Required Report - public distribution

**Date:** 3/8/2004

**GAIN Report Number:** TU4005

TU4005

**Turkey**

**Retail Food Sector**

**Report**

**2004**

**Approved by:**

![](media/image1.wmf)James Higgiston, Ag Counselor

U.S. Embassy

**Prepared by:**

Ibrahim Sirtioglu, Ag Marketing Specialist

**Report Highlights:**

The Turkish retail food sector is gradually recovering from the economic
crisis of 2001. The size of the local retail food market is estimated to
be USD 23 billion in 2003. The sector continues to modernize, though at
a slower pace than in the past ten years. The arrival of new
international chains has increased competition among the large retailers
and companies are focusing more on higher returns per outlet rather than
increasing the number of stores.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Ankara \[TU1\]

\[TU\]

**I. Executive Summary**

The retailing sector in Turkey has developed rapidly since the 1980's
with significant changes both in economic and social structures. More
than two decades of liberalization of the Turkish economy, stimulated by
its Customs Union with the European Union (1996), has freed Turkish
entrepreneurial dynamism. The Turkish economy has gone through cycles,
however. Since the early nineties high-growth periods have been followed
by crisis -- economic, natural and/or political. Lingering effects of
the 2001 economic crisis that are still being felt include high
unemployment.

Despite periodic setbacks, the medium-term economic outlook is positive
and a number of trends and events will positively influence the retail
sector. Income growth, high urbanization rates, and the increasing
number of women in the workforce all influence changes in tastes and
preferences that support the development of the retail sector.

Although the number of large retail outlets in Turkey is growing, the
majority of the population does not shop in these stores due to low
income and high prices. Industry sources estimate that only five to
seven million people do the majority of their shopping in modern retail
outlets. Food prices in Turkey, especially for imported processed goods,
are extremely high. For example, beef prices are higher in Turkey than
they are in Switzerland. High tariff protection applies to processed
food products with tariffs ranging up to 227.5 percent. The average per
capita income in Turkey is about USD 2,500 per year (2002), which
significantly limits the purchasing power of the majority of Turks.

The structure of the retail sector is significantly influenced by the
type of food consumed by the majority of the population. For low-income
groups, it is estimated that 55 percent of the diet is made up of bread
with additional 15 percent made up of rice, potatoes and pasta products.
For the entire population, processed foods make up only about 15 to 20
percent of consumption. Thus, the share of hypermarkets in the overall
food retail market is still low but increasing gradually. Industry
sources estimate that hypermarkets controlled approximately 9.5 percent
of the retail market in 2002, up from 6.5 percent in 1999. This share is
expected to reach 12 percent by the end of 2004.

The classification of food retail outlets in this report is based on
outlet size:

> Hypermarkets are over 2,500 square metres (m^2^),
>
> Large Supermarkets between 1,000 and 2,500 m^2^

Supermarkets 400 to 1,000 m^2^

Small Supermarkets less than 400 m^2^

> Markets 100 to 50 m^2^

Bakkals 50 or less m^2^

According to trade sources, the total number of food retail outlets
including convenient stores in Turkey declined to about 225,000 in 2002
compared to about 230,000 in 2001. The change is due to modern
supermarkets and discount stores replacing traditional stores. These
include small grocery retailers, called *bakkals*, to the less common
but rapidly growing hypermarkets selling food, household items, and
durable goods. This transformation has mainly occurred in large cities,
but recent investments have targeted medium‑sized cities where the
population is more than 600,000 and shopping habits are changing.

In 2002 industry sources estimate the Turkish retail market to be about
USD 66 billion, of which USD 23 billion (35 percent) comprised of food
sales. Total retail food sales broke down as 47 percent in bakkals and
markets, 10.5 percent in small supermarkets, 9.5 percent in
supermarkets, 7.5 large supermarkets, 10 percent in hypermarkets and the
remaining 14 percent in specialist food retailers and convenience stores
and open air bazaars.

