Multinational consumer goods company Unilever has invested US$128mn into a new ice cream production facility in Turkey, demonstrating the potential the country offers confectionery producers. BMI forecasts confectionery value sales (in local currency terms) to grow by 12.3% in 2014, and by a compound annual rate of 6.2% to 2017.
With a large, youthful population armed with rising spending power, Turkey continues to offer a dynamic consumer base for growth in confectionery volume and value sales over the medium term. We forecast confectionery volume sales to rise by 2.2% and value sales to tick up by 8.1% in nominal terms to 2017, demonstrating further room for premiumisation across the confectionery sector. With regard to the country's competitive landscape, the confectionery industry is a mix of domestic and international firms. Turkish companies Ulker and Eti are popular and growing, but firms such as Mondelez International and Nestlé are well established in the country and invest large amounts. Last month, Ulker published H1 results that reflect the strength of the Turkish confectionery market. For H113, overall sales grew 16.1% year-on-year (y-o-y) to TRY1.3bn (US$671mn), with chocolate sales increasing by 22.4% y-o-y to TRY645mn (US$332.9mn). Indeed, we expect the chocolate sector to outperform the confectionery market as a whole in the coming years.
|Ice Cream To Outpace Confectionery|
|Confectionery & Ice Cream Sales (tonnes)|
BMI also expects ice cream sales to outperform the overall confectionery market, with per capita sales forecast to rise by 28% over our forecast period, from 2.1kg in 2013, to 2.7kg in 2017. The country's hot climate, young population and increasing exposure to packaged ice cream brands will fuel such growth. Even more impressively, according to Unilever, per capita ice cream consumption was under 0.5 litres per annum in 1990. As mentioned, the multinational has invested US$128mn into a new production plant, hoping to consolidate its position as market leader in the country. Unilever has achieved this distinction by distributing its homogenous and well-known brands, such as Cornetto and Magnum, nationwide. Greater numbers of multinational companies are entering the fray. In 2012, US-based ice cream parlour chain Cold Stone Creamery announced that it was looking to enter the market, with plans to open its first store in Turkey at the beginning of 2014.
Turkey's young and growing population, and its increasing incomes, will drive the country's confectionery market, in particular the ice cream market. As the country moves on from this year's political fracas, tourism numbers are also expected to increase, which will benefit the sector enormously.