PART OF THE FAMILY

Turkey 2013 | ENERGY & MINING | INTERVIEW

TBY talks to Tarkan Kadooğlu, Chairman of Kadooğlu Group, on market share targets and operations in Iraq.

Tarkan Kadooğlu
BIOGRAPHY
Tarkan Kadooğlu was born in 1974 and began his career in trade in 1991 at Kadooğlu Group of Companies. He later studied Management off-site at Newport International University, US. He returned from his military service in 1995 to head up Kadooğlu Group of Companies at the age of 22. In addition to his current position, he is a Member of the Board at TÜSİAD.

How has your business continued to grow and develop since 2011?

In 2011, Kadoil's market share was 1%, and now it is 1.5%. We've had strong growth in the large cities of Istanbul, Ankara, Izmir, and Adana. Kadoil's branches have expanded in these cities, and we are now starting to put an emphasis on the branches with the best results. Our policy is unlike that of other companies. We only keep open the branches that have strong sales. It's very easy to create branches in this sector, but the important thing for us is branches that are exemplary. In 2011, we had 350 branches, but we shut down 50 of those stores. Our branches may be fewer in number, but our sales are going up and our stores are more profitable. In the past two years, Kadoil has improved and our plan is to continue improving in big cities. We focus heavily on advertising and the local market, and we care about our work. There is tough competition in Turkey and we must keep up. We are also planning to establish our own stations. In Turkey, the structure is to focus on good quality and cheap gas and oil. This focus is causing problems for the large companies, too. It's not enough anymore that a brand is well known. Previously, people didn't know the name Kadoil, so they would only take a few liters of petrol at a time, but now they are filling their tanks and telling everyone they know that this is a quality product. When we took over large-scale stations in Istanbul, Izmir, and Ankara, sales increased by around 3%. This shows that the system in Turkey is not focused on brand names anymore. There is an official sale price, but we increase sales by offering discounts. These discounts can be 5%, 8%, or 10%. We are also trying to improve our customer relations. Customers should feel like they are at home in our stores, and we try to maintain a family environment at our stations. We take care to ensure that our facilities are clean and we train our workers on how to interact with their customers in the best way possible. At Kadoil, we conduct special customer relations training to ensure this quality. When you combine these factors, there are many reasons to come to Kadoil. Our customers benefit financially by saving money, as well as emotionally in that they are comfortable in our stores. In a restaurant you care about quality and price; if both are good, you go there more often. That's the logic behind our company as well.

How would you assess the potential for the further growth of the retail market for petroleum in Iraq?

We are the only Turkish company in Iraq that distributes petrol. In the first stage, we had four stations in Soran, Duhok, Erbil, and Sulaymaniyah. When you put those four stations together, we sell the most petrol in Iraq. We would like to expand our operations; not just in the north, but also in the south. This will probably take one or two years. Our station in Soran is the largest station in our portfolio and has the highest sales in Iraq right now. The largest companies in Iraq are still looking for oil sources. The Ceyhan Pipeline transports oil from Iraq to Turkey, and there is a large amount of petroleum exported to Iran. Plus, in Basra, there are good export opportunities via the seaport. This shows that Iraq is going to get better soon in terms of economic production.

What potential do you see for the continued growth of renewable energy in Turkey?

Regarding renewable energy, we are not in the place we should be right now. In Turkey, the largest import item is energy. There are currently four kinds of renewable energy: hydro, wind power, geothermal, and waste-to-energy. We are expecting solar energy as well, but it's only in the planning stages right now. We don't expect the wind industry will grow much in Turkey, but geothermal energy should grow here because of our natural conditions. We are also expecting growth in the hydroelectric sector, but Turkey's bureaucracy puts up many barriers. There is also a serious problem building hydroelectric centrals because there is a dearth of skilled people who know how to build and work in these kinds of facilities. In the future, we would like to grow in the solar power sector. We won't even need to market it because the government will support it, and this is the right way to go for the future. You have to encourage investors in this sector and make it easier for them. We have heard from the Minister of Energy and Natural Resources that he is trying to do something to make it easier; if this does happen, renewable energy will improve and expand in Turkey's energy sector. This is the most important sector that can balance Turkey's import/export discrepancy since we are mostly importing energy from other countries. If we can change this, Turkey will be much better off economically.

“Turkey is going to be the biggest hub for petroleum in the world."

What are the advantages of Turkey's Mediterranean region as an energy hub?

Turkey is surrounded by sea on three sides, and has the advantage of connecting the Middle East with Europe. Turkey is a good bridge. Logistically, Turkey is in the best position compared to other Middle Eastern countries. The pipeline starting from Ceyhan makes it especially easy to transfer oil to and from other regions. There are still many programs and plans to invest there in the future. At present, there are a number of companies that are getting permission to build and operate a refinery in Ceyhan. It's good for Turkey to export to other countries. Turkey can use energy and export it to other countries. The country is integrating into the world, meaning it's very easy to do business here. Turkey is going to be the biggest hub for petroleum in the world.

What is your outlook for the oil and gas sector and where do you see Kadooğlu Group in 10 years' time?

There are currently 45-50 delivery companies, but only the most organized and powerful companies will survive. The other companies will go out of business and there will only be 15-20 companies left. There is really tough competition in this sector and there are many companies from the Arab world that want to move in. If you can own your own stations, you can survive in this sector. Still, I don't foresee any problems in this sector in the next 15 years. If hybrid cars get into the market, it might drop a bit, but not by much because we will sell electric recharging in the stations as well. We try to take things five years at a time. In five years, we will have 500 stations in Turkey and a 4% market share. We will expand mostly in the big cities. This is what we expect for Kadooğlu, and we have plans to accomplish this.