Retail Food Sector Trends (Market Share According to Outlet):

  ----------------------------- ------ ------- -------- --------- ---------
                                1999   2000    2001     2002      2003\*

  Hypermarkets                  6.5    8       9.5      9.6       10

  All Supermarkets Markets      17     20      25       27.5      31

  Markets                       12.5   10      9.5      9.4       9

  Bakkals                       49.5   48      42       40.5      36

  Others (Convenient Stores,    14.5   14      14       13        14
  Kiosks)                                                         
  ----------------------------- ------ ------- -------- --------- ---------

\*Post estimates

Following a rapid growth era \-- 35 percent between 1994 and 2000 \--
the Turkish food retailing market shrank about 20 percent in 2001 due to
the economic crisis, which continued throughout 2002. The economy
started to recover in 2003 and food sales increased about 4 percent in
real terms (on top of 18 percent local inflation). Despite the slower
growth since the crisis in 2001, hyper- and supermarkets continue to be
among the most dynamic sub-sectors. While existing food retail chains
continue to open up new stores, new international chains are buying
local chains. For example, Tesco of England bought majority shares of
Kipa in 2003. Competition is getting tougher among the food chains.
Oypa, which had fourteen stores decided to sell out its stores to other
chains and leave the retail food business. Hard discount stores also
grew rapidly starting from 2001. Discount stores have benefited from
changes in consumer preferences towards lower-price goods.

Trends in products and services provided by the major chains include
private label food items, phone and Internet purchase and delivery and
membership cards. Since bakkals have traditionally provided delivery
service, and the minimum purchase level is relatively low, supermarkets
hope this service will increase their customer base. In order to
increase their sales, large supermarkets have increased their
advertising spending and have started various promotion programs.

According to industry sources, at the end of 2002, there were over 4,000
supermarkets in Turkey, of which 150 were hypermarkets. The number of
hypermarkets increased more than three-fold between 1995 and 2000.
However, the growth rate of hypermarkets declined since the 2001 crisis
and the total number is expected to reach 160 units by the end 2004.

The share of hypermarkets and supermarkets is expected to increase from
their current 42 percent to more than 50 percent of the retail market by
the end of 2005. Although the share of bakkals and markets decreased
from 76 percent to 44 percent between 1994 and 2003, this segment still
continue to boasts more than USD10 billion in annual sales. However, the
growth in larger outlets is having an impact on the bakkals, and
increasing numbers of them are closing.

There were unsuccessful attempts by the government to slow down the
closure of bakkals by limiting new hypermarkets in the downtown areas.
In the near future, it is expected that the market share of bakkals will
fall below 35 percent. In the future the sector in large urban areas
will be dominated by major hypermarket and supermarket and hard discount
chains like Migros, Carrefour SA, Gima, BIM, Tansas, Afra, Yimpas etc.

# Number of retail Food Outlets

  --------------------------- --------- --------- --------- --------- ---------
                              1996      1998      2000      2001      2002

  Hypermarkets                40        90        130       149       151

  Large, Medium, Small        1,275     2,045     2,850     3,490     3,855
  Supermarkets                                                        

  Markets                     10,750    12,190    13,230    13,210    13,555

  Bakkals                     164,365   155,420   136,760   128,580   122,340

  Others (Connivance stores,  22,030    24,375    26,505    26,835    23,170
  Kiosks, etc.)                                                       

  TOTAL                       198,460   194,120   179,475   172,264   139,901
  --------------------------- --------- --------- --------- --------- ---------

Before the crisis, consumer-oriented agricultural imports to Turkey were
increasing at a modest rate. While imports only account for about 2
percent of retail food sales, an increasing variety of products are
finding their way onto the shelves.

Consumer-Oriented Agricultural Imports from All Sources, Based on UN
Trade Statistics

  ------------ ---------- ----------- ----------- ----------- -----------
               1996       1998        2000        2001        2002

  (Million     353.7      393.2       415.6       303.9       416.2
  USD)                                                        
  ------------ ---------- ----------- ----------- ----------- -----------

According to UN Data, US retail food product exports had a 4 percent
share of total consumer oriented food imports to Turkey in 2002. Tree
nuts, dairy products, snack foods, chocolate and confectionary goods and
sauces were the major US export items. Additionally there has been a
significant amount of US rice, corn, nuts, vegetable oil and pulses
exported to Turkey.

The following is a summary of the advantages and challenges facing US
exporters in the retail food sector in Turkey:

  ----------------------------------- -----------------------------------
  **Advantages**                      **Challenges**

  Change in retailing structure has   Customs Union with the EU creates a
  opened new areas for branded import privileged position for EU imports
  items.                              to Turkey. All food imports face
                                      arduous documentation requirements.

