US Turkey Exporter Guide 2019

Turkey Exporter Report Highlights:

The Republic of Turkey has a young population of 81 million people fueling consumption. The country is in a Customs Union with the EU and is the 17th largest economy in the world. An annual average of 3.5 percent GDP growth is forecasted by Economist Intelligence Unit between 2018 and 2023. In 2017 there was a 14 percent increase in total imports of consumer-oriented agricultural products compared to the previous year. Total imports of consumer-oriented agricultural goods have increased 9 percent in the first ten months of 2018 compared to same period in 2017. U.S. food exporters should utilize importers in Turkey to reach the market in most cases. There is still a gap in the market to fill. The food retail sales index is on an upward trend in real terms. The economy has slowed down after summer 2018 and geopolitical challenges continue in the region. Post: Ankara

Executive Summary

The Republic of Turkey has a young population of 81 million people fueling consumption. The country is in a Customs Union with the EU and is the 17th largest economy in the world. An annual average of 3.5 percent GDP growth is forecasted by Economist Intelligence Unit between 2018 and 2023. In 2017 there was a 14 percent increase in total imports of consumer oriented agricultural products compared to the previous year. Total imports of consumer-oriented agricultural goods has increased 9 percent in the first ten months of 2018 compared to same period in 2017. U.S. food exporters should utilize importers in Turkey to reach the market in most cases. The economy has slowed down after summer 2018 elections and geopolitical challenges continue in the region.

Imports of Consumer-Oriented Agricultural Products

EU countries are the major suppliers to Turkey in terms of Consumer-Oriented Agricultural Products. They have the advantage of proximity and the Customs Union. Formerly supplying most agricultural commodities for consumer use from the internal market, Turkey’s agriculture and food sector has in recent years become more specialized and export oriented and now also imports some consumer-oriented agricultural commodities such as rice, dried beans, walnuts, almonds, bananas, coffee, cocoa, meat, fish and different kinds of processed/packaged food items.

Turkey exporter guide 2019

 

Food Processing Industry

There are 42,030 food processing and 499 beverage producing enterprises in Turkey as of 2015, according to the latest statistics published by TurkStat. Turkey has a modern and developed food processing industry supplying the domestic population and exporting. The food processing industry constitutes 12.53 percent of all manufacturing industries in Turkey. As of the end of 2016, there were 577 foreign direct investments in food and beverage production of which 100 were German, 44 Dutch, 33 French and 31 U.S. Of these 577, 12 were started in 2016.

Food Retail Industry

Grocery Sales were US$ 84 billion as of the end of 2017 and inflation/seasonally adjusted Real Retail Sales Index have been increasing during the last 5 years. Despite political and economic challenges that Turkey is facing in recent years, the food retail industry has been growing due to a young, dynamic population with 75 percent urbanization rates and a growing middle class. Organized/modern retailers continue to grow as traditional/unorganized retailers slowly leave the stage.

Turkey exporter guide 2019

Turkey exporter guide 2019

 

I. MARKET OVERVIEW

The Republic of Turkey, located in the southeast of Europe and the northwest of the Middle East, bordering the Black Sea in the north and the Mediterranean Sea in the south, has a young population of 81 million1 people fueling consumption. The median age is 30.5 and 59 percent of the population is between the ages 15 to 54.

The urbanization rate reached 75%, with rapid urbanization since 2000. Along with the young population, high urbanization rate, increasing middle-class household income, broadening base of female participation in the labor force, the culture of spending drives consumption. The country is an Associate Member of the European Union (EU) and is in a Customs Union with the EU. In addition, Turkey has Free Trade Agreements with EFTA (European Free Trade Association Countries: Norway, Liechtenstein, Iceland, Switzerland) and 19 other countries. Turkey is the 17th largest economy in the world according to the World Bank in 2017.

The average Gross Domestic Product (GDP) growth between 2013 and 2017 was 6.1 percent and annual average projected GDP growth is 3.5 percent according to Economist Intelligence Unit (EIU) between 2018 and 2023. Turkey has registered the highest GDP growth since 2013 with 7.4 percent annual real growth rate in 2017 after stagnation in 2016 caused by a series of terrorist attacks and an attempted coup against the Government of Turkey (GoT) in July 2016. The strong recovery in 2017 mostly depended on a short-term fiscal stimulus and domestic and geopolitical challenges have since negatively impacted trade, tourism, investment, and growth.

