THE FOOD AND BEVERAGE SECTOR IN

FLANDERS INVESTMENT & TRADE MARKET SURVEY

The Turkish Food and Beverage Sector Market Report November 2015

Authors: Simla Çınar and Raphael Pauwels

Flanders Investment and Trade, c/o Consulate General of Belgium Siraselviler Caddesi 39 34433 Taksim Istanbul Turkiye

1 Intro

The following report aims to guide the trade and investment strategies of Flemish companies seeking to expand into the Turkish food and beverage market.

First of all we need to point out that Turkey itself is a big producer of food and beverages. The sector has an 18.9% share in GDP (2014). This has to do with the fact that the country is blessed with a suitable climate and ecological conditions for agricultural production, for a wide variety of fruits and vegetables.

Turkey is the 7th largest agricultural producer in the world, and the largest one in .

It is the world’s largest producer of apricots, , figs, cherries and sour cherries, quinces.

It is Europe’s largest producer of apples, green , beeswax, , chick peas, green chilies and peppers, cotton lint, cottonseed, and gherkins, , grapefruits, natural honey, , lemons and limes, , chicken meat, melons, whole fresh sheep milk, dry , green onions, , safflower seed, spices, spinach, strawberries, tea, tomatoes, vanilla, vetches, , watermelons.

No wonder then that Turkey’s exports of food and beverages are much larger than its imports.

In 2014 Turkey’s exports of the food & beverage industry reached USD 11.1 billion, coming from USD 4.3 billion in 2005 and USD 6.7 billion in 2010. Its main export markets are: , Germany, Syria, The Netherlands, USA.

In 2014 Turkey’s imports in the food & beverage categories stood at USD 5.6 billion, coming from USD 2.1 billion in 2005 and USD 3.4 billion in 2010. The main import markets are: Russia, Indonesia, USA, Ukraine, Germany.

So both exports and imports show rapid growth.

The current economic climate may not be too favourable in the short term, with Turkey’s GDP growth expected to be around 3% in 2015 and in 2016 as well, according to most financial institutions. Far below the 8 and 9% growth figures of a few years ago.

But…

… the fact remains that Turkey is a growing market with a large population of nearly 78 million people, a young population (50% is younger than 30), of increasing affluence, and more and more open to international flavours, to imported foods and drinks, to convenience food. A market with continuously increasing market share of the ‘organised retail’ as well.

Fuelled by increasing disposable income levels and strong consumer demand, the Turkish food retail sector reached USD 121 billion in 2014. The share of food in the total retail sector is 60% and the food retail sector is expected to grow 8% annually in the 2015-2018 period.

In this respect, opportunities exists for Flemish companies that are able to supply the market with novel and lifestyle aspiring products.

2 Cookies, chocolates, and beers from Flanders have already found their way to the shelves of Turkish supermarkets, to restaurants and bars. Bakery products, soy drinks, coffee filters as well. They show it is possible, and that there’s room for more to come – even though regulation can be a hassle.

May this report help you discover the opportunities.

Food & Beverage Sector Report, Turkey | 2015 3 2 Contents

1 Intro ...... 2 2 Contents ...... 4 3 Economic Climate - Setting the scene ...... 6 4 The Silver Lining - Business of food and beverages ...... 9 5 Fruit &Vegetables ...... 11 5.1 Fruits ...... 11 5.2 Apples ...... 12 5.3 Pears ...... 13 6 Dairy Sector ...... 14 6.1 Milk ...... 14 6.2 Cheese ...... 17 7 Baked Goods ...... 18 7.1 Biscuits ...... 18 7.2 Cereals ...... 19 8 Red Meat ...... 20 9 Fish ...... 22 10 The Beverage Business - Is the glass half full? ...... 24 10.1 Beer ...... 25 10.2 ...... 26 10.3 Spirits ...... 28 11 Food Retail Landscape ...... 29 12 Intermediaries in Agro-Food Networks ...... 31 13 Impact of Russia’s trade sanctions against the EU ...... 33 13.1 Russia and Turkey...... 33 14 Regulation of the Food and Beverage Sector ...... 36 14.1 Labeling Requirements ...... 37 14.2 Compulsory Information ...... 38 14.3 Nutritional Requirements ...... 39 14.4 Health Claims ...... 40 14.5 Labelling for Food Additives ...... 40 14.6 Packaging and Container Regulations ...... 41 14.7 Food Additives Regulations ...... 41 14.8 Pesticides and Other Contaminant ...... 42 14.9 Other Regulations ...... 42

4 14.10 Copyrights and Trademarks ...... 47 14.11 Import Procedures ...... 47 14.12 Sending Samples ...... 49 14.13 Latest in Regulation ...... 49 15 Duty Rates on Agricultural and Dairy Products ...... 51 16 Sources ...... 54

Food & Beverage Sector Report, Turkey | 2015 5 3 Economic Climate - Setting the scene

Turkey has experienced a volatile economic climate in 2014 and 2015, in line with the global political and monetary developments coupled with factors intrinsic to the country. War in Iraq and Syria, continuation of economic weakness in its largest trading partner, the European Union, in addition to the slowdown of China’s economy, portrayed an unfavourable international picture.

At home, political tension heightened and terror attacks resumed in the summer of 2015, and Turkish security forces went into a full force offensive against the Kurdish PKK militants. The economic environment casts a dark shadow over expectations, with the devaluation of the local currency (USD/TRY went from 2.20 early 2014, to a high of 3.07 in September 2015, then 2.86 by mid November), the softening of growth figures, and rising unemployment. Furthermore, the sharp rise in interest rates needed to keep the lira from plunging took its toll on the economy and led to a steep rise in non-performing loans by Turkish nationals.

It’s expected by Merrill Lynch that Turkey’s credit boom is coming to an abrupt end and is likely to deflate further amid tighter liquidity in 2016. However, a more positive outlook is on the cards for the next decade. The bank states that the share of households with an average annual disposable income in excess of USD 25,000 is expected to grow 50% over the next decade, rising from 40% in 2014 to over 60% by 2025-30, according to Euromonitor.

The formation of such a notable layer of middle and high income earners is thus expected to have a knock-on benefit for the consumer goods and services sectors. When compared to other developing countries such as Russia and South Africa, the Bank states that Turkey could see a much more rapid middle-class formation (BofA Merrill Lynch, Consumer and Retails Report September 2015).

Over the last year a positive trend occurred that diminished Turkey’s current account deficit problem since Saudi Arabia’s decision to increase oil output in September 2014, which resulted in the slump of oil prices from USD 100 to USD 50 levels. For Turkey, as a net energy importer, this in turn led to a marked improvement of the country’s balance of payments account. According to the Economist, Turkey’s energy imports had been costing 6% of the gross domestic product (GDP) a year, therefore, the halving of energy costs immediately relieved pressure from the country’s current account and helped somewhat in fighting high inflation.

Here are some of the underlying statistics of the country:

Indicator Term Data Consumer Price Index September 2015 7.95% Unemployment Rate June 2015 9.6% GDP 2Q 2015 and FY 2014 3.8% and 2.9% GDP 2Q 2015 and FY 2014-Current Prices $361 billion and $800 billion GDP Per Capita 2014 $10,390 Exports Value Jan-August 2015 $95 billion Imports Value Jan-August 2015 $140 billion Tourism Revenue 2014 $34.3 billion Tourist Number 2014 41.4 million Total Population 2014 77.7 million

6 Germany (9.6%); Iraq (6.9%); UK (6.3%); Italy (4.5%); France (4.1%); USA (4%); Russia Major Exports Markets (3.8%); Spain (3%); UAE (3%); (2.5%) (2014)

Russia (10.4%); China (10.3%); Germany (9.2%); USA (5.3%); Italy (5%); Iran (4.1%); Major Imports Sources France (3.4%); South Korea (3.1%); India (2.8%); Spain (2.5%) (2014)

 Customs Union Agreement with the EU

 Free Trade Agreements with , Bosnia Herzegovina, Chile, Croatia, Trade Agreements EFTA member countries (Switzerland, Norway, Iceland and Liechtenstein), , , Israel, Jordan, South Korea, , Mauritius, Montenegro, Morocco, , Serbia, Tunisia

Source: TurkStat and Invest in Turkey

After recording a 2.9% growth in 2014, the International Monetary Fund (IMF) expects Turkey to roughly maintain the same speed in 2015 and 2016. This is not only well below the growth figures of 8% to 9% in 2010 and 2011, but also below the average of some 4.5% over the past decades. However on the longer term, beyond the current economic slowdown, one of the big assets of Turkey is its large, growing and young population, where the median age of its 78 million people is 30. Rising incomes in addition to the willingness of the young population to experience new goods and services makes the country an exciting market to expand, especially for Western producers with products which promote a more affluent lifestyle, such as food products and beverages from Flanders.

The graph here below gives an indication of the purchasing power standards across Europe, in terms of gross domestic product per inhabitant. Although Turkey scores a positive growth pattern in terms of purchasing power statistics, it still significantly lags behind European levels.

Food & Beverage Sector Report, Turkey | 2015 7

8 4 The Silver Lining - Business of food and beverages

Although the economic climate may be less favourable in the short term, the fact remains that Turkey is a growing market with a young population of increasing affluence. Turkish customers are open to international or ethnic flavours, and a small niche is also willing to pay the price for organic and healthy lifestyle products. In this respect, opportunities exists for Flemish companies that are able to supply the market with novel and life style aspiring products. A thorough market research for the product must be established prior to entry and a trusted and experienced Turkish partner is recommended for a smooth market access.

The Turkish economy grew 4.1% in 2013 reaching a gross domestic product (GDP) of USD 821.9 billion, making Turkey the 17th largest economy in the world. In 2014 growth was 2.9%, while a depreciating lira made the GDP in US-dollar terms come out at USD 800 billion. For 2015 the international financial institutions expect the GDP growth will be between 2 and 3%. GDP per capita has grown 135% from $4,500 in 2003 to $10,806 in 2013, falling slightly to $10,482 in 2014.

Household consumption increased by 11.5% in 2013 to reach USD 582 billion. The proportion of household expenditures spent on food has decreased over the last decade from 27% to 20%, but the amount spent has grown from USD 59 billion in 2003 to USD 116 billion in 2013 (GAIN Exporter Report, 2014).