  Some US products are better priced  Transportation costs are much lower
  than local products. The lower      for nearby countries. Increased
  value of the dollar against the     cost of container shipment added
  Turkish lira in recent months has   additional cost on imported items.
  made some US products more          
  attractive.                         

  US products have a good image in    There are high import duties on
  Turkey and US tastes are welcomed   particular products. (Between 12%
  by Turkish consumers.               to 240% on bulk agricultural
                                      commodity products and 6% to 228%
                                      on processed food products)

  International retailers who market  There is a well‑developed local
  a wide range of imported products   food‑processing sector supplying
  in the sector have influence on     most product segments in the
  purchasing patterns.                marketplace.

  There is a growing demand for       US food products are poorly
  specialized products such as        promoted in Turkey. High shelf fees
  Tex-Mex, diabetic and diet foods,   charged by the large chains lead to
  which are mostly imported.          high costs for introducing new
                                      products.
  ----------------------------------- -----------------------------------

**II. ROAD MAP FOR MARKET ENTRY**

Turkey\'s highly fragmented food‑retailing structure is in a period of
transition, moving from individually‑owned small outlets such as
bakkals, to large outlets. As the industry changes, the supply chain
adapts to the changes. Hypermarkets, major supermarket and hard discount
chains import some of the items directly, whereas smaller outlets use
intermediaries as importers, distributors, and agents. A new-to-market
exporter can directly approach major supermarket chains' purchasing
departments. It is also useful to get in contact with independent
importers, especially those with nationwide distribution services. A
list of major Turkish food importers is available from TUGIDER
(Association of Food Importers) or from FAS Ankara. TUGIDER has 104
members and represents the majority of Turkish food importers. This
organization can be contacted by telephone at (+90) (212) 212-0919, and
by fax at (+90) (212) 212-0920 or at
[www.tugider.org.tr](http://www.tugider.org.tr/) . Another organization,
which may be of use in arranging Turkish contacts, is DEIK, the Foreign
Economic Relations Board, who assist Turkish businesses that are
interested in moving into international commerce. DEIK can be contacted
at telephone number (+90) (212) 243-4180, fax (+90) (212) 243-4184, or
at .

Interested US exporters are also recommended to participate in food
shows in Turkey. The leading food show in Turkey is **GIDA 2004,** which
is organized by ITF
([www.itf-exhibitions.com](http://www.itf-exhibitions.com/)), attracts
30,000 visitors and is scheduled to take place 9-12 September 2004 in
Istanbul.

**A. Supermarkets, Hypermarkets, Club and Warehouse Outlets**

Hypermarkets have recently become fashionable investments within the
retailing sector in Turkey. Sabanci, Koc and Dogus \-- three major
conglomerates in Turkey \-- are heavily involved in this sector. There
are more than 50 different chains operating in the Turkish retail
business. Foreign investors present in the Turkish retail market include
Carrefour SA (France) and Sabanci JV, Bookers (UK) and Sezginler JV
(joint ventures), or purchases of majority shares such as Tasco's recent
purchase of KIPA.

Large western‑style retail outlets have flourished in Istanbul, Ankara
Izmir, and other large cities such as Adana, Gaziantep, Bursa, Kocaeli,
Konya and Mersin. Here consumers are more aware of international trends,
have higher disposable incomes, and have automobiles to reach large
warehouse‑sized stores. Locally owned retail chains tend to concentrate
on middle to small cities and towns of Turkey.

**Distribution Channels**

Although distribution options vary depending on the product involved,
the typical product goes through the following stages to reach the
consumer: manufacturer/importer ‑ distribution company/department ‑
large‑scale wholesaler ‑ wholesaler/distributor ‑ retail unit.

-   Typically, an importer or agent who may also be a wholesaler and/or
    distributor imports products.

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-   Significant numbers of distributors offer nationwide service.
    National distributor companies distribute nearly 50 percent of total
    food and other consumer goods.

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-   Thirty percent of major manufacturers have their own distribution
    company operating nationwide.

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-   Most hypermarkets import directly besides purchasing from other
    distribution channels. However, this constitutes only a small
    portion of their sales.

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-   Increasing number of large and medium size markets (Migros, Tansas,
    Yimpas, Gima, Bookers) have begun to use e‑commerce for the supply
    of domestic and imported products.

