When I started to this blog, I wanted to give a name that is powerful and can reflect the spirit of whole blog inclusively, therefore I decided on ‘From Famagusta’ . Because, many of my thoughts and big part of my personality is shaped in this city, where I spent 4 years at my university education.
It is not possible to skip the story of Oza Coffee while living in this city, because everyone drinks Oza specially in the morning. It is known for its dark roasted turkish coffee among the people. The brand is very much associated with Famagusta, in other words it is part of the city culture. It is possible to observe this fact from the market shares of Oza in other cities of Cyprus. This is a unique place where each city has different coffee taste and culture, therefore different brand preferences.
Last spring, I made a project in the international business course with two classmates of mine about Oza Coffee, its market share, company history and structure, a close look to their international operations and how the company is getting affected from Cyprus problem. I remembered this project, when I wanted to talk about the story of Oza in this blog. I was happy to find it on my laptop, and read it once again after one year. It is really influential and really deserves to be shared. But, when I finished my reading, I realised that it is around 4,000 words. definitely a long one!
I tried a bit to cut it, or restructure it in a shorter way. In the end, I decided that the story will make sense fully, only if I share the whole 4,000 words. Those words are not only talking about the company, but also talking about the history of coffee, a bit of politics and the unique situation of northern part of Cyprus. So take the warning, it is long. But if this introduction lines mobilized your curiosity inside your heart, just follow it, take your time and enjoy the story !
Nowadays, the coffee drinking habit is an important part of turkish culture. Of course it is not only popular with Turks, but widely being used in every corner in the world. We hear a lot of comments like ‘ I didn’t drink my coffee yet, i cannot be productive’ . There is a Turkish saying very common which is ‘ bir kahvenin kırk yıllık hatrı vardır’ which means one cup of coffee brings 40 years of respect to each other. An American novelist Gerturd Stein says that “ Coffee is a lot more than just a drink; it’s something which is happening. Not as in hip, but like an event, a place to be, but not like a location, but like somewhere within yourself. It gives you time, but not actual hours or minutes, but a chance to be yourself, and have a second cup.” (Arata, 2014, pp:1)
Nowadays, it is a very important element of culture that is a reason for addiction, new friendships, having a good conversation, waking up in the morning or just enjoying your moment. In every aspect, we believe that it is important. In this essay, we will have a close look at coffee from Oza Kahve operations in Famagusta, Northern Cyprus. We are going to analyze the company, their marketing activities, exports/imports, the strategies they are using to keep the market share, challenges and advantages that they are facing from their environment.
We interviewed Umut (second generation) and Ergun Oza (third generation), a second and third generation family members for this essay to get an insider view to the company. Furthermore, we used some resources from some articles on the internet as well. In the main discussion part, we will explain the company with a special focus on their international business activities that includes export and import from Northern Cyprus. According to companies website, they started to export their products to England in 1995 and recently to Turkey. At this point, I would like to point out that it is very important and a great success that Oza is doing International business that successful in very special conditions of Northern Cyprus. We will also talk about their future plans, how government policy affects them, how they are competing with their rivals in the North Cyprus market, and many more details. In the last part, we will conclude our essay with the suggestions for the future of Oza, the coffee sector in North Cyprus and world.
Before going into the background of Oza Company, I would like to give some background information about coffee. The history of coffee goes at least as far back as the 10th century, with a number of reports and legends surrounding its first use. The native (undomesticated) origin of coffee is thought to have been Ethiopia. The earliest substantiate evidence of either coffee drinking or knowledge of the coffee tree is from the 15th century, in the Sufi monasteries of Yemen. By the 16th century, it had reached the rest of the Middle East, Persia, Turkey, Horn of Africa, and Northern Africa. Coffee then spread to the Balkans, Italy and to the rest of Europe, to Indonesia and then to America.
The coffee plant, which was discovered in Ethiopia in the 11th Century, has a white blossom that smells like jasmine and a red, cherry-like fruit. Back then, the leaves of the so-called “magical fruit” were boiled in water and the resulting concoction was thought to have medicinal properties.
Coffee spread quickly through the Arabian Peninsula, and for 300 years was drunk following the recipe first used in Ethiopia. In the 14th century, a new method of drinking coffee was discovered: the beans were roasted over a fire, ground and then boiled in water.