For 2015 research firm Business Monitor International (BMI) sees a decline in consumption expenditure, and a rather dramatic slowdown in all segments of consumer credit growth. However, BMI also adds that they do not believe food consumption growth in Turkey will be drastically affected.

This is due to the fact that the slowdown in private final consumption in Turkey will be fuelled by the decline in credit purchases, which typically does not affect non-cyclical household expenditure. It’s further noted that multinational FMCG and retail firms are investing in the country at an increasing pace. The research firm concludes that they believe the country offers one of the best global opportunities in terms of consumer expenditure growth from continuation of the income growth of the large and youthful population. All expectations made by BMI for the next years point to a positive growth for the sector. The summary of compound annual growth rate (CAGR) expectations by BMI for 2013 to 2018 period is as follows;

. Food consumption sales growth: 9.9% per year; . Food consumption per capita sales growth: 8.8% per year; . Alcoholic beverages value sales growth: CAGR to 2018: 9.4% per year; . Soft drinks value sales growth: CAGR to 2018: 10.7% per year; . Mass grocery retail sales: CAGR to 2018: 12.3% per year;

Prior to looking at specific food groups in the next chapter, it may be useful to point to the general advantages of exporting to or setting up in Turkey, as viewed by the GAIN Exporter Report of the US Department of Agriculture:

. Western products enjoy customer preference as income level rises. . Change in retailing structure has opened new areas for branded import items. . Demand for food products is also growing from the prominent tourism sector. . High export potential due to geographic proximity to Russia and Middle Eastern markets.

Food & Beverage Sector Report, Turkey | 2015 9 . International retailers that market a wide range of imported products in the sector have influence on purchasing patterns. . The growth of the food market also facilitates the demand for food ingredients, which are mostly imported. . The Customs Union with the EU creates an advantage for companies from Europe in terms of price and lower import duties, as well as the harmonisation of regulations between member and candidate countries.

On the flip side of the coin:

. Laws governing the food sector are mostly focused on protecting local production rather than promoting trade. . Regulations can be unclear, complex and can be changed overnight. . Depreciation of lira against the euro, has negatively influenced imported products with cheaper Turkish subsidies. . Turkey has a well-developed food processing sector, with high quality products and competitive pricing. There is also a rich base of agricultural production, providing raw ingredients at cheaper prices. . In retail stores, competition for shelf space has led to higher costs for introducing new products. . Turkey is a complex and challenging market requiring adaptability and persistence. . Challenges may lie in areas such as lack of transparency in regulations and documentation, unpredictable judiciary and legal framework.

In light of the backdrop provided above, the following chapters explore market opportunities, business climate and future expectations for a number of large categories in the Turkish food and drink sector.

10 5 Fruit &Vegetables

With a growing population of 78 million, Turkey is one of the largest markets in its region. Steady growth in income levels and changing consumer habits of the younger generation provide opportunities for exporting certain types of agricultural produce to Turkey. The market is moving towards an increased regulatory control for quality and performance and increasingly affluent consumers are seeking greater variety of better quality produce.

On the other side, it should be stressed that Turkey itself is a significant player in the agriculture market and has export volumes that largely surpass its import levels. The strengths of the local industry include the size of the market in relation to the country’s young population, a dynamic private sector economy and substantial tourism income.

Consequently, Turkey’s food industry has registered steady growth in recent years, with Turkish consumers becoming increasingly demanding, driven by the multitude of choices offered by mass grocery retail outlets. Rising disposable income and changing consumption patterns, along with the increasing number of women in full-time employment, have all led to an increase in interest for packaged and processed food, such as ready-to-eat meals and frozen food.

According to the Food Importers Association, unfortunately there are no viable statistics about the share of locally produced and imported goods in the agricultural sector. The Association states that around half of the produce is imported from overseas and there are a large amount of small sized producers in Turkey.

It’s argued that it is hard for international producers to break into the Turkish market as import duties on some products such as apples, pears and kiwi are as high as 60%, even climbing to 148% for bananas.

5.1 Fruits

According to the fresh deciduous fruit annual Gain report, Turkey’s production of all deciduous fruits (apples, , pears) was reduced in 2014 compared to the previous year, due to frost in spring of 2014.

Details of production levels are as follows, all figures are full year 2014 and are compared to 2013;

. Apples production down 23%, 2,233,000 metric tons (MT). . Pear production decreased 24%, 295,000 MT

Saudi Arabia, Syria, Egypt, Iran and Iraq continue to be the leading export destinations for Turkish apples and pears and Russia is the leading market for exports in 2014.

The report further states that Turkey is the second largest producer of apples and pears in Europe, though most of these are not of commercial varieties. Fruit producers usually run small operations; however a few large commercial plantations were established in recent years, which use better quality seedlings and modern agriculture methods. Most of the production in large and commercial plantations is exported, as they grow new varieties which are in high demand in importing countries. There is an increasing trend of establishing new plantations, specifically for export-oriented production that is more profitable.

Food & Beverage Sector Report, Turkey | 2015 11 5.2 Apples

Apples have traditionally been the most economically significant fruit crop for Turkey, followed by grapes and pears. Turkey’s diverse geographic regions allow production of 460 varieties of apples but only 10 of these are commercially viable. Apples are grown in many regions across Turkey but approximately 50% of all commercial apple production comes from three provinces: Isparta, Karaman and Nigde. These provinces are located in the southern part of Central and the Northern Mediterranean Regions.

Commercial apples are also grown in Antalya, Eregli, Denizli, Yalova and Amasya. Apple plantation area has not been increasing, but there is a notable switch from traditional apple trees to modern shrub-type varieties. Today almost half of the total apple production is modern varieties.

About half of the apples grown in Turkey are Red Delicious (Starking) and about one third are Golden Delicious. Amasya is the most popular local variety (shown in the below picture) and constitutes about 10 percent of total production. Granny Smith, Fuji, Gala, Jonagold, and Braeburn varieties are increasingly popular. New varieties are also becoming increasingly popular among growers due to their higher export potentials. Approximately 3% of Turkey’s total apple production is certified organic.

Apple production in most parts of Turkey was reduced due to weather conditions in 2014. The spring frost especially hit red apple varieties. In the east of Central Anatolia the yield loss rate has been between 50% to 70% and in the largest apple producing city, Isparta the rate of loss was about 20%. The blooming rate was normal but frost led to scarce fruit setting. Red Delicious was the most affected variety, the production of which went down from 1,300,000 MT in 2013 to 700,000 MT in 2014.

Traditionally about 90% of Turkey’s apple production is consumed as fresh fruit. About 5% is processed into juice, canned products, vinegar or dried products and less than 4% are exported. The remainder is lost to damage, and is added into domestic consumption in the production, supply and demand.

Consumers in larger cities recognize apples according to their colours. There is a lack of awareness in terms of varieties. Turkish consumers usually prefer red apple varieties and 43% of total apple production is composed of red varieties. Turkish consumers prefer sweet and strong flavoured varieties, therefore Gala and Fuji varieties are increasingly popular.

Amasya variety is the most important among local varieties and their market demand is increasing. Red Delicious is preferred more at the beginning of the harvest season and Golden Delicious after the New Year. This is because Red Delicious apples become softer a few months after they are harvested unless they are kept in cold storage properly. Controlled atmosphere storage facilities, however allow apples to be marketed throughout most of the year.

The Ministry of Economy published a communiqué on export subsidies for apples on April 6, 2011. According to this communiqué, the Turkish government provides USD 50 per Metric Ton (MT) to apple exporters annually. This subsidy is not given in cash, but can be deducted from utility costs such as electricity and water, or can be deducted from taxes.

There are no subsidies provided to pear and grape exporters. Producers of all fruits can benefit from the 350 (TL)/decar government support when they are establishing a new orchard. This support is given only to producers who buy certified saplings.

12 5.3 Pears

Pear production was also hit severely by weather conditions last year where production was decreased from 390,000 Metric Ton in 2013 to 295,000 Metric Ton in 2014. Production is expected to return to normal levels in 2015 if weather conditions are favourable.

Many different varieties of pears are grown in Turkey and are harvested throughout the year. Almost 50% of the production comes from the , followed by the Aegean and Northern Mediterranean regions, concentrated in cities like Bursa, Yalova, Antalya, , Konya, and Burdur. Both domestic and foreign pear varieties are grown in Turkey. The major varieties are Santa Maria, Akca, Mustafabey, Cassia, Willliams, Ankara and Deveci.

About 90% of pears are consumed fresh, 3-5% are exported, 2-3% are canned and the remainder is unsuitable for use. Annual per capita consumption of pears is 5 kilograms. Rusty varieties like Conference and Comice are not preferred by Turkish consumers. The most preferred varieties are Santa Maria, which constitutes 30% of total production, Deveci 20%, Ankara 10%, Williams 10%, Keiffer 5% and Akca 5%. In recent years, Santa Maria, Deveci and Williams varieties are cold stored and sold in the markets until March (Euromonitor, Agriculture Report for Turkey).

Food & Beverage Sector Report, Turkey | 2015 13 6 Dairy Sector

6.1 Milk

The majority of milk in Turkey is adult drinking milk. Plain drinking milk for children, excluding baby milk, is very limited with the only prominent product being from Danone. Within flavoured milk drinks, drinking milk for children prevails. A significant majority of flavoured milk drinks in Turkey are positioned towards children and they are mainly ambient products.

According to the Turkish Statistical Institute, the amount of collected cow's milk increased from 6,748,565 ton in 2010 to 8,632,246 in 2014. In the first 9 months of 2015 the amount was 6,633,571 ton, slightly higher than the 6,452,272 ton in the same period in 2014.

In 2014, drinking milk products registered single-digit current value growth which was marginally lower than the review period CAGR of 6%. This performance was driven by a positive environment over the last few years of the review period in terms of availability and demand for more natural drinking milk products. From 2011 onwards, the supply of fresh/pasteurised milk products increased significantly in response to consumer demand for more natural and healthier drinking milk. In 2012, the growth of fresh/pasteurised milk reached a peak, which is the reason for the higher CAGR over the review period compared to 2014.

The number of manufacturers producing fresh/pasteurised milk rose and the range of products available increased. In 2012, for example, the first reduced fat fresh/pasteurised milk was launched by Tat Konserve under its Sek brand. In addition, this milk type is dominantly packaged in glass bottles which consumers associate with health and hygiene. By the end of the review period, however, the rate of growth had slowed.

