The Kilos Journey: From the Quest for Manufacturing and Management Excellence to Partnership with Efes

Dr. Hadi Shahbazi CEO of Kilos

Please tell us about yourself; your background and journey to this point, from entrepreneurial ventures to leading a growing beverage production operation.

I was born in 1980, and while pursuing my bachelor’s degree, I was actively involved in our family business in the auto parts industry. After completing my bachelor’s degree in industrial engineering, followed by a master’s degree in business administration, I obtained a doctorate in business from Lisbon University. In 2005, I joined Golrang Industrial Group and worked in the fi eld of pharmaceutical supplements. This eventually led to the establishment of Abian Darou. We focused on designing and offering products in the supplement industry, which turned out to be a highly successful venture. In a short period, we became one of the leading companies in the supplement industry in Iran.

Please tell us about Golrang, Iran’s premier FMCG conglomerate, and Kilos, now a leading beverage production company with stateof- the-art facility. How did Kilos become part of Golrang and how is the acquisition working out for both parties?

Golrang Industrial Group is the largest private-sector holding company in Iran and other countries, with over 50,000 employees. Their strategy development plan for the next few years is to rank among the top 500 companies in the world. Golrang Group is a conglomerate consisting of over 150 active companies operating in various sectors. One of its sub-holdings is the Hasti Food Industry, which includes Kilos Company. Established in 2005, Kilos Company invested heavily in producing nonalcoholic beer and carbonated beverages. However, the primary founders failed to launch and complete the investment, resulting in fi nancial issues that ultimately led to the company’s shutdown. In 2020, Golrang Industrial Group purchased a portion of the company’s shares, while the founders retained a minority stake in the company. We plan to make use of Golrang Industrial Group’s infrastructure, including chain stores, distribution companies, logistics systems, fi nancing capabilities, and, most importantly, their exceptional management and entrepreneurship model. The goal is to become the largest producer of malt beer in the Middle East. Additionally, we aim to expand our production to include other carbonated beverages, malt seeds, and malt extracts. Kilos Company has a complete supply chain for beer production, from receiving barley from farmers to producing the fi nal product. The company has a malt production factory with a unique malting tower, which is the only one of its kind in the Middle East. In addition, there’s a Brew House and a concentration factory, where malt extract is processed and sold or exported to other brewing companies. The complex also contains storage and various packaging lines for cans, glass, and PET. It’s worth noting that some parts of the factory are still being set up and expanded. Currently, most energy drinks in the market are produced by Kilos Company as Contract Manufacturing.

Manufacturing is indeed a tough fi eld in Iran. How do you cope with multiple challenges in this market, from rising costs of operation and obstacle on the importation of raw materials to regulatory environment and an increasingly competitive market condition?

Golrang Industrial Group has many years of experience, and through their vision and management context, they have imparted the principles of business to their subsidiaries. On the other hand, the group has the necessary facilities required to tackle the issues and problems that different companies have been dealing with for years. The Golrang group has made trial and error and found solutions that continue to work. Although the companies in the Golrang group operate separately, the best practices in the group help overcome various problems.

Please feel free to discuss the challenges regarding the import of raw materials or other areas.

We haven’t encountered any signifi cant obstacles when it comes to importing raw materials. However, the biggest challenges we face are branding and the need for a large investment to operate the largest beer brewing complex in the Middle East. These two issues are the most signifi cant hurdles we need to overcome. Nonetheless, the solutions to these issues are entirely within our reach, and we have a clear path to follow. We have extensive experience in branding, and we are connected to the Golrang Industrial Group, which will help us with the investment.

What do you see as key success factors in manufacturing besides planning and quality control? Iranians usually don’t trust and respect local producers as much as they do foreign ones. How can local manufacturers assure consumers that their products are as good as their foreign counterparts’?

I believe that the most crucial aspect of a business is product development, which includes designing a high-quality product and establishing a strong brand. In our work, we prioritize branding because we know that consumers will trust our company if we provide the right product. To do branding effectively, we must create the right values and perceptions in the customer’s mind to earn their trust.

