From Turkey via Germany to USA: Halal foods supplier Nosor Baladna on path to global expansion
Escaping the Syrian war and fleeing to Turkey in 2011, Abdul Razak Kattan left roots, relationships, and memories behind to build a home away from home — literally and figuratively speaking.
Kattan gave up a food business employing 400 people and 120 vans to start afresh in Turkey where he founded the company Nosor Baladna that distributes premium oriental halal products to over 5,200 local retail outlets, and exports to the Middle East, Africa, and Europe.
In 2017, the firm expanded to Germany to serve Muslim consumers living in Europe.
“Within a year, we increased sales from 300,000 euros ($324,600) to seven million euros,” Germany’s managing director Werner Krauss told Salaam Gateway about Nosor Baladna’s 2018 revenue.
“Freekeh, an unripe harvested, dried and over open fire roasted durum wheat product, has been sold over 8 million times,” Krauss added, introducing the company’s best-selling items.
11 Arabic speaking sales representatives offer refined spices, pickled vegetables, and Syrian specialties such as makdous, small eggplants filled with peppers and walnuts.
“In Europe, [Nosor] Baladna currently serves over 1,500 wholesale and retail clients,” Krauss said. “The largest markets are Germany, France, Belgium, and the Netherlands.”
Baladna’s products are produced and halal-certified by WQR in Turkey before they are exported to Germany where they are distributed via the company’s warehouse in Grevenbroich near Düsseldorf.
“Availability is important. Since the beginning of this year, we have 99% of all products in the warehouse,” Krauss explained.
E-COMMERCE
Venturing into e-commerce determined the stock-piling. Just in time for the start of Ramadan, Nosor Baladna launched a selection of over 80 products on rewe.de, contributing to a growth burst that the company is currently managing.
“By the end of May, we’ll already have reached 60% of last year’s annual turnover,” Krauss said, as the Rewe parcel service extends the reach of Nosor Baladna’s products to rural areas that it previously had no access to.
With a 2018 turnover of 44.1 billion euros, the Rewe Group is Germany’s second-largest food retailer after Edeka, according to Lebensmittel Praxis, a food retail and industry magazine.
The process to obtain Rewe partner status took over a year. The Rewe halal purchasing manager visited the company and inspected the warehouse. The products were German food standards compliance tested — all collateral to technical, logistical, and promotional system adjustments.
Once the consumer finishes the booking by paying through the Rewe system, Nosor Baladna receives the order and dispatches the parcel – free of charge for orders of at least 29 euros. Rewe pays Nosor Baladna weekly, and the supplier deals directly with customer complaints.
In addition to Rewe, Nosor Baladna uses the Amazon and E-Bay online channels and went live with its own e-commerce shop this month.
"The payment system set-up alone was a technically challenging and complex process,” explained Krauss.
“We’ve hired an e-commerce manager and two programmers to deal with it all,” Krauss said, adding that since the opening, the company has grown from six employees to 41 team members.
A growth spurt from sales via online channels means the company has had to assess its supply to make sure it could physically fulfill online orders.
“After landing the Rewe partnership, we’ve to review our collaboration ambitions with Kaufland and Edeka,” Krauss said.
“Considering the capacity of these companies — Edeka, for example, has more than 5,000 stores — we need to be sure we can meet the postulated supply obligations,” he added.
Payment terms and cash flow is top of mind.
“Retailers only pay after 90 to 120 days. That requires a cash flow covering stock replenishment, transport, customs, and import duties.”
NEXT STOP: USA
Despite Nosor Baladna’s financial success, running the German operation wasn’t always easy.
“We learnt the hard way what product marketability is,” Krauss said, elaborating that the company paid hefty fines for using non-EU-conform labels and had to withdraw products not meeting the EU standards.
However, Krauss considers these incidents as a learning opportunity for the firm’s next expansion phase — the setup in the United States.
“It’s a very rocky road,” Krauss commented on the U.S. Food and Drug Administration accreditation in progress.
The German, who managed for four years several Al Sadhan Trading hypermarkets in Riyadh in Saudi Arabia, sees its enormous potential.
“Regarding halal, the U.S. truly is a developing country,” Krauss said.
Applying a tested model, the Nosor Baladna management has already set up an American limited company.
“Right now, we’re looking for a local fulfillment partner,” Krauss said.
If the German operation succession works out, Krauss will relocate to the U.S. in 2021 to oversee the B2B development.
HALAL BEYOND FOOD
As Nosor Baladna grew, the company searched for a financial institution that could support its regional and international expansion.
“With the KT Bank, we won an important financing associate,” Krauss said, referring to Germany’s, and the Eurozone’s, first Islamic bank.
“We were lucky to be at the right time at the right place,” the German commented on working with the financial institution headquartered in Köln, just 40 kilometers from Nosor Baladna’s site.
“The Islamic finance rules leave [more] room for product purchases,” Krauss said. “The bank virtually purchases the products on a six-month interest-free credit term.”
KT Bank AG is a subsidiary of Kuveyt Turk Participation Bank.
“Although halal is a growing market, we sometimes prefer to use the oriental premium slogan,” Krauss stated. “Often, consumers see halal just as a cruel slaughter practice, instead of a healthy lifestyle choice.”
“I don’t think German retailers hesitating to carry halal products is a political thing,” he said.
Instead, based on his numerous discussions with many purchasing managers, he feels they are more concerned about the liabilities and legalities of dealing with non-local companies.
“That’s why Baladna decided to run not only a sales force but also warehouses in Germany. We wanted to demonstrate 100% market presence,” Krauss said.
BALADNA VERSUS BALADNA
Sometimes, having a presence requires legal intervention. According to Intellectual Property Agents NJQ & Associates, Nosor Baladna filed a Qatar trademark registration application.
Assigned number 116275 and published in the Official Gazette on February 7, 2018, the application was opposed by Qatar's largest locally-owned food and dairy producer, called Baladna.
NJQ’s counter-arguments claimed a lack of alleged similarity between both marks, the client’s prior right for using the trademark “Nosor Baladna” in Qatar, and that the opponent had unsuccessfully filed an opposition against their UAE application.
The Qatari Registrar accepted the counter-statements, rejected the opposition raised, and allowed Nosor Baladna’s registration application, according to NJQ.
CARING FOR THE COMMUNITY
For Nosor Baladna, social commitment is an essential company philosophy pillar. In addition to social project promotions, the German society integration of Syrian refugees is a personal concern of company owner Kattan.
“Kattan knows what it means having to rebuild everything,” Germany’s managing director Werner Krauss said.
At the end of April, the Heinsberg Mayor, Wolfgang Dieder, was presented with 500 parcels containing a wide variety of foods. Heinsberg is a neighboring district to Nosor Baladna’s headquarters and has been hit hard by the COVID-19 pandemic.
“A crisis shows what connects people,” Krauss said. “Regrettably, in Germany, still often, a distorted image of Islam prevails.”
“We at Baladna see ourselves as ambassadors. We’ll work against this image with all our limited power.”
(Reporting by Petra Loho; Editing by Emmy Abdul Alim [email protected])
*CORRECTION: Rewe Group's turnover for 2018 has been corrected to 44.1 billion euros from 44.1 million euros.
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