Barakat’s business model bears fruit

“When I first came to the UAE in 1979, my name was a bit too much for security. I was introduced at the airport as German Superman,” says Barakat Group of Companies CEO Jeyaraman Subramanian.

Subramanian, or J.R. as the market calls him, now presides over a business that generates over AED 1 billion (USD 272 million) in revenue annually. It sees 70 tons of fruit and vegetables come to port every single day, alongside an additional 25 tons of airfreight.

Apart from a line of freshly squeezed fruit juices that pushes 70,000 daily liters out of the factory doors, Barakat is a key supplier of processed and whole fruit and vegetables to the hospitality sector.

A SLICE OF HISTORY

J.R. started his UAE career as an accountant, but eventually moved into sales. It suited his personality better, he says. In 1983, he met Iranian Mahmoud Barakat, a seventeen-year-old merchant with a small shop in Deira’s fish, fruit and vegetable market. “He went to London to study further, and I took over operations,” J.R. says.

J.R.’s responsibilities initially included Barakat Ship Handling, a ship provisioning business, where he gained a couple of nautical miles on the competition through sheer perseverance. “All the big competition used to meet seafaring ships in port. I realized the only way to get ahead was to secure orders from ships while they were still at sea.”

Dressed impeccably, J.R. would take a fishing boat out in the early hours of the morning to hail ships nearing land. “I’d be out at sea for days. But we’d have secured orders from those ships for all their provisions before the bigger firms even knew the vessels were about to dock.”

Barakat Ship Handling was sold off relatively early and J.R. turned his attention solely to the fruit and vegetable trade that had its nexus at the Hamriya Port’s wholesale market.

PEELING AWAY FROM WHOLESALE

The next order of business was to move on from mere wholesaling. Rather than wait for buyers to come to him in the bustling bazaar, J.R. started approaching procurement teams and chefs in the hospitality sector – from five star hotels to airports. “All these establishments have requirements in common: they want foodstuffs according to their system, and as per their quality gradations. They have standards for size, freshness, etc. And they were delighted when we said we’d bring what they want to them,” J.R. recalls.

Through the ‘80s and ‘90s, Barakat’s F&B supply business rose steadily. The Group was among the first to offer fixed annual price contracts. “We’d offer our clients a year-long rate for, say, tomatoes. For F&B controllers, that was great news because cash outflows could easily be predicted.”

A TRULY DUBAI STORY

Barakat is a Dubai story, and to hear J.R. tell it, one helped immeasurably by sensible officials wanting to facilitate business. For instance, J.R. recalls being allowed to offload produce straight into a Barakat truck directly off tarmac from an Emirates Airlines plane that had just landed circa ’86. “That’s what I love about Dubai. People in strategic positions were always business friendly and tried to help. They let us onto the tarmac – this is before cold stores in the airport – because the hot air from the jet engines would turn our mushrooms and berries black the minute the cargo hold was opened.”

Dubai’s fondness for business, J.R. says, comes from its enterprising founders. He recalls Sheikh Rashid, father of Dubai’s current ruler Sheikh Mohammad bin Rashid Al Maktoum, visiting the Hamriya fruit and vegetable market to ask if the traders there were doing well. “He’d pull up all alone in his Rolls Royce, and speak to the traders in Urdu, asking if the onions had come in that day. He was always encouraging business and trade.”

JUICY SUCCESS

The next step for Barakat Group was when J.R. had a conversation with Michael Wunsch, executive chef at Dubai’s Al Bustan Rotana. “He was having difficulties keeping up with the level of peeled onions and potatoes, and sliced carrots. We decided to go into business together to address that was a pain point common to all chefs,” says J.R.

From that conversation came Wunsch’s move to Barakat, and the company’s move to build and operate two specialized factories in Dubai to supply hotel chains across the region with fruits and vegetables peeled, sliced and diced to requirements.

With the equipment already in place and the ability to process around 70 tons of vegetables and fruits on daily basis, Barakat was ready for step two: launching its own line of freshly squeezed juices.

Wunsch’s experience was key in setting up a laboratory that ensures consistency in taste despite seasonality. “For instance, the lab will find the right proportions to mix sweet Egyptian oranges with acidic Australian ones to produce fresh juice with optimal levels of sugar and acidity,” J.R. explains.

CHALLENGES

Seasonal fluctuations in taste and supply are a constant challenge for a business that deals with fresh produce. Taste consistency too is a hurdle. “No bunch of grapes, even from the same vine, will taste the same. There’s nothing you can do about that when supplying fresh produce, except just offer the best. But we try and get our juices to taste within a narrow band. Our lab helps with that,” says J.R.

Getting the right human resources has also been a challenge for him. “Which fresh graduate wants to come and work in a fruit and vegetable business?” he asks rhetorically. “They feel ashamed. It’s a challenge for me to find people. On the plus side, it [has] taught me to retain people. We’ve retained most of our staff through 27 years of operation. And now that we’re successful, people are actually clamoring to join.”

THE FUTURE RIPENS

Barakat Foods is expanding. And J.R. has worked to set up downstream partners – for instance a jam plant that takes 20% of Barakat’s top produce for its fruity concoctions. He says the Barakat journey has just commenced. “Sheikh Mohammad, the ruler of Dubai has inspired me. He once said there is no end in the race for development. I’m going to keep expanding. And now there’s huge interest in taking Barakat abroad. I want to see my existing managers go to other countries and become [proponents] of Barakat operations there.”

In the works is a plant to grow and harvest mushrooms across 1 million square feet of land in Hatta. And the domestic market for juices has a lot of potential, says J.R. “The UAE consumes 2 million liters of flavored drinks a day, including sodas. We’re only 3% of that market. Why not improve that ratio, and help improve health simultaneously?”

As seen on Zawya Business Pulse. To see more, please click here