Paul Murray, CEO Middle East, Overseas Distribution Company.

SPONSORED CONTENT: Following the launch of its Dubai office in September, Overseas Distribution Company (ODC) has secured a high-profile partnership agreement with British American Tobacco (BAT).

Paul Murray, CEO Middle East, confirmed to TRBusiness that the partnership is set to begin on 1 February 2025 and will see ODC handle distribution for the tobacco giant in the markets it now serves.

“Our immediate focus is creating the infrastructure to support a smooth transition for them between distributors, ensuring that their operator partners are not impacted in any way,” he said.

With the formal set-up of the new commercial and logistics office in the emirate now compete, ODC is embracing opportunities to deliver enhanced services and route-to-market solutions for all its partners.

“We have opened dialogue with all of our existing brand and operator partners who we currently work with across Europe, CIS, Africa and the Americas from our Antwerp base to explore opportunities on how we can provide solutions to the Middle East, India and Asia Pacific regions supported by our operation in Dubai.”

Middle East dynamics

Staying agile in the face of regional uncertainties, while taking a global view, is a key part of the strategy.

“Regional conflict is of concern and will impact travel retail performance in the region,” said Murray.

“While the likes of Dubai, Qatar and Saudi have remained relatively stable, broader Middle Eastern tensions, such as those related to oil prices and political instability, create a greater degree of uncertainty which has and will continue to impact travel and passenger numbers in key transit hubs.

“The ongoing Russia-Ukraine conflict as an example has reduced the number of Russian travellers who are historically high spenders in the luxury sector, which is now reflected in declining sales in certain categories like fashion and luxury goods​.”

He continued: “Looking at the broader market, the global duty free industry has been growing at around 6.7% CAGR since 2021. Dubai and Qatar have benefitted from this global recovery in international travel, but slower growth in 2024, combined with reduced passenger spending, presents new challenges.

“We need to be mindful not to focus only on regional conflict but also on macroeconomic pressures such as global inflation, which affects discretionary spending in airports.”

Snapshot of the ODC gathering during the 2024 TFWA World Exhibition in Cannes.

While inflationary pressures are set to persist, and will likely impact consumer spending and travel demand, ODC believes that operators in economic powerhouses in the Middle East and beyond will be able to leverage their strategic positions as global travel hubs to help navigate these pressures.

“A focus on innovation and adapting to changing consumer preferences in order to sustain growth needs to be driven by both our brand and operator partners, and at ODC we remain committed to working in partnership with both to support and maintain their growth,” he said.

Thinking global

While the Dubai office marks ODC’s first Middle East base, it is set to play a pivotal role in the company’s global growth plans.

“It should not be mistaken that our strategy to locate our office in Dubai is simply driven by a Middle East centric model,” explained Murray.

“Yes, we will be providing our brand partners a route to market to all countries in this region that it makes sense to serve from here, but our strategy to create a regional office and hub here in Dubai is driven by the desire to create and provide the ideal platform to deliver favourable logistics facilities and infrastructure with efficient distribution and supply chain solutions also across the Indian Ocean and Asia Pacific regions to our brand partners.”

ODC team members and guests at the company’s networking event during the 2024 TFWA World Exhibition in Cannes.

He continued: “Jebel Ali Port is situated at the crossroads of Asia, Africa, and Europe, making it a natural transshipment hub for goods moving between these regions. Its proximity to key markets in the Middle East, India, Africa, and the Asia Pacific region is key and reduces shipping times for our brand and operator partners.

“This is supported by not only its connectivity to 140 ports worldwide, but also its state-of-the-art terminals and high-tech logistics services which supports our growth ambitions with a capability of handling capacity of over 22 million TEUs (20-foot equivalent unit) per year.

“Dubai is also well connected to road and air, linking it seamlessly to major markets, which makes our location ideal for shipping to and from Asia, Africa and the broader Middle East.”

Giving brands and helping hand

In terms of his best piece of advice for newcomers looking to gain a distribution foothold in channel in the Middle East, Murray shared the following words of wisdom: “This is a question I have been asked many times over the years by brands trying to enter the travel retail market globally, and the answer I give is not often what new-to-market brands want to hear,” he said.

“It should be noted that this is the case across most categories and all regions, however there are examples where some brands and categories do buck the trend.

“Although I celebrate the innovation and creativity that new-to-market brands bring across all categories, the reality in most cases is simple and the challenge sits firmly with the retail operator. Travel retail operators want known FMCG brands as their objective is to deliver results to their shareholders. Airport retailers are not focussed on building new brands, they want established brands so they sell through quickly – this is also driven by consumer demand who want brands they already know well.

“That said, we do see some movement by operators who want to offer and create a ‘sense of place’ promoting local brands and products that will offer the consumer something unique that will remind them of their travels.

“Good examples of this include Lagardère’s Bottega dei Sapori store in Rome Fiumicino’s Terminal 1 and the ZOMA concept in Zanzibar where locally produced and traditional items are offered to the consumer.”

Paul Murray joined ODC as CEO Middle East in September.

Brands that are committed will find their way.

“It is important to find a trusted partner with knowledge and understanding of the market as well as well-established strong relationships in place with operators to ensure that an opportunity to get their brand in-front of the right decision maker is realised,” he said.

“In addition to this, a realistic understanding of the commercial terms and investment support that will be needed to succeed is key. Ensure the product is relevant. Understand their point of difference and why consumers will show interest and purchase the brand.

“And most importantly, understand that they need to work in partnership with all key stakeholders to make the brand work.”

In time, ODC will offer route to market services from its Dubai hub to partners across all categories, including tobacco, liquor, confectionary and perfumes and cosmetics.

The 2025 vision

In terms of the strategy for 2025, in continuing to build a long-term sustainable business, Murray underscores the plan is very simple. “To become the preferred distribution partner in travel retail across these new regions delivering secure comprehensive supply chain efficiency and executional excellence to our brand and operator partners.

He added: “While it’s possible to expand quickly, we believe that true success lies in establishing the capability to provide exceptional execution from the moment we engage with a partner.

“We will prioritise patience and a commitment to delivering secure, comprehensive supply chain efficiency and executional excellence to our brand and operator partners. This requires time and careful attention to detail. Our goal is to create trust and long-term partnerships, and we remain committed to upholding our values rather than pursuing short-term opportunities.”

Members of the ODC team are attending the 2024 MEADFA Conference in Abu Dhabi (17-19 November). Brands and operators can reach out to [email protected] for a meeting.

READ MORE: Overseas Distribution Company fuels Middle East expansion with Dubai office