The Economist Intelligence Unit (EIU) forecasts about 3 percent and 1 percent GDP growth for 2018 and 2019, respectively. Some institutions are even forecasting a recession for 2019. The annual inflation rate has risen to 21.62 percent as of November 2018 and the Turkish Lira (TL) has depreciated against major foreign currencies quickly. The TL/USD exchange rate was 3.76 on January 2nd, 2018 and 5.28 TL/USD as of December 10, 2018.

As of 2018, some major companies in Turkey have asked for restructuring of their debt, according to news reports. Many of these firms did this by declaring “concordat” which is basically an official permission given to a company, by court order, to restructure its debt. Yildiz Holding, a Turkish conglomerate with major investments in the food sector such as famous Ulker and Godiva brands, asked its bankers for a restructuring of debt. Likewise, Dogus Holding, with large investments in luxury restaurant chains (170 locations in 12 countries) sold 17 percent of its company operating the restaurants called “d.ream” to foreign funds and asked for restructuring of debt as well. Yörsan, one of the largest dairy companies in Turkey is in the same situation, officially declaring concordat. Keskinoglu, being one of the largest poultry firms in the Turkish market operating since 1963, has also declared official concordat in mid-2018.

Saray Farms, Turkey’s largest cattle husbandry company, operating since 1998 with two large facilities and 36,000 cattle, has initiated the process of declaring concordat as of November 2018. The company has both beef and dairy facilities. Agromey, an Izmir based company, which is one of the largest aquaculture producers in Turkey has also recently declared concordat. Concordat is perceived as the last step before bankruptcy in the Turkish business context. It indicates that the company has enough assets and business potential but due to the poor cash flow, debts are not being serviced properly. Debts of a company are restructured so they can make payments. The concordat boom is not limited to the food industry; companies from various industries including but not limited to logistics, construction, shoe making, textiles and more are declaring official concordats with court orders, as a result of the economic slowdown. The agriculture sector represents 6.7 percent of total GDP which is $57 billion as of 2017.

The US State Department provides information about the investment climate in Turkey which has a lot of business-related information which can be valuable for traders. Note that some products from the United States currently face additional tariffs, which affects competitiveness of U.S.-origin agricultural goods.

Turkey exporter guide 2019

 

Turkey exporter guide 2019

II. Turkey EXPORTERS BUSINESS TIPS

a. MARKET RESEARCH

It is important to conduct market research before deciding to launch in Turkey, either a detailed analysis or a quick market scan, depending on your product and experience level with Turkey. It is essential to make sure that there is a market for the specific product in Turkey. Even if you are experienced in diverse regions, the Turkish market might be quite different than expected. It is a mix of Middle Eastern, Western European and U.S. cultures, traditions, consumers and business practices. Markets, companies and consumers in Turkey are less transparent compared to Western Europe and the United States. It is often harder and more expensive to access market intelligence; usually there are fewer open sources compared to developed economies. Like in some other Mediterranean/Levant cultures, most of the market intelligence and business is conducted based on relationships. Please visit our country page for other FAS exporter assistance reports. Other reports can be purchased from various sources such as, but not limited to, Euromonitor or Neilsen. Getting a reliable local partner/agent is a good way of doing relationship-based market research.

b. LOCAL BUSINESS CUSTOMS & TRENDS

After conducting market research determining that there is a potential market in Turkey for the food/agricultural item that you are dealing with, it is important to develop a good strategy for market entry considering the local business customs. The Turkish business community is very open to doing international business. Turkey straddles Southern European and Middle Eastern cultures, and relationships are very important for business. This makes already existing relations and connections in the country especially important. Personal relationships and connections are essential. Turkish businesspeople attach great importance to courtesy in business related endeavors. Turkey is a country with a business culture and people that is somewhat like Southern/Western European countries/cultures but on the other hand, it has many qualities taken from Middle Eastern/Islamic cultures and Central Asian, Turkic cultures. Business life and habits are all affected from the mix, so it is important to understand your counterpart. In most cases, a local business partner is very useful to understand the context. Some points to consider are as follows:

