Welcome to another episode of Economic Impact, conversations from Emirates Development Bank (EDB), the key financial engine for economic development and industrial advancement of the UAE. In each instalment CEO Ahmed Al Naqbi speaks to change-makers and thought-leaders in the UAE to learn how they’re contributing to the nation’s economy and realising the UAE’s economic ambitions.
This time, CEO and co-founder of House of Pops, Mr. Mazen Kanaan (@mazenkn) joins Ahmed Al Naqbi to discuss his experience launching a health popsicle brand in the UAE.
Listen to 'Economic Impact' wherever you get your podcasts. Plus, you can watch ‘Economic Impact’ on the EDB website, edb.gov.ae, and on Youtube.
Subscribe and like us on Facebook, Instagram and LinkedIn - and let us know what you think...
To find out more, just look for ‘Economic Impact, Conversations from Emirates Development Bank'.
Speaker 1: HOST
Speaker 2: GUEST
00:00:00 INTRO V/O
“This is Economic Impact...Conversations from Emirates Development Bank”.
00:00:05 Speaker 1
A’Salaam A’laikoom. Welcome to Economic Impact, Conversations with Emirates Development Bank, with regards to the economic development agenda of the UAE with key players in the economic ecosystem. I'd like to welcome today the CEO and Co-founder of House of Pops, Mr. Mazen Kanaan. Welcome. Welcome to the conversation.
00:00:22 Speaker 2
Thank you. Thank you for having me.
00:00:25 Speaker 1
If we just jump right into it. Can you give us a bit of a background about how you got to the point of starting a popsicle company? You know, how did that come onto your mind? Why was that the concept that you decided to go with? What was the background to that?
00:00:41 Speaker 2
Hello, thank you again for having me on this podcast.
So, actually, I don't know how long back we need to go, but initially I always had in my mind that, you know, I want to do something on my own. But I was waiting for the right opportunity or something that really clicks well with me.
I have started my career working with Unilever, the multinational FMCG and the last 6-7 years I was working on ice cream and this is where I found that there is a gap in the market for something which is healthy and tasty at the same time.
At that time, the Health and Wellness was a trend that was spreading all across all the different industries and segments. You would go to the supermarket, you will find those high protein cookies, Keto Brownies, a lot of protein, but when you go to the ice cream, you will still find the high fat...
00:01:32 Speaker 1
High sugar.
00:01:33
...high sugar product.
00:01:34 Speaker 1
Right.
00:01:34 Speaker 2
And then I said OK, then you know there could be an opportunity. So together with my, with my wife...
...now, she's my wife. At that time, she was my friend. We decided, “OK, let's jump into it”. And she also has a background in culinary. She did culinary studies. So, we thought that this is a good match. I know the category. I know how to market it. She knows how to cook.
00:01:56 Speaker 1
How to make it...
00:01:57
So, let's, let's give it a shot and then this is how it started in 2018, in September 2018, we went to the farmers market ripe market here and for the first time on September 8, actually in in three days (at the time of recording) it's going to be our fifth anniversary.
00:02:13 Speaker 1
Fantastic. Congratulations.
00:02:13
So, I always like to put it that you went there. It was just the two of us with a small bike. The big dream. So. So yeah, this is how it started. Then there was a good traction and then we started expanding through different channels and the growth started happening.
00:02:27 Speaker 1
So, in the very beginning, going from the concept stage of having an idea and as you said, I mean it's fantastic. You seem to have found the right partner in the sense of a culinary student who actually understood how to possibly put the flavors together and how to actually put it together. How do you go from that to an actual reality of business? What were some of the hurdles or the challenges that you had to face in those early stages when it was still just a concept in your mind?
What were the things, I'm assuming again with your experience with Unilever, you probably had a good understanding of the numbers, what the expenses would be, what the let's say investment would have to be.
Was there anything that was a surprise to you anything there that you, you know jumped out at you while you were trying to set up the business and you were like, well, I didn't expect this?