Change ratios of production of milk and milk products, 2014 - 2015 (y/y) January February March April May June July Collected Cow Milk 0,6 2,4 1,9 2,9 4,3 3,2 0,1 Cream from farms 72,9 110,9 8,1 51,3 45,8 97,8 33,3 Drinking Milk 1,8 7,7 5,7 2 4,1 0,9 7,5 Cream -8,7 6,4 -4,2 -2,2 -3,6 44,5 5,2 Concentrated Milk 38,1 46,8 15,8 10,5 39,7 25,1 72,4 Whole milk powder, partly skimmed milk powder, cream milk powder -27,6 -19,2 3,4 15 -4,3 -18,6 -4,9 Skimmed milk powder 15,5 0,5 0,6 1,5 -3 29,3 17,2 Butter 11,5 3,1 22,5 12,9 16,2 12,3 20,4 Cheese made from cow's milk 7,1 4,6 -1,6 9,9 10,3 7,7 3,2 Cheese made from sheep,,buffaloe and mixed milk 230,5 -19,7 113,3 -11 -3,5 5,2 -10,2 Yoghurt -3,2 1,1 0,6 0,9 6,2 2,1 -2,6 Drink made of yoghurt () -5,1 -1,4 2,7 7,4 8,4 -9,5 26,5 Source:TurkStat

In 2014, BIM remained the leader in drinking milk products with a 26% share of value sales. BIM is the leading grocery retailer in the country and is focused mainly on the development of its

14 private label lines, which are around 30% cheaper than branded products. The company saw a rapid share increase from around 18% in 2009 thanks to a high number of new outlet openings over the review period in both urban and rural areas of the country. Private label has a strong position within drinking milk products because of the share held by BIM. Additionally, other chained grocery retailers such as Migros, Carrefour and Tesco Kipa also offer their own drinking milk products (Euromonitor, Drinking Milk Products in Turkey January 2015).

According to the Turkish Milk Producers Association, the Turkish market is encompassing a growing number of brands each day as consumers are becoming more sophisticated with a rise of income and therefore demand more alternatives. Nearly 60% of this amount is currently sold through the grey market, which constitutes sale of milk by small establishments, which is not regulated by the Ministry of Agriculture. The remaining 40% of production is being supported by the government through certain subsidiaries. The government is currently strategizing to increase subsidy levels for both local agriculture companies and dairy producers.

The Association states that as demand increases, customers prefer domestic producer’s goods because they are more palatable to Turkish tastes. Furthermore, as Turkish producers are now more closely inspected by the ministry, health and safety standards have risen significantly. Inspections are being published on governmental websites and are completely transparent and accessible by the customer. This in turn leads to greater confidence by the local customer for domestic producers. Furthermore in the last couple of years Turkish dairy factories have gone through a modernisation process which also increases consumer perceptions of quality and sterilisation. It can be argued that these factors have played an important role in the reduction of the market share for international goods in the Turkish market.

Food & Beverage Sector Report, Turkey | 2015 15 In line with the major global producers, OECD expects Turkish milk production to continue to rise and arrive at 22 Metric Ton in 2023 from 17 Metric Ton in 2014, as is shown in the graph here below.

2011-13 2023

European Union India United States China Pakistan Russian Federation Brazil New Zealand Turkey Argentina Ukraine Australia Mexico Canada Japan Colombia 0 25 50 75 100 125 150 175 200 225 Mt Source: OECD, FAO (MT)

16 6.2 Cheese

Cheese production from cow’s milk has increased every single month in 2015, when compared to the previous year. Production from sheep, , buffalo and mixed milk on the other hand has been decreasing.

January February March April May June July

Cheese made from cow's 2014 48401,1 48524,5 53321,2 50989 53455,9 54289,1 51236,3 milk 2015 51850,4 50759,2 55630,1 56036 58956 58476,4 52880,8 Cheese made from 2014 309,747 1164,01 2722,9 5054 6023,57 4766,53 3947,99 sheep, goats, buffalo and mixed milk 2015 1226,6 937,616 2419,79 4497,29 5905,22 4924,99 3537,52 Source: TurkStat

According to the Euromonitor report on Cheese, the market break down is led by white cheese commanding 35% of the market. White cheese is a soft block cheese called “” which is usually consumed in breakfast time or in traditional Turkish pastry. The rest of the market is 40% soft cheddar and 25% spreadable cheeses

In 2014, cheese achieved current value growth of 8% and retail volume growth of 1%. This was the result of new products and advertising campaigns launched by the leading companies, such as Ülker Icim Suzme Peynir (strained soft cheese) from Yildiz Holding AS. Additionally, the category’s growth was fuelled by an ongoing switch from unpackaged to packaged cheese. According to trade experts, in retail volume terms, unpackaged hard cheese and soft cheese together accounted for around 65% of total cheese sales in 2013. Thus, there is much potential for growth for packaged cheese in the country.

In 2014, BIM remained the leading company in cheese thanks to its private label products holding a 20% value share of sales. The company also registered one of the highest increases in sales of 17%. BIM, a local hard discounter, is the leading grocery retailer in the country and owes its share increase to its policy of concentrating on its private label products and a sharp increase in the number of its outlets. BIM’s private label products are around 30% cheaper than branded products and due to the rapid expansion of the company in both urban and rural areas of the country its value share in cheese rose from only 8% in 2009 to 20% in 2014. Due to the leading position of BIM, private label held an overall value share of 23% in 2014, with chained grocery retailers such as Migros, Carrefour and Tesco Kipa also offering their own private label lines.

Over the next 5 years cheese is predicted a value CAGR of 3% at constant 2014 prices. This positive performance will be due to improved economic conditions in the country, along with the launch of more sophisticated new products, supported by advertising campaigns. Additionally, value growth will benefit from increasing unit prices as a result of rising milk prices, demand for better quality products such as organic cheese and the shift from unpackaged to packaged products.

Food & Beverage Sector Report, Turkey | 2015 17 7 Baked Goods

Artisanal products dominate the baked goods category in Turkey, with a market share (in value terms) of 94% in 2014. In volume terms the sales of unpackaged/artisanal bread constitute nearly 97% of total volume sales of baked goods in Turkey.

The dominance of the artisanal products largely stems from the Turkish consumers’ preference for fresh baked products. Although still dominating, the artisanal share is decreasing in baked goods because of changing eating habits of Turkish consumers.

The overall sales of baked goods are expected to decline in the next 5 years, leading to a negative value CAGR of 3%. This decline is due to the declining value sales of unpackaged/artisanal bread and bread substitutes. Sales of unpackaged/artisanal bread are expected to decrease due to the increasing health awareness and changing eating habits of Turkish consumers. Moreover, the increasing consumer awareness of waste bread due to the “Don’t Waste Your Bread” promotion campaign of the government will continue to have negative impact on the daily sales of unpackaged/artisanal bread (Euromonitor, Baked Goods Market Research Report 2015)

7.1 Biscuits

Turkey’s relatively high young population and leading companies’ successful new product launches lead to a current value growth of 11%. The growth is mainly due to the successful new product launches in 2013 and 2014 such as Yildiz Holding’s Ülker Dore, new NH high fibre biscuit range, Saklikoy and Eti Gida San ve Tic AS’s new Eti Burcak Sutlu Cikolatali. Apart from these new product developments, the leading companies are also investing in their established brands. For example, Yildiz Holding AS launched the mini bite-size version of its famous Biskrem brand.

In 2014, the leading company in biscuits continued to be Yildiz Holding AS (Ülker) with a 43% value share. (For Belgian readers: this is the company that acquired the famous Belgian chocolate producer Godiva a few years ago.) The second ranking company is Eti Gida with a 33% value share. Yildiz Holding’s wider product range and wider and more successful distribution network have enabled the company to become the leading player in biscuits in Turkey. The two leading players dominate biscuits and further consolidate their position with their successful new product launches which target changing consumer preferences in Turkey.

Until 2019, biscuits are expected to register a higher value CAGR of 3% at constant 2014 prices. Increasing young population, urbanisation, expected new product launches and successful advertising campaigns will fuel this growth (Euromonitor, Biscuits Report January 2015).

18 7.2 Breakfast Cereals

In 2014, the breakfast cereals category registered a higher current value growth than 2013. When compared to the Western European average, the consumption of breakfast cereals in Turkey is low. However, it has been rapidly increasing as a result of urbanisation and higher numbers of mothers at work. Breakfast cereal is increasingly regarded as a quick, practical and highly nutritious meal. As the level of education and employment are increasing in Turkey, more and more people prefer a breakfast with breakfast cereals. Moreover, new product launches by the leading companies further stimulate the growth of breakfast cereals.

In 2014, Nestlé continues to dominate breakfast cereals with a 51% share, thanks to the good performance and strong brand awareness of its Nesquik and Nesfit brands. Although the company used to be very active in terms of new product launches, in 2014 the company focused on marketing activities for its existing products rather than launching new products. Additionally, the majority of the company’s sales are coming from its Nesfit brand which registers negative growth due to the increasing popularity of muesli products among young female urban consumers with high health awareness. Due to this shift, the company loses share to other companies which are more active and successful in terms of targeting changing consumer preferences with new product launches.

Up to 2019, breakfast cereals are expected to register positive growth, as consumers will switch to easy and quick breakfast options. This is especially the case for larger cities, where consumers need practical meal replacement alternatives as a consequence of their increasingly active life. However, breakfast cereals are expected to register a lower value CAGR at constant 2014 prices, over the next 5 years. Mainly, this will be the result of market saturation, especially with regard to flakes. (Euromonitor, Breakfast Cereals Report, January 2015).

Food & Beverage Sector Report, Turkey | 2015 19 8 Red Meat

All imported red meat and livestock to Turkey is organised through a tender process by the Meat and Milk Board (ESK). According to the information we received from the Turkish Ministry of Agriculture, companies from Belgium are allowed to import red meat to Turkey, if they are successful in the tender(s). However, in terms of charcuterie products, Turkey only allows imports of pork products; other processed meat import are not allowed in the country. To participate in the tenders for meat, Flemish companies are recommended to follow ESK’s website at http://www.esk.gov.tr/en. The annual quota for red meat imports are at 19,000 tonnes, usually dispersed to 3 tenders.

Market leader in the field of red meat production is Pinar Et, which holds more than twice the market share of the second largest player. Other leading companies include Aytac, Namet, Polonez and Banvit.