  • Dress well for business meetings, especially if it is the “getting to know each other” stage. Overdress if not sure what to wear. Dress conservatively if not sure. Shorts, sandals and sportswear are not taken well in business environments, especially for men even in southern beach cities.
  • Punctuality is taken seriously compared to Mediterranean and Middle Eastern cultures. Standard time is three hours ahead of Greenwich Mean Time (GMT). Turkey does not observe daylight savings time since 2016.
  • Take Turkish and Islamic holidays in consideration. Although business is conducted at all times, it might be smart to consider the Islamic holy month of Ramadan. It is important to judge how much value your counterpart attaches to these days.
  • Family is important in Turkey; the superiors in the company are often seen as father/mother figures that need to take care of the employees in many senses.
  • Turkish people take pride in their rich history and cultural heritage. Try to learn something about Turkish history.
  • Turkish people are also are proud of their rich and varied cuisine. When you try Turkish food, compliments are appreciated.
  • Turkish coffee and tea have a special role in Turkish culture and also in business meetings, they will be offered at the start of a meeting as a courtesy. It is polite to accept one of those when offered, or ask for a glass of water.
  • Business lunch and dinners are rather important to build relations/connections; it is a good sign when invited. Try to accept when possible. These relations will affect the business done.
  • Turkish businesspeople prefer to do business with people whom they trust on a personal level; lunch and dinners might serve as very good platforms to build a personal connection and trust.
  • Almost everything is taken personally. There is a very fine line between personal and business matters.
  • In Turkish culture, it is important to take good care of business guests (as they do with personal guests), especially foreign ones. Reciprocity is expected and taken as a very good sign when done properly

c. GENERAL CONSUMER TASTES & TRENDS

Although there is a strong Turkish culinary tradition and ample processed food production in the country, upper middle and upper income level consumers, especially in large cities like Istanbul, Izmir, Ankara, Antalya, Bursa etc. tend to be open to new, imported tastes. Young and single professionals in the metropolitan areas tend to have more interest in international travel compared to their parents.

Thanks to this younger metropolitan population with increasing disposable income, there is an increased awareness of international tastes and influx of international cuisine to Turkey in the last two decades such as Italian restaurants, sushi places, Mexican restaurants, Indian restaurants, Thai kitchen, Chinese restaurants and takeaways, American style diners, luxury burger houses, various fast food chains dominantly from the United States and many fusion cuisines.

In the last decade or so, Turkish supermarkets have been featuring more international ingredients and imported processed food compared to almost nothing a decade ago. According to Post observations, thanks to the same demographic group, healthy, functional and organic food sectors are growing as well.

Consumers are becoming increasingly educated about and aware of the quality, nutritional value, and packaging of their food. They tend be more aware of the food safety and expiration date of the foods they consume compared to a few decades ago. Except for those at higher income levels, Turkish consumers are price sensitive in general; discount retailers and private label brands are on the rise.

III. IMPORT FOOD STANDARDS & REGULATIONS and IMPORT PROCEDURES

a. CUSTOMS CLEARANCE and DOCUMENTS GENERALLY REQUIRED BY THE COUNTRY AUTHORITY FOR IMPORTED FOOD

Import procedures are complicated and burdensome in Turkey. Generally a local business ally eases the process as they are familiar with the procedures. For details on the requirements, please refer to FAS Turkey reports on Food and Agricultural Import Regulations and Standards and Required Certificates. The U.S. Foreign Commercial Service also gives some general information on import procedures to Turkey. In most cases some counseling with a customs broker/consultant in Turkey is useful as these brokers/consultants often understand the complex import processes better than a new to market, lesser-experienced company. You might contact Istanbul, Izmir , Mersin, or Ankara Customs Brokers Association depending on your needs.

b. COUNTRY LANGUAGE LABELING REQUIREMENTS

On January 26, 2017, the Ministry of Food, Agriculture & Livestock (changed into Ministry of Agriculture and Forestry as of Summer 2018) abolished the previous Turkish Food Codex Regulation on Labeling and published two separate regulations to replace it which include: The “Turkish Food Codex Regulation on Food Labeling and Provision of Information to Consumers” (available here in Turkish) and “The Turkish Food Codex Regulation on Nutrition and Health Claims” (available here in Turkish). As with the prior versions of the regulations, these were prepared in parallel to the relevant the EU Directives and Regulations within the framework of EU harmonization.