00:03:19 Speaker 2
OK. So, in Unilever, the things that I got was more related to the category, understanding the category and how to market ice cream and how to build a brand…
00:03:31 Speaker 1
OK.
00:03:32 Speaker 2
…but it's a totally different environment when you want to start your own thing because Unilever does not prepare you to that. Actually, I don't know if anything prepares you to that.
00:03:39 Speaker 1
Right, right.
00:03:40 Speaker 2
You need to be a bit foolish because if you start, you know, checking all the realities. OK, I'm going to start. We said we're going to open a factory. No one knows how to open a factory! So there is this kind of foolishness a bit. It helps in the beginning.
So initially some of the challenges we had of course was so I had savings, you know, for around 13 years I invested bit by bit my savings there but the challenge was always when do I know that this is a business that's going to last so that I invest a lot there. I read a nice book called ‘The Lean Startup’. It's a beautiful book and I was inspired by the way that, OK, you need to go step by step. So I tried to follow this as much as possible.
00:04:14
Right.
00:04:22 Speaker 2
Initially we started with a CapEx of $10,000. We got $3,000 worth of equipment from China, very basic and then in this warehouse that we got in Umm Al Quwain, we set up the operation in, in the office room because we didn't need to use all the space and then slowly, slowly we started...
00:04:32
Right.
00:04:42 Speaker 2
...expanding. So one the first challenge is really the cashflow manager. The second challenge was once you start growing or if you want really to expand, people need in the trade to take you seriously. If I want to go to Kite Beach, I'm telling them I want to have a location there. They did not hear about the House of Pops...
00:05:09 Speaker 1
Right.
00:05:10 Speaker 2
...so how to come across as a brand and the third element was attracting the right talent. Uh, because yeah, if you want to get someone with good experience, people will find it very risky to leave their job and join us.
00:05:24
Right.
00:05:24 Speaker 2
But there are some elements that helped us. I think one of the biggest help was Covid, um, in a way that so first in terms of being able to find real estate where we can go and establish, I started reaching out to real estate or people who are managing the real estate companies here in June 2020 where everyone, everything was shut down, but I thought, OK, it's going to open at some point and they need tenants there.
00:05:58 Speaker 1
Right.
00:05:59
So, I went and started doing deals at the 3-4 deals between JBR and Kite Beach each. So, then that was one thing, and then also Covid impacted how the young generation see companies and see their careers and they were more prone to leave multinational companies to work in startups that align with their values and we can elaborate on those points as well.
00:06:20 Speaker 2
But those are the channels.
00:06:22 Speaker 1
They call it the great resignation, so, so many people definitely during COVID I think had a chance to sit back, evaluate where they were in life, what they wanted from life and then potentially, you know, make a career changes, you know, drastic career changes and different directions and a lot of them definitely went into entrepreneurship as well.
And you said some interesting things and and I just want to ask that question you said how to come off as a brand, right?
So, when you were approaching some of these entities, I think this is very important for entrepreneurs to understand because when you're sending a picture, a proposal to, let's say, Kite Beach or the managers of Kite Beach. In order to get a location. They obviously want to ensure that there's the best quality, or standards of a company coming to set up the F&B, whatever it is, that that they're setting up.
So how did you do that? How did you ensure that you came off as a established brand when you were still in very early stages obviously at that point?
00:07:16 Speaker 2
Exactly. So that took a lot of marketing, I would say skills to be able to land it. So, if you go to Kite Beach, there were around four or five ice cream - because ice cream is not an innovative category…
00:07:28 Speaker 1
Right.
00:07:29 Speaker 2
…everywhere you go, especially on the beaches, there are plenty of offerings.
So, then the way we enter that, we are not an ice cream. No, no, we are not competing. We are, fruit on a stick. You know, it's a healthy thing.
So, I played a lot on two elements. The naturalness of the product and the sustainability. Because now with these days and especially in UAE, there is a lot of focus on sustainability and every company has a sustainability target.
