inverting the pyramid in egypt; a beer maker blossoms with its nonalcoholic brew

By JOSEPH B. TREASTERDEC.
When the Egyptian government sold the national beer company a few years ago, no one bought 1999.
Although there is no competition in the brewery and it has been making steady profits, it is a management nightmare.
Workers lazily read newspapers or snooze while dirty, old machines pour foam beer into dirty green bottles, often with insects, branches and dirt.
The taste of flagship Stella beer varies from batch to batch, and sales are declining.
If all this is not enough to be a headache, it is considered a sin for many people to drink beer in Muslim-dominated Egypt.
But Egyptian entrepreneur Ahmed Zayat, who has earned degrees at Harvard and Boston University and is thriving at Wall Street companies specializing in real estate and leveraged acquisitions, has discovered the potential for others to see only traps.
Nearly three years after controlling Al Ahram\'s beverage company-
This requires some creative negotiation and high
Flying stock issue on the London Stock Exchange-Mr.
Zayat, 37, has turned dirty businesses into one of the best.
A performing company in Egypt.
With the help of consultants from Danish brewers Carlsberg, he started his first ad --rate beer.
In addition, Al Ahram has gained enough prestige to start producing Carlsberg and Guinness beer early next year.
Most importantly, he found that the real profit could come from non-alcoholic beer ---
Apple, lemon and strawberry. -
It\'s off the shelf.
\"It tastes like beer,\" said Fatenn Mostafa, marketing director.
Zayat hired from Pepsi, \"it\'s a little naughty.
\"While expanding sales in Egypt through the blitzkrieg of TV commercials, a sales representative team and a team of trucks providing door-to-door delivery ---
All the new tactics here. -Mr.
Zayat has begun exporting non-alcoholic beer to Saudi Arabia and is ready to enter other countries in the Middle East, Africa and Asia, especially Nigeria and Indonesia, with a large Muslim population.
In the year to June 30, sales revenue increased by 60% and profits increased by nearly 30% to $26 million. Mr.
Zayat\'s success is a catalyst for a new round of investment in Egypt.
The beer company is just one of more than 300 states --
State-owned companies that the government has always wanted to sell, as Egypt takes the lead in transforming from top companies throughout the Middle East
Reduce control and state ownership to a more liberal style of capitalism.
For most investors and investment bankers, these companies are in trouble.
But when they saw Mr.
Zayat was able to handle Al Ahram and they started looking for other rough diamonds.
Josse Dorra Fiani, president of Fiani & Partners, a Cairo consulting firm, said: \"He is an example for other investors . \". Before Mr.
Zayat completed his deal in early 1997.
Since privatization began in the early 1990s S, state-owned companies have been sold.
Now the number is 18. There are two states.
In recent weeks, companies in Mexico and the UK have acquired all cement companies.
More than a dozen other deals are underway, government officials said.
\"We saw a different attitude,\" Mokhtar a said . \".
Khattab, deputy minister of public enterprise, clearing house for sale of state-owned assetsOwn company.
However, he added that he sees some new enthusiasm as a cumulative effect of years of government efforts. Mr.
Late one night, Zayat, who was blowing a Cuban cigar in the brewery\'s office, said investors who missed the opportunity to buy the company \"totally misunderstood the opportunity.
\"Advertisementhe took over the brewery for about $70 million, only about one --
Third, the government\'s asking price.
It angered some government officials, who still had a hard time clapping for his achievements.
But it shows investors that Cairo could be flexible ---
Many people have doubted it.
He made it clear to the government that selling prices are only part of a successful deal.
In addition to helping attract other investors,
Zayat has achieved several other goals of the government\'s privatization program.
He has begun to contribute to Egypt\'s export earnings and has inspired a group of local investors to start a new beer company that creates competition and new jobs in a country with an unemployment rate of about 10%.
When the third beer company is about to be established
Zayat\'s company, which has an overwhelming share of the domestic market, concluded that too much competition too fast may not be good.
As a result, he acquired the emerging company as part of the expansion.
To start the wine business, he returned to the government, bought its small wine maker, and took another company from the state\'s inventory. Mr.
Zayat\'s company, which already sells soft drinks, said he plans to bring in vodka, scotch whisky and other spirits with the goal of Egypt\'s tourism trade and the growing affluent foreign population
Educated young people
No one will expect such success.
The interest of big investors in Egypt is so small --
The government sold more than 80 state-owned companies piecemeal on the Cairo stock exchange.
Out of frustration, it cleared nearly 30 other companies that were considered unsalable.
When no investors were willing to buy beer companies, the government turned to the local stock market.
