Internationalization of Halloumi Cheese

Submitted to:
Assist. Prof. Dr. ILKER CINGILLIOGLU

International Business BUS 401

Done By:
Ngozi Anita Omenogors
Osama Ghnaimat
Faisal Said Abdelrahim Shuqom
Sadiq Muhammad Garba
Victor Adeoluwa Adegboye
Mert Gullu
Anjad Mohammad Alajarmeh
Can Ozdemir
Burak Bayraktar
Ahmet Yildirim
Mahmoud A. A. Musleh
 Table of Contents

1. Summary
Page 3

2. Company and Product

Features Page 4-5

3. International Demand on the

Product. Page 5-6

4. Modification to Fit the Foreign

Market Page 7

5. Competitor
Analysis.. Page
7-9

6. Market Entry/Penetration Strategy

a. SWOT Analysis and Four
Ps Page 9-10
b. Legal Framework...............................................
Page 10

7. Importing through Alibaba

a. Features/Ingredients of the
part Page 11
b. Payment/Transportation
details. Page 12

8. Contract of Sale
 a. Incoterms
. Page 13-14
b. Method of
Payment Page
14

9. Business
Plan
Page 15-16

10. Financial
Forecast Page 17

11. References
Page 19
 Summary

Koop Company is a company located in North Cyprus. It is famous for producing

dairy products and selling them in both Cyprus and Several different countries.

Koop was founded by 21 farmers in a village near Nicosia in 1958 under the

name of Dairy Products Company. After that its name changed to Koop. In

1962, the land of the current milk factory in Nicosia was purchased with a loan

received from the Cooperative Central Bank for the construction of the original

factory. During the first years, the Dairy Products Company operated between

January and May only, using only sheep milk. In 1968, the company was

purchased by the Cooperative Central Bank and subsequently expanded and

improved its operation under the name KOOP ST (COOP DAIRY) since 1970,

KOOP has increased capacity and expanded its product range with regular capital

investments. The company pays increasing attention to quality, hygiene and

production standards and strives to improve its technologies continuously

Today, KOOP processes 25% of the milk produced in Northern Cyprus and it is the

largest and the most comprehensive institution in the region, producing dairy

products and fruit juices. It provides products and services to the community

with 180 personnel that works 7 days a week, throughout the year, working

double shifts during the high milk seasons.

One of their famous dairy products is Halloumi Cheese. Halloumi has been a

staple in the Cypriot diet for as long as there have been shepherds tending their

folds in this classically beautiful Mediterranean landscape. Koop is currently

trying to export their famous product to Estonia, hoping to increase demand on it

and let their product go international.

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A soft, springy cheese made from pure milk, with a unique taste somewhere

between Kashkaval and Mozzarella cheese, Halloumi is more than just cheese, it

is an entire cuisine. You can slice it fresh- its perfect with fresh fruit, salad or a

favourite wine. Grill it it doesnt melt, so its great for summer barbecues. Grate

it- and pasta becomes more delicious or fry it without the need of oil or butter

and sometimes served as a meat replacement.

Halloumi comes in four different varieties: Regular mixed milk Halloumi, Halloumi

Light from mixed mild and only 12% fat, fresh traditional Halloumi made purely

from sheep and goats milk and matured traditional Halloumi made purely from

sheep and goats milk. The regular/standard Halloumi ingredients are as shown

in the table:

Techniques of Production

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The key ingredient in making halloumi is fresh milk which, according to the

Standard, CY 594/1985 is either sheep or goat or a mixture of these with or

without cows milk. The remainder materials are rennet (excluding rennet coming

out from the stomach of pigs), salt and mint, fresh or dried. Rennet is a natural

enzyme which is derived from the stomach of the young calves. Current

practices involve the use of laboratory developed rennet from microbial

elements. The milk that is used for making all cheese products should be of the

highest quality, especially with regard to its chemical and microbiological

composition, free from any impurities.

For those who are not quite familiar with Halloumi Cheese; Halloumi cheese has

been around for many centuries and the name Halloumi is automatically

associated with Cyprus but it is also popular in Greece, the Middle East and is

now made around the world.