So, we're saying, OK, you know, if you bring us in, we can help you achieve or achieve a bit on those sustainability targets that you have because our packaging does not have any plastic and the product is healthy, it has less sugar, it's healthier. Let's say…
So, those two things coming across as a different creating another category for ourselves and it was not easy and I needed to have, I mean like God or luck or put people in my way in those companies that really wanted to give me a chance and they were fighting internally to get it done. So this is a blessing.
00:08:30 Speaker 1
Yeah, definitely. I would say that people underestimate how much employees in these organizations if they personally believe in you. If you sell yourself and sell your brand in a way where they will believe in it, that could be the difference between something getting approved through that company versus, you know getting the wall of silence, essentially.
00:08:49 Speaker 2
Yes, exactly.
00:08:50 Speaker 1
Erm, that first day when you approached and you set up your cart in the Ripe food market. That's the Ripe food market that's down by opposite of Burj Al Arab down by the Madinat Jumeirah over there.
00:09:02 Speaker 2
At that time, it was during still the last month of the summer, they it they were doing it in the mall in Times Square. So, this is where we started before moving outdoor into the Police Academy.
00:09:08 Speaker 1
In Times Square, OK. And yes, the police Academy location. Exactly.
So, how was that, how was the reception to your product?
I personally love your product because of the I know you say that it's not an innovative category, but what I found innovative about your popsicles was the combination of flavors, which I do want to ask how you came to those combinations.
But before that, how was the reception to the actual, you know, little stand that you had set up that first day and what did you guys experience that first day? Was it a success? Was it a failure?
How did it go that day?
00:09:48 Speaker 2
It's, it was a memorable day, of course, because we have opened the factory or took over this production unit back in April, and from April to September, we were just experimenting.
We did some testing internally with friends etcetera, but then the real deal came on September 8th and uh from it starts from 9:00 to 5:00 from 9:00 to 1:00. We didn't sold any piece and we were like…
00:10:15 Speaker 1
OK, that's been very demoralizing.
00:10:17 Speaker 2
...Yes. And then from 1:00 till I think 3 or 4 O’Clock, we sold like 100...
00:10:23 Speaker 1
Masha’Allah.
00:10:23 Speaker 2
...and it was like 2,000 and we were "What 2,000!", and you know you start calculating if 2,000 per day. If I multiple it by 30 this is 60,000, you know...
00:10:30 Speaker 1
Yeah, yeah, yeah.
00:10:31 Speaker 2
So, we got extremely excited that day. And uh, of course, so, trial was generated by the branding because and then once people try it and then understand the product and the health benefits, then this would the taste would drive repeat. So, it was very important for us to lend a good branding to attract people and drive trial.
And then repeat will come with the product. It was really good and we learned a lot. It was very important for us to be face to face with the consumer, because a lot of mis-conception would say, OK, I want to launch a product, let me go and start in the trades, in Carrefour, in Lulu and all those supermarkets. But then your brand will get lost.
You know, you cannot really drive it and you will not really understand the feedback.
00:11:18 Speaker 1
Right.
00:11:19 Speaker 2
We stayed four years before entering the trade, because it was very important for us to stay, to be with the consumer in their moment of consumption and one of the feedback, for example, building on your point.
We were very happy that yeah, it's healthier. There is no refined sugar, etcetera. And one lady at that time came said, I love your product and I love that you don't use sugar, but I would rather you use sugar, but don't use plastic in your packaging.
And it was a key moment we said. OK. She has a point like you cannot just be good for yourself.
And she led us to really go and change the packaging after six months from launching to move into more sustainable things. So, this is the beauty of being, you know, on the, in the market facing...
00:12:01 Speaker 1
What's the packaging made of now?
00:12:03 Speaker 2
It's made of, it's called BOPLA, Biaxially Oriented Polylactic Acid. It's made of plant starch,
00:12:09 Speaker 1
Plant Starch
00:12:11 Speaker 2
and it can be decomposed in six months into air, and a sole nutrient, and CO2.
00:12:16 Speaker 1
Great, great. Great. Yes, as you rightly said, you know, it's not just about being good for yourself, but being good for everybody.
