Tanmiah Food Company: KSA’s most progressive poultry player
Tanmiah Food Company has spent the past six decades crafting an award-winning poultry production setup that is not only the preferred choice of the Saudi quick-service restaurant industry, but is also lightyears ahead of the competition when it comes to sustainability. CEO, Mr Zulfiqar Hamadani, outlines the multimillion-dollar expansion plans that will propel the business toward its goal of becoming the leading – and most sustainable – poultry producer in the region. Written by Gemma Kent.
IN the rapidly evolving GCC market landscape, Saudi Arabia remains the region’s largest consumer market, with appetite generated from both an overwhelmingly young population and an expanding middle class with high levels of disposable income. Together, these trends are driving consumption in food retail and restaurants, as well as creating a more discerning and environmentally conscious consumer that not only demands better quality produce, but also expects the companies they purchase from to conduct their business with minimal environmental impact.
Sustainability initiatives need not hamper a company’s success or profitability, however – such projects, when done right, can in fact help to cut costs and wastage for the business itself, creating a win-win situation. “We do not see sustainability as a burden on our business – rather, we build it into our model in such a way that it adds value,” advises Mr Zulfiqar Hamadani, CEO of Tanmiah. Indeed, as a business that started out from a single feed mill and has since grown into a fully integrated poultry business that supplies every major QSR (quick-service restaurant) brand in the Kingdom, adding value is something that comes naturally to Tanmiah.
Celebrating 60 years
As the first venture to be established by its founder and major shareholder, Al Dabbagh Group, Tanmiah is celebrating its 60th anniversary this year. “It was HE Sheikh Abdullah Al Dabbagh, former Saudi Minister of Agriculture, who set up a feed mill in the city of Jeddah in 1962,” Mr Hamadani recalls, “and since then the business has evolved to become one of the Kingdom’s leading food producers. In 1992 the company was reorganised, and a fully integrated poultry business called Agricultural Development Company (ADC) was created. This was followed, in 1999, by the establishment of Supreme Foods Processing Company (SFPC).” Then, in 2004 Tanmiah launched Desert Hills for Veterinary Services Company (DHV), a producer and distributor of animal feed, day-old broiler chicks, hatching broiler eggs, animal health products and livestock equipment.
In 2018 Zulfiqar Hamadani was appointed CEO of the company, and last year presided over a successful and heavily oversubscribed IPO that released 30 per cent of Tanmiah’s shares onto the Saudi Stock Exchange.
Today, Tanmiah employs around 2,500 people across its operations. It slaughters approximately 350,000 birds per day, and supplies quality processed chicken products to fast-food giants like McDonald’s, Burger King and Subway. “The business has certainly come a very long way over the past six decades,” he asserts, “but we are excited because we have even more aggressive expansion plans in place for the next four to five years, including becoming the region’s leading poultry company by 2025.”
Premium fresh chicken
Being a Saudi-based business, Tanmiah’s entire poultry farming operation – along with a facility for further processing and a distribution hub – is based within the Kingdom. “While the bulk of our farming takes place in the central provinces of Riyadh and Qasim, a key strength of ours is the fact that our operations are scattered throughout the country,” Mr Hamadani points out. “Moreover, our largest factory for further processing is situated in the UAE and we have an extensive distribution network stretching across various territories.”
Indeed, the company’s high-quality products are sold throughout Saudi Arabia and the rest of the GCC, as well as to Lebanon and Jordan.
Tanmiah’s customer base can be divided into three main categories that are determined by the products they buy, the first being major food retailers that sell the company’s fresh chicken, such as Carrefour, Lulu and Panda. “The second category is those customers that purchase animal health products from us,” Mr Hamadani outlines, “and this includes some of our competitors in the poultry farming business, such as Almarai and Al-Watania, who buy from us because we supply to the market a number of major brands like Zoetis, Anpario and Boehringer Ingelheim.”
The further processing category encompasses sales of Tanmiah’s locally-produced processed products to customers like Burger King, Yum brands, McDonald’s, Subway, and some local QSR brands. “We are proud to be the only poultry farming company in the entire region that is BRC-certified and approved to make processed products using Saudi-grown chicken, for supply to the leading international QSR brands,” he adds.
At the end of last year, the company added another link to its value chain when it signed a master franchise agreement with US fried chicken giant, Popeyes, which will transform Tanmiah into a complete farm-to-fork operation.
Food security for the Kingdom
Integration is important for any poultry business anywhere in the world, but especially in Saudi Arabia, where production is often more challenging on account of the climatic conditions and desert terrain. “With that in mind, for the past decade we have been working hard to perfect the back end of our operation – that is to say, our parent farms, hatchery, feed mill, broiler farms and slaughterhouses – which supplies not only our very elaborate distribution network, but also our own further processing facilities,” Mr Hamadani explains. “Going forward, we have a further US$200 million worth of expansion planned for our production facilities and distribution network, which will enable us to further extend our reach and contribute toward our goal of becoming the leading poultry producer in the region.”
Regional goals aside, Saudi Arabia will remain at the centre of Tanmiah’s plans for future expansion, on account of the government’s efforts to enhance the Kingdom’s food security. Various measures have already been introduced to foster the poultry sector’s growth in Saudi Arabia, with support available to encourage new poultry businesses and expand those already in operation, while purchasing land and gaining permission to establish farms has become easier. “Saudi Arabia is 60-per-cent self-sufficient for chicken meat, and the government wants to increase this to 80 per cent by 2025,” he reports. “However, we also intend to expand further into the UAE, Bahrain and Kuwait, while Iraq is a substantial market that we are considering exploring in the longer term.”
