UAE firms buy Power Horse stake
Vis Mundi and Levant Capital, both based in Dubai, announced the completion of their purchase of equity in the 22-year-old Power Horse brand last week, although none of the parties revealed the terms of the deal. Salvatore Caizzone, founder and chief executive of Vis Mundi, said his firm was always looking for FMCG investment opportunities.
“Energy drinks have been the fastest growing category globally within beverages and an attractive field for us. Specifically, Power Horse had the right investment profile: a well-established brand in some geographies but with still substantial growth opportunities,” he said.
“While already enjoying strong consumer recognition, we can still improve brand differentiation and uniqueness. Last but not the least, brand size: according to Euromonitor, Power Horse delivered almost US$180m retail value sales in 2015, which represents a sizeable platform on which to build further,” added Caizzone.
Greater penetration, new production?
He said Power Horse was very prominent in the Middle East and Africa, and this could be built on: “Our plans are based on leveraging the good job done so far in the key markets and expand the brand by following three main building blocks: to strengthen brand equity in the core markets and win further consumer penetration and market share; to roll out to new geographies, both by closing gaps in the key regions and expanding to new global white spots; and to consider brand stretching into adjacent or new categories.”
When asked if there were any plans to move Power Horse production, Caizzone said: “Today Power Horse is entirely developed and produced in Austria in a state-of-the-art Spitz F&B manufacturing centre. While centralised sourcing helps us keep the highest quality standards, we will evaluate local sourcing opportunities, especially around the largest volume business geographic units, the Middle East being one of these. This could happen either via highly qualified contract manufacturers or by setting up our own factory.”
He also noted that Power Horse has its own longstanding distribution company for the Middle East, based in Dubai, and works with some of the region’s top distributors.
More clarity needed from producers
Energy drinks such as Power Horse are under increasing scrutiny in the region, particularly in Saudi Arabia, following a number of health scares. Governments across the Middle East have also raised the possibility of increasing taxes on energy drinks and other high-sugar beverages, for both public health and fiscal reasons.
Responding to these issues, Caizzone said: “We believe we industry players should share more clarity and information about energy drinks. We are available to collaborate with the relevant institutions and authorities to help creating a more responsible drinking environment. However, [although] we are against introducing new tax burdens on the consumers, we believe new taxes, if and when introduced, would have limited impact on category consumption.
“Consumers like energy drinks and many also understand the benefits of responsible drinking. Let me give you a personal example. Lately, my daughter had to study hard to prepare for her Master’s degree exams. A few days ago, she told me she got excellent grades and added ‘thanks to Power Horse I could increase concentration and study longer hours’,” he added.