Turkey’s market for meat and meat products recorded an average annual growth of 11% over the 2007-2012 period. Growth was boosted by favourable demographic and social trends but hindered by limited government intervention, resulting in undersupply and rapid rises in retail prices. Sharp increases in retail prices for meat in Turkey led to a surge in meat smuggling. Industry of meat and meat products sees a 13% growth over the next 5 years despite problems such as inefficient production, lack of feed supply and disease outbreaks. The red meat industry is fragmented, with over 850 companies and the five leading players generating only 8% of production. Turnover is set to expand at an average annual rate of 11% until 2019 (Euromonitor, Meat Report for Turkey).

The import of red meat has significantly been reduced in the last 5 years from 251 million dollars in 2010 to 121 million dollars in 2014.

Year Total January February March April May June July August Sept October Nov December 2015 52355 1060 2925 3895 3767 6026 9307 10535 14840 2014 12106 96 155 549 801 600 674 794 426 690 114 2353 4853 2013 29279 11366 213 3184 125 9579 822 572 223 161 2287 263 485 2012 99743 8470 10509 22299 11567 5275 4112 6702 10755 6323 4707 5105 3920 2011 514810 69336 64977 84130 74375 54485 41728 24885 29372 20782 24960 12774 13006 2010 251235 217 240 188 164 128 136 185 98 63 21347 79973 148496 Source: TurkStat (000, USD)

In 2015, the red meat market has again experienced a very sharp price rise. According to an article in the newspaper Today’s Zaman, the retail price of red meat has surged 40% per kilogram since August 2014 and hit 40 lira per kilogram. This has also been highlighted in the minutes of the Turkish Central Bank which cautioned the upward trend in the price of red meat on the negative impacts on June 2015 inflation (Today’s Zaman, “Meat prices up 40 percent, speculations mount over shady imports” August 2015).

In 2010, shortages of domestic on the Turkish market were contributing to increased food price inflation, which has occurred again in 2015. As a result, Turkey effectively allowed beef imports by reducing the rate of duty in autumn 2010, from a prohibitive 225% down to as low as 30% by early 2011. The tariff was gradually increased again, returning to 225% at the beginning of 2013. The subsequent rise in beef imports was entirely supplied by the EU with Turkish importers mainly taking chilled young bull beef. Turkish beef imports in 2011 were as much as 111,000 tonnes with Poland the largest supplier followed by Germany. By early 2013

20 trade had ceased with Poland, the one remaining supplier at the end of 2012. By 2014 Turkish imports only amounted to 640 tonnes mainly supplied by Bosnia. Besides beef, store cattle are also imported for finishing in Turkey, this trade re-commenced somewhat earlier than the product trade, in November 2014. France, in particular, benefits from this trade, shipping 42,000 head, mainly young stores, between November 2014 and June 2015. The other main supplier is Uruguay, but Brazil is also expected to enter this market following agreement on sanitary certification. The EU supplied 96,000 head in the first seven months of 2015, whereas there were no shipments in the same months of last year, with France the main supplier, Hungary is the second largest (AHDB Beef & Lamb).

Food & Beverage Sector Report, Turkey | 2015 21 9 Fish

Turkey’s fish and fish products market enjoyed an average annual growth of 13% over 2007-2012 from growing favourable social trends and government programmes. Decreasing profit margins discourage new entrants to the sector. The fish and fish products industry is fragmented, being served by more than 2,200 entities with the five leading players generating only 11% of total production. Outlook for the next 5 years for the industry is positive, with an expected 70% growth in turnover, thanks to government programmes and flourishing aquaculture in Turkey. (Euromonitor, Food Report for Turkey).

Imported fish has been experiencing a positive trend in the last few years from 137 million dollars in 2010, to 197 million in 2014.

Year Total January February March April May June July August Sept October Nov December 2015 150368 19821 13276 21919 17016 19707 16141 15166 27324 2014 197458 11821 18276 11867 12843 12740 13309 13404 16710 26225 18605 18057 23604 2013 187281 12317 11181 11544 15915 18332 16292 15813 11342 17521 15333 26183 15509 2012 178133 9877 11925 16415 16339 15658 13167 19922 16251 14647 15552 11831 16549 2011 175565 7373 8373 16565 13334 19638 15855 18707 13409 10940 13529 20188 17653 2010 137034 11066 10278 14025 11924 9577 12165 6300 9569 7311 13212 12700 18908 Source: TurkStat (000, USD)

The following table compares the total catches in selected fishing regions in the EU from 2003 to 2013. In line with other European countries, Turkey’s fishing sector has been on a steady decline.

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EU-28 5 707 5 710 5 496 5 254 4 910 4 914 4 804 4 999 4 832 4 419 4 806 Belgium 26 26 24 23 24 22 21 22 22 24 25 Denmark 1 031 1 090 911 868 653 691 778 828 716 503 668 Germany 238 238 264 276 227 207 195 215 218 205 219 Ireland 266 280 267 211 215 205 269 319 206 276 246 90 91 91 97 94 87 82 70 63 61 64 Spain 798 715 717 681 687 853 686 742 799 758 882 France 699 661 586 583 549 490 430 440 487 461 529 Italy 291 274 294 312 283 232 248 230 213 196 173 Latvia 114 125 150 140 155 158 163 164 156 90 116 Lithuania 155 160 138 153 150 157 150 138 137 70 75 Netherlands 524 520 547 434 366 376 341 376 365 345 324 Sweden 285 269 255 268 236 230 202 211 180 150 177 United Kingdom 631 652 665 615 609 588 580 605 595 626 618 Iceland 2 002 1 749 1 661 1 344 1 420 1 306 1 164 1 063 1 154 1 452 1 384 Norway 2 549 2 524 2 392 2 246 2 337 2 367 2 480 2 562 2 178 2 047 1 944 Turkey 463 505 380 489 589 453 425 446 478 396 339 Source: Eurostat (000 tonnes live weight)

The main species in Turkey are primarily caught in the Black Sea and in terms of volume are small pelagic, anchovies, pilchards, sprats, and horse mackerel mounting to 72% of the catch in 2012. They are used almost exclusively for the production of fishmeal and fish oil, the main ingredients in fish feed. The rest of the catch is achieved from the Sea of Marmara with around 10%, the Aegean with 8% and the Mediterranean contributing with a mere 4%. Along with rapid growth of farmed fish production, the national seafood processing industry is still not fully

22 formed. Processed fish is aimed mainly at export markets as preferences on the domestic market are primarily for whole fish. Farmed seabass and seabream are exported chilled or frozen as gutted, filleted, in vacuum-sealed trays, and more recently as frozen ready meals. Farmed rainbow trout is filleted and smoked for western markets. Export of seafood includes crustaceans, molluscs, and cephalopods, which may be frozen, preserved, or chilled. The EU is Turkey’s primary market for fish and seafood exports, but exports are increasing to Russia, the Middle East and even the Far East, as well as the US. Turkey also has a tuna ranching industry which catches and fattens tuna for the Japanese market (Eurofish, Turkish Sea Market 2014).

Aquaculture

Turkey’s marine aquaculture industry is located primarily on the coast and employs some 8,000 people. Marine fish farming increased from 88,600 t in 2010 to 100,900 t in 2012. The number of vertically integrated groups operating their own hatcheries, fish feed plants, fish farms, and processing and packaging facilities is increasing constantly. The main species farmed here are seabass (66,000 tonnes) and seabream (31,000 tonnes). The Black Sea is the site for a modest production of sea-raised trout (3,000 tonnes). There is also a large and growing production of freshwater rainbow trout (111,000 tonnes) in the interior of the country.

Aquaculture with a relatively short history in Turkey began with the farming of rainbow trout and common carp in the late 1960s and developed further with gilthead seabream and European seabass culture in the mid-1980s. Production of the three major species, namely rainbow trout, seabass and seabream increased rapidly during the 1990s (FAO, Turkish Aquaculture Sector Overview). Reported aquaculture production in Turkey from the 1950s is as follows;

Source: FAO Fishery Statistics, Aquaculture production

Turkey is ranked first in the Mediterranean for seabass farming and second, behind Greece, for seabream. It has a 25% market share of the seabass and seabream trade in Europe (Eurofish, Turkish Sea Market 2014).

Food & Beverage Sector Report, Turkey | 2015 23 10 The Beverage Business - Is the glass half full?

Turkey ranks last among European countries and last among Organization for Economic Co- operation and Development (OECD) member countries in terms of per capita alcohol consumption rates, estimated at around 1.5-1.6 litres per person per year.

Turkey also ranks low on the world list of per capita alcohol consumption, well behind the world average.

According to a report by the Turkish Ministry of Health, 87 percent of Turks over the age of 15 said they had never tasted alcohol. Many restaurants in Turkey do not serve alcohol, especially those in rural areas, in the eastern part of the country, or in conservative neighbourhoods.

The process to get an alcohol license in Turkey is difficult, and there are strict rules on which restaurants and in what areas licenses can be obtained. TABLE: Consumption Rates by Type of Alcohol in Turkey:

-

Source: Tobacco and Alcohol Market Regulatory Authority (TAPDK). TABLE: Imports of Beer and Fermented Alcohols in Turkey:

Source: Tobacco and Alcohol Market Regulatory Authority (TAPDK).

24 TABLE: Imports of Distilled Spirits in Turkey:

Source: Tobacco and Alcohol Market Regulatory Authority (TAPDK).

10.1 Beer

Despite being a Muslim country, in terms of alcohol consumption, many metropolitans in Turkey have a similar attitude to Europe. However, in the last decade, the political environment from the AKP government and the resulting deeper conservatism in the country, has witnessed the implementation of a number of policies to curb alcohol consumption. As well as limitations in advertising, and increases in excise duties, legislation passed in 2013 limits sales of alcohol between 10pm to 6am. Despite such policies, consumption of beer noted positive growth.

According to a report by investment bank JP Morgan in February 2015, there has been a faster than anticipated recovery in the Turkish beer market by consumers adapting to higher beer prices. Furthermore, better than expected weather conditions are also expected to drive demand for beer and soft drinks in 2015. However, on the downside, ad hoc increases in excise duty rates on beer above inflation levels reduces sector profitability. Looking forward, JP Morgan raises caution over the hardening attitude towards alcohol consumption by the , which may eventually lead to a reversal of the long term trend towards higher alcohol consumption.

