By TBY | Azerbaijan | Jun 26, 2014
Karat Holding was established in 1994, one year before the Azerbaijani economy started to take its first steps toward recovery after the Nagorno-Karabakh conflict destroyed one-third of the country’s territory […]
Karat Holding was established in 1994, one year before the Azerbaijani economy started to take its first steps toward recovery after the Nagorno-Karabakh conflict destroyed one-third of the country’s territory and left over 1 million internally displaced persons (IDPs) and refugees. Karat Holding started as a family business that traded agricultural commodities such as wheat, grain, barley, corn, and flour. A few years later, the owners saw an opportunity to process these commodities in Azerbaijan, and changed the focus from importing to processing, which was the first step in the development of its wheat flour production line.
Reflecting on the changes in the population’s eating habits over the past two decades, Taleh Gasimov, Karat’s Managing Director, notes that “Starting at around the time of our independence, we noticed a growing consumption of pasta, while the per capita consumption rate increased by over 80%. Pasta is a new product; people who used to eat bread and cheese nowadays prefer to eat pasta with various sauces. I think that it is part of globalization and the diversifying effect on people’s eating habits. Even if there is a stable rice tradition, pasta will still continue to gain ground in this market, and I know that we have made the correct decision.”
Karat Holding has contributed to the growing awareness of pasta in Azerbaijan by diversifying its product portfolio, sold under the Karmen brand, to include specialty pastas like cellentani, in addition to the more traditional shells and fusilli. Furthermore, it has introduced its pastas to regional markets like Georgia and Turkmenistan, and even to certain African and Asian markets. In its efforts to improve and expand the business, the company lowered production costs by streamlining production and established an effective marketing strategy. Internationally, Karat aims to promote its product in parallel to the “Made in Azerbaijan” brand, and to establish both brands as reliable and of high quality. Already, awareness of the quality of Azerbaijani products is increasing in markets such as West Africa, the Philippines, and Central Asia. Karat has also established milling facilities abroad in Georgia, where 30% of the flour is produced by, or imported from Azerbaijan, to bring production closer to the markets in which it operates.
Domestically, the company has expanded its production to include related goods, such as flour, groats, and animal feed, which is a by-product of the wheat grinding process. Around 25% of the grain ground for pasta making can be used as animal feed, which in Azerbaijan is known as bran. Bran has become so popular in fact that it is now one of Karat’s three most popular products. The company prefers to focus its bran sales on the local market, for logistical reasons, and also because it chooses to protect local farmers by offering them affordable and high quality feed. According to Gasimov, “It is very good for the poultry and meat industries. The more we sell here, the lower the cost of beef and chicken.”
Regarding the company’s future plans, Gasimov intends to remain focused on agri-business, the sector in which it is already well established. Accordingly, it plans to enter a new market, such as Ukraine, in the near future, and to add a second brand to the product portfolio. What’s more, now that the holding has modernized all its mills in Azerbaijan to bring them up to international standards, the company will shift its attention to modernizing its facilities in Georgia.
The success stories of Azerbaijani companies like Karat Holding, which are rapidly expanding in foreign markets, are all the more impressive given the fact that, until recently, Azerbaijan had met most of its food need through imports. Bolstered by resolve, a focus on quality, and the latest technologies, Karat Holding will undoubtedly make a name for itself in the Caucasus region and beyond.