One-on-one with P&G Senior Vice President for North Africa Markets
Proctor and Gamble (P&G), one of the world’s leading fast-moving consumer goods (FMCG) companies, has invested over EGP 3 billion in the Egyptian market, exporting from it to over 35 countries.
With such size of operations, variety of products, and penetration of the market, P&G is one of few companies that can fully assess how Egyptians’ buying habits are shifting to the global crisis.
Arab Finance sat with Tamer Hamed, P&G Senior Vice President for North Africa Markets for an in-depth interview about the company’s future plans given the pandemic, Egypt’s market stance in comparison to MENA countries, and their operational shifts to accommodate the changes in buying habits.
In June, you announced an investment of $50 million in Egypt in 2020 and 2021 for a new production line. What can you tell us about this investment?
We look at Egypt as an export hub, and our local plants supply over 35 countries. This investment, which is over two years, will enable us to continue and grow our export efforts.
Our investments, in general, take different shapes: upgrade of production lines; implementation of new technologies; optimization of production equipment to meet the demands in Egypt and the export markets.
We also added a new masks-manufacturing line to serve our employees and partners, as well as donate to help Egyptian front-liners fulfill their duties while staying safe during the COVID-19 pandemic.
What is the size of P&G’s current investment portfolio in Egypt?
Our investments exceed EGP 3 billion. We have 2 state-of-the-art manufacturing plants, one planning service center for the MEA region, and our headquarters for our North Africa operations.
How does your investments, growth plans, and size in Egypt compare to your presence in other MENA countries?
Egypt is our largest operation in all of Africa. However, speaking on a MENA level, while Egypt is important, our size in gulf countries is bigger.
That said, I believe the country has a unique edge when compared to other regional countries; we are a talent export hub and this is an important role we play.
Across different functions, we have exported over 100 homegrown Egyptians who now serve P&G in managerial positions throughout the world. This is something we are very proud of.
Has the pandemic impacted your future investment plans?
We remain focused on the potential of Egypt. The pandemic changed the pace at which we act on our priorities but not the direction.
For example, one of our current priorities is to reduce our reliance on imports and increase our local manufacturing. While this plan was set pre-pandemic, & we are committed to it, we have only delayed its progress by a few months.
In general, our mission is to improve the lives of our consumers. We are committed to serving and providing more value to more consumers in Egypt, where our journey started 34 years ago. Regardless of the pandemic reality, we are planning to build on our success story in the country further.
Speaking of COVID-19, how has it impacted your near-future plans and operations?
We are very conscious that new habits are being formed. The pandemic has changed what people consume, how they consume it, and the way they now purchase their needs.
Disposable income per household has decreased, globally not just nationally, and this changed how consumers define value. This is a new challenge for companies like P&G and we need to stay relevant. It is our responsibility to figure out ways where we improve the value equation.
Furthermore, our market analysis shows that not only are people consuming less, but their standards are shifting in different directions. We are seeing increased interest in less-premium products; however, at the same time, other consumer segments are paying more attention to the quality they are buying rather than the price tag.
Again, it is our responsibility to meet the different expectations and needs of the market, and we must do that in a cost-optimized way, especially, since we believe that things will be difficult post-pandemic, in terms of consumer purchasing power.
What about your operations, has the pandemic impacted your output, distribution, factory, and in-office employees?
With the curfews and the partial lockdowns, we applied strict social distancing measures at the workplace, redesigned operational shifts, and asked our employees who can to work from home to do so.
Nonetheless, we kept our output steady and we were able to meet our customers’ demands on time.
Has there been any shifts in your marketing approach?
Yes, as we need to stay relevant to our consumers’ everyday life. Innovation programs and the choice of media have both been fed with new consumer insights.
Generally speaking, what are the challenges you face in the Egyptian market? How do they compare to other regional countries?
In comparison to neighboring markets, Egypt’s potential is definitely on the higher end of the range. Not only that, but the country’s potential has a wider spectrum of a consumer base, both in terms of numbers and segments. While that is a positive thing, it is an increased challenge for us to serve them.
Furthermore, the country is experiencing more challenges as it was just out of the recovery phase of the 2016 devaluation. For the analogy, imagine someone who was sick and needed time to recover to his previous healthy state, once he got there he was hit by another ailment. While all markets are suffering, we are the only ones facing this reality.
Thirdly, Egypt for other valid reasons is facing some liquidity challenges in the market.
Finally, while the government has made remarkable progress in enhancing the business environment, there is still a lot to be done to reduce the challenges the business community faces.
How do you see Egypt’s economic recovery and growth plans in the coming years?
I am optimistic about the economic recovery since all the fundamentals are there. The government‘s efforts in combating the first wave of COVID-19 were plausible and this prevented unfavorable scenarios.
What is the role of companies like P&G in aiding the country’s economic growth and citizens’ welfare?
We believe that as corporate citizens we have a critical role to play in sustainably develop the communities where we operate. Thus, we have partnered with large NGOs and international development organizations, like the UN, to aid in projects such as: integration of women-owned businesses into our supply chain; reduction of our environmental footprint in manufacturing; aiding the government’s efforts against the pandemic.
Moreover, we believe it’s our duty to continue making and delivering our products at the best value to our consumers and retain our employees despite the economic challenges that emanated from the pandemic.
Finally, what is the one piece of advice you would like to give to regional governments and private entities?
The recent pandemic has proven that the most successful outcome comes from government and private sector cooperation. The more we approach this co-operation systemically, the better, and more sustainable, will be the outcomes.
By Nadine Abou el Atta