You don’t often hear the story of a philosopher who had his (third) eye opened to the world while visiting the financial markets. This is exactly what happened to the Dutch philosopher Baruch Spinoza. Born in the 17th century just after the Tulip bubble crash, this giant of Western philosophy and son of a spice and olive oil merchant was enlightened when he saw how traders in the Amsterdam stock exchange didn’t care about the race, creed, or religion of the buyers and sellers. Capitalists didn’t care about any of that; money was the only thing on their minds (راس مال). It was the epitome of capitalist humanism.
This brings me neatly to one of Jordan’s oldest companies and the first beer 🍻 manufacturer in the region: General Investment. Ticker: GENI (GENeral Investments).
The reason I’m looking into this company is not to discuss the “Orthodoxy” (or “Haram-icity”) of investing in a Sin Stock1; but to see if local soda drinks manufacturers like GENI benefited from the post-October 7 boycott of Pepsi and Coca-Cola. Other than beer, GENI produces a soda brand called VITA. So, did they benefit or did their sales go flat?
Company History
Established in 1955, GENI (or as it is properly known as GIC) was one of the first breweries2 in the Middle East and the first Amstel brewery outside of the Netherlands.
In 1964 it created its local brand of beer called Petra Beer (Fun Financial Trivia: at that time, the Bank Loan to GDP ratio was less than 16% compared to today’s 102%).
It became a publicly traded company in 1987.
Company Financials
-Balance Sheet
GENI has one of the most impressive balance sheets in the Amman Stock Exchange. The Equity ratio (Equity/Assets) is 88%. This is a very comfortable and envious 🧿 financial position to be in (I hope no scheming lender lures them into a debt trap with big dreams and unplayable interest).
-Income Statement
The income statement, on the other hand, leaves much to be desired. GENI’s sales have stalled for the past decade with very little growth. Profits have been stagnant yet consistent.
The ‘sales of non-alcoholic’ drinks show a decline of 81% from 2022 to 2023.
The ‘sales of non-alcoholic drinks’ for the first half however show a near doubling with revenue increasing 120% and higher than the total yearly sale of 2023. Relatively this is promising. In absolute numbers, is not a dominant brand and market leader.
Fizzionomics
According to the Producer’s Index by the Department of Statistics, the boycott reduced production of Soda in the country drastically. It is currently below 2010 levels (population of 🇯🇴 in 2010 was 6.7 million).
Even the imports of soda (categorised under “Beverages, Spirits and Vinegar”) have dropped by 22% in the first five months of 2024 compared to the same period of last year.
It seems Matrix™ and all the other Jordanian carbonated brands didn’t catch on and did not fill up the vacant market share. Overall, Jordanian consumers seem to be moving away from fizzy drinks.
Coke and Pepsi have pushed back against the boycott claiming that the majority of the money spent on their beverages is recycled back in the Jordanian economy. However the trend is clear and the consumers have made up their minds.
GENI’s Vita has a chance for a comeback. To gain market share, they don’t just need good marketing and a competitive price. They need a good product3. If done well, they can eat up a good chunk of the market and revitalise the company’s product portfolio.
While we wait for whatever the future holds ☢️💣, we can remember Omar Khayyam’s famous line:
“اشرب فمثواك التراب المهيل”
Sin Stock are companies associated with gambling, alcohol etc. Things that are not ethical nor socially responsible. Fund managers also include Tobacco and Firearms. More here: https://www.investopedia.com/terms/s/sinfulstock.asp
Jordan had many firsts but I am no historian so cannot determine the first real brewery in the region. Here is a nice recap of beer in the Middle East: https://beerisforeveryone.com/the-cradle-of-craft-beer/
I personally didn’t like the taste of Matrix and unfortunately went back to drinking 7up (it’s like a medicine for me): and for every penny spent on 7up, I donated the equivalent amount to Gaza.
Could GENI have gotten overshadowed by long-standing competition in the market? (i.e., 13C)
More on the history of beer in the region:
https://youtu.be/gK4DMt8ARyU?si=ylvlF8erqQ_92j6L