In the mid 15th century, coffee cultivation reached Yemen. Yemen’s climate and fertile soil offered the ideal conditions for cultivating rich coffee harvests. With its new brewing method and aroma, coffee’s renosounce spread even further a field.
When coffee reached to the Ottoman Empire, it became that much more popular to an extend to affect the social life with the newly opened coffeehouses. In 1623, An attempt to ban coffee happened, because the Padisah (Sultan) thought that the opposition gained strength in coffee houses. ”.After Murad IV claimed the Ottoman throne in 1623, he quickly forbid coffee and set up a system of reasonable penalties. The punishment for a first offense was a beating. Anyone caught with coffee a second time was sewn into a leather bag and thrown into the waters of the Bosporus..” (Blotnick,2013) .
Coffee is a popular beverage and an important commodity. Tens of millions of small producers in developing countries make their living growing coffee. Over 2.25 billion cups of coffee are consumed in the world everyday. Over 90% of coffee production takes place in developing countries, while consumption happens mainly in the industrialized economies. The top three producers of coffee are Brazil, Vietnam and Columbia.
Coffee is worth over $100 billionworldwide. Arabica and Robusta are the two main commercially grown and sold coffee beans. Arabica is the more common type of bean grown (70 percent of coffee is Arabica), and it’s considered more flavorful. Robusta is hardier and cheaper, most commonly seen in instant coffee jars.
Arabica is the more common type of bean grown (70 percent of coffee is Arabica), and it’s considered more flavorful. Robusta is hardier and cheaper, most commonly seen in instant coffee jars.
Coffee is a popular drink among Cypriots as well since many long years. Coffeehouses were the only centers of socialization for people in many villages. Unlike today, The production of Coffee had more simple technic, without a brand name and a mass production with machines.
BACKGROUND OF OZA KAHVE
Oza Coffee is operating in Business to Business Market. According to Oza Kahve official website information, The company was founded on March 28, 1984 by Ergun OZA. OZA Coffee’s first workshop was an area of 15 square meters in the year of establishment. One coffee roster machine that was freehand and one coffee grinder existed in this workshop. Paper bags were being used. Oza Coffee was producing its product and serving people under hard conditions.
Oza Coffee enlarged its workshop area to 30 square meters from 15 square meters with self-denying works. One more coffee grinder was bought so two coffee grinders existed and instead of paper bag. OZA Coffee had continued to work with this system for three years, and after that the building’s area was enlarged to 70 square meters.
In addition to this new building, it was going on to serve the domestic market with a factory conveyor system, four coffee grinders and coffee roster machine, wich has a 30 kg. capacity. OZA Coffee started to serve with a fully automated packaging system which was more modern and more practical in 1992.
As a result, supply and demand started to exceed company’s expectations, they started to reap the rewards by starting to export to the LONDON (UK) market.
Manufacturing plant was enlarged because of the increasing demand for OZA Coffee and the rising level of work. In 1995 OZA Coffee laid the foundation of factory, that is serving now, after 11 years of the beginning of production.
Commenced a building on the facility, which was laid on the foundation, as 1300 square meters covered area on the 2000 square meters land. Front offices, board rooms and dining hall, which are the antacid and antibacterial apoxy seam filling, which are the requirements of ISO 9001:2008-ISO22000:2005. Production and stock facilities consists of 1000 standards. Which enabiling us to a daily capacity (8 hours) of 3500 kg. per day.
OZA Coffee manufactures its products and serves people under hygienic conditions and automation system which are acceptable to EU standards, in this facility. Additionally, I would like to point out that all these operations are happening only with 12 people who is working for the company.
According to the information that is written in the official website of the company their products are as followed;
Espresso and Filter Coffee
3 in 1 Instant Coffe
2 in 1 Instant Coffee
100 gr. Turkish Coffee
100 gr. Light, Medium and Dark roasted Turkish Coffee
500 Gr. Turkish Coffee
500 gr. Classic Dark roasted Turkish Coffee
250 Gr. Turkish Coffee
250 gr. Medium and Dark roasted Turkish Coffee
1000 Gr. Turkish Coffee
1000 gr. Classic light roasted, dark roasted and gold Turkish Coffee.