New product launches positively stimulated the performance of beer in 2014. In particular, imports of new premium lager brands revitalised the consumption of beer. Nevertheless, the volume growth remained moderate but positive, due to increasing prices, from rise in excise tax.

Efes Pilsen (Anadolu Efes Group) continued to lead the Turkish beer market in 2014 with a total volume share of 75%. The company enjoys high levels of brand awareness and benefits from its extensive distribution network and large-scale production, which enabled it to consolidate its leading position among beer companies. Over the next 5 years, beer is expected to register a total volume CAGR of 1%. The main impetus behind the better performance in the category is set to be the increasing levels of company investment in new product launches and increasing marketing activities, especially within on-trade channels (Euromonitor, Turkish Beer Market 2015).

After Efes Pilsen, Tuborg is the second largest brewer and commands majority of the 25% share of the remaining beer market. Although Efes had enjoyed 85% market share in 2012, Tuborg successfully increased its hold with heavy investment in the quality of its production facilities following its ownership change in 2008 and its significant marketing efforts for its flagship brand, Tuborg Gold (Canadean, Turkey Beer Market Insights 2013). According to the investor relations presentation by Efes, the company expects low single digit growth in 2015 for Turkey. This year the company seeks to restore margins and shares through continued focus on cost

Food & Beverage Sector Report, Turkey | 2015 25 reduction, accelerated capability, development and execution of brand development strategy (Anadolu Efes Investor Presentation 2014).

In terms of imports Tuborg currently supplies Leffe, Hoegaarden, Guiness, Corona and Weihenstephan to the Turkish market, whereas Efes has Duvel, Grolsch and Samuel Adams under its umbrella. Other Belgian beers like Kwak, Kasteelbier, Petrus, Bavik, Chimay, can be found in specialty beer shops and a smaller number of cafés in Turkey.

10.2 Wine

Turkey has a very long history of vineyard cultivation and wine production. It is an established fact that Anatolia, the Asian part of Turkey, is the motherland of vineyards and wine. Evidence indicates that grapes were processed into wine and named vino by the Pre-Hittites who lived in Anatolia between 3000-4000 B.C.

The country has diverse types of soil and climate that allow wine producers to cultivate several types of grapes for producing different types and tastes of wine. The producers in the sector continually increase their wine production capacity and invest in modern technologies. Besides the large wine producing companies, there are also almost 300 small producers located in Central Anatolia, Marmara- and the . Total wine capacity of the sector is about 120 million litres.

The increasing popularity of wine among Turkey’s young professionals, continued to have a positive influence on volume growth in wine in the country during 2013. In addition, relatively low levels of increase levied on the excise tax imposed on wine also stimulated volume growth in the category during 2013. Due to these positive effects, wine registered superior total volume growth in 2013 than the 2% total volume CAGR recorded over the entire review period.

According to the wine sector report by the Ministry of Economy; Turkey offers a potential of growing around 1,250 varieties. Although Turkey has traditionally specialised in producing table grapes and raisins, it also has 34 kinds of wine grapes, 22 of which are valuable native varieties. Most Turkish are made from native wine grape varieties. producers also use the native grapes in combination with European varieties to create high quality new wines with a new taste for the world wine market. Although vineyards are spread over the country, production is mainly concentrated in the Aegean, Mediterranean and Central Anatolian regions. Wine grape varieties by regions are as follows:

26 Regions White Red Regions White Red Clairette Emir Öküzgözü Pinot Adakarası Central Hasandede Boğazkere Papazkarası Anatolian Narince Kalecik Karası Marmara Semillion Karaşeker (kuntra) Kabarcık Papazkarası and Thrace Beylerce Dimrit Yapıncak Karalahana Sergikarası Burdur Vasilaki Dimriti Carignane Kabarcık Sergikarası Çalkarası Mediterranean Semillion Boğazkere Dökülgen Dökülgen Horozkarası Aegean Bornova Misketi Öküzgözü South East Kabarcık Sultaniye Boğazkere Cabarnet Rumi Sergikarası

Source: Ministry of Economy

Wine varieties are widely diversified and improved in quality. The market for wine expands in Turkey as more varieties and better quality wines become available. As a consequence of the increase in the quality of wine, many Turkish brands have been awarded gold medals in international competitions.

According to Euromonitor, the increasing shift away from beer towards wine had a positive effect on growth in wine in 2014 as the category increased in total volume by 19%, a significantly higher rate of growth when compared to 2009-2014 review period, where total volume CAGR of 4% was recorded. Increasing numbers of consumers who are sensitive about the alcohol content and price of alcoholic drinks are increasingly preferring wine instead of beer, as a result of the decreasing price gap between the two categories. Kavaklidere Saraplari continued to lead the market in 2014, with a total share volume of 22%. Founded in 1929, Kavaklidere is the first private sector wine producer in Turkey and owns 550 hectares of vineyards. The company enjoys high levels of brand awareness due to its longstanding presence in the sector. In addition, the company has an extensive distribution network, which also further consolidated its position in 2014. After Kavaklidere, Doluca can be identified as holding a significant market share. Other players include Pamukkale, Sevilen, Suvla, Gulor, Urla and Kayra.

Over the next 5 years, sector is expected to record an increase in total volume at a CAGR of 8%, which is set to be higher than the last 5 years. The main impetus behind the acceleration in growth expected in the category over the forecast period is set to be the increasing popularity of wine as a consequence of increasing number of wine tasting courses, which is set to boost the popularity of wine, especially among young adults living in urban areas. Additionally, the Turkish government’s current excise tax policy is expected to have an influence over the forecast period, further decreasing the price gap between wine and beer and contributed to the shift away from beer towards wine among low-end consumers (Euromonitor, Wine in Turkey Report 2015).

Food & Beverage Sector Report, Turkey | 2015 27 10.3 Spirits

During 2014, consistent excise tax increases had a negative effect on total volume growth in spirits as unit prices increased. Nevertheless, the marginal total volume decline recorded in the category in 2014 was slower than the 1% total volume decline recorded in 2013, thanks to new product launches such as Jack Daniel’s Tennessee Honey and The Botalist by Brown-Forman and Tanqueray No10, Tekirdag No10 and Gilbey’s Vodka by Mey. These new product launches added dynamism to spirits in 2014. In 2014, Mey continued to lead spirits with a total volume share of 77% (Euromonitor, Spirits in Turkey Jun 2015).

Established in 2004 after the privatisation of the Tekel's alcoholic drinks division, Mey operates as two separate companies in Turkey, one involved in manufacture and the other responsible for sales and marketing. In 2011 Diageo completed the acquisition of Mey from TPG Capital for 1.3 billion pounds.

Mey's product portfolio includes the traditional Turkish aniseed drink Raki with brands Yeni Raki and Tekirdag Raki also Istanblue and Binboa Votkas and also Kayra, Terra and Buzbag Wines. Since 2011, Mey has been working under the umbrella of Diageo, an alcoholic beverage manufacturer trading in close to 180 countries with offices in 80 countries. Mey also holds the distribution rights of Johnnie Walker, Crown Royal, J&B, Windsor, Buchanan's and Bushmills whiskeys, Smirnoff, Ciroc and Ketel One, as well as Baileys, Captain Morgan, Don Julio and Tanqueray (Mey Icki, Corporate Website).

According to Euromonitor, the company’s well-established brands such as Yeni Raki and Istanblue helped it to consolidate its leading position within spirits. It also enjoys high levels of penetration both within on-trade and off-trade channels thanks to its extensive distribution network throughout Turkey. Furthermore, is aggressive in new product launches and regularly expands its product portfolio within various spirits categories. Nevertheless, the company’s total volume sales registered a 2% decline in 2014 due to the negative performance of its Yeni Raki brand, which constitutes the majority of its total volume sales. Another factor behind the company’s value share decrease is the increasing competitive pressure it faces from other well- established companies within spirits such as Pernod Ricard and Brown-Forman.

Spirits are expected to increase in total volume at a CAGR of 1% over the next 5 years, a better performance than the marginally positive total volume CAGR recorded in sınce 2009 to 2014. The main reason for the better performance expected in the category is set to be growth in the number of young adults living in urban areas of Turkey, a situation which is set to have a positive influence on sales of spirits over the forecast period. In addition, increasing levels of company investment in terms of new product launches are also expected to have a positive influence on the performance of spirits over the forecast period. Last but not least, the positive performance expected in Turkey’s travel and tourism industry is also set to further boost the performance of spirits over the forecast period (Euromonitor, Spirits in Turkey, June 2015).

28 11 Food Retail Landscape

The Turkish retail sector has significantly evolved in the last 2 decades from small corner shops to supermarkets. The trend towards a more sophisticated retail space has enabled international brands to be represented in shelves and satisfied the lifestyle of the generation that desired a greater variety of products.

The retail sector is classified into two major groups of organised and unorganised retailers. Organised retailers are mostly chain stores that have a corporate entity and are fully registered such as Migros and Carrefour. The sales area of such supermarkets can vary from 400sqm to hypermarkets of up to 2500sqm. Unorganised retailers are smaller corner stores, with floors of less than 50 sqm. (USDA Gain Report, 2011).

According to consultancy firm Deloitte, the food and beverage sector represents the largest segment of the total retail market with a 44% share and is expected to grow with a CAGR of 5% and reach almost USD 150 billion in 2018. The consultancy firm expects continued expansion strategies at the discount retailers as well as a consolidation in the market (Deloitte, Retail Sector Update, July 2014).

