The market impressions in this article are based on the distributor search project that Alliance experts executed in 2018 for the English manufacturer of table-top sweeteners.
The Sweetener Company
The British sweetener manufacturer HCP – The Sweetener Company, produces under its own brand Slimmer and under private label, in particular for discounter retailers like Aldi. Due to optimized “lean” production, the company is able to manufacture quality products for low costs. The Sweetener Company has an important market share in the UK and in some other European countries. Approximately 60 companies (distributors and importers) in the Turkish food sector were contacted by phone, e-mail and face to face meetings.
Sweeteners: no drugs, but food
Like in most of the countries in the world, sweeteners were first introduced in Turkey by pharmacies. Therefore the product has an image of drugs for diabetes and obese. It became first popular in the 1990s. After this first trend of use, the popularity decreased. Gladly it was started to be sold in supermarkets, but it couldn’t find the right space in the supermarkets. Sweeteners can’t be found next to sugar, coffee or tea, but is sold in special seperate shelves for diabetes, organic food, etc. This gives the consumers the feeling that they are special / strange. In hotels, cafés and restaurants however, sweeteners are more normalized and served next to sugar. Last decade has shown a popularity of coffee shops (leaded by international brands like Starbuck). These coffee shops have added to the awareness of sweeteners among the public.
The Turkish sweetener market
Despite this growing awareness of sweeteners, the sweetener sector in Turkey is still not as strong as could have been expected, but the growth is a lot higher (22%) than the world’s average (5%). Having the highest percentage of obesity in Europe (see picture on the right), the importance of diet and wellness products is continuously growing.
According to Turkish Statistics Institute, 2 963 tons of high density sweeteners were imported into Turkey in 2016. Imports have doubled in the last four years. More than half of this is from Chinese origin.
In the international market, the price per ton sugar is $ 800, where this is $1300 in the Turkish market. Using high density sweeteners instead of sugar will costs on average $ 61, per ton of sugar sweetness equivalent. The Turkish import laws allow the import of aspartame, saccharin, sodium saccharin, other salts of saccharin, sodium cyclamad, calcium cyclamad, acesulfame-K, neohesperidin dihydrochalcane, thaumatine, sucralose and aspartame-acesulfame salt. With relatively low Turkish import taxes, the high density sweeteners are cheap and increasingly preferred for food and beverage production.
Although the sweeteners in the industrial market is cheap, this is not shown in the supermarket prices of table top sweeteners. Compared to countries in western Europe, sweeteners are a lot more expensive in the Turkish market. Table top sweeteners are considered a luxurious good, a “wellness product”. This is most likely the reason of that the market for table top sweeteners is not as much developed as could be expected.
Concerns about sugar and sweeteners
Like in other countries, there are some concerns about sweeteners among the public. Now and then “researches” show up in the news. To give an example, it’s said that a zero-calorie-product doesn’t give a feeling of fullness, so people will still eat more to get the same feeling of being full. Another example is that it is said that artificial sweeteners give a psychobiological signal of appetite and that this adds to increasing a sugar addiction. Such concerns have also led that a growing number of people drink tea without sugar or sweetener.
Where sugar consumption was mainly in the news for public health issues, recently the sugar consumption has also been in the media because of the privatization / closure of state-owned sugar factories. This privatization is leading to political discussions, where the unhealthy effects of sugar is often used as an argument, by the politicians and media of the governmental side. In these publications it’s named “sugar based on starch”. Where most of the people don’t really know what starch is, so actually don’t know what “sugar based on starch” is. It just sounds artificial, and what is artificial must be bad. This is combined with the news that sugar is bad in general.
Turkey has shown 90% increase of diabetes the last 12 years, and an increase of 44% of obesity. Result is that Turkey has now the highest percentage of obesity in Europe. Turkey has the highest consumption of tea in the world, where tea is traditionally consumed with sugar. This proves a high potential for sweeteners in Turkey, and it’s shown by a high growth of sweetener usage.
Current market size
The marketing director of (market leader) Splenda estimated the value of the sweetener market last year at the level of $ 8 million, what corresponds to 300 thousand consumer packs. The Turkish state still has a monopoly position in the sugar sector, and is not sharing information about this sector for political sensitively reasons.
Used as ingredient
Artificial sweeteners are in detail described in the Turkish Food Codex. It is accepted to be used in all kinds of food products like dried fruit, nuts, cookies, soups, juices, milk, ice-cream, sauces, marmalades, etc. The public is not aware of it, but eats and drinks it every day. Food producers are growingly aware that the use of sweeteners for sweetening their products, is a lot cheaper than using beet sugar.
Two companies in Turkey are producers of sweeteners. One company is Kardel Gıda Pazarlama A.Ş. with brand Fibrelle, that is sold in Migros supermarkets and online. The other company is Egepak A.Ş. with the brand Takita. This is sold in Migros and Carrefour supermarkets.
Given the financial situation of Turkey, the companies were happy / honoured to be contacted by a foreign / English company. They were first reserved about the chances of a foreign product, but explaining the opportunity of a discounter product (with competitive prices) made change the point of view.
Late payments and changing exchange rates
Like in most sectors in Turkey, also the retail sector works with a system of late payments. The minimum starts at 60 days, and this can go up to 12 months. This combined with the fast changing exchange rates, producers, distributors and importers are acting as the financers and risk takers. We used to say that “importers are like bankers”. Of course, these risks are shown in higher margins.
Therefore, the payment structure is one of the most important issues to discuss. During negotiation it’s to be advised to think and talk in terms of sharing benefits and risks. At the end, there is a strong price oriented mentality. If the prices are much lower then what is available in the Turkish market, traders see chances of selling the products.
Supermarkets in Turkey
The most important national discount supermarkets in Turkey are Bim, Şok and A101, and the most important full-price stores are Migros and Carrefour. Besides these 5 biggest chain shops, there are strong regional supermarkets chains with up to 500 shops (e.g. Hakmar, Çağrı, Mopaş, Uyum).
|Supermarket chain||Number of shops||Payment terms||Explanation|
|Bim||5600||60 days||Hard discount, “Aldi copy”. Out of 600 products, 580 are OEM.|
|Şok||5500||150 days||Soft discount. Selling mainly from factories owned by their mother company (Yıldız Holding). 80% OEM, 20% brands.|
|A101||7000||100 days||Soft discount. Out of 800 products, 400 are OEM.|
|Migros||1897||Up to 12 months||Full-price store. Stores with different sizes. Mainly branded products, but also OEM (Migros brand).|
|Carrefour||735||Up to 12 months||Full-price store. Started as a hypermarket, later added smaller shops. Mainly branded products, but also OEM (Carrefour brand).|
Besides these supermarket chains, there still exists a large number of small grocery shops, about 150 000 in total. This number is decreasing. Also the street markets are still important in Turkey.