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Turkey Food and Drink Report Q1 2010
Business Monitor International, Nov 2009, Pages: 63
The Turkey Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Turkey's food and drink industry.
While the Turkish economy is forecast to have contracted by 6.2% in 2009, the sharp improvement in Q2 growth combined with the marked recovery in leading indicators reinforces our long-held view that Turkey is among the best positioned economies in emerging Europe to recover quickly post-financial crisis. While the impact of the recession has certainly been felt in the country’s food and drink industry, the sector is now showing signs of improvement.
In September, Coca-Cola Içecek (CCI), Turkey’s leading soft drinks company, announced that it had recorded a 14.5% year-on-year (y-o-y) mark up in H109 to TRY76.9mn (US$51mn). The bottler's encouraging navigation of the downturn and the broader resistance of the low-cost carbonates segment in the current down-trade-friendly climate was particularly well emphasised by its stellar sales volume showing. Over CCI's first-half cycle, consolidated sales volume increased by 13.8%. These figures are in line with BMI’s positive forecast for Turkey’s soft drinks sector. Driven by product innovation, a young market, a predominantly Muslim population, and a thriving tourism industry, we are forecasting strong growth in the soft dinks industry, with sales forecast to grow by 64.8% between 2009 and 2014, to reach a value of TRY10.5bn.
It is not just CCI that has reported more positive financial results. In August domestic beverage behemoth Anadolu Efes announced that it had bounced back in Q209 after foreign exchange losses and debtservicing expenses incurred in Q109 forced the company to report a net loss of TRY25.2mn (US$16.8mn). Anadolu Efes recorded above-consensus second-quarter net income of TRY251.4mn, representing a sharp 35% year-on-year (y-o-y) increase. With group-wide beer sales coming under more stress than soft drinks in H109, much of the second quarter recovery can be traced to the soft drinks unit. While carbonates and bottled water will continue to be the principle growth engines, opportunities in higher value segments such as fruit juices should continue to open up. Anadolu Efes also reported that group sales volumes increased by 4% y-o-y in H109. Despite the below par performance of Anadolu Efes' international beer unit Efes Breweries International (EBI), the company fared well domestically, as beer volume sales in Turkey increased by 2.3% y-o-y while soft drinks volumes grew by 13.8% y-o-y.
Beer volume sales across a number of the world's markets are either contracting or reporting flat growth as consumers cut back on non-essential spending. The domestic beer unit's performance largely reflected the effectiveness of the company's marketing initiatives and the further progress it made in improving its route to market across both on- and off-trade channels. Bearing in mind that Turkey's population currently stands in excess of 70mn (and rising), its long-term economic outlook is dynamic and its alcoholic drinks industry is held back by the fact that Turkey is a majority-Muslim country. There are immense opportunities for cross-segment soft drinks growth that are currently untapped.
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