Turkey: Vibrant market for food and beverage

THE Social Security Institution in Turkey puts the number of food and beverage manufacturers at 40,872 and 634, respectively in 2014. The Central Bank of the Republic of Turkey indicated that the share of the food, beverage and tobacco industry in the FDI inflows to the total manufacturing industry was 28 percent between 2009 and 2013, the highest share among all industries.

Flanders Investments and Trade Market Survey on the Turkish food and beverage sector suggest that this sector had an 18.9 percent share in the country’s GDP in 2014. The country is blessed with suitable ecological conditions for agriculture, thus is the seventh largest agricultural producer in the world and the largest in Europe. It produces the most apricots, hazelnuts, figs, cherries, sour cherries and quinces globally, and in 2014 the country’s F&B exports reached USD11.1 billion, rising considerably from $4.3 billion in 2005.

Figs, apricots and other dried fruit are among major products from Turkey (Photo: Evren Kalinbacak I Dreamstime.com)

The survey added that with Turkey’s growing market holding over 78 million consumers and a young populace of increasing income, the indigenous people are more inclined towards international flavors and convenience food. The Turkish food retail sector reached $121 billion in 2015, fostered by increasing disposable income and strong consumer demand.

According to the data issued by the Turkish statistical authority, aquaculture in fishery sector is rising and 537,345 tons of aqua products were realized in 2014. Chairman of Turkish Seafood Promotion Committee (STG) Melih Isliel was quoted as saying that the share of aquaculture fishery reached up to 43.8 percent and targeted to go beyond 50 percent by the year 2023.

Turkey’s key economic indicators

In 2014, about 580,000 jobs were given to those in the tourism and restaurant industries which averaged out to be 2.2 percent of all employment. It was stated in 2015, this amount was to grow by 5.9 percent to reach 614,000 (2.3 percent of all employment) and by 2025, these industries are said to offer roughly 915,000 jobs with an increase of 4.1 percent.

“In a country of 78,505,000, there needs to be plenty of goods and services for both the residents and tourists,” said Aaron Allen, founder at Aaron Allen & Associates.

“The gross domestic product (GDP) is split into two categories: direct contribution and total contribution. In 2014, the direct contribution of the tourism industry was at 4.7 percent and said to increase by 2.8 percent in 2015. This indicates the internal spending (for both personal and business purposes) by consumers while in Turkey is on the rise. By 2025, the GDP is said to increase by 4.6 percent. The total contribution (the spending of new hotels and tourism) in Turkey is also on the rise, as it was at 12 percent in 2014, increasing by 3.0 percent in 2015. Come 2025, the total contribution of tourism is expected to reach 11.6 percent.”

The Flanders survey also suggests that Turkey’s household consumption increased by 11.5 percent in 2013 to reach $582 billion. The proportion of household expenditures spent on food has decreased over the last decade from 27 percent to 20 percent, but the amount spent has grown from $59 billion in 2003 to $116 billion in 2013.

Research firm Business Monitor International (BMI) sees a decline in consumption expenditure in 2015, and a slowdown in all segments of consumer credit growth but believes food consumption in Turkey will be not be very much affected.

The summary of compound annual growth rate (CAGR) expectations by BMI for 2013 to 2018 period is as follows:

• Food consumption sales growth: 9.9 percent per year;
• Food consumption per capita sales growth: 8.8 percent per year
• Alcoholic beverages value sales growth: CAGR to 2018: 9.4 percent per year.
• Soft drinks value sales growth: CAGR to 2018: 10.7 percent per year
• Mass grocery retail sales: CAGR to 2018: 12.3 percent per year

Tourism is fueling demand

Aaron Allen says that tourism in Turkey has been heating up thanks to many foreign travelers. The increase of tourism started from 2002 to 2005, as in those years, the number of travelers skyrocketed from 12.8 million to 21.2 million, which allowed Turkey to become the 6th most popular spot to travel. Last year alone, 34.9 million foreign travelers visited Turkey.

He also said that foreign tourists seem to be buying more when visiting Turkey. In 2014, visitor exports were up to about 16.8 percent. In 2015 the figure is said to have grown 3.2 percent over 2014, attracting about 43,433,000 travelers. The figures are likely to increase in the next few years to reach 89,390,000 by 2025, growing at 5.1 percent. International travelers are also spending in restaurants. The expenditure on food in 2014 reached 116,423.8 million, while in 2015 it grew to 120,238.5 million. In 2016, it is expected at around 122,851.8 million.

Foodservice analysis

“There’s no question, Turkey’s food scene is on the rise and the local restaurants are seeing an impact in total revenues. In 2015, it was said that revenues from both restaurants and food trucks reached about $10.52 billion. By 2020, the total revenue for these dining destinations is set to hit $11.342 billion,” said Aaron Allen.

The dining scene in Turkey is mixed with both traditional and modern restaurants with a huge emphasis on seafood and kabobs (or ocakbaşı). Esnaf Lokantası – which means “tradesmen restaurant” – are very popular eateries in Turkey. These casual restaurants offer authentic cuisines for a low price. Fast food restaurants are also on the rise in Turkey, offering cheap food on-the-go.

Imported items have become increasingly more popular in Turkey owing urban population growth. From 2009 to 2014, the population grew 11 percent and is expected to continue to rise in the next few years. This has resulted in more modern groceries taking over the traditional markets.

As in many other counties, fast food is booming in Turkey. In 2014, it was reported that fast food service grew 25 percent. It’s said to continue to grow each year by roughly 11 percent. This may have something to do with the expansion of shopping centers with large food courts, including the Mall of Istanbul that opened in 2014 bringing with it 22 different fast food dining destinations.

Foreign Market Consulting Ltd, in its report suggested that major factors and trends influencing future production and consumption of food in Turkey are: urbanization, increasing hygiene standards and healthy nutrition trends, number of working women, growing demand for ready-to-eat frozen foods, growth of mass grocery retail outlets and modern production sites of manufacturers with incessant investments to flourish. – ZAINAB MANSOOR