Turkey Food and Drink Report Q1 2013

While the long-term domestic demand credentials of the BRIC (Brazil, Russia, India and China) economies are often heralded, Turkey may well be discussed similarly in the years to come. It has a number of factors in its favour, including a dynamic and youthful population in excess of 75mn, a strong economic outlook and an improving business environment and private sector mentality. Over the next few years, we expect strong growth in the consumer sector.

On a related note, Turkey’s increasing appeal to foreign investors – due to a number of factors such as market-friendly policies and enormous demand for infrastructure development, including power grids, transport infrastructure and housing – further underpins our view that domestic demand will grow strongly over the next few years. As infrastructure develops, companies will be able to reach more consumers efficiently, speeding up the evolution of tastes and preferences across the country. Organised retail channels should develop quickly to support this development as more consumers trade up from informal independent stores.

Headline Industry Data (local currency)

? 2013 per capita food consumption value sales = +6.8%; forecast compound annual growth to 2017= +7.0%.

? 2013 alcoholic drinks sales = +10.5%; forecast compound annual growth to 2017 = +10.2%.

? 2013 soft drinks sales = +12.7%; forecast compound annual growth to 2017 = +12.3%.

? 2013 mass grocery retail sales = +12.0%; forecast compound annual growth to 2017 = +12.3%.

Key Company Trends

Carrefour Linked With Migros Joint Venture: In October 2012, Carrefour was linked with a deal that would combine its venture in Turkey with that of Migros Ticaret. It is not clear whether any such deal would involve Carrefour breaking away from its joint venture with Sabanci or whether there would not be a dramatic change in the current equity structure involving Carrefour and Sabanci. The latter is probably more likely as buying out Sabanci's holding would be more costly. We have previously argued that an exit from Turkey would not be a good outcome for Carrefour despite the pressure the company is under at home and the need to raise its share price, which is down by about 47% since the start of 2011. Given the latest joint venture reports, it does appear that Carrefour is not looking to leave Turkey but rather is looking for new ways to maximise its potential in what is one the few genuinely exciting long-term growth markets within European retail.

Ingredients Firm Says No To GM Imports: In August 2012, Turkish ingredients company Ünak Gida withdrew its application to import genetically modified (GM) soy after a campaign by environmental group Greenpeace Mediterranean. The Federation of Food and Drink Industry Associations of Turkey decided against importing 29 varieties of GM organisms into the country, citing unfavourable public reaction by non-governmental organisations. Greenpeace's campaign against the GM organisms was called 'We do not buy it'.

Key Risks To Outlook

External Environment Continues to Pose Downside Risks: The major risk to Turkey’s macroeconomic trajectory stems from its external environment. With the eurozone debt crisis once again intensifying at an alarming rate and economic data out of the US and China disappointing in recent months, there is strong potential for trade and investment flows as well as broader economic sentiment in Turkey to decline significantly from current levels. Moreover, given Turkey’s large current account deficit and dearth of foreign direct investment inflows, the country remains susceptible to external shocks and a major outflow of foreign capital. As a result, risks to our growth forecasts are firmly to the downside.

Table of contents

Chapter - BMI Industry View

Chapter - SWOT Analysis

Turkey Food Industry SWOT

Turkey Drink Industry SWOT

Turkey Mass Grocery Retail Industry SWOT

Chapter - BMI's Core Global Industry Views

Table: Core Views

CEE Food & Drink Risk/Reward Ratings

Table: Central & Eastern Europe Q Food & Drink Risk/Reward Ratings

Table: Central & Eastern Europe Q Food & Drink Risk/Reward Sub-Factor Ratings (scores out of )

Turkey's Food And Drink Risk/Reward Ratings

Macroeconomic Outlook

Table: Turkey – Economic Activity

Chapter - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts

Confectionery

Table: Confectionery

Canned Food

Table: Canned Food Value/Volume Sales – Historical Data & Forecasts

Processed Foods

Table: Pasta

Table: Fish

Table: Bread Products & Jams/Jellies

Dairy

Table: Dairy

Drink

Alcoholic Drinks

Table: Alcoholic drinks

Soft Drinks

Table: Soft Drinks

Hot Drinks

Table: Hot drinks

Trade

Table: Sectoral trade indicators

Mass Grocery Retail

Table: Mass Grocery Retail Sales by Format – Historical Data & Forecasts

Table: Grocery Retail Sales By Format

Chapter - Food

Key Industry Trends And Developments

Companies Raising Capital For Expansion

Multinational Interest Growing

Companies From Further Afield Also Joining The Fray

Restaurant Trade Roaring

Market Overview

Food Consumption

Food Production

Confectionery

Agriculture

Organic Agriculture

Halal Food

Chapter - Drink

Key Industry Trends And Developments

Coca Cola Iceçek Our Emerging Markets Pick

Anadolu Efes Expands In Russia And Ukraine

Foreign Companies Interested In Domestic Beverage Producers

Market Overview

Alcoholic Drinks

Beer

Spirits

Wine

Soft Drinks

Table: Soft Drinks Sales Breakdown In Turkey

Hot Drinks

Chapter - Mass Grocery Retail

Key Industry Trends And Developments

Discount Stores Have Excellent Prospects

Tesco Linked To Turkey Deal

Duty Free Capitalising On Turkish Airlines Boom, Just Like In The Gulf

Market Overview

Table: Structure Of Turkey's Mass Grocery Retail Sector By Number Of Outlets

Table: Structure Of Turkey's Mass Grocery Retail Market – Sales Value By Format (TRYbn)

Table: Value Of Sales Per Outlet

Chapter - Competitive Landscape

Table: Key Players In Turkey's Food & Drink Industry

Table: Key Players In Turkey's Mass Grocery Retail Sector

Chapter - Company Monitor

Food

Ülker Group

Nestlé Turkey

Sabanci Holding

Drink

Anadolu Efes

Coca-Cola Içecek (CCI)

Mass Grocery Retail

Migros Turk

BIM

Tesco Kipa

Chapter - Demographic Outlook

Table: Turkey's Population By Age Group, - (')

Table: Turkey's Population By Age Group, - (% of population)

Table: Turkey's Key Population Ratios, -

Table: Turkey's Rural And Urban Population, -

Chapter - BMI Methodology

Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

Related research categories

By sector: General drinks

By market: Turkey (in Asia)