Your business development partner in Turkey! 

 With Turkey's economy already showing signs of recovery, a number of major players in the food and drink sector have started to announce future expansion plans, as discussed in BMI's recently published Turkey Food & Drink Report for Q3- 2010. We stand by our core view that Turkey will experience a healthy macroeconomic recovery in 2010. As a result of the latest data, we have revised up our full-year 2010 Turkish growth forecast to 4.9%, reflecting our long-held view that Turkey is one of the best positioned economies in Europe to recover quickly and strongly after the global recession.

Bearing this healthy growth outlook in mind, in March 2011 Nestle Turkey announced plans to invest TRL75mn in the Turkish market. According to Hans Ulrich Mayer, board chairman for Nestle Turkey, the company posted an annual turnover of TRY1bn for 2009, an increase of 15% over the year before. Nestle has been present in the Turkish market since 1909 and now has 400 products and more than 40 brands, spanning 11 product categories, having introduced more than 50 new products into the market in 2009 alone. Given this strong track record, particularly during the global economic downturn, it is easy to see why Nestle continues to prioritise the Turkish market.

Also in March 2011, Turkey-based food and drink giant Yildiz Holding, owner of the luxury chocolate company Godiva, announced that it is contemplating initial public offerings (IPOs) for some of its core units as it continues to seek out expansion projects. Yildiz benefits from a strong portfolio of food and drink assets headed up by ownership of Ulker, one of Turkey's leading food companies, with assets across the confectionery, dairy and soft drink segments. While the firm has thus far only stated that each of its units has an IPO strategy and has not disclosed which of its units will be among the first to IPO, BMI believes Ulker (already publicly traded) will continue to draw in a large chunk of Yildiz's domestic capital expenditure in 2010.

In further Ulker news, in January 2011 the firm revealed that it was in talks with US-based firm McCormick & Company regarding a possible partnership in the Turkish market. McCormick produces a range of flavouring products, including spices. According to Ulker spokesperson Zuhal Seker, the two companies are discussing a possible distribution agreement. Ulker has reached similar deals in the past with American cereal and convenience food producer Kellogg's and Swiss food company Hero as a means of diversifying its brand portfolio. With demand growing for new flavoring products, this partnership could place Ulker in a strong position to capitalise on this rising demand.

As arguably emerging Europe's most distinct and promising F&D market, Turkey's hefty population (about 72mn) and strong long-term economic growth prospects distinguishes it from a region that to a large extent suffers from a weak long-term demographic outlook. Nestle's and Yildiz's ability to keep financing expansion through 2010, relative to mid-tier rivals in particular, will likely be a major competitive advantage especially as competition in the sector continues to heat up.

Herebelow you can download a report on Turkish Food and Drink Industry: 

FOOD.BEVERAGE.INDUSTRY[1].pdf FOOD.BEVERAGE.INDUSTRY[1].pdf
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Turkish supermarket boom fuels private label growth

exerpt from  foodanddrinkeurope.com 24.08.2010

A new Turkish government report shows that the nation’s consumers are increasingly favouring the mass grocery retail (MGR) sector, while rising disposable incomes also mean an accompanying shift towards packaged, frozen and processed foods.

The July 2010 report, prepared by consultancy firm Deloitte, states that Turkey still has the lowest per capita consumption of packaged food in Europe, and identifies potential for foreign direct investment (FDI) in these sectors, with Turkish GDP growth of 6.8 per cent predicted this year by the OECD. According to the report:“Although Turkish consumers have been shopping primarily from small markets and grocery stores, the market share of these traditional retailers has been steadily eroding. “Through the widespread presence of modern MGR outlets since the early 1990s and rising disposable incomes, consumption has been shifting towards packaged and processed foods.”

Turkish Statistical Institute figures back this view: national MGR sales totalled 11.8bn Turkish Lira (TL) in 2005, but are predicted to rise to 22.3bn TL this year (around 40 per cent of all food and beverage sales) and 34.6bn TL by 2014. Major market players in a “highly competitive” MGR market include Migros with 9 per cent, followed by Carrefour with 8 per cent and BIM with 7 per cent, the report states. Other international names include Metro and Tesco Kipa.

Euromonitor senior research analyst Sarra Kassem told Food Navigator.com that she recognized key changes in Turkish consumption habits: “Ready meals are doing particularly well in 2010, with many launches. Throughout the recession people spent more time eating-in at home, and that trend has continued.”  Kassem added that the supermarket boom coupled with the recession had led to strong growth within private label foods: “The sector isn’t as developed as in the UK, say, and the quality is lower, but pricey products like olive oil are doing particularly well.  Bakery goods form majority of total food and beverage companies by number in Turkey (65 per cent), and form a crucial part of Turkish diets. Thus the report noted rising demand for packaged artisan and high-fibre breads, as well as potential export-led growth in organic and halal goods. Kassem also identified dairy as a significant growth sector, while she sees alcohol as a fast-growing niche area with beer, wine and whisky sales booming: “But consumption is limited to Istanbul, Ankara and the coasts. It’s not really pronounced in rural areas,” she said.

44 foreign companies now operate in the Turkish food and beverage sector, and recent merger and acquisition activity saw Cadbury’s acquire native confectionery firm Intergum for US $450 in late 2007; Canadian argi-processing concern Alliance Grain Traders bought the Arbel Group for US $134m in July 2009.  The BMI pinpointed Turkey as the fifth most attractive emerging European market for FDI in 2010, and given Turkey’s push for EU accession, speculation abounds over how this would affect the food industry.