This article discusses the market conditions, opportunities, and challenges encountered during the distributor search process in the Turkish market for a British sweetener manufacturing company in 2018.
The British sweetener manufacturer, TSC, produces under the Smer brand and offers private label products, especially for discount retailers like Aldi. Through optimized lean production processes, the company can produce high-quality products at low costs. TSC has a significant market share in the UK and a few other European countries. During the distributor search process for TSC in Turkey, phone calls, emails, and face-to-face meetings were conducted with approximately 60 distribution and import companies in the food sector. Given Turkey’s financial situation, these companies were pleased to be contacted by a foreign British company. Initially, they were cautious about whether a foreign product would have a chance in the market, but presenting an opportunity for a competitively priced discount product changed their perspective.
Sweeteners are not medicines
Like in many countries around the world, sweeteners were first introduced in Turkey through pharmacies. As a result, sweeteners have an image of being a medication for diabetes and obesity. Although sweeteners gained popularity in the 1990s, they lost their appeal following this initial trend. Even though they started to be sold in supermarkets, they could not find a suitable spot on the shelves and were often placed in special sections like diabetes and organic foods rather than alongside sugar, coffee, or tea. This positioning led to sweeteners being perceived as unusual and special products. However, sweeteners have been offered alongside sugar in hotels, cafes, and restaurants, which has helped normalize their use. In the past decade, the inclusion of sweeteners in coffee shops of international brands like Starbucks has increased awareness among consumers.
The Turkish sweetener market
Despite the growing awareness of sweeteners, the sweetener industry in Turkey is not as strong as expected. However, the growth rate in Turkey (22%) is significantly higher than the global average (5%). As the country with the highest obesity rate in Europe, the importance of diet and health products is constantly increasing. According to the Turkish Statistical Institute, 2,963 tons of high-intensity sweeteners were imported into Turkey in 2016. Imports have doubled in the past four years, with more than half coming from China.
Prices
While the international market price of sugar is $800 per ton, the price in Turkey is $1,300. The cost of using high-intensity sweeteners instead of sugar, on average, is $61 per ton for sugar-equivalent sweetening. Turkish import laws allow the import of aspartame, saccharin, sodium saccharin, other saccharin salts, sodium cyclamate, calcium cyclamate, acesulfame-K, neohesperidin dihydrochalcone, thaumatin, sucralose, and aspartame-acesulfame salts. Thanks to relatively low Turkish import taxes, high-intensity sweeteners are affordable and increasingly preferred for food and beverage production.
However, despite sweeteners being cheap in the industrial market, this does not reflect in the prices of tabletop sweeteners in supermarkets. Compared to Western European countries, sweeteners are significantly more expensive in the Turkish market. Tabletop sweeteners are generally considered a luxury and a “health product.” This perception is one of the likely reasons why the tabletop sweetener market is less developed than expected.
Concerns about sugar and sweeteners
Like consumers worldwide, Turkish consumers have various concerns about sugar and sweeteners. Excessive sugar consumption is a concern due to its potential to cause health problems like obesity, diabetes, and heart disease, while there are uncertainties and debates about the long-term health effects of artificial sweeteners.
The zero-calorie nature of sweeteners may lead some consumers to believe they do not increase the feeling of satiety, potentially triggering the tendency to eat more. Moreover, concerns about whether sweeteners can increase sugar addiction and whether the sugar content on labels is accurately stated create additional uncertainties. Preferences for natural and organic alternatives also stem from concerns about chemical content. These concerns shape consumer choices regarding sugar and sweeteners and influence the market perception of products.
Current market
Despite the popularity of sweeteners, the existing sweetener market in Turkey is less developed than expected. The marketing department of Splenda, the market leader, estimated the value of the sweetener market at $8 million last year. This figure is equivalent to approximately 300,000 consumer packages.
Artificial sweeteners are regulated in detail in the Turkish Food Codex. They are allowed to be used in a wide range of food products, including dried fruits, nuts, biscuits, soups, fruit juices, milk, ice cream, sauces, and marmalades. Although consumers may not be aware of their daily consumption of these sweeteners, food manufacturers frequently prefer them. Since sweeteners offer a more cost-effective option compared to sugar beets, they are increasingly being used by food manufacturers.
There are two major companies producing sweeteners in Turkey. One is Krrdl, which produces the Frbl brand available in Migros supermarkets and online platforms. The other is Egpk, which produces under the Tkt brand, found in Migros and Carrefour supermarkets.
Challenges related to the payment system
Like most sectors in Turkey, the retail industry operates with delayed payments. The minimum payment period is typically 60 days, which can extend up to 12 months. Combined with rapidly changing exchange rates, manufacturers, distributors, and importers act as financiers and risk-takers. These risks are often reflected as higher margins.
Therefore, the payment structure is one of the most critical issues to discuss during negotiations. It is essential to think about and talk over the sharing of benefits and risks during negotiations. If the prices in the Turkish market are significantly lower than those available elsewhere, companies may consider opportunities to take advantage of this situation.
Supermarkets in Turkey
Among the supermarkets in Turkey, the most important national discount markets are Bim, Şok, and A101. Migros and Carrefour are other major market chains.
In addition to these five major chains, strong regional supermarket chains with up to 500 branches include Hakmar, Çağrı, Mopaş, and Uyum. Additionally, there are approximately 150,000 small grocery stores in Turkey, although their numbers are gradually decreasing. Street markets also hold a significant place in Turkey.
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