Halloumi may have its origins in the Bedouin tribes of the Middle East who

probably found its long keeping attributes ideal for their particular way of life. Its

presence in Cyprus is lost in time, but it was definitely produced on the island

before the Turkish invasion of 1571. Before, Halloumi in brine was an essential

part of the peoples diet, especially so in the absence of any refrigeration

facilities.

International Demand on the Project

Currently, we are trying to export the famous Halloumi Cheese of Cyprus to the

European Union, Estonia to be specific. Halloumi, fresh or mature, has always

been the flagship of Cyprus authentic cuisine. For centuries, this product is a key

constituent of the Cypriot diet and has been closely associated with the culture

and traditions of the local people. You can slice it fresh- its perfect with fresh

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fruit, salad or a favourite wine. Grill it it doesnt melt, so its great for summer

barbecues. Grate it- and pasta becomes more delicious or fry it without the

need of oil or butter and sometimes served as a meat replacement.

As part of this exporting process, we are also going to be importing packaging

material from China, to finalize our product and send it to Estonia ready to be

sold in the Estonian market. Only a few companies exported Halloumi to Estonia

before and given the fact the demand on cheese is high in Estonia, we are

expecting good return.

Demand on Halloumi Cheese is considered relatively high worldwide. From the

Middle East to Europe, reaching the United States. Surprisingly, demand on

Halloumi Cheese in the United Kingdom has increased by 25% over the past few

years; which motivated a lot of Cypriot companies to start exporting their famous

product to different areas all around the world.

After some research, we have found that Estonia; is one of the top 5 countries in

cheese consumption. Many cheese companies already exist there and they have

wide varieties; not many produce Halloumi though. Cheese consumption on

Estonia is measured to be around 21 kilograms per capita which is considered

relatively high compared to the highest cheese consumption country (France)

with 26 KG per capita annually; as the graph shows:

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Moreover, Estonian people seem to be familiar with Halloumi cheese and theyve

shown to have a huge demand on it whenever its available. Problem is, its not

always there. Few Estonian companies did import Halloumi Cheese in the past

years but due to its unavailability, its prices were relatively high.

Product modification to fit the foreign Market

When exporting a product to a country that doesnt share the same language or

culture of the home country, some adjustments need to be made. Local customs,

such as religious practices or the use of leisure time, often determine whether a

product is marketable. The sensory impression made by a product, such as taste

or visual effect, may also be a critical factor. For example, Japanese consumers

tend to prefer certain kinds of packaging, leading many U.S. companies to

redesign cartons and packages that are destined for the Japanese market.

As for our product, we will make sure that the Halloumi cheese wrap/package will

have its details written in both Estonian and English language; so it is easy for

Estonians to read. Furthermore, a more appealing packaging material will be

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used bearing in mind that all other cheeses in Estonia are neatly wrapped in

fancy plastic boxes or fancy wrapping paper.

Competitor Analysis

As mentioned before, Estonia is quite high on cheese consumption; which means

a lot of companies are already competing in this field and many are getting into

business by each passing year. In order for companies to gain profit and make

success, they are obliged to deliver high quality products and have acceptable

prices. Otherwise, the company will fail and probably end up bankrupt. Some of

the well-known Dairy Companies in Estonia are: Pltsamaa Meierei Juustutstus,

Tere AS and Valio Eesti AS. We will be emphasizing further on each company in

the following paragraphs.

First, Pltsamaa Meierei Juustutstus Company is set to maintain its leading

position in cheese in 2014 with 39% value share. The company got into business

in 1992. Today, the company has become one of the largest dairy wholesalers

and distributors in offering the market in addition to the largest selection of

cheese, butter and yeast. The company is a market leader in the Estonian

cheese about 40% market share. Their best-known brands are traditional

Estonian cheese, Dutch cheese Original, Piimameister Otto, Russian cheese, and

cheese of mice and Royal Blue. In addition to dealing with the company's own

products in the marketing of imported brands, representing the world famous

juustubrnde in Philadelphia, President, Bergaderm, Frico, Galbani and many

others.