Merrill Lynch depicts that Turkish retail sector enjoys low up-front investments from the availability of commercial lease space across the country. Among the largest players, BIM and Migros command a 26% share of modern food retailing in the country. On the other end of the scale the unorganised market share of small corner shops is expected to be stabilised at around 40% of the market over the longer term (BofA Merrill Lynch, Consumer and Retails Report September 2015). The leading players in the field in terms of the number of stores are hard discount stores such as BIM:

Stores 2012 2013 Difference BIM 3,281 3,662 381 A 101 1,291 1,687 396 SOK 1,238 1,222 -16 DIA SA 1,108 1,217 109 MIGROS 529 622 93 HAKMAR 228 252 24 TANSAS 184 218 34 MAKRO MARKET 154 171 17 CARREFOUR SA 181 195 14 KILER 193 203 10 Source: http://www.ortakalan.com.tr/

Grocery retailers have registered a growth of 3% in 2013. The operator of Turkey’s leading discounter chain, BIM, maintained the leading position in grocery retail in 2014, with a 7% market share. Migros, meanwhile, ranked second with a 3% share of the market. Both of these companies recorded growth in their value shares, thanks to the increasing number of outlets they operate. The reason for BIM’s leading position in grocery retail is the fact that it operates the highest number of outlets in grocery retailers, not to mention that it continues to benefit from the increasing consumer demand for discounters in general. In addition, the private label products offered by the company remain very successful and this ensures that the company is able to maintain its top ranking within grocery retail, due to its strong position in a number of packaged food categories, including a high number of frozen processed food and dairy categories. In addition, the company’s strategy, which involves cutting expenditure on

Food & Beverage Sector Report, Turkey | 2015 29 advertisements and in-store investment and reflecting the revenues from these as price discounts, has been highly successful in terms of attracting price-sensitive consumers. The increasing consumer preference for convenience is expected to continue over the next 5 years, which will force the leading companies to increase their penetration within smaller streets by opening new outlets with smaller sales areas (Euromonitor Report, Grocery Retailers, January 2015).

30 12 Intermediaries in Agro-Food Networks

A research article in the German Magazine “Die Erde” sheds light onto intermediaries in agro- food networks in Turkey and transforming food market structures. The article also provides insight into how business is conducted in Turkey for agricultural products. Intermediaries in agro-food networks have often been blamed for ineffective trade resulting in large quantities of spoiled food, exploitation of farmers and inflated food prices. The dependence on middlemen is especially emphasised in studies on the market situation and livelihood of smallholders. Therefore, reforms in the regulation of food trade systems, such as the abolishment of the obligatory integration of state controlled wholesale markets into trade systems, aim to improve the market integration of smallholders.

Such reforms are often part of broader agro-food market liberalisation activities including the acceptance and encouragement of foreign direct investment (FDI) into food markets, both wholesale and retail.

Since the 1990s, with the entrance of transnational corporations (TNC) to the Turkish retail sector, the demand for standardised and packaged products according to international standards in the fresh fruits and vegetables (FFV) segment increased. However, demand often exceeded supply as wholesale markets in Turkey still lacked required infrastructures, such as cold storage and packaging facilities. In response to these inadequacies a new generation of intermediaries evolved to serve the demands of transnational actors in food retailing and increasingly hotels, restaurants and caterers (HORECA) in the Turkish market.

The diffusion of supermarkets in Turkey was not only the result of an increasing presence of transnational retailers, but also of strategic adjustments of Turkish actors in the market. Domestic actors also opened supermarket chains or reworked their one-shop business strategies towards developing retail chains. A representative of PERDER, the Turkish retailer association, estimates that more than 450 local or regional retail chains exist in Turkey. Besides the changing demands from supermarkets also the customs union agreement between Turkey and the European Union (EU) established in 1995 and the negotiations about Turkey’s full membership since 2005 influenced transformations in standards and trade in FFV. These developments also led to changes in the regulation of the ways wholesale markets were allowed to operate.

The most recent regulatory adjustment came in 2010 mainly concerning the certification of standards and the traceability of produce, their quality and origin. The law aims to ensure industrial certainty about local quality at the level of wholesale markets”. As a result, wholesale agents face a number of laws and regulations they have to comply with:

. Compulsory barcoding systems for every produce to increase traceability; . The establishment of a central registration system on quantities and prices, so that knowledge and information can be retrieved from everywhere; . Allowing purchases outside of the wholesale market upon the condition of presenting the in- voice and producer receipts;

Even though the law has been in force since 2010, the obligations concerned with infrastructure developments, like the implementation of laboratories and testing facilities, as well as appropriate cold storage facilities or the barcoding system were delayed until 2013, due to high financial investments and technological adjustments.

Food & Beverage Sector Report, Turkey | 2015 31 In terms of governance structures and towards reworking patterns of actors the most important change in the law of 2010 was the possibility to trade outside wholesale markets upon the presentation of invoice and tax documents through the purchaser of the products. The obligation to present invoice and tax documents aims to prevent unregistered trade and guarantee traceability. This is an important feature, as unregistered trade in Turkey is estimated to be very high often resulting in tax avoidance or misleading labelling of products, e.g. in relation to modes of production (organic vs. conventional) or regional origin.

Commissioners and merchants exert strong roles in the Turkish wholesale market. Bulk buyers in Turkey for fresh produce include transnational and domestic retail chains operating at different spatial scales, traders on bazaars, neighbourhood shops as well as HORECA. Although farmers can market their produce via direct marketing to the end customer for amounts up to one ton or through producer organisations, wholesale intermediaries are usually the dominantly chosen option for Turkish farmers to market their produce in larger quantities to the expanding domestic market, and producers set the minimum sales prices. The commissioner then arranges the transaction. One reason for the stability of the commissioner-producer relationship is that commissioners often pay in advance. In consequence, power asymmetries are established through the fact that many of the commissioners also fulfil functions of financial institutions. Eliminating the commissioners thus would also mean to eliminate certain financial structures.

Producers therefore have to rely on the information provided by the commissioner which underlines the role of trust in such networks and leads to an information advantage and a considerably high power of the commissioners over the producers.

In contrast to commissioners, merchants on wholesale markets have had a less dominant role in terms of power over producers. This derives from the fact that commissioners do not take ownership of the produce and therefore cannot suffer from lock-in effects stemming from the perishability of the produce. In contrast to merchants, commissioners do not have the risk to invest in purchases they cannot sell.

Since 2010 wholesale agents have faced a number of challenges, due to the fact that FFV trade can be performed outside the wholesale markets which decreases expenses. It can be expected that in the future more and more retailers will source their products in direct agreements with producers, vertically integrated supplier firms, producer unions or cooperatives. However, traditional trading structures are likely to remain stable and will thus be resilient in the foreseeable future since personal networks and relations to other actors in the system including farmers and buyers often define a successful operation.

The article in Die Erde concludes that, governance structures including wholesale markets will be overcome in the short term. Therefore also wholesale markets have to functionally upgrade and invest into infrastructures for appropriate storage and processing of FFV products. This form of upgrading of wholesale organisations, however, is less a strategic decision than the result of regulatory pressure. Therefore, these processes have to be seen as resilience rather than strategic reworking. Still, the resilience of traditional purchasing and supply patterns also mirrors the socio-economic reality in Turkey where not everybody has the financial capacity to buy sorted, packed and branded FFV products (Die Erde, Intermediaries in agro-food networks in Turkey, 2014).

32 13 Impact of Russia’s trade sanctions against the EU

Russia imposed an embargo on imports of agricultural products, raw materials and food from countries which had joined the anti-Russian sanctions on August 7, 2014. The ban applied to imports of beef, pork, fruit and vegetables, poultry, fish, cheese, milk and dairy products manufactured in EU member countries, the United States, Australia, Canada and Norway. Later the food embargo was extended until August 5, 2016. Russia accounted for 10% of EU agricultural food exports in 2013 and the banned products amounted to 4%. The Russian Government has pledged to compensate the decline in purchases from EU by boosting its imports from other countries, including Turkey, Latin America and ex-Soviet, nations.

The European Commission has provided support to stabilise markets in response to the Russian ban, notably for dairy and fruit & vegetables in the most affected countries. The local EU market has learned to diversify exports to new markets, or in some cases, adapted their production. Additional promotion activities and talks to lift trade barriers in third country markets has also been carried out. Furthermore, negotiations for trade agreements have been intensified such as the recent agreement with Vietnam. As a result, the Commission has opened the Canadian market for pears, which were originally supplied from Belgium and apples from Poland. These where two important markets with a global market value of more than € 300 million euros (MeatCommerce website).

13.1 Russia and Turkey

Russian trade sanctions against EU producers since August 2014 have led to an initial increase in exports of Turkish food produce to the country, from 2.12 billion euros in full year 2013 to nearly 3 billion euros in 2014.

List of banned food products imports from EU and US Meat of bovine animals, fresh/chilled/frozen Pork, fresh/frozen Meat and edible offal of the poultry, fresh/chilled/frozen Fish and crustaceans, molluscs and other aquatic invertebrates Milk and milk products Vegetables Fruits and nuts Sausages and similar products of meat, meat offal /blood Finished products including cheese, curd based on vegetables fats Source: Rosselkhoznadzor

However despite the initial surge, trade numbers gradually flattened, as the depreciation of the Russian Ruble against the Turkish Lira shaved off potential profits and lead to a decrease in business appetite. Furthermore, the requirements and the approval process by Russia for Turkish exporters have further acted as a barrier. Therefore, the notion of European companies supplying for the market gap left by Turkish exporters directing goods to Russia has fallen below expectations.

Furthermore, Russia has increased poultry and meat production to make up for the drop in numbers, which further provided a buffer for the market. In the first 9 months of 2015, Russia’s own production rose by 9%, according to Rosselkhoznadzor, the Ministry of Agriculture of the Russian Federation.

Food & Beverage Sector Report, Turkey | 2015 33

The USDA Foreign Aricultural Service summarized it as follows, in a mid 2015 report:

“Turkey expected to benefit when Russia implemented an agricultural trade ban against the United States, Canada, European Union, Australia, and Norway in August 2014. However, exports to Russia have not increased as dramatically as anticipated, especially in terms of revenue.

Furthermore, exports of most products have been sporadic and variable. In the January - April 2015 period, Turkish fruit exports to Russia increased 39 percent in volume though only 27 percent in revenue compared to the same period last year.

Vegetable exports, on the other hand, actually decreased by 8 percent in volume and 13 percent in revenue compared to the same period last year. Turkey has greatly increased its export of poultry products to Russia (977 percent in the January-April period when compared with previous years), however poultry exports have declined significantly in the first quarter of 2015 compared to the dramatic increases in the third and fourth quarters of 2014 (with the exception of hatching eggs).

Dairy exports to Russia have not increased significantly and have experienced tremendous variability. Some of Turkey’s largest companies did not try to enter the Russian market as they view the market opportunities as temporary and risky and they were not willing to make investments in sales and distribution systems. They feel that there is more to lose from investing in Russia than there was to gain.

Furthermore, some companies have reported problems with collecting payments from Russian importers. While the announcement of Russia’s western trade ban sparked high hopes among Turkish exporters last year, the extension of the ban has not generated the same response.