 

c. TARIFFS and FTAS

There are tariffs for most food and agricultural items imported from the United States to Turkey. The tariff rates vary for different products. The tariff rates may be checked at the Ministry of Trade web page by HS code (Tariffs for the US are listed under D.Ü. (Other Countries)). Several agricultural/food items from the United States currently face additional tariffs since June 2018. While these tariffs are expected to be temporary, there is currently no timeline for their removal. Turkey is in a Customs Union with the EU. In addition, Turkey has Free Trade Agreements with EFTA (European Free Trade Association Countries: Norway, Liechtenstein, Iceland, Switzerland) and 19 other countries. Among these 19 countries the FTA with Syria is on hold for a period of time. Furthermore, FTA negotiations with Qatar and Venezuela have been concluded (but not signed yet). Due to the FTAs with EU and EFTA, European countries are competitors to U.S. products such as packaged foods, food processing ingredients and additives.

d. TRADEMARKS and PATENTS

Turkish Patent and Trademark Office under the Turkish Ministry of Industry and Technology is responsible for Patents and Trade Marks. You can take a look at the Turkish industrial property law which governs the patents and trademarks and related regulations (link in Turkish) about the applications of the law.

IV. MARKET SECTOR STRUCTURE and TRENDS

a. SUPPLY CHAIN & PRODUCT FLOW

A good way of exporting to Turkey is using a local agent in the country. This agent is sometimes an importer, distributor, wholesaler, a commission-based trader or some combination thereof. Local representatives will have experience in market development and contact information of potential buyers, such as the organized grocery retailers, food processors and/or food service sector. A good representative can guide you in the market, including on import rules and regulations, which ports to utilize, local business practices, conducting market intelligence formally or informally, starting sales calls, etc.

Turkey exporter guide 2019

The chart represents the flow of consumer oriented agricultural goods. In rare cases, retailer/cash & carry might import items themselves rather than buying from an importer (not shown on the chart).

b. RETAIL FOOD SECTOR

Despite political and economic challenges that Turkey is facing in recent years, the food retail industry has been growing due to a young, dynamic population with 75 percent urbanization rates and a growing middle class. The grocery retail sector has been growing for the past five years in terms of both number of outlets and real sales index. Grocery retail sales were $83.8 billion, which constituted 55% of all retail sales through approximately 360,000 organized and unorganized grocery retailers in 2017. Discount and hard-discount chains have been growing for the last five years with their private label products. Several foreign market chains have left the market in the past decade leaving the stage mostly for domestic chains. Although still limited in sales, there is an increasing demand for imported processed food. Please read our Retail Foods Report for detailed analysis of the sector.

 

c. HOTEL, RESTAURANT, INSTITUTIONAL (HRI) FOOD SERVICE SECTOR

There has been an increase in incoming tourists in 2017 and 2018 compared to 2016 when there were several security problems. Fast food restaurants have been performing better compared to full service and fine-dining outlets. There are approximately 140,000 food service outlets in Turkey in all segments. The industry is very fragmented with mostly small stand-alone restaurants. Five thousand institutional food service companies are serving corporations, hospitals, schools, universities, state and municipal offices, nursing homes, and some military bases, either via cooking in their own facilities and delivering the food or cooking on customer premises. Please read our Food Service: HRI Report for detailed analysis of the sector.

d. FOOD PROCESSING SECTOR

There are 42,030 food processing and 499 beverage producing enterprises in Turkey as of 2015, according to the latest statistics published by TurkStat. Turkey has a modern and developed food processing industry supplying the domestic population and exporting. The food processing industry constitutes 12.53 percent and the beverage industry constitutes 0.15 percent of all manufacturing industries in Turkey. As of the end of 2016 there were 577 foreign direct investments in food and beverage production of which 100 were German, 44 Dutch, 33 French and 31 U.S. Of these 577, 12 were started in 2016. Please read our Food Processing Ingredients for detailed analysis of the sector.