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As a second leading company, Tere AS holds 18% value share of the Estonian

Dairy Industry. Tere AS is a modern sales and production company with a wide

but efficient product portfolio, having developed from a dairy processor into a

well-organised innovative company. The main business of Tere AS is the

purchasing of crude milk, and the production and sale of dairy products. The

product list of Tere includes more than 150 high-quality products. Our most well-

known trademarks are Tere, Natural, Hellus, Haps, Merevaik, Emma, Kohuke and

Mumuu.

In third place, Valio Eesti AS has 9% value share. Valio Eesti is one of the largest

local dairy companies, which was founded in 1992 and which produces and

markets fresh dairy products and cheese made mostly of milk from Southern

Estonian farms. Valio Eesti updates its product selection every year

and manufactures more than 150 different dairy and cheese products in total.

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SWOT Analysis and Four Ps
In general, dairy products in Estonia are witnessing a huge increase in demand

over the past few years. Companies are producing new cheese each year and

cheese brands and flavours are increasing as well. In order to compete with

existing Cheese companies in Estonia, first, we must market our product

effectively. We started with our companys SWOT analysis, as shown below:

Strengths Weaknesses
Your
High Cheese Quality. First export attempt.Internal
Esteemed Company Factors
Name. Unfamiliar with the
Good Experience. Estonian Market.

Opportuniti Threats
Wide Variety of

High Demand on
Cheese Brands in External
Cheese in Estonia.
es Estonia. Factors
After conducting our companys SWOT Analysis, we are considering the four Ps
Lack of Halloumi
process to make sure that the product is appealing to consumers in terms of
Cheese availability.
Halloumi Cheese isnt
quality, price and availability. Price, Product, Place and Promotion process will
as popular in Estonia.
guide us to adjust some of the product features, distribution process, price and

marketing strategies to fit our targeted market perfectly. The nature of the

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product may not be changed but however, the price will be adjusted based on

competition. Furthermore, figuring the effective distribution channels and the

correct location of sales is essential to guarantee sales.

Pric Produ Plac Promotio

e ct e n

Entering a food and beverage product into the Estonian market has certain legal

steps. The ministry of health and food standards must approve the product; in

addition, a patent is required. Halloumis packaging must meet certain

characteristics, both to count to standards requested by the health ministry and

to have more of the Estonian people preferences. We propose a more attractive

design and higher quality packs.

Market Entry/ Penetration Method

Many firms prefer FDI to enter International markets through ownership and

control of assets in host countries, since it is going to be our first attempt to go

international, we have decided Exporting would be the best way to gain access

into Estonia market. For a start, we intend to export our products to well-known

intermediaries in Estonia. Once we get more experience and more conversant

with the market we intend to extend the distribution of our products through

various means to retail stores situated in major market in Estonia.

Selling the product

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Once the Halloumi cheese arrive Estonia, 3 well-known intermediaries will take

care of the rest (More info available on page 11). They will have delivery trucks

waiting by a location agreed upon between our company and the intermediaries,

to deliver the Halloumi Cheese to their warehouses and to place them in their

stores. Intermediaries names are Maxima, Saastumarket and Selver.

Before exporting to Estonia, packaging material will be imported from China. In

the following paragraphs we will be discussing importation details from Alibaba

such as: Packaging features and specifications, payment methods, and

transportation.

The best place to produce Halloumi would be Cyprus. It has the perfect

atmosphere and it is considered the source of Halloumi Cheese nowadays. As for

packaging the Halloumi Cheese, We are going to be importing plastic bags from

China, through the use of Alibaba.com. Alibaba is a Chinese e-

commerce company that provides consumer-to-consumer, business-to-consumer

and business-to-business sales services via web portals. It also

provides electronic payment services, a shopping search engine and data-

centric cloud computing services.

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The group began in 1999 when Jack Ma founded the website Alibaba.com, a

business-to-business portal to connect Chinese manufacturers with overseas

buyers. In 2012, two of Alibabas portals handled 1.1 trillion yuan ($170 billion) in

sales. The company primarily operates in the Peoples Republic of China (PRC),

and at closing time, on the date of its initial public offering (IPO), 19 September

2014, Alibaba's market value was measured as $231 billion. However, the stock

has traded down and market cap was $145 billion at the end of September 2015.