Although Russia will continue to be an important export market for Turkish agricultural products, it has clearly not met the sector’s hopes and expectations.”

Only three companies from Turkey have met the veterinary requirements by Russia; they are Pinar Sut, Unilever and Aynes Gida. However, the following companies may also meet the criteria and can be approached for partnerships by Flemish companies.

M CapTL Revenues TL Share of Company Description mn mn Exports

Initial beneficiaries

Tomato paste, dairy products Tat Gıda 364 793 6% and pasta manufacturers Pınar Sut Dairy product producer 845 810 11% Animal breeding, milk Yaprak Sut ve Besi 29 6 0% producer Banvit Poultry manufacturer 257 166 9% Seker Pilic Poultry manufacturer 233 63 20% Merko Processed products 47 70 64%

Karsusan Su Urunleri Aquaculture fish 19 14 0% Tukas Tomato Paste 93 137 31%

34 Milk and poultry producer, Tac Tarım Urunleri 67 3 0% animal breeding

Secondary beneficiaries Dardanel Canned fish 27 99 18% Frozen Food, Fruit Juice, Frigo Pak Gıda 6 20 79% Canned Food Kerevitas Frozen Food 136 264 7% Fruit and vegetable juice and Konfrut 85 60 51% concentrate AVOD Dried vegetable 33 35 84% Ar Tarım Organik Organic fruit and vegetable 24 8 0% Penguen Gıda Canned Food 88 85 38% Selcuk Gıda Dried food 8 11 89% Pınar Et Processed meat products 393 479 2%

Vanet Gida Processed meat products 176 7 7%

Source: Is Investment, Food Sector Flash Note, August 2014

Food & Beverage Sector Report, Turkey | 2015 35 14 Regulation of the Food and Beverage Sector 1

The main target of Turkish food and agriculture policy is to harmonize the related laws and regulations with the European Union (EU) acquis communautaire.

In the scope of EU harmonisation, the Turkish Government issued a new Law no. 5996 on Veterinary Services, Phytosanitary, Food and Feed on June 13, 2010 with the objective of protecting and ensuring public health, food and feed safety, animal health and welfare, plant health and consumer interests taking into consideration environmental protection. In the past, veterinary services, phytosanitary, food and feed policies were covered by separate laws and regulations.

Unlike the old legislations, Law 5996 covers all stages of production, processing and distribution of food, materials and articles intended to come into contact with food and feed, controls of residues of plant protection products and veterinary medicinal products and other residues and contaminants, control of epidemic or contagious animal diseases and harmful organisms in plants and plant products, welfare of farm and experimental animals and pet animals, zootechnics, animal health and plant protection products, veterinary and plant health services, entry and exit procedures of live animals and products to the country as well as related official controls and sanctions.

The Law also gives an authority for the principles and procedures relating to the production, packaging, sale, import and export of spring water, drinking water, natural mineral water and water for medical purposes and the principles and procedures relating to compliance with technical and hygienic rules, ensuring fulfilment of quality standards and monitoring and control of quality standards of potable and utility water to the Ministry of Health (MoH). MoH is also responsible for the principles and procedures relating to the production, import, export, and control of dietary foods for special medical purposes.

For the implementation of Law no. 5996, the Ministry of Agriculture and Rural Affairs was extensively re-organized by the Decree Law no. 639 under the name of the Ministry of Food, Agriculture and Livestock (MinFAL) in June 2011. Currently, MinFAL is the competent authority with regard to food and feed safety, veterinary and phytosanitary issues in Turkey. Under MinFAL, the General Directorate of Food and Control (GDFC) is the most important ministerial structure for food and feed safety, veterinary and phytosanitary policies, adoption of legislation related to these policies, relevant official controls and inspections at all stages of processing, distribution and placing on the market as well as ensuring animal health and welfare. The GDFC is the contact point for international organizations such as Codex Alimentarius Commission, European Food Safety Authority (EFSA), European and Mediterranean Plant Protection Organization (EPPO), World Organisation for Animal Health (OIE), World Trade Organization (WTO).

Another important law is Law no 5977 on Biosafety which was published in the Official Gazette on March 3, 2010. The objective of this Law is to establish and implement a biosafety system in order to prevent the potential risks of the genetically modified organisms and products thereof obtained through modern biotechnological means within the context of scientific and technological advancements; protect human, animal and plant health; safeguard and ensure the sustainable use of the environment and biological diversity and to determine the procedures

1 The information in this chapter is to a large extent based on the GAIN Reports by the US Department of Agriculture.

36 and principles governing the control, regulation and monitoring of these activities. It governs all activities including but not limited to the research, development, processing, placing on the market, monitoring, utilization, importation, exportation, transit, transportation, preservation, packaging, labelling and storage regarding Genetically Modified Organisms and products thereof.

Veterinary medicinal products, human medicinal products and cosmetics which acquired license or got approval from the MoH do not come under the scope of the Biosafety Law.

In the scope of this Law, the Biosafety Board was established in 2011. Since then, 16 corn events and 3 soybean events have been approved by the Biosafety Board for feed use. However 2 of 16 corn events were suspended by a court decision in December 2013. In 2015 an additional 13 traits were approved in July and November; and 25 more are still undergoing risk and socio-economic assessments.

Not even one single trait has been approved for food use (products intended for human consumption).

Enforcement of Turkish food and agriculture legislation is performed by 81 Provincial Food, Agriculture and Livestock Directorates (PAD) and 846 District Directorates (DD). The public laboratories of MinFAL, including 39 Provincial Food Control Laboratories, 1 National Food Reference Laboratory, 9 Veterinary Control Institutes and 9 Plant Quarantine Laboratories and Plant Protection Research Institute Laboratories and 87 private food control laboratories which are authorized and audited by MinFAL and are involved in the official control system. Auditing of directorates and districts and laboratories is performed by GDFC officials (General Directorate of Food and Control).

The legal infrastructure of agriculture is mainly based on regulations and/or communiqués rather than on laws. The reason for this is that the Turkish constitutional system does not allow laws to be adopted, amended or abolished easily. Therefore governments have traditionally preferred to publish regulations, communiqués, directives or circulars. The majority of the regulations on food and agricultural products are prepared and published by the MinFAL. However, there are also regulations published by other Ministries, such as the Ministry of Finance and the Ministry of Health. About a hundred implementing regulations of Law no. 5996 have been published and enforced by MinFAL since 2011. The Turkish government rarely informs the international bodies such as the WTO about possible or actual regulation changes. Exporters should also be aware that there may be some variation among provinces in applying legislation. This may be due to the lack of guidelines for the enforcement of rules in some cases.

14.1 Labeling Requirements

The communiqué regulating the packaging and labelling of foods was published on August 25, 2002. This communiqué was prepared within the framework of harmonization with the EU Directives 2000/13/EEC on the Labelling, Presentation and Advertising of Foodstuffs, 90/496/EEC Directive on Nutrition Labelling of Foodstuffs, and Directive 80/232/EEC on the approximation of the laws of the member states relating to the ranges of nominal quantities and nominal capacities permitted for certain pre-packaged products. It was amended once in 2004 and twice in 2006.

On December 29, 2011, the GDFC published a new Turkish Food Codex Regulation on Labelling in the Official Gazette. It was prepared parallel to EU Directives of 2000/13/EEC, 2008/5/EC, 1999/10/EC, 2002/67/EC, 90/496/EEC, 87/250/EEC and Regulations 608/2004/EC and 1924/2006/EC and amended three times since it was published. The regulation concerns the

Food & Beverage Sector Report, Turkey | 2015 37 labelling of foods to be delivered as such to the consumer and certain aspects relating to its presentation and advertising. Nutritional and health claims are also involved in the scope of this regulation.

According to the regulation, labels should not mislead the consumer by suggesting that the food possesses special characteristics when in fact all similar food possesses such characteristics and by attributing to the food effects or properties which it does not possess. Statements, signs or pictures should not be on labels which mean or imply that food has the property of preventing, treating or curing a human disease. The importer is responsible for the imported food product’s labelling.

An imported food item may arrive in its original package, but a permanent “sticker” label, in Turkish, must be attached to the package before it is marketed. Each food has to be labelled clearly, completely and accurately in before placing on the market. Other languages in addition to Turkish may also appear on the label. Labelling requirements are enforced by PAD and DD officials. Turkish authorities do not grant exceptions to their labelling regulations.

14.2 Compulsory Information

The compulsory information must appear on the packaging or on a label attached to it. The information must be marked in such a way that it is easily visible, clearly legible and indelible. The following information is compulsory on labels of foods for those domestic and imported:

. The name under which the product is sold, . The list of ingredients, in descending order of weight, . Allergenic ingredients, . The net quantity of product, . Date of minimum durability. For highly perishable goods (due to microbiological activity), “use by” and date. Date must be given as day/month/year or: “best before” and date in terms of day and month for foods expected to keep for three months or less, or: “best before end” and date in terms of month and year only for foods expected to keep for more than three months but not longer than eighteen months, or “best before end” and date in terms of either month and year or year only for foods expected to keep for more than eighteen months, . Any special storage conditions or conditions of use, . The name or business name and address of business operator ( i.e., manufacturer or packager or seller or importer) . Business Registration number of business operator, . Country of origin, . Instructions for use, . Strength of alcohol by volume with respect to beverages containing more than 1.2% alcohol by volume, . The quantity of certain ingredients or categories of ingredients such as fats, oils, herbs, etc., . Production batch/lot number and date.

Additional Compulsory Information:

38 . The statement "….contains alcohol" if the ethyl alcohol is used as an ingredient in the manufacture or preparation of a food notwithstanding the amount of the alcohol. (The transition period for this requirement will end on 1 January 2015), . The statement "contains ... obtained from pigs" if the product contains any product/ingredient obtained from pigs notwithstanding the amount of that product/ingredient. (The transition period for this requirement will end on 1 January 2015), . The statement “ ….contains herbal sterol/stanol” or “….contains added herbal sterol/stanol” if herbal sterol and/or sterol ester is added to product, . The statement “….contains high amount caffeine, not for children or pregnant or lactating woman” if product contains caffeine exceeding 150 mg/L, . The statement “….contains licorice. Patients with hypertension should avoid the consumption” if the product contains glycyrrhizic acid or ammonium salts of glycyrrhizic acid, . The statements “…contains sweeteners” or “….with sweeteners” or “…contains sugar and sweetener” or “…contains aspartame (source of phenylalanine)” if the product contains sweetener and/or added sugar, . The statement “….packaged under protective atmosphere” if the product is packaged with packaging gases.

