New Kid on the Block: BMJ in the Near East

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The United Arab Emirates is host to quite a few cigarette manufacturers that are becoming increasingly active global players. But one of them, BMJ Industries, has chosen a particularly challenging turf shunned by many others: the Near East, including Iraq and Syria.

By Thomas Schmid

Already founded in 2000 in Ras Al Khaimah, one of the seven emirates that make up the UAE, BMJ Industries FZ-LLC reached its full operational capacity only as recent as 2011. But according to its sales and marketing manager, Malik Warrayat, the company today is “the region’s largest privately owned and operated cigarette manufacturer.”

He said this fact could be assessed across all tangible parameters: annual production volume and turnover, employee size, company capitalization, and others. BMJ currently produces well over 500,000 cigarette master cases per month in its three factories, one each located in Dubai, Ras Al Khaimah, and the Balkan country of Montenegro. “In those factories, we currently have a total of 25 cigarette-making machines, which produce cigarettes in a broad variety of formats, from king size standard and round corner to queen size, from 100s soft pack to nano size with standard or jumbo outer packaging, to super slims and king size filter tubes,” Warrayat elaborated.

The company also operates its own primary processing facility, a coconut charcoal, and shisha molasses factory; manufactures disposable shisha pipes, produces filters, and inner foils; and runs several tipping paper printing machines. While the Dubai plant presently has a maximum production capacity of 9 billion cigarette sticks per annum, the factories in Ras Al Khaimah and Montenegro are capable of shelling out up to 30 billion and 21 billion, respectively.

Warrayat disclosed that these capacities are being utilized to a degree of over 80%, split between 80% manufacturing of BMJ’s own products and 20% contract manufacturing for other companies. BMJ’s products are currently available in more than 32 countries, with a focus on the MENA region. And business has been good, with consistent year-on-year increases in terms of volume. In 2015, the company’s total volume figure was 17% higher than in 2014; in 2016 it jumped by 41% compared to the previous year; in 2017 by 26%; and for 2018 Warrayat projected yet another 20% increase.

BMJ’s secret to success, measured by consistently increasing production volumes just as much as by growing market shares, is its “ability to maintain superior quality standards,” Warrayat said. This, he asserted, was made possible by “our visionary chairman, Ahmad Bkairat, who insisted that the company needed to exert uncompromising direct control over each and every major cigarette component” by having them produced in-house rather than purchasing them from external suppliers. But yet another reason for the rising star of this “new kid on the block” might be its willingness to enter markets where few others dare to tread; either because they are deemed too difficult or because the local security situation is precarious. That dare-devil attitude has made BMJ a force to be reckoned with particularly in some of the more challenging territories of the Near East.

One case in point would be Iraq, where BMJ started distributing its cigarette brands in 2011. Since then, the company has taken the market leader crown, delegating KT&G to the runner-up position. “Of all the countries in the region, Iraq is currently our largest market in terms of volume sales,” confirmed Warrayat. However, as the company has not established a subsidiary in the country, it exclusively relies on the services of a local distributor. But Warrayat also divulged that “during periods of conflict we have issues distributing our products, which causes us huge losses. While this has been improving lately, there have been times when we could not transport any goods locally, had to pay many months of demurrage and suffered heavy market share slumps.”

A mere year later, in 2012, BMJ eyed an incomparably more peaceful and orderly nation, Jordan, as its next regional market. Again, the company collaborated with a local distribution partner, with the result that BMJ’s proprietary cigarette brands Oscar, MAC, and Napoli have since become end consumer favorites. “Like in other markets, the most complaints that we’ve heard from consumers and distributors alike was about a lack in quality consistency in some of the already available brands, and I guess our products were seen as finally delivering the quality customers demanded,” Warrayat said.

In Lebanon, which BMJ entered roughly around the same time as the already mentioned countries, MAC and Super Grand reportedly are the company’s top-selling brands, although Warrayat declined to make additional comments on the market situation. Only one thing is for certain: as elsewhere, BMJ uses the distribution service of a local outfit. But perhaps the most challenging marketing step lies straight ahead for the company: supplying the Palestinian National Authority territories. Apart from the Gaza Strip some contiguous areas in the West Bank, the territories are comprised of a fractured patchwork of often tiny enclaves completely enveloped by Israel, through which all supplies must pass. BMJ plans to start marketing its best-selling Oscar brand there, which, if proceeding without a hitch, would indeed be a quite impressive achievement. “We have already registered the brand [with the Palestinian authorities] and our first consignment could be on its way anytime now,” Warrayat confided but cautiously added that there still were “some pending shipping issues” to resolve.

Meanwhile, BMJ is not currently represented with its products in Israel, which is not a big surprise to anyone. Like a majority of other Arab nations, the UAE government does not maintain diplomatic relations with Israel and in fact upholds economic sanctions against the country, banning local firms from engaging in any trading activity with it. And BMJ, Warrayat asserted, has no intention of going against that rule.