Capacity and Product Report
The production rate of our company annually is 260 working days. Production capacity and information is listed below.
Annually, 450,000 tonnes of Turkish coffee, 650,000 tonnes of Espresso, 170,00 tonnes of 2in1 and 3 in 1 instant coffees can be manufactured at our factory. The Arabica coffee beans that are used for the Turkish coffee products are imported from Brazil and the 2in1 and 3in1 instant coffee products contain beans imported from Germany.
Oza Dark Roasted Coffee
This product is roasted for a long period of time and has a very aromatic smell and flavour. When Ergun Oza Coffee LTD was first established, the only product that was produced was the Classic Oza Turkish Coffee. Oza Coffee was the first to introduce dark Roasted blend coffee to TRNC. Currently, dark roasted coffees are packaged in 100 gr aluminium packets, 250gr tin cans, and 1000gr& 500gr packets in zip locked special packets.
North Cyprus Market
Oza Kahve Company has 42,5% share in the coffee market of Northern Cyprus. They have a promotion policy to protect their market share. For example, they are offering their customers free carton cups and one kilogram free for each 10 kilogram purchase. Additionally like Coca-cola, they are providing free nameplate, umbrellas with Oza logo and small repair supports to their customers. These actions are implementing to market as part of their differentiation strategy. Because there is no other coffee company that is providing the same things. This enables the company to keep and increase its market share in North Cyprus.
According to Ergun oza, some of their rivals are also selling carob products and dried-fruits. In other words their operations are split to different products. This puts them to a disadvantage for not focusing on coffee and increasing their market share and the quality of the product that they are providing. However, Oza Kahve is only operating in the coffee sector. This means they are able to focus on their coffee products and ensure that they are providing the best quality of their product in the best possible conditions. This is an obvious advantage for the Oza Company.
Umut Oza informed us about a very first move from a Cypriot coffee company that is happening which is the exciting news about , Oza coffee-house that will be opened in Ankara and Girne. Both will be operated as franchise. Girne will open in 10 days, Ankara will be after 1 month. The Coffee house that is going to be opened in Ankara will create several positive effects to company. For example, this will contribute to brand awareness and to their market share since consumers will have the opportunity to taste all products from the store. Additionally, the company will be able to Access the market more directly. This will give a chance and opportunity to increase exports to Turkey. Moreover, the company used customization strategy when designing these two stores. They found out that, the coffee shops in Turkey are usually in a restaurant-cafe concept, which has food as well. So, they adapted their store accordingly. But in North Cyprus, the coffee house will have a self-service concept with only coffee varieties.
Also, we can say that Girne branch will affect Oza Kahve’s market share positively in North Cyprus. Since its less-known in Girne, this move will enable them to increase sales in the Girne region.
According to Ergun Oza, a third generation member of Oza family, the company became Lacimbali (a company who sells coffee machines) distributor in North Cyprus, and selling of these machines will start very soon in North Cyprus. Also he shared his dream about opening ”Oza Barista School”, an initiative that will train people to become barista. Because during the efforts for opening the coffee-house in Girne, he noticed that there is a shortage of barista’s in the labour market of North Cyprus.
We got classified information from the second generation director of Company, Umut Oza. Unlike the general belief, ‘ there is no embargo for TRNC’ he stated. He added that the embargo is in our minds. North Cyprus has a unique economic and political condition. It’s a country that is only recognized by Turkey. Therefore, all flights and trade is taking place via Turkey, in other words Trade is indirect with the rest of the world and this is creating extra costs to companies who wanted to involve in export-import business. This is the external factor that is affecting the companies about exporting and importing. The internal, and may be the most influential factor is the fact that companies in cyprus is not giving enough attention to their packaging and rules and regulations of other countries including Turkey.
Oza Kahve is exporting its products to Turkey, United Kingdom and to Lebanon. Additionally the coffee beans that they use in their productions are coming from Brazil according to the information that we received from company officials. Umut Oza said that, a ship from Brazil to Turkey comes for 1200 dollar and from Mersin Port to Famagusta he is paying 1000 dollar more for his purchase. It is obvious that this creates extra cost to company and causes expensive prices for North Cyprus Market. On the other hand, because Turkey is in the customs union with EU, it creates extra complications about exports, because we are not part of this single Europe Market as North Cyprus. He gives another example as well to this from his Business Negotiations for further export to Germany. The company is facing specific duty a tariff barrier because of the rules of German government. Mr. Oza stated that there is a 2,19 Euro tax for Turkish Coffee and 4,78 Euro tax for Instant coffee per kilogram, for the companies producing outside of EU market. This kills its ability to compete, and without being a EU member or a member of Custom Union it is not really possible to enter to Germany Market.