Features

Those plastic bags are BOPP type and they are shipped from Hebei, China from

the supplying company which is called Baoding City Zhenghui Printing & Packing

Industrial Co., Ltd.. The bags are sealed and handled through a heat seal and

theyre considered food packaging bags. They are also going to be vacuumed

and have the advantage of being moisture proof and proven to have very clear

printing on them. As for our order, shipment is going to be done through water

and delivery will take place 20 30 days after placing the order.

Payment

Payment is going to be done through Alipay. Alipay Cross-Border E-Payment

Service is a payment solution that allows buyers to pay for goods sold on

international partner merchant websites using Renminbi (RMB). Alipay will then

remit the sum in a foreign currency (one of the twelve that are currently

supported) to the international merchant in settlement. As of December 2010,

Alipay has more than 550 million users and facilitates around 8.5 million

transaction every day. Alipays payment solution provides international

merchants with access to the burgeoning Chinese marker at a low cost and also

efficiently.

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Once we place our order, Alibaba is responsible for a refund if product quality

does not meet the standards set in our contract. Furthermore, if the products are

not shipped on time as per our contract, Alibaba will refund the covered amount

of our payment.

As soon as the packaging material arrives from China, our team in Cyprus will

take care of wrapping the Halloumi Chees using the plastic bags. After that, our

product is ready to be exported

Contract of Sale (Incoterm, transportation and payment)

In every buying/selling transaction that happens internationally, both companies

agree on certain INCOTERMS in order to organize the trade. INCOTERMS are

standard sets of trading terms and conditions designed to assist traders when

goods are sold and transported. Each incoterm rule specifies the obligations of

each party and it also specifies the point in the journey where risk transfers from

the seller to the buyer. Before signing a contract or sending a purchase order,

buyer and seller must agree upon the responsibilities each party will have and

how costs and risks will be divided.

When exporting the Halloumi Cheese to Estonia were going to be using Delivery

at Place (DAP) as an incoterm. In Delivery at Place, The seller is responsible for

arranging carriage and for delivering the goods, ready for unloading from the

arriving conveyance, at the named place (i.e. quay, container yard, warehouse).

Risk transfers from seller to buyer when the goods are available for unloading; so

unloading is at the buyers risk. The buyer will also be responsible for import

clearance and any applicable local taxes or import duties.

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After packaging the Cheese, it will be delivered from Girne to Taucu, Turkey by

ship. Distance between Girne and Taucu is measured to be around 80 miles

which is 10 hours by ship, Including waiting time and port control. After that, it

will be delivered to Estonia by trucks that will be waiting by the port in Taucu.

The trip from Taucu to Tallinn, the capital of Estonia is estimated to be between

2 and 3 days, based on certain factors such as traffic, borders control and

weather conditions. Once they reach the delivery point in Tallinn, the buyer is

now responsible for the rest.

To succeed in todays global marketplace and secure more revenues against

foreign competitors, exporters must offer their customers (importers) attractive

sales terms supported by enticing payment methods. Due to the fact getting

paid in full and on time is the ultimate goal for each export sale; a suitable

payment method must be arranged in order to minimize the payment risk while

at the same time meeting the needs of the buyer. As for us, we will be using

Open account.

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Open Account sale occurs when the goods are shipped and delivered before

payment is due, which in international sales is mostly in 30, 60 or sometimes in

90 days. Due to intense competition in export markets and the prevalence of

credit extension in numerous overseas markets, foreign buyers may press

exporters for accepting open account terms. As a matter of fact, exporters who

are unwilling or hesitant to extend credit may face losing a sale to their

competitors. Exporters can still offer competitive open account terms while

considerably mitigating the risk of non-payment by getting export credit

insurance.

Business Plan

Summary & Business Description:

The story of Cyprus cheese making begins at the hills and fields of the island,

where the mild Mediterranean climate, the rich and aromatic vegetation offer the

most suitable conditions for the production of high quality milk. Koop Company

has been producing dairy products for quite a long time now and has expanding

over the years. It started with only multiple products and now, it processes more

than 25% of Cyprus of milk production and produces milk, different types of

cheeses and juice as well. The mission of KOOP is provide the highest standards

of products as required by its members, while following professional norms. At

the same time, it strives to produce a range of fruit juices, milk and dairy

products demanded by the market at world standards, to contribute to the

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economy by creating new employment opportunities and to benefit the

consumers by offering a competitive price.