The Saudi government’s strategy will also help Tanmiah fulfil its objective of transitioning from leased to owned assets, as Mr Hamadani describes: “Up to now, we have thrived as a capex-light business with leased assets, but as we move forward we are finding ourselves in a situation where the available assets in the lease market are not up to our standards in terms of capacity and quality. We have therefore decided to move from leased to owned assets for everything beyond our farms – we will continue to partner with local farmers – and will soon commence construction of our own hatcheries, slaughterhouses and processing plants, with support from both government and commercial financial institutions. The first of these facilities will be based in the provinces of Riyadh and Qasim, with the potential for further units in the north and south in the future.”
A circular economy star
Support from the government has certainly been a significant contributor to Tanmiah’s continued growth and success – particularly since the announcement of Saudi’s Vision 2030, which has propelled the company’s ambitions in recent years. “Taking time to build the right team has also been a major factor in our success,” affirms Mr Hamadani, “and on top of that is our commitment to quality, which has not always been an advantage to us. Insisting on the absolute highest standards sometimes meant our profit margins were not as robust as some of our competitors’ – nonetheless, we are now reaping the rewards of that dedication, having become the first choice supplier to most of the leading food service brands.”
As well as outperforming its competitors in terms of quality, Tanmiah has set a benchmark for sustainability in the poultry sector, and is again working closely with the government. “We have been engaged in sustainability projects since before most of this region had even thought about it,” he states, “with a view to establishing a fully circular economy whereby nothing in our production system goes to waste.”
One of the company’s most impressive sustainability initiatives is its ‘One Million Trees’ project – launched in 2018 with the aim to plant one million trees by 2025. Mr Hamadani elaborates: “Slaughterhouse wastewater (SWW) is one of the most detrimental types of industrial wastewater to the environment, and inadequate treatment prior to disposal can lead to river deoxygenation and groundwater pollution. We currently generate 936 million litres of wastewater per year, which is treated to agriculture grade and released back into the environment. However, following an in-depth study we discovered that organic particles from the treated water could penetrate freshwater beds if not consumed or absorbed by plants.”
The study also concluded that Tanmiah’s 936 million litres of wastewater would be sufficient to plant and grow 150,000 trees.
“At the farms when the flock has been harvested, the poultry litter creates a very rich fertiliser, which will feed our trees,” he notes. “So far, we have planted 200,000 trees on desert land in Shaqra – and based on our plans for growth, our activities will provide enough water for one million trees by 2025.”
‘Sustaining’ is one of the three pillars around which Al Dabbagh Group conducts its business, alongside ‘earning’ and ‘giving’. “Earning is what we strive for in our everyday activities, while giving is realised through our philanthropic activities – and we are associated with a number of charities to that end, including one initiative that donates a portion of every dollar the consumer spends on Tanmiah products towards buying food for those in need,” Mr Hamadani tells us. “The principle of sustaining refers to our intention to continue building a company that can be passed down through the generations, and taking care of the planet is a major part of that. In order for future generations of Tanmiah’s management to be able to continue on this path, we are careful to ensure that all our sustainability projects also have a positive impact on our bottom line.”
Last year Tanmiah launched the Grand Challenge, whereby it has invited innovators from all over the world to help find a creative and sustainable solution for the company’s raw poultry litter. “In a nutshell, we would like this waste to become of value to the company and to the environment,” he remarks. “Having received many fantastic entries, we are looking forward to announcing the winner of the US$1 million prize very soon. Indeed, we are very happy with, and proud of, what we have achieved so far – alongside what we will go on to achieve – in the realm of sustainability.”
Building a lasting brand
Looking ahead, market trends will play a key role in the implementation of Tanmiah’s various expansion plans, as the company continuously shapes its product offering and customer base. “We have observed a consumer shift towards healthier products,” Mr Hamadani comments, “which tends to work in our favour because people move away from red meat and choose to eat poultry instead, while we are also keeping a close eye on the plant-based protein trend, which is still at a nascent stage in this market.”
In addition, rising numbers of women joining the Saudi workforce is driving demand for off-the-shelf prepared foods. “Today’s supermarket shelves are full of raw chicken in various forms, but we believe prepared and ready-to-eat foods are the need of the hour. While there are some such products being imported, they are not really the solution because they do not align with the local cuisine,” he reflects. “Our very large and efficient product development department is therefore working on products that simply need heating up to be ready to eat. Indeed, we are observing all these trends and preparing accordingly to ensure we can stay ahead of the curve, as we have done successfully for several decades.”
Until the onset of the Covid-19 pandemic, Tanmiah was focused on perfecting its production as a company operating in Saudi Arabia, with the challenges that brings. “Now we know that we can produce chicken efficiently – and it is not just me as CEO making that claim, we have won numerous awards from Aviagen, owner of the Ross broiler breeder brand that is predominantly used in the region – we are very confident that we can grow the business while maintaining consistently high standards of animal health and biosecurity,” Mr Hamadani concludes. Indeed, the next few years for Tanmiah are sure to bring widespread brand building and enormous capacity expansion – with contributions to a circular economy at the forefront of such endeavours.
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