So, back to the flavors. How did you come up with that kind of a flavor profile because, you know, one of the things that caught my attention a year or two ago when I first tried House of Pops was I think it was the mango-passionfruit, which is a very, very good combination for me.
But you know, there was some other combinations there that I found very, very innovative in a sense.
So how did you guys come to that?
00:12:45 Speaker 2
So, initially in our category you need to have a wide range, you know because a wide range, drives excitement and people get excited. You know, “What do I want to choose”? You'll always have the basic flavors that will sell the most mango, chocolate, strawberry. But then you need to have to drive excitement.
And this is where Marcella's feedback, er Marcela, my wife’s background - she comes from Costa Rica - and the tropical fruits and the tropical flavor is something like in her blood. Even she is like very like full of flavour! She's very active. So, she put a lot of herself and her character into the flavours and what you mentioned, for example, the passionfruit. It's a big...
00:13:16 Speaker 1
Makes sense…
00:13:17
...even she is like very like full of flavour! She's very active!
00:13:20 Speaker 1
Right.
00:13:20 Speaker 2
So, she put a lot of herself and her character into the flavours and what you mentioned, for example, the passionfruit. It's a big, a big fruit, a big flavour in, in Latin America, they call it maracuya. So it was we call it Mango Mara.
So, that so she was driving all those flavors, some of them worked perfectly. Some like we had a tropical fruit, it did not really work well.
00:13:46 Speaker 1
Right.
00:13:46 Speaker 2
So, there was a lot of trial and error and you were very flexible. Whatever works we keep, and we keep re-innovating. And it's very interesting that, how the category works because people would be saying, "Ah, did you hear House of Pops have launched this new charcoal lemonade? Ohh, you need to try. They go. Oh, it's very interesting. It's looks very nice…
...Can I have mango, please?!"
And you know, so those new dish flavors bring excitement and bring you to the shop. But then a lot of time you go back to your...
00:14:19 Speaker 1
Safer, safer options over there. Yeah, Yeah…
Yeah, well, that's great. And like I said, I think that as you rightly said, that kind of innovation attracts the attention, especially in a very competitive market where you probably have a lot of alternatives that you can go for. But all the alternatives typically are standard. You know, you expect certain flavors that are available.
Erm, I was curious…so I had a chance to visit your factory a few weeks back. It was a fantastic visit, very different to the majority of the factories that I tend to visit in the sense of the, you know, the industrial scale and walking in with a lot of machinery and a lot of heavy equipment and so on.
What struck me when I walked into your factory was immediate whoosh of the fantastic smell of fresh fruits. I loved it. I mean it immediately put me in a good mood.
How did you guys go about setting up the factory, establishing it and building it to the scale that you've reached now, where relatively large scale in the sense of the freezer is the cold storage. Even the, the, processing that you have for the for the Pops themselves.
Talk me through a bit of that journey and how you got to where, where you are now…
00:15:29 Speaker 2
Initially, as I mentioned, we started in Umm Al Quwain Free Zone there and it was 100 square meter, 1000 square, er 100 square feet, uh, warehouse and we started, you know, increasing the machine, number of machines and the equipment there.
But after three years we thought, OK, we are getting bigger, and we deal with a lot of hotels. We are looking to export, certification is extremely important for you to get the right quality and to communicate, you know, ‘I am certified’. I have all those certifications.
And our operations in Umm Al Quwain reached a limit where you can only get HASSA (Health & Sanitation Safety Awareness Training).
And we at that time also recruited a great talent from IFCO, er, who was a factory manager.
When he came to Umm al Quwain, he said, “Listen, it's amazing, but I cannot sign on like being ISO or things. There are some standards we need to add here”. And then we said, OK, now is the time to move out.
And one thing was good because they're in the free zone. Whenever you want to ship internally you pay a certain tax 5% two point five per cent.
