The factory is clinically clean and the aroma of ground coffee quite intoxicating. In the hills above Jdeideh the $6.5 million production center for Najjar coffee might easily be taken for a hospital to judge from the blue-coated staff and protective headwear.
Here vast machines, some designed by Lebanese engineers and built in the U.S., can deliver a daily output of 40 tons of roasted beans and ground coffee. The firm exports 20 percent of output and comfortably leads the market in Lebanon, accounting for an estimated one-third share.
“We even export 600 kilograms a year to Brazil for Lebanese expatriates. We’re so proud.” said Georges Najjar, general manager of the 41-year-old family business.
Sales are growing by 5-8 percent a year, said Mr. Najjar, who believes that consumer preference is the ultimate measure for the quality of his coffee.
“Our coffee passes the rigorous quality tests of the European Union and is exported there,” said Mr. Najjar, as he sipped a sample of the latest batch at the laboratory where tests are carried out for density, moistness levels and granular structure. “Our business is like the wine business. Consultants have offered to come and do quality certification, such as ISO 9002,” he said. “The process involves a mountain of paperwork, certifying that even if you make a bad product it is well-structured and managed. I refused.”
Thereisa Khreich, head of control, assigns an 80 percent mark to the coffee after checking for qualities such as brew appearance, taste and body. The coffee is a “classique,” priced at LL2,500 per 200 grams, the standard Najjar coffee. Soft gourmet, a grand cru made of Costa Rica, Columbia supreme, Cerrado, Santa Domingo and Ethiopian Sidamo blend sells for LL4,500.
Najjar also offers a wider variety of roasted coffee at gourmet kiosks set up in 25 supermarkets around the country where beans are freshly ground.
“I was reading about how gourmet coffee shops took off in the U.S. in the late 1970s. There is a social interaction element that makes our shops successful,” said Mr. Najjar. More expensive lines of coffee are also offered at the company’s Maison du Cafe outlets in Zalka (complete with fortune teller three times a week), the Bristol Hotel and lately in Zahle.
“Investors come to me wanting a franchise for Maison du Cafe, but I’m not ready. Franchising needs a culture,” Mr. Najjar said, reckoning that the new downtown, universities and crowded shopping areas like Furn al-Shubbak would be candidates to start the franchise in six months.
Much of Najjar’s development, he points out, took place during the war and without the help of the government, including the launch of Lebanon’s only Turkish coffee-maker, designed and manufactured by a subsidiary of Najjar. The firm has sold around 10,000 machines since 1988, mostly abroad.
Najjar’s quality production and the investment made in personnel, marketing and manufacturing make the firm, and similar Lebanese companies, larger investors than their foreign counterparts who came to Lebanon, Mr. Najjar said.
He is concerned about ethical competition and sensitive to the fact that his product is sold to thousands of small shopkeepers, a customer base he worked hard to maintain but which is vulnerable to larger supermarket competition.
The government, he believes, has bent over backward to attract foreign investment, allowing Spinneys to sell basic items such as powdered milk below cost and McDonald’s to import potatoes.
“What about the Lebanese industrialists who pay astronomical energy costs and the corner shop owner who makes his living selling the same products Spinneys dumps?”
Mr. Najjar, who paid for the two-year old Najjar plant largely from the firm’s own money, realizes that he has to be more innovative to grow further. He is open to new methods of financing, such as raising equity, but is reluctant to reveal his expansion strategy.
He pointed out that Starbucks the Seattle coffee company which made fine coffee popular with a new generation raised $350 million when it went public and used the proceeds to leverage another $2 billion in debt to open around 1,000 coffee shops.
If Najjar was in a country with entrenched and sophisticated financing and legal systems, it would have been another Starbucks, says one banker. The firm is not short on innovation.
When Najjar entered the coffee business in 1957, the market was wide open and full of distributors. The Brazilians even had their own depot at the port and imported coffee directly.
Mr. Najjar’s father, Michel, was the chief financial officer for Achkars, merchants of legendary success in the Arab world who dominated coffee distribution in the Middle East. A ship belonging to the family which was seized by the Germans in the Mediterranean during World War II is rumored to have persuaded Brazil to declare war on the Third Reich.
Personal differences weakened the Achkars and the regional market became a free for all. Michel formed a company importing expresso machines up to 1967 then went into importing and roasting coffee beans.
Coffee vendors in Lebanon were relatively few then, buying their own roasting equipment and more expensive grinders.
Michel Najjar started offering free grinders to shopkeepers who used his coffee. “It was a marketing coup. We boosted sales and offered roasted coffee to any retailer who wished to grind coffee,” said his son. The market expanded from a few hundred shops to thousands.
Around 1976, Najjar introduced vacuum-packed and ready-ground coffee. Research has since been aimed at finding ways of producing and packing the coffee to keep it fresh longer after opening.