CAIRO: Before it was swept up by the nationalist wave that brought Gamal Abdel Nasser to power, Egypt’s wine industry was run largely by khawagas – or, less colloquially, foreigners.
In 1963, however, authorities nationalized Al-Ahram Beverages Company, Egypt’s chief winemaker and manufacturer of the ubiquitous Stella beer, and the khawagas slipped mostly out of sight.
Over the following decades, factories slid into disrepair while growing religious conservatism cut into sales. Once-proud Egyptian brands became known as “Château Vinaigre.
Now it appears the tides are shifting again. Egypt privatized Al-Ahram in 1997, and the international beverage firm Heineken scooped it up five years later, installing fresh management in 2006.
Egypt is now among Heineken’s 20 largest markets, and the Dutch company has put wine at the forefront of their latest marketing push.
Egypt’s history as a winemaking nation is well documented; Pharaonic vineyards were among the first on human record.
But spurring local consumption is still big task for the beverage company.
Both supply and demand in the modern industry depend largely on foreigners – Al-Ahram’s chief executive is Belgian and over 80 percent of wine sales come from tourists.
Religion is one reason. Drinking alcohol is banned under Islamic law, and rising Saudi influence here during the 70s oil boom prompted more Egyptians to turn teetotal.
Drinking laws here are, of course, liberal compared to those imposed by the custodians of Islam’s holiest sites, but Saudi influence still looms: Last year, the Grand Hyatt’s owner, a relative of the Saudi king, dumped out much of his hotel’s booze.
“The religious context doesn’t help in the consumption of alcohol, and we respect that, said Phillipe Saintigny, Al-Ahram’s chief marketing officer.
“But we also have plenty of Egyptians of all religions drinking our products.
Taxes are another challenge. Individuals importing alcohol into Egypt must pay a 3,000 percent customs tax – though restaurants, hotels, and firms such as Al-Ahram are able to do so for a mere 350 percent. Even domestic production is not free; Al-Ahram pays a 100 percent tax on every bottle of wine they make locally.
“It’s high, no? said Saintigny. “The good news is that we are providing a lot of cash for the government.
Adding to this, advertising is circumscribed, the lack of local farmers able to grow quality wine grapes limits production, and the licensing process can be sluggish.
Within this context, Heineken is trying to expand and refurbish their operations. They recently launched two new wine brands – Ayyam, a white, and Zaman, a red – and brought in Spanish and British consultants to advise production. A few months ago, the company released a “baladi bar guide to classic but neglected downtown drinking spots.
The goal of all this is, of course, higher sales. To this end, the company would also like to see their exports grow. Al-Ahram currently exports 15 percent of their production, mostly to Middle Eastern and African markets, such as Syria, Jordan, Uganda, Rwanda, Angola, as well as non-alcoholic drinks to Saudi Arabia.
Locally, there is at least one upside to high customs: It is not easy for competitors to enter. Though it is difficult to obtain precise figures, Al-Ahram’s internal estimates suggest the company controls about 75 percent of Egypt’s wine sales and about 80 percent of its beer sales.
Still, fewer taxes and more competition would be preferable, Saintigny said.
And so the firm is lobbying the state to lower duties. The company’s pitch, he said, is that more and better wines will spur tourism, a boon of special importance during a slowdown.
“The government basically understands that we are very important to the tourism industry, so from this respect it is helping, Saintigny said. “You don’t imagine tourists in Egypt without drinking.