And then with the growth of the business, this extra payment that we are getting would rationalize renting a bigger facility. Of course, we go back to the challenge of cash flow and how can you invest the money. And then we are very lucky, I think to be in a country like UAE where there are institutions like EDB, who would come at the right time and say, OK, you know what, you have a business, you have potential. We are ready to pitch in because it's not easy to get, to get funding and financing.
I mean, the first finance I got from a bank was 21% interest and Uh, but uh, you know, you were squeezed and I want. Didn't want really to get into equity financing. We can discuss about it. I as as long as I could drive. But then yes, EDB came into the way and then it helped us finance. And now we have like you said a beautiful facility and that is future proof.
00:17:43 Speaker 1
Fantastic
00:17:43 Speaker 2
So, we are ready for the future.
00:17:45 Speaker 1
Fantastic. So up until then, you were pure equity and then you know the financing was mainly used for the expansion of the facility and the equipment and the ability to, to increase your production.
00:17:57 Speaker 2
Yes, and to invest behind assets. So, I put my savings, uh plus after some time…so, actually when I left you deliver and I started the business, I took another job. So, for three years in parallel, I was working in another company and then channeling the funds because it's expensive, ice cream is heavy on assets you need to buy freezers. Now we have more than 350 freezers between carts and freezer etcetera.
So yes, the savings went there. And then also we got access for funding in order to get assets and work on cash flow and to build the factory.
00:18:35 Speaker 1
OK, that’s great. Mazen, I'd like to ask you, what advice would you give to an entrepreneur, young or someone who's potentially, you know, starting out maybe a little bit later in life, but what would be the advice that you would give them on what they should do in order to start up a business?
00:18:51 Speaker 2
I would reply based on my, my experience. I think the first advice is that they definitely need to find a gap in the market.
Uh, because without it, it will be extremely expensive to be able to generate trial or make your product work. And if there is any niche, uh, then yes, you can, you know, try to enter and try to dominate there. So, number one is to find the gap.
Second is I think to look not only for the functional benefit, but more for the emotional reward that the product or the proposition will give, because people get more attracted and engage with an emotional proposition rather than the pure functional and the functional, anyone can copy it…
Like, our ice cream, if you get three scientists or three food technologists together for one month, they might get 70 per cent a similar product. But the way we communicate the brand, this is what will make it unique and we'll build the world.
#And, third, I think you should go with the lean startup approach as I, I mentioned don't over invest and throw your money step by step. You'll get some positive feedbacks and you grow the brand in the same way that the feedback is coming.
So those I think are the three main ones and then I think one very important check is that you should be passionate about something because they'll find a lot of challenges along the way, and if you don't have this passion, it will be very difficult to wake up next day and say OK, you know I'm going to face those challenges again.
00:20:29 Speaker 1
Right. What are your plans for COP 28? This is now obviously the Year of Sustainability. House of Pops, as you rightly said, takes that very seriously with the materials that you use with the flavors that you use and, and the natural materials that you that you used to produce your popsicles with.
So how are you, you know looking to leverage off of COP 28, leverage off of the Year of Sustainability and what are your plans over the next few months?
00:20:58 Speaker 2
So, we are very excited that cop is happening in the UAE this year and it's something extremely relevant to us. So, we are going to be present…first we're going to have our ice cream sold around COP. So that's one element.
We have contracts in place, another element we are going to be also taking part in some of the discussions that are relevant how can you be even as a startup, how can you grow a conscious brand and be environmentally friendly and also in our journey of sustainability, the packaging is just the starting point.
We are very keen on taking it to the next level.
We want to understand more our carbon footprint, sorry of the factory, of our operation, because also the gas that we are using in the in the freezers is a critical element we are using gas which is R290, it has a very low global warming potential of three compared to 2,000/2,500 of other gases.
Even the shirt and the shorts of our promoters are made from recycled plastic bottles. It's another, uh, partnership with Degrade where we are working together on that and we do a lot of recycling of the material that we are using in the factory. We discussed briefly about also using solar systems...
