic workplace and HACCP certification, which have. PMEA: You have said there is a lot of potential for exporting in Egypt , where there’s been a devaluation of the local currency. YRM: After the devaluation of Egyptian pound, we now have a lot of opportunities to export, because manpower costs are low compared to neighbouring countries. Five years ago we had a Turkish company competing with us who sold pizza boxes in the Netherlands for 16 cents, and we were selling at 17c. But in the past three years we have been selling the same box for 15c with a good profit margin, thanks to the devaluation. So we now have good opportunities to export our products. The materials are cheaper, with better quality.
PMEA: But a big part of the cost of packaging is the raw materials. Labour is a small fraction of the cost. Merely reducing labour costs is not going to make you highly competitive, right?
YRM: The cost of material from Europe or China is expensive, but we don’t pay customs to import from Europe to Egypt, and if we re-export we get a tax rebate of 5-7%. This helps us to be competitive, and we can export and retain good margins.
PMEA: That must contribute to the success of the Egyptian companies in a big way.
YRM: We can compare Egypt with Singapore, which does not have a lot of resources but still is a very vibrant economy. Our Egyptian government is doing an excellent job in keeping the tax incentives.
NOTE: Grace Team was the winner of the Best In Class: Carton Board F&B and Gold Winner at the Prime Awards 2019. The company was recognised for its innovative print and finishing in the Paroxetine Pharma Carton Box, which had spot varnish and a simple design. The winning sample boasted a clear display of brand, with specifications in both Arabic and English, makes it a winner
from both consumer convenience and ease of use standpoints.