But the reputation of the brewery is so bad that so many local investors are reluctant to include \"sin stocks\" in their portfolios that the government has cut initial public offerings in the medium term
1996 to 5% and settled at the issue price of $4.
925 a shares are adjusted to a recent stock split, not to hope --for $6. 25.
The company also sold two other shares of the same size to two large Egyptian institutional investors and offered an additional £ 10% to its employees.
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The poor performance of the local stock market helped him.
Zayat talked about the price of the remaining 75%.
His real estate experience also helped him.
The government wants nearly $0. 2 billion in shares in exchange, in part because the 100-year-old main factory looks like a Crusader castle, sitting on the most valuable real estate in Cairo, close to the city center, right across the street from Cairo University. But Mr.
Zayat wants to buy a company instead of investing in real estate.
He therefore proposed that the government keep the land but rent it out to him for five years.
Meanwhile, he will build a $50 million premium brewery in the desert on the outskirts of Cairo, something the Middle East has never seen before.
He bought the land for less than the market price, as the main developer of a new industrial village that the government is launching.
As part of the package, sir.
Zayat negotiated 10-
Annual tax holiday for new factory.
In November 1996, the government finally accepted Obama\'s bid. Zayat of $5.
51 a shares, adjusted by division, were 11% higher than the disappointing offering price on the Cairo exchange.
Today, the stock is worth $19. 85 a share.
It will take 18 months and 22 negotiations to achieve his goal. Mr.
Zayat\'s meeting with a row of government officials usually lasted more than 12 hours.
\"Once,\" he said, \"I said for 16 hours, and as a result everyone in the room fell asleep except for the person I spoke.
\"Even after the government agreed, there was a problem:
Zayat is not yet $70 million.
He had to sell the idea of selling beer to Muslims to international investors.
He held a public offering of global depositary receipts in London and a roadshow in Europe and the United States.
Zayat not only has enough money to pay to the government, but also more money to pay for itself.
\"Half of the people in the government are still asking, \'If he does, can\'t we? \'
Said Daniel C.
Ambassador to Egypt, Kurtz. Mr.
Zayat paid his bankers and lawyers $10 million and brought $25 million in instant profits to himself and a handful of American supporters.
After all the financial magic
Zayat and his supporters eventually took a 12% stake in the company. Mr.
Zayat has also taken a creative approach to running his business.
He started to ship to the door because the government restricted the permission of the beer shop because he guessed correctly that those who might be embarrassed to go to the beer shop would be happy to handle some cases with caution and be brought to their doorstep
Blocked by the government\'s ban on ads for alcoholic beverages, he used Trojan horse Technology, filling the airwaves with spots of non-alcoholic beer that look very much like beer ads in Europe and the United States, it has great effect on both products.
Before the government sells breweries, people will
Be investor estimates that a tenth of its 3,200 employees can operate.
But the government banned him from firing him on a large scale.
Instead, Zayat began a full restructuring.
He hired experts from Carlsberg\'s consulting department to cut production to about 800 people.
He transferred hundreds of people to the new sales force at the brewery and assigned others to work in the warehouse or serve as drivers.
About 300 people accept early retirement.
He also created an inspection team that is responsible for quality control.
He ended the management board system, raised wages, provided stock bonuses for employees, and replaced six of the brewery\'s
Six working days. and-a-half-
5 hour shiftday, 8 a. m to 5 p. m. routine.
Now, with the booming business
Zayat says he has more employees than he did when he first started. Mr. advertising
Zayat brought the factory into the late 20 th century with some simple equipment, greatly speeding up the work speed.
There were four calls when he arrived.
There are 1,600 now.
He increased the number of desktop computers from 4 to more than 300, and the number of fax machines from 1 to dozens.
His delivery team almost doubled to 450 trucks.
To improve quality control, he installed a simple plastic sheet to prevent dust and bugs from falling into a beer bottle while walking along the conveyor, and he bought an X-
Check each bottle with a full shooting machine. Mr.
Zayat said he has been planning to expand the brewery\'s product line.
But even he was beaten by non-alcoholic beer sales growth of nearly 400 percent.
\"This is our future,\" she said . \"Mostafa, Mr.
Director of Marketing at Zayat
She said that about 90% of the company\'s profits in the past came from regular beer, but that proportion is expected to fall to 45% in three years, even if beer sales continue to grow.
\"We will never let every Egyptian drink beer . \"Mostafa said.
It will always be a Muslim country.
But non-alcoholic beer has all the elements of success.
Very healthy.
It has no caffeine.
It looks like a beer.
It tastes like beer.
But religious acceptance.
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A version of this article was printed on page B00007 of the National edition on December 25, 1999, with the title: Subverting the pyramids of Egypt;
A beer maker has flowers for its non-alcoholic beer.