+-------+------------+-------+-------+-------+-------------+--------+
| ##    |            |       |       |       |             |        |
| ####  |            |       |       |       |             |        |
| Major |            |       |       |       |             |        |
|  Supe |            |       |       |       |             |        |
| rmark |            |       |       |       |             |        |
| et Pr |            |       |       |       |             |        |
| ofile |            |       |       |       |             |        |
+-------+------------+-------+-------+-------+-------------+--------+
| *     | **Type of  | **O   | **T   | **N   | **Location  | **     |
| *Comp | Outlet**   | wners | urn-o | umber | (# of)**    | Purcha |
| any** |            | hip** | ver** | of    |             | sing** |
|       |            |       |       | Outl  |             |        |
| **N   |            |       | **USD | ets** |             | **A    |
| ame** |            |       | Mill  |       |             | gent** |
|       |            |       | ion** | **(20 |             |        |
|       |            |       |       | 03)** |             |        |
+-------+------------+-------+-------+-------+-------------+--------+
| M     | Hyper,     | Tu    | 1.5   | 484   | Nationwide  | Direct |
| igros | super &    | rkish | Bi    |       | & Intl'     |        |
|       | discount   |       | llion |       | (20)        | Imp    |
| SOK   | stores     |       | (CY   |       |             | orters |
|       | (SOK),     |       | 2003) |       |             |        |
|       | e-trade    |       |       |       |             |        |
+-------+------------+-------+-------+-------+-------------+--------+
| Metro | Cash &     | G     | 400   | 8     | Istanbul    | Direct |
|       | carry /    | erman | (CY   |       | (2), Izmir, |        |
|       | club       |       | 1998) |       | Bursa,      |        |
|       | centres    |       |       |       | Ankara,     |        |
|       |            |       |       |       | Adana,      |        |
|       |            |       |       |       | Bodrum      |        |
+-------+------------+-------+-------+-------+-------------+--------+
| BIM   | Hard       | Tur   | 1.2   | 750   | Nationwide  | Imp    |
|       | discount   | kish, | bi    |       |             | orters |
|       | stores     | US &  | llion |       |             |        |
|       |            | Saudi | (CY   |       |             |        |
|       |            | Ar    | 2001) |       |             |        |
|       |            | abian |       |       |             |        |
+-------+------------+-------+-------+-------+-------------+--------+
| T     | Hyper &    | Tu    | 500   | 192   | Nationwide  | Impo   |
| ansas | su         | rkish |       |       |             | rters, |
|       | permarkets |       | (CY   |       |             |        |
| Makro |            |       | 2003) |       |             | Distri |
|       |            |       |       |       |             | butors |
+-------+------------+-------+-------+-------+-------------+--------+
| Gima  | S          | Tu    | 450   | 78    | Nationwide  | Impo   |
|       | upermarket | rkish |       | (     | & Intl' (2) | rters, |
|       | &          |       | (CY   | Gima) |             |        |
|       |            |       | 2003) |       |             | Distri |
|       | discount   |       |       | 41    |             | butors |
|       | stores     |       |       | (     |             |        |
|       | (Endi)     |       |       | Endi) |             |        |
+-------+------------+-------+-------+-------+-------------+--------+
| C     | Hy         | Tu    | 120   | 12    | Nationwide  | D      |
| arref | permarkets | rkish | (Carr |       |             | irect, |
| ourSA |            | &     | efour | 4     |             | Imp    |
|       | Su         |       |       |       |             | orters |
| Champ | permarkets | F     | Sales | 135   |             |        |
| ionSA |            | rench |       |       |             |        |
|       | Discount   |       | CY    |       |             |        |
| DiaSA | stores     |       | 1998) |       |             |        |
