Growth in speciality teas has spearheaded general progress in the mature but expanding Turkish tea market. And with the possibility of EU membership, the opportunities for international groups could further increase, according to a report published recently by market analysts, Euromonitor International.

The combination of the highest per capita tea consumption in the world and an expanding economy has resulted in major growth in speciality black tea in Turkey during the past seven years, according to market analysts, Euromonitor International. Double-digit growth in speciality teas between 1997 and 2004 has spearheaded growth in the general tea market, and Turkey has also seen an increase in the sale of tea bags.

Black speciality tea has clearly benefited from the improving economic conditions and this has also presented opportunities for international players such as Unilever and Lotte. Unilever dominates the category and accounts for nearly 70% of retail value sales of speciality tea. Its Lipton brand has strong brand equity in Turkey with high visibility.

With a total tea volume of about 180,000 tonnes in 2004, Turkey is the world's second largest tea market after India. It has the highest per capita consumption at 2.5 kg, followed by the UK (2.1 kg) and Morocco (1.4 kg). Nearly 60% of tea is produced by the state-owned company ÇAYKUR, and virtually all of the tea comes from the Rize province

It is not only the speciality black teas which have seen growth in recent years.
Despite the maturity of the Turkish tea market, retail volume sales of tea have enjoyed steady growth except form a dip during the 2000-2001 recession. Retail volume sales of tea grew by about 5% to reach about 108,000 tonnes in 2004 in contrast to Western Europe as a whole which saw only 1% growth. In terms of the product category, black standard tea continues to be the biggest contributor of volume sales, accounting for around 89% of retail volume sales in 2004.

Drinking black standard tea is an integral part of Turkish life and culture. According to survey data in the local trade press, 90% of the Turkish population drink tea at least once a day, with 33% of the population mixing different teas in order to create their own blend.

Loose black standard tea is the traditional and most common type of black standard tea, representing 99% of black standard tea volume sales. However, loose tea is gradually losing share to tea bags as tea bags are considered to be more modern and easier to use.

Euromonitor International's research revealed that retail volume sales of tea bags (a growth of 34%) largely outperformed loose tea (24%) between 1997 and 2004. New product launches in tea bags are increasingly being seen, which has facilitated the sales of tea bags. ÇAYKUR, for example, has launched its own tea bag product, ÇAYKUR Poset Cay.

As is the case in other Western European markets, the health and wellness trend is also influencing consumers' choice of beverages in Turkey. Fruit/herbal tea and green tea are the main beneficiaries of this trend.

Fruit/herbal tea has been the most dynamic category, with retail volume sales growing by 38% between 1997 and 2004, fuelled mainly by growth in sales to the younger urban population. As the market grows, commercially packaged and branded fruit/herbal tea has increased in availability. So far, there are over 20 types of fruit/herbal tea, which are traditionally consumed by the Turkish people. The most popular of these is ihlamur tea. The local company Dogadan Gida Urunleri is the market leader with its Dogadan brand, but international players such as Unilever and Twinings also hold significant market shares in this segment.

Commercially packaged green tea, first introduced to Turkey in 1999, remains a novelty to the locals. Health-conscious Turkish women are the target consumers and the principal consumers of green tea. In 2004, both ÇAYKUR and the Dogus Cay introduced green teas - the first local green tea products to be launched. Euromonitor International believes that fruit/herbal tea and green tea will provide good potential for growth in the years to come.

However, although the Turkish tea market is enjoying healthy growth in sales, the tea industry realises that it is faced with competition from other beverages, particularly instant coffee. Modern versions of tea such as tea bags, speciality tea and fruit/herbal teas are targeted at young consumers, who are also the main consumers for instant coffee. Tea manufacturers are concerned that they are chasing a relatively small consumer base and that they will probably face hard competition from coffee brands. The spread of international coffee shops such as Starbucks has further increased the concerns of local tea producers who consider the global café trend a threat to their tea businesses.

On top of this, the increased volume of illegal imports represents a threat to local tea players. Currently, there is no official data regarding how much tea is illegally imported and sold locally. However, Euromonitor International has observed that a large amount of illegal tea is consumed in the East and South East part of Turkey. To tackle the situation, ÇAYKUR launched a product similar in taste to the contraband teas, which have a strong flavour, some years ago, but many insiders feel that it requires a concerted effort from both the government and the tea industry to tackle the problem.

Turkey's eventual entry into the EU could also have a bearing on the country's tea market, in particular owing to increased international investment. Increased foreign investment and improved general investment conditions could speed up the privatisation of ÇAYKUR, experts believe. However, the Turkish tea industry is concerned that entry may lead to increased imports of cheap Asian tea.

On a positive note, Euromonitor International believes that opening up the tea market will eventually benefit the development of the industry, with potential improvements in agricultural efficiency, and an expanded palette of products available to consumers.

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