Umut Oza said that his company made export to Lebanon possible by recording products as Turkey Origin. That created advantage and easiness for entering into the Lebanon Market.
The government policy in North Cyprus is not fully protecting local producers against foreigners. Also, slowness of bureaucracy affects negatively the companies in general and Oza specifically. Additionally, it is very well-known fact that, our government is mostly focusing on salary payment of civil servants. They are too busy to satisfy their own group of people which is called corruption. Therefore, unfortunately there is no policy towards companies, economy and to the international trade in general that we can talk about. Umut Oza said that ‘ I wanted to express my complaints about how the government lack of control and audit the activities of companies. He said that he want government officials to come and check what they are doing, and if he is doing something wrong, they should shut them down. He added that we are doing everything according to European standards, but those who do not have standards and who do not have hygienic work, production factories are continuing to operate as well and that is creating an unfair situation.
COFFEE CULTURE IN NORTH CYPRUS
There is a very famous saying in our culture which is ”bir kahvenin kirk yillik hatri vardir”, which means that a cup of coffee creates respect to each other for forty years.
Oza Kahve started its operations in Famagusta in 1984. Therefore, people of Famagusta have a strong habit of drinking double roasted Oza turkish coffee, which means they are not preferring other coffee brands at all. This gives great market share in Famagusta to the company which is more than 90 percent according to the company director. But in the capital city, Nicosia people mostly prefer lighter coffee with single roasted. They are mostly preferring Sultan, Con and Ozerlat. Kyrenia, are the same as Nicosia, they prefer single roasted coffee but Con is the more popular one there.
EXPORTS AND IMPORTS OF OZA- Doing International Business in North Cyprus
Oza company process 360,000 kg coffee beans for local market use and 28,000 coffee beans to foreigner markets.
Oza kahve is exporting its products to England since 1995. In 2015, The company started to export to Turkey and Lebanon. According to 2015 data figures that we received from the company during our interview,last year 10,221 kilogram processed coffee exported to Turkey, Lebanon and England. Interestingly, Lebanon had the biggest part in this figure with 6000kg coffee.The rest 4221 kg is exported to Turkey and England in the same year.
Oza coffee company is working with a foreign trade representative, an export agent in Turkey for this export operations, their main cooperation is about finding new markets in middle east, which partly achieved by Lebanon export. We learned in our MGMT308 course that, these types of exports are called Indirect exports .
Also, Oza Kahve is negotiating right now with companies from Slovenia, Germany and Macedonia, for further export of their products.
Mr. Oza also stated that the corruption and slowness in the bureaucracy of Mersin port creates problems for their exports. But he is lobbying and explaining these things to the Turkey officials during their visits.
Umut Oza told us that, Every country has their own different food quato and different standards, rules and conditions for the products that will enter into the country. He stated that, it is very important to understand this facts for making a successful international trade operation. Oza company started to adapt their standards and packaging accordingly to be able to continue to sell their products. For example, as we stated in the Cyprus Problem part, because of the specific duty for companies that are based outside of EU, it is not competitive to enter to Germany market for Oza. Fortunately, they were able to get Turkeys origin permission which enabled them to enter into the Lebanon market.
Oza company attends to many fair organisations for presenting and promoting their products to different nations and cultures. These fair organizations are:
- TRNC INTERNATIONAL CAREER OPPORTUNITIES FAIR (TRNC)
- Iraq Agrofood 2013 (IRAQ)
- Istanbul Worldfood Exhibition 2013(TURKEY)
- Tüyap Adana Gıda Fuarı 2013(TURKEY)
- International Career Opportunities Forum and Cyprus Turkish Products Exhibition(TRNC)
- EMITT FAİR(TURKEY)
- Vakantie Beurs Vakdag Holland 2013(NETHERLANDS)
- Iraq Agrofood 2012(IRAQ)
- Esidef 4 İş Geliştirme Platformu(TURKEY)
- ITB Berlin 2012(GERMANY)
Human Resources, Marketing And Social Media.