+-------+------------+-------+-------+-------+-------------+--------+
| Beg   | Hyper &    | Tu    | 70    | 9     | Kayseri     | Impo   |
| endik | su         | rkish |       |       | (5), Ankara | rters, |
|       | permarkets |       | (CY   |       | (4)         | Agents |
|       |            |       | 2003) |       |             |        |
+-------+------------+-------+-------+-------+-------------+--------+
| Osmar | Su         | Tu    | 100   | 33    | Istanbul    | Impo   |
|       | permarkets | rkish |       |       | (42),       | rters, |
|       |            |       | (CY   |       |             | Agents |
|       |            |       | 1998) |       | Zonguldak   |        |
|       |            |       |       |       | (2)         |        |
+-------+------------+-------+-------+-------+-------------+--------+
| Pe    | Su         | Tu    | Ap    | 67    | Aegean      | Imp    |
| hliva | permarkets | rkish | prox. |       | region      | orters |
| noglu |            |       | 115   |       |             |        |
|       |            |       | (CY   |       |             |        |
|       |            |       | 2001) |       |             |        |
+-------+------------+-------+-------+-------+-------------+--------+
| Kiler | Su         | Tu    | n.a.  | 34    | Istanbul    | Imp    |
|       | permarkets | rkish |       |       |             | orters |
+-------+------------+-------+-------+-------+-------------+--------+
| Mar   | Small      | Tu    | 60    | 78    | Marmara     | Impo   |
| ketim | su         | rkish |       |       | Region      | rters, |
|       | permarkets |       |       |       |             | Agents |
+-------+------------+-------+-------+-------+-------------+--------+
| Tesco | Hy         | Tu    | 200   | 5     | Izmir       | Impo   |
| -Kipa | permarkets | rkish | (CY   |       |             | rters, |
|       |            |       | 2003) |       |             | Agents |
+-------+------------+-------+-------+-------+-------------+--------+
| Y     | Hyper &    | Tu    | 350   | 63    | Nationwide  | Impo   |
| impas | su         | rkish |       |       | & Intl'     | rters, |
|       | permarkets |       | (CY   |       |             |        |
|       |            |       | 2003) |       |             | Distri |
|       |            |       |       |       |             | butors |
+-------+------------+-------+-------+-------+-------------+--------+
| Co    | Hy         | Tu    | 40    | 4     | Istanbul    | Impo   |
| ntour | permarkets | rkish |       |       | (3), Ankara | rters, |
|       |            |       |       |       |             |        |
|       |            |       |       |       |             | Distri |
|       |            |       |       |       |             | butors |
+-------+------------+-------+-------+-------+-------------+--------+
| Maxi  | Hy         | Tu    | 150   | 4     | Istanbul,   | Impo   |
|       | permarkets | rkish |       |       |             | rters, |
|       |            |       |       |       | Tekirdag    |        |
|       |            |       |       |       |             | Distri |
|       |            |       |       |       |             | butors |
+-------+------------+-------+-------+-------+-------------+--------+
| Afra  | Hy         | Tu    | 150   | 22    | Konya (3),  | Impo   |
|       | permarkets | rkish |       |       | Antalya(2)  | rters, |
|       |            |       |       |       |             | Distri |
|       |            |       |       |       |             | buters |
+-------+------------+-------+-------+-------+-------------+--------+
| Real  | Hy         | G     | n.a.  | 7     | Ankara,     | Imp    |
|       | permarkets | erman |       |       | Gaziantep   | orters |
+-------+------------+-------+-------+-------+-------------+--------+
| B     | cash &     | Tu    | n.a.  | 12    | Istanbul,   | Direct |
| ooker | carry      | rkish |       |       | Izmir,      |        |
| (JV)  |            | & UK  |       |       | Kocaeli     |        |
+-------+------------+-------+-------+-------+-------------+--------+
|       |            |       |       |       |             |        |
+-------+------------+-------+-------+-------+-------------+--------+

