Jan. 7 (Bloomberg) -- Across the Persian Gulf, the Muslim holy month of Ramadan is marked by family gatherings, prayer and bountiful, fast-breaking feasts featuring spit-roasted lamb, dates, lentil soup and other traditional fixings. Such banquets wouldn’t be complete without a fruity, non-alcoholic drink called Vimto.
The ruby-colored cordial “is something we’ve grown up with,” Khalifa Haroon, 28, the head of Interactive and Innovation for Vodafone Qatar, said in a telephone interview from his home in Doha. “I remember you’d actually hear the Vimto coming because it’s poured into a glass jug filled with ice. When you hear the ice clinking, it’s Vimto time.”
Vimto has helped make Adel Aujan, the Saudi tycoon who controls the brand in the region, a billionaire. The 66-year-old chairman of Dammam, Saudi Arabia-based Aujan Industries, the Middle East’s largest independent beverage company, has a net worth of at least $1.3 billion, according to the Bloomberg Billionaires Index.
Sales of closely held Aujan Industries’ three brands -- Vimto, a juice drink called Rani, and Barbican, a non-alcoholic malt beverage -- will exceed $1 billion in 2012, according to the company, quadruple its revenue in 2004. Aujan beverages are sold in 70 countries, with more than 70 percent of revenue coming from the Gulf, Iran and Iraq. About half of Vimto’s annual sales are generated during Ramadan, according to the brand’s local website.
In December 2011, Atlanta-based Coca-Cola Co. bought about half of Aujan for $980 million. The deal was the biggest consumer-goods investment ever made by a multinational company in the Middle East, according to data compiled by Bloomberg. Aujan and his family retained the other half, as well as an Iran-based manufacturing facility that was not included in the transaction.
“Sheik Adel Aujan has long had a vision of nurturing people and he has created an inspirational portfolio of brands,” Ahmet C. Bozer, president of the Eurasia and Africa Group for Coca-Cola, said in an emailed statement to Bloomberg News. The “portfolio certainly makes this partnership attractive but Aujan has a great leadership team and great people committed to growth and sustainability.”
The company owes much of its sales surge over the past decade to regional advertising, according to Thorsten Hartmann, director of research at Dubai-based IMES Research. Since 2005, the company has flooded televisions, billboards and radios from Morocco to Iran with ads featuring photogenic youth and quirky mascots touting Aujan drinks.
A recent TV commercial stars a group of young men cavorting around Dubai in a vintage convertible, rapping in Arabic about “how they roll,” to a punchy hip-hop beat, Barbican bottles in hand.
The company’s sales may increase as rulers throughout the Middle East boost spending to ensure their populations get a bigger share of state energy wealth. Saudi’s King Abdullah declared $130 billion of extra spending in February and March of 2011 in response to popular movements that ousted leaders from Tunisia to Yemen.
“Aujan Industries is nothing but a rare success story in the Middle East, of which I am very proud,” Aujan said in an e-mail to Bloomberg News. “We concentrated on brand building rather than general beverage trading, which I believe has brought us our success today.”
Aujan shares the company with his two brothers, Adnan and Abdulwahab, and is the family’s controlling shareholder, according to Ajith Henry and Liam Turner, spokesmen for the billionaire at Burson Marsteller in Dubai. The spokesmen did not respond to questions regarding specific stakes held by other family members.
Aujan’s estimated 30 percent stake in Aujan Industries is valued at $670 million, according to data compiled by Bloomberg. The company is valued using the Coca-Cola transaction and the average enterprise value-to-sales, enterprise value-to-earnings before interest, tax, depreciation and amortization, and price-to-earnings multiples of five publicly traded beverage companies from emerging markets: Turkey’s Coca-Cola Icecek AS, Mexico-based Arca Continental SAB and Cola Femsa SAB, Chile’s Embotelladora Andina SA and Almarai AB of Saudi Arabia. Enterprise value is defined as market capitalization plus total debt minus cash.
Based on an analysis of cash received from the transaction, company dividends and market performance, Aujan probably has a portfolio of investable assets valued at $500 million, according to the Bloomberg ranking. The billionaire also owns seven resort properties worth at least $80 million, including five luxury hotels in Mozambique and two safari camps in Zimbabwe, near Victoria Falls.
In 1996, he founded the 8,000-acre Victoria Falls Private Game Reserve that’s home to 25 different species of large game, a rhino-breeding program and an anti-poaching academy. The properties are valued using local occupancy and room rates, a 10 percent capitalization rate and estimated debt of 50 percent.
The beverage maker’s roots date to 1905, when Aujan’s father and three uncles founded Abdulla Aujan & Brothers, which traded commodities such as tobacco and rice. In 1928, the group expanded to beverages when it acquired the exclusive rights to import and distribute the original Vimto drink, a non-carbonated cordial that was invented by an herbalist in the U.K. in 1908.
Aujan joined the family business in 1968, after studying in the U.S. at Fort Lewis College in Colorado. Unlike many family-owned businesses in the Gulf that diversify into multiple industries, Aujan kept the company focused on beverages. He first expanded the company’s sales and distribution networks beyond Saudi Arabia, then helped to create Vimto Carbonated, a fizzy version of the original British drink.
It took Aujan almost two decades to develop the company’s first original product, the Rani Orange Float, which was inspired by a mandarin drink he had tasted on a trip to Japan. Introduced in 1982, Rani juices come in ten flavors, feature floating bits of fruit pulp, and have become so popular that locals use the word “rani” to refer to any beverage laced with particulates. In 2011, Rani accounted for 84 percent of Aujan’s sales, according to the company.
“It’s true brand innovation,” said Hartmann of IMES Consulting. “It’s become a product type rather than a product, like Kleenex.”
In 1983, Aujan began importing the non-alcoholic beer brand, Barbican, from its U.K.-based producer Bass Beers. In 1999, after manufacturing changes at Bass caused disruptions in Aujan’s regular supply of the beer, he acquired the brand for limited markets and, in 2010, bought it outright. The near-beer is now produced in Aujan’s factory in Dubai.
Barbican, which accounts for five percent of Aujan’s sales, “is now a lifestyle brand,” said Hartmann. “Young, edgy, cool, a healthy alternative to soda.”
Kenneth Shea, a beverage industry analyst with Bloomberg Industries in Princeton, New Jersey, said Coca-Cola’s stake in the company will widen that influence further.
“Coke likes to establish a relationship with the leading regional player,” Shea said in a telephone interview. “What this deal will likely do is help Coke distribute its own products within Aujan’s distribution market. They’ll also learn about the market from the market leader.”
Coca-Cola’s sales by volume in the Middle East region was 19 percent higher in the first nine months of 2012 than the same period a year earlier, according to the company’s third-quarter earnings report. In October 2011, the company said it planned to spend $5 billion in the Middle East and North Africa over the next ten years.
In an interview in December 2011 with U.K.-based The Canmaker magazine, Aujan said he has no plans to retire. He does intend to “slow down” in the near future and devote more time to his conservation projects in Africa, according to the magazine. Aujan’s son, Abdullah, 31, is the only one of his three children who works at the family company.
“The recent Coca-Cola deal recognizes in monetary terms all the hard work that was put into the company over the last 100 years,” Aujan said in the e-mail. “Our brands have stood the test of time for decades.”
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