Brands target Turkey

03 July 2012

ISTANBUL: Brand owners like PepsiCo, Unilever and Diageo are seeking to enhance their position in Turkey, taking advantage of the strong levels of growth being experienced by the country.

According to official figures, the rapidly-expanding market posted an 8.5% expansion in GDP in 2011, second only to China, with consumption contributing 70% of its overall output. Its 75m population is also relatively youthful and is seeing affluence rise.

PepsiCo, the snacks and beverage manufacturer, names Turkey among its top ten global outlets, and saw double digits sales lift locally last year.

"A lot of people are entering the middle classes," Eugene Willemsen, PepsiCo's president, southern Europe, told the Financial Times.

Ülker Group, an indigenous player in the same sector, logged a 10% sales increase during 2011, a figure that could hit 15% in 2012. "We are growing because Turkey is growing," said Mehmet Tütüncü, the firm's president of food and beverages.

To try and tap these trends, Unilever, the FMCG giant, has rolled out products, such as ice creams, adapted to local preferences. More broadly, it splits the country into big cities and rural areas, reflecting varying tastes.

"In the villages people are still looking for international goods, whereas in the bigger cities people are looking for more sophistication; for example they will want to have special desserts from eastern Turkey", Izzet Karaca, CEO of Unilever Turkey.

Another key feature defining the market is the presence of traditional bakkals, or corner stores, delivering 40% of consumer goods sales in the country, and limiting the strength of supermarkets.

Some of the other characteristics distinguishing the Turkish trading environment are that a modest 20% of women are in paid employment, meaning ready meals have less of a role, and private label comparatively limited appeal.

"All our global clients have Turkey in their top ten investment markets," Philip Norminton, managing director of the consumer unit of Nielsen, the research firm, in Turkey.

Volume sales of fast-moving consumer goods actually fell by 1.3% in the year to April, Nielsen found. Non-alcoholic drinks were off 1.5%, dairy was down 2.7%, and tobacco by 2.7%, but inflation and tax boosted value returns over the previous year.

Consumer spending on alcoholic drinks visibly suffered after taxes increased late last year, but Galip Yorgancioglu, CEO of Mey Içki, the drinks group owned by Diageo, reported the impact was not enduring.

"When consumers got used to the new prices, they came back to their previous frequency levels," he said. "Probably Turkey is one of the few markets that has not been negatively impacted by the global crisis."

Data sourced from Financial Times; additional content by Warc staff