B.  **Convenience Stores, Gas Marts, Kiosks, Etc.**

-   Seven Eleven is the leading organized convenience‑type store chains
    in Turkey since 1995. The new Seven Eleven owner, Opet, plans to
    increase the number of outlets from 25 to 50 by the end of 2005.

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-   Other convenience stores, gas marts and kiosks are generally single
    individual enterprises.

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-   Gas station mini‑marts are also new in Turkey, with seven or eight
    major brands. Marketim, a market chain, has made an agreement with
    Elf Gas Stations to open up 24 hour service gas station mini‑marts.
    They planned to open 25 outlets initially. Other gas stations and
    gas mini-marts do not operate as part of a chain marketing system
    (they self-stock).

**Distribution Channels**

Since this category is currently fragmented, with limited sales volume,
outlets cannot purchase from first hand distribution units or import
directly. They buy from wholesalers, hypermarkets, as well as importers,
agents and/or distributors.

C.  **Traditional Markets**

Bakkals, certain types of convenient stores and open-air bazaars are
forms of traditional outlets in Turkey. Bakkals are small outlets, which
sell anything from food (fresh and prepared) to personal care products.
Convenient stores mostly sell dry nuts, and confection items, tobacco
products and soft drinks. Open-air bazaars mainly concentrate on fresh
vegetables and fruits. All three are still preferred by the majority of
Turkish consumers. Two main reasons for this preference are: bakkals and
convenient stores are in convenient locations close to home and corner
bazaars offer a wide variety of products, fresh fruits and vegetables,
clothing, over-the-counter products and personal care products at low
prices.

**Distribution Channels**

-   Bakkals and convenient stores are supplied from various channels
    including distributors, agents, wholesalers, small wholesalers, and
    hypermarkets. Open-air bazaars obtain supplies from farmers and
    specialty wholesalers (vegetables and fruits).

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-   The sale of imported food items is much lower in traditional markets
    than in supermarkets, due to a different customer base. There is
    little import of fruit into Turkey, other than tropicals such as
    bananas, pineapples, mangos, and papayas. Imported bananas and kiwis
    are also available at traditional markets whereas mangos and papayas
    are still for luxury consumption, and are only available at big
    supermarkets and specialty retail outlets. Recently, Turkey has
    imported foreign apples as a luxury item.

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-   Imported pulses and rice are available both in the bakkals and open
    air bazaars since domestic production does not meet domestic demand.

**III. COMPETITION**

Low per capita income, poor income distribution, high local tariffs and
non-tariff barriers prevent any significant increase in imports of
consumer ready food items. Imported food items represent only a fraction
(two percent) of domestic food market. Industry sources estimated that
only the top five to ten percent of Turkish population can afford
imported food items. In addition, Turkey has a well-developed domestic
food processing industry and local food products continue to dominate
the Turkish retail market with 98 percent market share. Turkish food
producers are flexible and innovative and tend to produce products
similar to imported ones when they see a good opportunity to increase
sales.

In 2002 imported products accounted for only USD 416 million of the USD
23 billion retail food market. (2003 import data is not available yet).
Confectionery, chocolates, cheese and butter, coffee and cocoa, snacks,
biscuits, canned food, ready-to-eat meals, soft drinks, energy and
sports drinks, mineral water, and alcoholic beverages represent the main
retail products currently exported to the Turkish market. They mostly
consisted of widely known international branded products.

According to UN data during the first 11 months CY2003, Turkey imported
about USD 24 million worth of consumer-oriented agricultural products
from the US of which tree nuts, pet food, processed fruits and
vegetables, seafood, dairy products and snack foods were among the
leading items. The main competition for US food products comes from
European countries, which enjoys the advantage of the Customs Union
Agreement.

On average, European countries have two-thirds share of total Turkish
retail food imports. Investments of major European hypermarket chains
such as Carrefour SA of France, Metro and Real of Germany, and Booker
and Tesco of UK have also played a role in the dominancy of European
countries in Turkish imports of retail food products. The great majority
of imported dairy products, cheese, snack foods, processed fruits and
vegetable are traditionally sourced out of EU countries. During 2002
Turkey imported a total of USD 55 million dairy products, USD 26 million
snack foods and USD 9 million breakfast cereals of which EU countries
respectively supplied 85 percent, 82 percent and 78 percent.

**IV. BEST PRODUCT PROSPECTS**

# Products now present in the market

The best product prospects for the imported food market are
internationally well-known branded products. Branded products in general
accounted for 30 percent of overall imported (non-bulk) food products.
These include cocoa and instant coffee, chocolate and confectionary
goods, cookies and crackers, breakfast cereal, various cheeses, soft
drinks & alcoholic beverages, and sauces. Major imported items break
down into the following categories:

**Cocoa and coffee**: Turkey is dependent on imports in this category,
since there is no local production of cocoa and instant coffee. The
dominancy of the Nestle and Jacobs' brands in the instant coffee market
makes it difficult for new entrants to the Turkish market. Recently
however, some discount chains and cash & carries, such as BIM and
Booker, have commenced the direct importation of low priced products.
However, since the arrival of Starbucks there is a niche market for
gourmet coffee in the upscale cafes and restaurants as well.

**Dry nuts and confection items***:* US Popcorn, roasted corn, almonds
and confection sunflower seeds are popular among the Turkish consumers
and there is a growing market of these items provided price is
competitive compared to other sources. US exports of almonds to Turkey
reached a record level in 2003.

