Wednesday 14 August 2013, Amsterdam
The growing conservatism of the Turkish people has seen the strongly religious/conservative APK government hold power for more than a decade, and brought about the implementation of a number of policies – including increased excise duty rates, a ban on advertising, and limitations on sales - designed to reduce the consumption of alcoholic beverages.
Despite this however, the Turkish beer market actually grew in 2012, with the Effes Beverage Group continuing its domination of the market, whilst its competitor Turk Tuborg has stolen a share of the volume, supported by the success of its Tuborg Gold brand. The popularity of imported beers has continued to rise, with premium beers being imported from Europe; the consequent increased variety of beer options has helped improved consumer knowledge of beer.
MARKET CONTEXT
For organizations that have a stake in the Turkish beer market, a proper understanding of the broader context of life in Turkey, and beer’s place in it, is paramount to successfully capitalizing on the opportunities the market presents.
Population Growth
Turkey is a large country, both geographically (800,00 sq km), and in terms of population (75.6 million). It also has a young and urban population, with a median age of 30.1 years, and with only 22.6% of the population living in rural areas. This growing, predominantly urban, youth segment of the population is driving beer growth in the country.
Economic Growth
The Turkish economy continues to be dominated by a highly dynamic industrial sector concentrated around major cities in the western provinces, along with well developed finance and service sectors. The Turkish economy grew at a rate of 2.2% in 2012, following a higher growth rate of 8.8% in the previous year in the previous year. Construction, textiles and tourism are key drivers of economic growth in addition to agricultural production. This consistent growth, especially in light of the growing segment of youthful, less conservative consumers, is driving the good performance of the beer market in Turkey.
Despite this however, the political situation in the Middle East – especially in Syria – continues to play an important role in the development of the Turkish economy. The threat to Turkey’s future from terrorism, which is especially active in eastern parts of the country, has lessened somewhat thanks to a peace deal with the terrorist group PKK established at the end of 2012.
Live to Eat, Not Eat to Live
Whilst food preferences and preparation vary by region and ethnicity, the Turkish people are generally passionate about food, whether it be the fish dishes of the Black Sea region, the spicy meat kebabs of the east, or the traditional stews that are popular in homes across the country. With a love of food, often comes a love of drink, and this offers hope for the beer industry in Turkey, despite the social pressure against alcohol consumption outside of the major cosmopolitan and tourist areas.
Drinking Habits
Turkey is a Muslim country, but conventions on alcohol consumption – especially in metropolitan areas around Istanbul, Ankara and Izmir, along with those regions that see a lot of tourist trade – are similar to those in European countries. The national spirit is raki, but its population is waning among younger consumers who tend to prefer beer, not just as part of their nightlife, but because it is easier and cheaper to consume.
Tax increases are largely blamed for consumer beer prices more than doubling over the last seven years, making Turkey one of the most highly-taxed beer markets in Europe. The current taxation policies and legislation limiting alcoholic beverage marketing and advertising are clear evidence that the AKP government is aiming to reduce alcohol consumption in Turkey; as beer is the most commonly consumed alcoholic drink, it is the most affected by these policies. The social implications of recent government decisions means that even in Istanbul, it is seen as more socially acceptable to drink alcohol at home, and in the present economic climate, this is made even more attractive as a result of its being much cheaper.
MARKET TRENDS
With the challenging cultural and economic environment for Beer in Turkey, brewers must be highly sensitive to current and emerging trends in the market in order to capitalize on revenue boosting opportunities.
Increasing Knowledge of Beer Drinkers
Despite continued pressure on sales from high taxation and limits on marketing and alcoholic beverages, the total consumption of beer reached 9.6 th tl in 2012 – a 4% rise on the previous year.
The main reason for this growth has been the successful performance of the second largest brewer on the market: Turk Tuborg. In 2012, Effes Beverage Group and Turk Tuborg continued to be the two major leading brewers, with a volume share of 85% and 15% respectively. However, compared to the previous year, Effes Beverage Group lost 1% share, whilst Turk Tuborg increased by just over 1%.
This has been in part driven by Turk Tuborg’s heavy investment in the quality of its production facilities following its ownership change in 2008, and its significant marketing efforts for its flagship brand, ‘Tuborg Gold’. This has seen successful communication campaigns centered around its 100% malt content, and is evidence for the increasing consciousness of Turkish consumers of the ingredients used in beer; indeed, Effes Beverage Group has followed this trend and launched a number of malt beers, including Effes Malt and Bomonti Unfiltered.
Increased Imports
Another noteworthy trend in the Turkish beer market is the increased number of imported beers on the market in 2012: consumption volume of imported beers has increased more than 51% in comparison with 2011. These include Duvel, Peroni, Corona, Guinness, Leffe, and Hoegaarden, and lend further evidence for the increased awareness of Turkish consumers about beer driving the market.
OUTLOOK
In 2013, a similar story is expected to 2012: the government is very likely to increase special consumption tax (OTV) on domestic/licensed beers, and excise duty on imports. There are already plans for further limiting the marketing and advertising of alcoholic beverages, which will ban the advertisement of alcoholic beverages across all media; sponsoring concerts and similar events will be prohibited for alcoholic beverage companies or brands, and labels to emphasize the health risks associated with drinking will have to be added to packaging in a similar way to cigarette packaging.
Turk Tuborg’s market share and the share of imported beers are both expected to increased above the category average, with a wider selection of world beers available.