00:22:19 Speaker 1
Right
00:22:19 Speaker 2
...solar panels to bridge this gap of of of energy. We are facing some struggles from the infrastructure but we are trying to explore different options.
So, we are all in in this in this journey and this having cup this year gives us a lot of momentum and I think also you mentioned that you have a lot of support for those initiatives as well in EDB.
00:22:41 Speaker 1
Absolutely, absolutely, definitely working alongside partners like yourselves, looking to support more clients who are in the renewable space and the sustainability space. It's part of the mandate of EDB. So, we will be there alongside you, Insha’Allah.
00:22:57 Speaker 2
Insha’Allah.
00:22:58 Speaker 1
Now going back into, let's say, more of the future for House of Pops.
What are you looking to do, you know, I'm sure there's still a lot to do here in the UAE, but I'm sure that you also have your eye probably on the GCC, on the export market.
So, generally speaking, what do you see for the future of House of Pops and, and by the way, are you looking at other lines of products you know, is it just going to be the popsicles or are you looking at some other things there?
And then what do you plan on doing for the future on all these things?
00:23:26 Speaker 2
I think I've never been more confident about the future of House of Pops as much as I am today, celebrating five years now, one of the major milestones is that we got a check, a confidence on the brand, on the flavor, on the value that we are offering, but more importantly on the team…
We just recently offered a, a candidate the for him to come and be the head of finance and with him coming we'll have a full board ready to really drive and now we have Shahid joining us as head of finance and he has worked on Baskin-Robbins in Saudi and on Overdose and different startups. So, with this team we can deliver, I think, 10 times the revenues that you are currently delivering now it's just about you know, because you can get growth, but you need to be able to integrate it well.
00:24:20 Speaker 1
Right.
00:24:20 Speaker 2
We have also a factory that can accommodate 5-6 times the current production, so everything is ready to drive the growth…
So, how will the growth come?
Number one, so, we have three pillars. We have defined. Number one is by brand building and brand expansion into different formats. As you rightly said. So, we are going, we are going to launch our first communication real communication campaign with a film that we shot in, in, in Lebanon in October.
And we are going to increase the formats. So, initially we were very focused on the Popsicles format. Now we are developing cups…
00:25:02 Speaker 1
OK.
…pints…
00:25:03 Speaker 1
OK.
00:25:04 Speaker 2
Bites, as well - and this is going to really give us a huge room for growth in terms of the, uh, formats.
The second part is developing and growing geographically through partnerships with two kind of partners, one would be distributors to distribute in the supermarkets and second to be franchisee.
And then third is using this extra capacity that we have in our factory in order to drive private label. And this private label we are, we have already projects ongoing and we are taking part in private label exhibitions and conferences to get more businesses. Now what's our current footprint. So outside UAE, we have now Al Moayyed as a partner in, in Bahrain as a franchising partner.
And we are developing the market with them in Saudi. We have almost finalized a contract to open 80 outlets in the coming six years, part of a master franchising agreement, which going, there is a huge potential in Saudi. The same discussion is ongoing in Kuwait, Qatar and Oman, so, erm…
GCC is the first priority. The second priority will be going to Europe. We are, we have booked in SIGEP, which is the biggest ice cream exhibition in Europe, in Italy. In Rimini, we're gonna be exhibiting. There we are. We also booked in Sirha, in 2024 in France, in order also to drive that.
So, there is a huge opportunity. We're taking it one at a time. Priority number one is for the GCC before expanding further.
00:26:45 Speaker 1
That sounds great. I mean, there's so much opportunity ahead of you, very exciting times for you at House of Pops. Er, Mazen, I want to thank you so much for taking the time for coming in for the discussion today. Wish you all the success for the future and thank you so much for your time again. Thank you.
00:27:01 Speaker 2
Thank you for hosting me. It's a pleasure and I'm looking forward to have more partnership.
00:27:06 Speaker 1
Thank you.
00:27:06 Speaker 2
Thank you.
00:27:07 OUTRO V/O
“Economic Impact. Conversations from Emirates Development Bank”.