I strongly believe that we can manufacture goods that can compete on a global scale and match the standards of the best in the world. It is essential that we have the desire and determination to do so, and in turn, our domestic consumers will undoubtedly appreciate the delivery of high-quality and accurate products.

Besides producing your own brands, most notably Matador, Kilos (through its parent company Golrang) is now partner to the world’s 9th largest and Europe’s 5th largest brewer, Efes, from the neighboring country, Turkey. How is the under-license production of Efes products going? With millions of Iranians traveling to Turkey every year, is the name recognition enough to make the project a major success?

The production of goods under the license of Efes company is a promising start to a collaboration between two major international holdings: Golrang Industrial Group and Anadolu Efes Holding. Anadolu Holding has a diversifi ed business portfolio, which includes Migros chain stores, Khodro Turk, beverages, and other sectors. This partnership between two major holdings will create new opportunities for further cooperation. Efes is a well-known brand that has a global presence in over 80 countries. It is the fi fth most popular brand of malt beer in the European Union and the ninth most popular brand in the world. However, the company’s success is not just limited to its wide reach. Efes has tailored its products to meet the needs and preferences of local consumers, which it has done exceptionally well. We should strive to deliver this created value to consumers and compete with traditional competitors in the domestic market, which presents unique challenges. message to get across, lack of prior experience or technicalities should not create a hindrance, my advice is to go for it!

Iran has known to be the world’s largest per capita market for non-alcoholic beers. How do you describe and assess the current state of affairs for the Malt Beverage market in Iran? What are the opportunities and challenges in that sector?

Beer is a distinct beverage that differs signifi cantly from the popular fl avored malt drink in Iran. As a result, the Iranian market has its unique characteristics and cannot adopt the successful global models in this fi eld. Therefore, creativity is crucial for the market’s growth, as the world’s prosperous models cannot be used for this market.

Efes is multi-billion Dollar company with presence in more than 60 countries. What are the advantages of working with such a large organization (adopting global best practices, knowledge transfer…). Are there any downsides/challenges? If, so what are they?

The biggest advantage of Efes for Kilos is the transfer of knowledge. We can quickly learn from their production experience gained over many years, which is very valuable for us.

What’s next for Kilos? Are there any expansion plans on the horizon? What about exports? Is the partnership with Efes expanding to new products (malt or other beverage categories)?

Kilos Company is pursuing a development plan in multiple areas, including the production of malt grain and malt extract, falling under our business-to-business activities. Apart from that, we are also involved in business-to- consumer activities related to the beverage industry and have several brands in our portfolio. Our primary focus is on exporting halalcertifi ed products to Muslim countries, and we rely on our association with Golrang Industrial Group to achieve this goal. Presently, we export the Matador brand to Afghanistan, Lebanon, and the UAE.

How do you feel about the economy in general in the year we just entered in? Are you optimistic or pessimistic about business prospects in 2024? Why or why not?

I believe that if we disregard the political situation in the Middle East, our country’s internal state will remain relatively stable, and we can expect gradual progress. Additionally, establishing a peaceful domestic environment plays a crucial role in achieving economic stability.

Your colleagues at Kilos Group have recognized that your management style and approach will be a signifi cant part of your legacy within the company. Could you share your thoughts on what you would like to be remembered for in future generations of this company?

Prior to entering the Kilos complex, we had developed several pharmaceutical products that left a lasting impression. With the Kilos collection, my aim is to create brands that will be remembered for many years to come. The Abian Darou Group continues to be one of the leading entrepreneurial brands in the pharmaceutical industry. I consider myself a student of Professor Fazli’s entrepreneurship and have made it a point to learn as much as I can along the way. Personally, I believe in nurturing young and talented individuals and am keen on collaborating with them. I am ready to face the challenges that come with this path.

Leave Your Comment