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Turkey Food and Drink Report Q2 2010
Business Monitor International, Feb 2010, Pages: 63
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.
Following the economic slump of 2009, the Turkish economy is showing strong signs of recovery, with real GDP growth forecast to rise back to 3.7% in 2010. As discussed in the recently published Turkey Food & Drink Report for Q209, this economic recovery is already being reflected in the country’s mass grocery retail (MGR) sector, with a number of major expansions announced by industry leaders this quarter. We expect Turkey's MGR industry to reassume its position as one of the world's most promising in 2010 after being inevitably restrained by the economic downturn in 2009. The industry is likely to be boosted by the anticipated pickup in headline retail sales and promising growth is forecast across all core formats, boosted by a string of recently announced expansions. One retailer that has been particularly aggressively pursuing expansions is Carrefoursa, the joint venture between the French multinational retailer Carrefour and Turkish conglomerate Sabanci Holding. In October 2009 the retailer announced plans to launch 200 stores in Turkey in 2010. About 100 of the stores will be launched under the Dia hard discount banner with the rest being split between the higher value hypermarket and supermarket segments. This was followed by an announcement in early January 2010 of plans to launch 100 new express stores and four hypermarkets in Turkey in 2010.
With the opening of each new outlet involving an investment of TRY1mn (US$0.7mn), it is clear that Turkey remains a priority market for Carrefour, despite speculations that the retailer plans on exiting a number of emerging markets. Although Carrefour already leads the hypermarket segment with a store footprint above 20, this store format contributes considerably less to overall MGR sales than the supermarket format. In fact, looking at our forecasts for individual store formats, we can see a major shift taking place. We are currently forecasting hypermarkets to experience a very strong growth rate of 146.7% between 2009 and 2014, while discount store sales are forecast to increase by 153.2% over the same period, but from a lower starting point. Nevertheless, by the end of our forecast period, sales in discount stores are expected to outstrip hypermarket sales, with discount sales expected to reach TRY11.2bn while hypermarkets sales are expected to reach TRY9.3bn.
Clearly, discount stores are becoming an increasingly important store format, which is unsurprising given consumer price sensitivity beyond the core urban centres and the still low regional penetration of modern retail. The leading operator in this format is domestic player BIM Birlesik Magazalar A.S, which comfortably beats the discount operations of Migros Turk (under the Sok banner) and Carrefour (Dia banner). Operating over 2,500 stores, BIM has more than three-times as many discount stores as either rival. This focus exclusively on the discount segment has allowed BIM to increase its store footprint by more than 75% since 2006. Having announced in November that Q309 sales increased 22% year-on-year (y-o-y) to TRY1.4bn (US$962mn) as well as a 122% y-o-y earnings uptick to TRY55.7mn, BIM also has the finances in place to continue with rapid expansions and give international retailers a run for their money.
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