Future Goals and Marketing Strategies:

Koops current goals focus on increasing the companys share in the Cypriot

market by delivering high quality products and attracting new customers through

the use of marketing techniques, and working on new goods based on customers

demand. Here are some of the goals we want to achieve, these goals are set to

be achieved in the upcoming 1-2 years, as we think its possible:

Processing up to 30% of the Cypriot market milk

Increasing profit by 5%
Exporting Halloumi Cheese and other Dairy products to different countries
Entering a new field Other than dairy and juices

The heart of any business success lies in its marketing. Most aspects of

businesses depend on successful marketing. The overall marketing umbrella

covers advertising, public relations, promotions and sales. Marketing is a process

by which a product or service is introduced and promoted to potential customers.

Without marketing, your business may offer the best products or services in your

industry, but none of the potential customers would know about it. Without

marketing, sales may crash and companies may have to close.

The success of a company often rests on a solid reputation. Marketing builds

brand name recognition or product recall with a company. When a company

reaches the high expectations of the public, its reputation stands on firmer

ground. As your reputation grows, the business expands and sales increase. The

reputation of the company is built through active participation in community

programs, effective communication--internally and externally--and quality

products or services, which are created or supported by marketing efforts.

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For the process in which we are working on exporting to Estonia we will be

using two marketing strategies. The first one is the usual, which will include

passing out posters in grocery shops in Estonia including the product name,

ingredients, price and where to find it. This strategy will make Estonian more

familiar with our product and might motivate them to try it.

The second strategy consists of free samples of our exported Halloumi Cheese.

Food tasting stations will be available at the intermediaries responsible for selling

our product. They will market our product by asking consumers to taste it both

the Cheese as it is, or grilled.

Financial Forecast Analysis

Producing 1 kilogram of Halloumi Cheese requires 11KGs of milk, which will cost

us around 12.65 Turkish Lira. In our first shipment to Estonia, we will be sending

5,000 Kilos of Halloumi Cheese, which makes 20,000 pieces of Halloumi Cheese,

each weighing 250 grams. Packaging the Halloumi will cost us around $0.005 per

piece; so 100$ for all. Bearing in mind expenses mentioned above and the

delivery expense to Estonia which is estimated to be 26,260 Turkish Liras, each

unit will cost us 4.50 Turkish Liras. After considering our own expenses and the

market prices for cheese in Estonia; weve decided to set a selling price of 7.50

TL per unit, weve also conducted a financial forecast as shown below:

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 Expected Expected Expected Profit
Years Demand Revenue (In Turkish Lira)
(In Units) (In Turkish Lira) After subtracting
Expenses
Without subtracting
expenses
1 30,000 225,000 90,000

2 44,000 330,000 132,000

3 50,000 375,000 150,000

4 56,000 420,000 168,000

5 66,000 495,000 198,000

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Weve also managed to create a website that includes our business plan and

some further explanations. The websites main purpose is to market our

exportation trade with Estonia and designed to include some information about

Koop Company.

For further information, please visit:

http://europeanhalloumi.com
http://businessplan.europeanhalloumi.com/index.pdf

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 Reference

http://www.koopsut.com/en/about-us/

http://www.valio.ee/en

http://www.investinestonia.com/en/investment-guide/legal-framework

http://i100.independent.co.uk/article/the-10-countries-in-the-world-that-
eat-the-most-cheese-revealed--gkKzi-d6vg

http://export.gov/basicguide/eg_main_043085.asp

http://www.alibaba.com/product-detail/Dairy-Cheese-
packaging_2003643716.html?spm=a2700.7724838.30.44.AgbIos

http://worldfreightrates.com/freight

http://global.alipay.com/ospay/home.htm

http://www.cyprusfoodndrinks.com/cgibin/hweb?-A=67&-V=authentics

http://europeanhalloumi.com

http://businessplan.europeanhalloumi.com/index.pdf

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