TAQA Snacks: Impact, Resilience, and Profitability Custom Case Solution & Analysis

Section 1: Evidence Brief

Financial Metrics

• Currency Devaluation: The Lebanese Pound -LBP- lost over 90 percent of its value against the US Dollar -USD- between 2019 and 2022.
• Inflation Rate: Lebanon experienced hyperinflation exceeding 150 percent annually during the case period.
• Revenue Composition: Transitioned from 100 percent local LBP revenue to a target of 70 percent export revenue in USD to cover operational costs.
• Input Costs: Raw materials such as imported nuts and packaging are priced in USD, while local labor and some grains are priced in LBP.
• Capital Constraints: Banking restrictions in Lebanon prevented the withdrawal of USD deposits, necessitating the use of fresh dollars from exports for international transactions.

Operational Facts

• Product Portfolio: Healthy snacks including oat cookies, crackers, and nut bars that are vegan and GMO-free.
• Sourcing: Utilization of Lebanese wheat and local flour mills to reduce reliance on imported grains.
• Energy Supply: Reliance on private diesel generators for up to 20 hours per day due to the failure of the national power grid.
• Geography: Production facility located in Beirut, exposed to logistical disruptions and the 2020 port explosion.
• Certifications: Pursuing ISO and FSSC 22000 standards to meet international export requirements.

Stakeholder Positions

• Soumaya Merhi -Founder-: Prioritizes brand integrity and social impact while recognizing that profitability is the only path to resilience.
• Local Farmers: Dependent on TAQA for consistent demand but struggle with rising fuel and fertilizer costs.
• Export Distributors: Require consistent supply and quality standards that are difficult to maintain in a crisis-stricken economy.
• Employees: Facing severe purchasing power loss; TAQA must provide USD-denominated stipends to retain talent.

Information Gaps

• Unit Economics: The case does not provide the specific margin per SKU in USD versus LBP.
• Competitor Pricing: Lack of detailed data on the pricing of imported healthy snacks in the Lebanese market after the subsidy removal.
• Debt Structure: Specific terms of any outstanding bank loans or private equity investments are not disclosed.

Section 2: Strategic Analysis

Core Strategic Question

How can TAQA Snacks decouple its financial viability from the Lebanese economic collapse without abandoning its social mission and local heritage?

Structural Analysis

• Value Chain Analysis: The primary bottleneck is the conversion of local operational effort into hard currency. While production occurs in a high-inflation environment, the value is only realized when the product crosses the border. The cost of energy and logistics in Lebanon acts as a structural tax on every unit produced.
• PESTEL -Economic/Political Focus-: The total collapse of the banking sector and the lack of a stable currency make traditional domestic growth impossible. Survival depends on treating Lebanon as a production hub and the GCC/Europe as the primary revenue engines.

Strategic Options

Preliminary Recommendation

TAQA must adopt the Aggressive Export Pivot. The Lebanese market currently functions as a proof-of-concept and brand-story generator, but it cannot support the cash flow requirements of a growing enterprise. Exporting is not an expansion strategy; it is a fundamental survival requirement to fund the Lebanese operations and pay employees in stable currency.

Section 3: Implementation Roadmap

Critical Path

• Month 1: Finalize FSSC 22000 certification to remove technical barriers for entry into major European retail chains.
• Month 2: Secure distribution agreements in Saudi Arabia and the UAE focusing on specialized health-food retailers.
• Month 3: Transition all procurement for export-bound products to a dedicated USD account managed outside Lebanon to ensure supply chain continuity.

Key Constraints

• Logistical Volatility: The Beirut port remains a single point of failure. Implementation requires a contingency plan for trucking goods to Tripoli or using air freight for high-margin nut bars.
• Working Capital: The gap between paying for raw materials in USD and receiving export payments can span 90 to 120 days. Securing a revolving credit line from an international impact investor is mandatory.

Risk-Adjusted Implementation Strategy

The strategy prioritizes the GCC market due to geographic proximity and high demand for healthy, plant-based products. To mitigate the risk of energy blackouts, the production facility must transition to a hybrid solar-diesel model within six months. This reduces the sensitivity of the unit cost to global oil price fluctuations and local fuel shortages.

Section 4: Executive Review and BLUF

BLUF

TAQA Snacks must immediately transition to an export-first business model. The Lebanese domestic market is no longer a viable primary source of revenue due to hyperinflation and currency collapse. By targeting the GCC and European markets, TAQA can generate the USD cash flow necessary to sustain its Beirut operations. Success depends on maintaining the Lebanese brand narrative as a premium health-conscious offering while physically insulating the supply chain from local infrastructure failures. The local market should be treated as a marketing investment for brand authenticity, while 80 percent of volume must be exported within 12 months to ensure solvency.

Dangerous Assumption

The analysis assumes that the Lebanese brand origin remains a positive differentiator in international markets. In the premium health segment, political instability in the country of origin can lead to concerns regarding supply reliability, potentially causing foreign retailers to de-list the product despite high consumer demand.

Unaddressed Risks

• Talent Brain Drain: The probability that key management and production staff emigrate from Lebanon is high. The consequence is a total loss of institutional knowledge that USD stipends may not prevent if physical safety or quality of life continues to decline.
• Regulatory Protectionism: As TAQA enters the GCC, it faces the risk of new non-tariff barriers or local content requirements that could favor domestic Saudi or Emirati healthy snack brands over Lebanese imports.

Unconsidered Alternative

The team did not fully evaluate a complete relocation of the manufacturing core to a stable regional hub like Cyprus or Dubai. While this contradicts the social mission of supporting Lebanon, it eliminates the energy, currency, and logistical risks that currently threaten the existence of the company. A dual-entity structure—where IP is held abroad and Lebanon acts as a contract manufacturer—would provide better legal protection for the founder.

Verdict

APPROVED FOR LEADERSHIP REVIEW