V. AGRICULTURAL and FOOD IMPORTS

a. AGRICULTURAL & FOOD IMPORT STATISTICS

Turkey exporter guide 2019
Total 231,146 238,703 198,269 225,982 220,200 235,534
1 Almonds, Fresh Or Dried, In Shell 46,164 31,987 18,083 40,710 56,599 25,853
2 Walnuts, Fresh Or Dried, In Shell 55,637 70,903 62,297 64,741 51,652 94,291
3 Almonds, Fresh Or Dried, Shelled 32,728 37,572 48,484 49,772 47,799 62,025
4 Food Preparations Nesoi 48,271 41,953 38,817 37,904 32,642 28,897
5 Tea Or Mate Extracts/Essences/Concentrates & Preps 666 766 877 1,340 3,218 2,774
6 Vegetables Nesoi & Mixtures, Dried, No Furth Prep 1,099 1,323 931 1,787 2,716 569
7 Bread, Pastry, Cakes, Etc Nesoi & Puddings 2,009 1,444 930 1,020 2,055 1,378
8 Grapes, Dried (Including Raisins) 1,238 2,181 3,663 2,516 1,794 131
9 Coffee, Roasted, Not Decaffeinated 295 907 1,217 1,421 1,605 1,011
1 0 Sauces Etc. Mixed Condiments And Seasonings Nesoi 1,242 1,682 997 1,130 1,050 1,171
1 1 Orange Juice, Not Frozen,Of A Brix Value Not Ov 20 933 1,537 1,007 1,562 1,001 0
1 2 Apple Juice, Nesoi,Nt Fortified W Vitamins, Unferm 0 0 62 0 990 0
1 3 Fruit & Edible Plant Parts Nesoi, Prep Etc. Nesoi 204 444 646 757 929 477
1 4 Citrus Fruit (Including Mixtures), Prep Etc Nesoi 29 14 0 28 850 1,157
1 5 Cocoa Preparations, Not In Bulk Form, Nesoi 2,429 2,400 1,789 1,025 828 306
Others Consumer Oriented Agricultural Products

Turkey exporter guide 2019

b. BEST HIGH-VALUE, CONSUMER-ORIENTED PRODUCT PROSPECTS CATEGORIES

Tree nuts, sun flower seeds for confectionary, dates, functional foods, sauces, gourmet/ethnic food ingredients, spices, cranberries & dried fruits, wine and non-alcoholic beverages are some consumer oriented food products that have potential. Please see our Retail Foods Report for more details. VI. KEY CONTACTS and FURTHER INFORMATION Turkish importers/agent/distributor companies typically attend large shows such as Anuga in Germany, Sial in France, Gulfood in Dubai and Seafood Expo Global in Belgium.

Food trade shows in Turkey can be helpful to visit before deciding to enter the market and promote a product. Anfas Food Product, World Food Istanbul, CNR Food Istanbul, IbaTech, Ekoloji Izmir Exhibition, Gourmet Izmir OliveTech Exhibition, Future Fish EuroAsia and Food Ingredients Fi Istanbul are good shows to visit and meet importers. The Turkish tourism industry is usually at ITB Berlin Tourism Exhibition to sell holiday packages, nevertheless there could be opportunities to talk to them as buyers too, although that is not their focus at the show. Travel Turkey Izmir Expo and Eastern Mediterranean International Tourism & Travel Exhibition are two local tourism-related exhibitions.

Entering the Turkish market often requires a long-term perspective and persistence, as building trust is important. Correct market analysis must be done thoroughly before entry. Turkey is a large country and has a very diverse set of consumers, retailers, HRI and food processing entities. We recommend reviewing our other reports and contacting the FAS Turkey office with any questions. Foreign Agriculture Services (FAS) offices listed below may assist with connecting U.S. food exporters and Turkish importers.

Union of Chambers and Commodity Exchanges of Turkey (TOBB)

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THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
POLICY

Date: 2/4/2019
GAIN Report Number:TR8043

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