Oza Kahve is strong in the city that they born. In Famagusta, more than 90 percent of the market is dominated by Oza Coffee according to Umut Oza.
‘ Word of Mouth Marketing (WOMM). Isn’t this really the original social media platform? I grew up with the famous Faberge commercial that showed a woman who “told 2 friends” about the product and how “they told 2 friends… and so on…and so on”. Hasn’t WOM always been a powerful way to influence business results? ‘ (Whitler, 2014, p:1). As we can see from a forbes article, word of mouth marketing is always the most effective one especially in the case of Cyprus. We can say that this is a strong reason about their dominance in Famagusta and lack of market share in the other parts of Cyprus. Because, their influence area with informal family and friend network is limited to Famagusta.
Also partly because of word of mouth and their wrong advertising, there is a strong perception in North Cyprus that, Oza company is only producing dark roasted coffee, and nothing at all. This creates a decrease in demands for Oza Products. In fact, they have single roasted turkish coffee and 3in1 varieties aswell.
Although they started to produce 3in1 instant coffee varieties for 2 years, it is not possible at all to find these products in Nicosia and Kyrenia. Umut Oza answered this question with the problems in their organizational structure. He stated that, one person cannot do everything properly, and it is a need to organize better marketing activities with young talented university graduates. For this reorganization he is waiting for his son to finish his education while training him inside of the activities of the company. This situation is a very common problem of the companies in Northern part of Cyprus. Because most of them started as family companies, they dont have proper management structure, therefore they are not able to use their capacity fully. Mr Oza said that, this is a big weakness to our company that is preventing a growth in our market share in the island.
Additionally, they are employing 12 people in the company. Mr. Oza said that ‘we are doing the best to ensure that our employees are feeling themselves part of a big family, here we apply participatory decision-making by asking the opinions of other members of company as well
In this part you will find the SWOT analysis of Oza company, that we found out after our research about the company.
SWOT ANALYSIS OF OZA COMPANY
- Traditional Turkish hospitable
- Turkish Brand
- Family company
- Workers feel like family members in company
- Participatory decision making
- First company in Cyprus that produce 3in1 coffees
- Pure nature products
- Using of Social Media
- Marketing problems in all Cyprus
- Problem in Organization schemes
- People know Oza coffe produce only dark roasted coffees
- Importance of advertising
- Increasing of coffe culture in Cyprus
- Large coffe consumption
- Reach the potential people whose priority is tea
- Increasing of young population who likes coffee
- Decreasing cost with high technology
- Boycot of foreigner brands for some reasons.
- Importing foreign coffe products
- Increasing Coffe raw materials prices and it’s cause increasing of cost of products in coffe
- Competitors offers new products
- Tending to healthy nutrition and demand for caffeine-free products
- Global economic crisis
In conclusion; Oza Kahve that began its operations in 1984 is a success story that is happening in Famagusta. It is a brand that is well-known in its home city and exporting its products to three country right now. Additionally they are the first who produce instant coffee in Northern Cyprus and first Turkish Cypriot company that enters to the coffee-house sector. However, they have the same characteristics with most of other companies in the island in terms of weaknesses about organizational structure, and this is something that prevents them from growing more. What we can say as a suggestion is, Oza Kahve will grow immediately, if they redesign their organizational structure.
-02 MAY 2016 INTERVIEWED WITH UMUT OZA AT THEIR FACTORY
-04 MAY 2016 INTERVIEWED WITH ERGUN OZA IN EMU
-Arata, Emily (2014) ‘ 25 quotes about coffee from History’s most caffeinated thinkers ‘ May 1 2014 http://firstwefeast.com/drink/2014/05/25-coffee-quotes-from-historys-most-caffeinated-thinkers
Downloaded in 9 May 2016
-Blotnick(2013)’ Five Historical Attempts to Ban Coffee ‘
http://mentalfloss.com/article/12662/5-historical-attempts-ban-coffee Downloaded in 6 May 2016,
-Whitler, Kimberly A. (2014) ‘ Why Word Of Mouth Marketing Is The Most Important Social Media ‘ at Forbes, july 17, 2014.