Lebanon: 100-year-old business finds ways to survive crisis

“Our business has survived many wars, but this crisis is different,” says Hani Bohsali.

Businesses that have been operating in Lebanon for more than 100 years, are today struggling to survive, with inflation at 295 per cent and a valueless currency.

In the food sector, for example, importers have to struggle as well to get a hold of fresh dollars in order to buy their products. “Doing business in Lebanon has become a very complicated process,” warns Hani Bohsali, owner & CEO of Bohsali Foods SAL in an interview with the Cyprus Mail.

Bohsali Foods, based in the Beirut suburb Bourj el-Barajneh, is a third-generation company founded in 1905. It is currently specialised in the import and distribution of foodstuffs, split into 3 main categories: Fast moving consumer goods (FMCG), mainly oils, canned foods, tea, pasta, sauces and similar items, Agrifood products in bulk, rice, beans, cereals, food ingredients for the food industry, starch, cocoa powder, flavours, soy products.

The business started as a sweets manufacturers shop, coupled with the sale of premium quality samneh (ghee as it is named now) that was used to produce this premium quality treat.

The business has survived many wars, most recently the Civil War in 1975, which was a terrible conflict.

Yet, this crisis is different, Bohsali says.

“This particular crisis is different in its economic and financial aspect. It is true that the political aspect is still similar to those we have experienced in the past.

What make this particular crisis different are the financial crisis and the fall of the Lebanese Banking System, which had been greatly praised in the past. It may be the excess praise of our banking system and the false strength of our Lebanese lira that have led us to such a steep collapse,” Bohsali says.

“In this particular crisis, we face two major challenges: The fall of the Lebanese Banking System and consequently the lack of financing tools, credit facilities and any decent tools needed for doing international business. This is particularly dangerous for a company like ours that specialises in importing as a main source of supply; the devaluation of the local currency, the lack of foreign currency and the need to go to the parallel market to fulfill our import needs.

This left our company to rely on its own resources and working capital to secure its funding needs. This is still a major challenge after more than 18 months since the crisis started as the lack of leverage hinders the growth of the business.

The business was forcibly changed into a cash business, not by choice, but by need. This has its own set of rules as well as its own set of problems: the risk of loss due to the constant decrease in value of the local currency, and and the security risk in transporting piles of cash.”

Bohsali says that his company deals in goods that, even in the crisis, have remained affordable to most consumers.

“We do not deal in high value items that have become unreachable to most people. The portfolio is still the same, although some items within this range of ‘basic’ products have also become difficult to sell. For example, Tuna, Sweet Corn and Mushrooms are still selling. But canned artichokes, palm hearts and asparagus which were once consumed frequently have become expensive for many people and their sales have dropped,” Bohsali complains.

Profit margins have decreased, of course, but the cost of major expenses is also in local currency, and so has declined in value — fuel, rental fees, customs and (partially) salaries,” he adds.

Bohsali is obliged to compete with products coming from other “cheaper” countries, and alternative markets that meet the budgets of the consumer in Lebanon today.

“These products have always been on the shelves in remote poorer areas. Currently these products have found new markets in big towns and in cities, replacing higher priced ones.”

 Consumers are spending much less. The monthly basket of the consumer has been reduced to only basic needs like food, basic medication, education etc… Many sectors have been hard hit, including clothing, cars, electronic appliances… These sectors are an integral part of the economic circle and if they are in trouble, then all the economy is in trouble.”

Bohsali does not lose hope, however.

“It is too early to account for profit and loss for the time being.

The time is one of survival, where the business owner has to limit expectations. This forces us to take only short-term decisions that will secure the well-being of the company and its employees until the external environment shows signs of improvement.

Nevertheless, I am not among the people who are planning to move out of Lebanon, even if there are more opportunities outside. We know quite well that the current survival of most of the population is enabled by foreign remittances of their families out of Lebanon. That’s a fact.

I am among the Lebanese people who have always lived in Lebanon, had all my studies, including my university studies in Engineering and my graduate studies in Business Administration in Lebanon (in the most difficult times, in the mid-80s). I have witnessed all the Civil War starting 1975 where I was a young boy, witnessed all the Israeli invasions, the different local wars, the recovery, the renaissance, the rebuilding of Beirut and Lebanon, all the political assassinations, the abysses.

I still have enough reasons to stay…”