**Wine***:* Recent changes in local wine import and distribution
regulations will allow importers to import wine directly rather than
going through TEKEL (Turkish Tobacco and Alcohol Monopoly). These
regulatory changes will also cut total import taxes and enable them to
distribute wine freely. Popularity of wine as an alcoholic beverage has
increased in recent years. Consumption has doubled during the last five
years, and Turkish consumers are willing to try new varieties.

**Chocolate and confectionary goods**: Although there is a very
developed local industry in Turkey, major international brands have the
opportunity to sell small quantities of premium products in high-end
outlets such as delicatessens, hypermarkets and supermarkets. It is very
difficult for lesser-known brands to be successful in Turkey.

**Flour and flour-based products**: Crackers and cookies, diet breads,
crisp breads and special kinds of pasta are present in the Turkish
market. These products tend to appeal to higher income consumers, and
are distributed via upper middle-income retail outlets (specialty shops,
supermarket and hypermarkets).

**Energy & Sports Drinks**: The young, wealthy city dwellers favour the
\"sporting\" lifestyle and want the products that go with it. Turkey
also has some domestic production of \"energy\" and "sports" drinks, and
existing brands are continuing to experience large growth rates.

**Breakfast Cereals**: Corn flakes, instant oats, muesli, bran fibre
flakes with raisins, mixed fruit and chocolate cereals are major
breakfast items welcomed by Turkish consumers.

**Sauces and syrups***:* Imports of these products continue to grow as
tastes diversify. These products can also be found in smaller
supermarkets and bakkals in the larger cities.

**Ice Cream**: Two brands are dominant in Turkish ice cream sold through
retail outlets, with many smaller newcomers. Sales are increasing
dramatically (15-20 percent) due to tourism and changing taste and there
is much room for super-premium brands that can adapt to the local taste
preferences or get placement in tourist outlets. See another report,
**TU9029 Market Brief - Ice Cream** for details.

**Pet food**: This market is increasing about 20 percent annually, with
very limited domestic production.

**Products with strong sales potential not present substantially in the
market**:

**Beer**: Recent changes in beer import regulations, which eased terms
for importation and distribution of imported beer, represent a good
opportunity for US beer. Beer consumption in Turkey is increasing with a
higher rate (about 1.4 percent per year compared to zero in the EU) due
to a relatively large young population and large number of foreign
tourists (14 million in 2003). Presently almost all the beer consumed in
the country is produced locally and Turkish consumers are open to new
products and tastes.

**Ready-to-eat, ready-to-cook meals & canned soup**: The ready-to-eat
and ready-to-cook meals market has a high potential, linked to the
increase in working women and the generally more hectic lifestyles.
There are only a few local companies marketing such products. Foreign
importers, therefore, especially those specializing in Far Eastern,
French, and Tex-Mex, have a good chance for successful market entry.

**Gourmet/Foreign Foods:** As Turkish tastes become more sophisticated,
there is a growing interest now shown in restaurants featuring novel
foods such as \"Tex-Mex\", \"Chinese\", "Thai" and \"Japanese\". The
availability of these foods is likely to spread from high-priced
restaurants to the retail food outlets in coming years.

**Frozen food**: Though there is a limited amount of imported frozen
food and frozen seafood in the Turkish retail market, importers believe
that there is good potential in this sub sector over the next five
years.

Products that are not successful in the market:

There are a few examples of failed products in the Turkish market, such
as some international brands of chewing gums and chewing candies. It is
not the intrinsic product types that have failed, but the specific
brands imported or the inadequate marketing strategies or expenditures
applied when the product lines were introduced. Adopting products
popular in the west is a large part of the modern Turkish lifestyle.
Internationally known brand names are very useful for this. Exporters
should be particularly sensitive to brand positioning and be ready to
invest in necessary research and marketing support to assist their
importing partners in a successful introduction.

**V. POST CONTACT INFORMATION**

FOREIGN AGRICULTURAL SERVICE

EMBASSY of the UNITED STATES

110 ATATURK BULVARI

ANKARA, TURKEY

TEL: (90‑312) 455-5555 ext. 2406/2407/2420

FAX: (90‑312) 467‑0056

INTERNET: agankara@fas.usda.gov

HOMEPAGE: www.fasturkey.org

For more information on high value food and other agricultural sector
reports for Turkey or other countries around the world, please refer to
the FAS home page, URL address: