Diversifying business the key for fast-moving Kreol
Having built multi-category distributor Kreol Group from the ground up over the past three decades, CEO Lal Arakulath is as invested as ever in the enduring power of duty free and travel retail. He speaks to Benedict Evans about the company’s momentum, underpinned by an evolving portfolio and strengthening partnerships.
Food and confectionery remains UAE-based Kreol Group’s (Kreol) most important category. It is one that has seen a slew of interesting consumption patterns in recent times.
“As a multi-category distributor, food and confectionery still make up over half of our category mix,” commented Lal Arakulath, CEO, Kreol Group.
“This segment is evolving through the growth of snacking,” he noted, explaining that retailers have often neglected snacking as a sub-category. As such, he is intent on taking advantage of what he sees as a gap in the market.
Tasty opportunities
The demand among consumers for a more diverse array of snacking options within travel retail has been self-evident in H1 2024 and Lal has been positioning Kreol’s food and confectionery assortment accordingly.
– TRBusiness
“We believe that one of the key drivers will be duty paid, due to the number of domestic pan-Indian airports planned to be built.” Lal Arakulath, CEO, Kreol Group
“Snacking is growing due to the rise of low-cost carrier airlines, which don’t serve meals, leading passengers to purchase snacks for self-consumption. Pringles has spearheaded growth in our food category by capitalising on the gap created by retailers neglecting snacking.
And Kreol has not forgotten about its premium buyers either.
“Godiva and Kägi represent our more premium offerings and are more globally known household names,” said Lal. “We also feature regional delicacies with Petit Gourmet, a brand of UAE-born Baklawa Made Better (BMB) Group that specialises in Mediterranean treats and Middle Eastern sweets.
“A select segment of customers is willing to splurge on unique or higher-end items, indicating premiumisation opportunities,” he continued, mentioning the contrast with supermarket brands that Indian subcontinent and ME passengers have favoured historically.
Notwithstanding the above, there are underlying challenges to chocolate confectionery that have only been exaggerated in recent months. In West Africa, which produces over 70% of the world’s cocoa, unfavourable weather conditions and disease has significantly reduced crop yield during the past year. Subsequent market speculation has seen cocoa prices hit historic highs in recent months, with Trading Economics data from August showing a 114.41% spike in price-per metric ton year-on-year.
“Cocoa price increases are a major concern,” noted Lal. “Larger companies have hedged by booking their cocoa lots in advance, but smaller family businesses haven’t, creating a state of limbo. Retailers are reluctant to pass on price increases, leading to less stock on shelves and ultimately less satisfied customers.”
A people business
To mitigate against such variables, Kreol Group is working hard to diversify its portfolio through a series of successful partnerships and acquisitions.
“On an industry level, the importance of relationships and understanding both your brand and retail partners is key,” commented Lal, who highlighted the strength of Kreol’s relationship with the Asia Pacific and Middle East branches of major travel retailers Avolta and Lagardère Travel Retail and the acquisition of BMB Group and Swiss chocolatier Kägi in 2023.
He also hinted at further gains with the likes of Aer Rianta International (ARI).
– TRBusiness
Above left to right: Kreol Arakulath, Freda Cheung, Lal Arakulath, and the Kreol HQ.
Notably, Kreol Group has made some key executive moves in recent times, the most notable of which has been Freda Cheung, President and CEO of Avolta Asia Pacific.
Cheung joined the Board of Directors of Alpha Kreol India – the JV between Kreol Group UAE and Avolta AG – in June. “The industry is built on trust and knowing your partners as people first is crucial,” explained Lal Arakulath.
Keeping an ear to the ground
The message from Lal Arakulath is clear: this is a people business; proceed accordingly. Having an eye for people and an ear to the ground has paid dividends for Kreol Group, especially in the Middle East and India.
“We are supplying some of our brands, like Freakin Healthy, to the hybrid concepts being piloted in the region, such as Avolta’s Hudson café concept,” commented Lal.
– TRBusiness
BMB Freakin Healthy.
He references the hybrid F&B and retail concept at Sharjah International Airport in the UAE, which introduced the store in June as part of its Destination 2027 strategy. Kreol has found similar success – albeit with different concepts – through its pioneering supermarket category in arrivals terminals in India.
“The logic is that many passengers find it convenient to do supermarket-style shopping at the airport, especially when there is no large-format modern trade retail in their localities,” explained Lal.
India’s burgeoning growth
Much has been made of the enormous potential of travel retail in India. As a Dubai-based business, Kreol is perfectly placed to take advantage of the special connection between Dubai and India, with 11.9 million Indians travelling to Dubai in 2023, topping the list of visitors by nationality.
A July study conducted by Airport Dimensions predicts a 16% growth in travel frequency domestically, and 25% internationally over the next 12 months.
Delhi International Airport ranked as the 10th busiest airport in 2023 by passenger numbers, according to ACI World data, and the industry will be keeping a keen eye on the billions set to be invested in the construction of new terminals and airports.
For Kreol Group, the real potential lies in the domestic sphere: “We believe that one of the key drivers will be duty paid, due to the number of domestic pan-Indian airports planned to be built,” according to Lal Arakulath.