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Turkey Food and Drink Report Q1 2011
Business Monitor International, Nov 2010, Pages: 60
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.
Industry View
Turkey's short-term consumer spending outlook emphatically distinguishes it from the rest of emerging Europe, with trends far detached from a region that for the most part has been systemically negatively affected by the economic turbulence of the past 18 months.
Turkey is expected to be one of Europe’s strongest performing economies over the next decade. Able to call on a dynamic long-term economic outlook (by 2019 its per capita GDP is expected to resemble that of Portugal’s, according to the authors Europe team), a business friendly regulatory environment and a growing population already in excess of 70mn, Turkey is likely to emerge as one of the world’s highest potential consumer markets over the next decade.
Headline Industry Data
- 2010 per capita food consumption +6.27%=; forecast to 2015 =+53.14%
- 2010 beer volume sales = -2.76%; forecast to 2015 = +16.35%
- 2010 mass grocery retail sales = +18.30%; forecast to 2015 = +88.0%
Key Company Trends
Discount Retail Outperforming – Discount retail sales continue to perform strongly with the leading players laying down significant expansion plans. In May 2010, the rapidly growing Turkish discount retailer Diasa put forward plans to launch 300 new stores by year-end 2010. One of the much vaunted ‘E7’ emerging markets (along with Brazil, China, India, Indonesia, Mexico and Russia), the authors believe a strong case can be made for Turkey’s mass grocery retail industry to be considered emerging Europe’s most promising.
In April 2010, Turkey’s leading discount retailer BIM Birlesik Magazalar AS announced its aim to grow annual sales by 25% in FY10 (12 months to December 31 2010), with growth largely being driven by aggressive organic store expansion. Sometimes called the ‘Turkish Aldi’ due to the similarity of its business model to that of the German discounter, BIM reported above consensus FY09 headline year-onyear (y-o-y) earnings growth of 86% to TRY213mn (US$101.94mn), with annual sales increasing by 25%.
Domestic Companies Holding Up Well – In July 2010, underlining the authors very positive view on the Turkish consumer (and their macro preference for domestic demand stories over export oriented economies), Turkey-based Coca-Cola Içecek (CCI) recorded H110 (six months to June 2010) sales volume growth of 9.9% y-o-y. Despite coming off a much higher base, Turkey sales increased 10.3% y-o-y to 225.2mn unit cases. Proportionally, it contributed close to 75% of headline sales in H1. Sequentially, group volumes grew 9.91% over the Q110-Q210 period.
In April 2010, it was announced that Anadolu Efes came through FY09 (12 months to December 31 2009) resiliently with net income up 36% on the year to TRY423mn (US$278.2mn). Strong earnings and 3.9% y-o-y consolidated sales revenue growth to TRY3.1bn came despite particularly tough trading conditions for Efes' emerging Europe beer arm EBI, subsequently emphasising the resilience of the Turkish consumer market in 2009 relative to nearly all of emerging Europe. After a particularly challenging first quarter (fiscal year), positive momentum established in Q2 continued to play out sequentially over the H2 period with firmer beer prices in Turkey supporting growth.
Risks To Outlook
The main risks to the author’s Turkish consumer outlook are largely external. While the diversified structure of the Turkish economy has to a large extent allowed it to rebound more emphatically than most of emerging Europe in 2010, a further deceleration in Europe (including the prospect of another liquidity crunch), could affect their long-term consumer outlook.
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