In addition to compulsory labelling, certain foodstuffs such as infant and follow-on formulas, wines, aromatized wines, spirit drinks, food supplements, energy drinks, non-alcoholic beverages, sugar, honey, coffee, meat and meat products, fruit juice, and dairy products have specific labelling requirements in their ‘vertical’ communiques.

Because of difficulties fighting adulterated foods such as honey, alcoholic drinks, energy drinks, black tea and food supplements, MinFAL decided to implement a new single code system for certain food categories. This system is called “Product Verification Monitoring System (PVMS)”. According to PVMS a consumer will verify purchased food products information by using a 19 digit number. An article related to PVMS was published in the second amendment of Turkish Food Codex Labeling Regulation, on September 03, 2013. MinFAL determined seven food categories, which are alcoholic beverages, food supplements, honey, energy drinks, black tea, vegetable liquid oil, infant formula, follow-on formula, supplementary baby foods to implement this system.

14.3 Nutritional Requirements

Nutritional labelling is mandatory when there is a nutritional and/or health claim on the label, presentation or advertisement of foodstuff. Food supplements are out of the scope of this requirement. This requirement is valid also for the foods for special dietary purposes without prejudice to its vertical legislation. Nutritional labelling includes energy value, fats, carbohydrates, proteins where required fibre, and salt/sodium, vitamins and minerals. Nutritional claims and their requirements are given in detail in the Regulation.

Some examples for the nutritional claims allowed in the Regulation on Labelling are as follows:

. If the energy value of the solid food is not more than 40 kcal, the nutritional claim as “low calorie” might be on the label, . If the energy value or ingredient amount is reduced 30 percent with respect to similar product, the claim “reduced calorie” might be on the label,

Food & Beverage Sector Report, Turkey | 2015 39 . If the amount of alpha linolenic acid amount is minimum 0,3 gr per 100 gr or 100 kcal food, the claim “source /contains/ added Omega 3 fatty acids” might be on the label, . If the 100 gr or 100 ml foodstuff contains sugar not more than 0,5 gr, the claim “sugar free” might be on the label

Whole group of nutritional claims and their requirements allowed by the regulation can be observed at http://www.tarim.gov.tr/Sayfalar/Mevzuat.aspx in Turkish language.

14.4 Health Claims

According to the regulation, health claims on the label, presentation or advertisement of foodstuff are allowed if:

. the product is consumed as food or food supplement . the product has the claimed effect at normal consumption level . the alcohol content of the product is not 1.2 percent . the product contains 3 of the following requirements at the same time: o maximum sodium amount is 120 mg/100kcal o maximum 8 percent of energy value comes from saturated fatty acids o maximum 10 percent of energy comes from added sugar o minimum 55mg/100kcal calcium naturally

Claims are not allowed which refer to:

. negative effects on health when that foodstuffs is not consumed . weight loss amount or rate . advices of doctors or other medical persons

The whole group of health claims and their requirements allowed by the regulation, please visit the web site at http://www.tarim.gov.tr/Sayfalar/Mevzuat.aspx in Turkish language. Some examples of health claims are as follows:

. “This foodstuff contains probiotic microorganism. Probiotic microorganisms may help to regulate digestive system and support immune system” . “This foodstuff contains omega 3 fatty acids EPA and/or DHA. EPA and/or DHA may help to protect your heart and vein health.” . “This foodstuff contains low sodium. Low sodium may help to reduce the risk of high blood pressure and protect your vein and heart health.”

14.5 Labelling for Food Additives

Labelling rules for food additives are indicated in the Regulation on Food Additives which was published in the Official Gazette no. 28693, dated 06/30/2013. In this regulation, in addition to compulsory information, there are specific labelling requirements for food additives which will and will not be supplied to the consumer.

Labelling for Food and Feed containing, consisting or deriving from Genetically Modified Organisms (GMO’s):

In addition to general labelling rules, specific labelling rules for food and feed containing, consisting or deriving from GMO’s are set in the Regulation on Genetically Modified Organisms and its Products published in Official Gazette no 27671 dated 08/13/2010. Currently, there is no GMO event approved for food use in Turkey. There are 16 corn events of which 2 of them are

40 suspended by a court decision in December 2013 and 3 soybean events approved only for feed use. Imported feed into Turkey must be labelled “Contains GMO” if it contains GMO over 0.9 percent within a given shipment.

14.6 Packaging and Container Regulations

Turkish Food Codex Regulation on Materials and Articles Intended to Come into Contact with Food was published on the Official Gazette no 28157 dated 12/29/2011 and it was amended on 08/03/2012. This regulation is applied to materials and articles, including active and intelligent food contact materials and articles, which in their finished state;

. are intended to be brought into contact with food; . are already in contact with food; . can reasonably be expected to be brought into contact with food or to transfer their constituents to food under normal or foreseeable conditions of use and were intended for that purpose;

This regulation is not applied to materials and articles which are supplied as antiques; covering or coating materials, such as the materials covering cheese rinds, prepared meat products or fruits, which form part of the food and may be consumed together with this food and fixed public or private water supply equipment.

Under the framework regulation, there are specific requirements related to materials and articles such as glass, paper, metal, plastics, ceramics, regenerated cellulose and those which contain vinyl chloride monomers. These regulations are available at website http://www.tarim.gov.tr/Sayfalar/Mevzuat.aspx in Turkish language.

14.7 Food Additives Regulations

The food additive section of the Turkish legislation is quite detailed and aimed to prepare it to conform to EU regulations. Revised Turkish Food Codex Regulation on Food Additives was published in the Official Gazette no. 28693 dated 06/30/2013. The regulation specifies general conditions for inclusion and use of food additives in the list. It sets the food additive functional groups, names of food additives, defines the food categories, and lists maximum amounts and conditions of additives allowed in defined food categories as well as exceptions and restrictions. It also lists food items in which food additives are not allowed to be used or lists certain food additives which are not allowed to be used for certain traditional foods namely fermented sucuk (herbal sausage), heat-treated sucuk, poultry döner, döner and köfte (meatballs), ().

The ministry states that the reason of this prohibition is to protect the traditionalism of these products and protect unnecessary usage of additives. In addition, nitrates are banned in fermented sucuk and pastirma and nitrites are banned in döner and köfte. The ministry states that the aim of this prohibition is to prevent the additives used except for technological necessities. Regulation is available at http://www.tarim.gov.tr/Sayfalar/Mevzuat.aspx in Turkish language.

Food & Beverage Sector Report, Turkey | 2015 41 14.8 Pesticides and Other Contaminant

Turkish Food Codex Regulation on Maximum Residue Levels of Pesticides was published in the Official Gazette no. 29157 dated 12/29/2011 and amended once in 2013. The Regulation is applied to foodstuffs of plant and animal origin to be used as fresh, processed and/or composite food in or on which pesticide residues may be present. It does not apply to the manufacture of products other than food or sowing or planting or activities authorized by national law for the testing of active substances. The regulation lists the maximum level of pesticides which are permitted in foods and undergoes occasional updates.

Turkish Food Codex Regulation on Pharmacologically Active Substances and Their Classification Regarding Maximum Residue Limits in Foodstuffs of Animal Origin was published in the Official Gazette no. 28282 dated 05/04/2012. Pharmacologically active substances and their classification regarding maximum residue limits are set in the regulation.

Both Regulations were prepared in the scope of harmonization to EU, however, there are differences from EU in both Regulations. The Turkish Food Law maintains provisions for regulators to refer to the Codex Alimentarius or EU Directives if the pesticides or pharmacologically active substances are not contained in the Turkish Food Codex.

Both regulations are accessible at http://www.tarim.gov.tr/Sayfalar/Mevzuat.aspx in Turkish language.

14.9 Other Regulations

MinFAL has followed a dual approach in preparation of food regulations: "horizontal" legislation that covers aspects which are common to all foodstuffs such as additives, contaminants, labelling, hygiene, official controls, etc., and "vertical" legislation on specific products such as food supplements, cocoa and chocolate products, sugars, wine, spirit drinks, beer, meat and meat products, infant and follow-on formulas, honey, fruit juices, fruit jams, etc.

Please see below some horizontal regulations and publishing dates:

Date of Name of official Important articles regulation gazette December Official import - Based on 5996 law, veterinary services, plant health, food and 17, 2011 controls of plant feed law: originated food - Importers should get an electronic username and password for and feed pre-notification - Importers should electronically fill attached pre-notification form for plant origin food; feed and food contact material and attached copies of certificate, ingredient list, and other documents which will be determined by MINFAL. - Border Inspection Post or provincial directorates provide a date of inspection

42 - Frequency of analysis is determined by risk analysis - If there is a non-compliance, importers can either use special treatment, declare change in intent of use, send it back or confiscate the product - If there is a protocol between two countries electronic certificate will be accepted - Turkish translated labelling should be done before actual import control carried out. December Measurements to - EU harmonization regulation, 96/23/EC 17, 2011 monitor certain - EU harmonization regulation, 97/747/EC substances and - If inspectors detect residue on imported animals or animal their residue on products they will increase the frequency of analysis from the live animals and same country of origin animal products. December Food Hygiene - EU harmonization regulation, 852/2004/EC 17, 2011 - Based on 5996 law, veterinary services, plant health, food and feed law: - Define general hygiene criteria for premises including HACCP criteria and good management practices December Food premises - Based on 5996 law, veterinary services, plant health, food and 17, 2011 registration feed law and approval - Define which premises requires registration and define criteria of how they should register December Food and Feed - Based on 5996 law, veterinary services, plant health, food and 17, 2011 official controls feed law: - MinFAL is now ready to delegate some of their control and inspection authority to accredited private food control offices or some NGOs. Import and export controls are excluded. - MinFAL decided to publish the list of approved premises, approvals suspended premises, approvals cancelled premises, it will increase transparency. - Defined traceability, responsibility, general requirements for imports and exports December Pre-notification - -EU Establishing harmonization rapid regulation, alert system 282/2004/EC 17, 2011 and veterinary - EU harmonization regulation, 136/2004/EC checks of - Based on 5996 law, veterinary services, plant health, food and animal feed law: and animal - Pre-notification of imports of animals and animal products products - Veterinarians responsibilities to check and sign forms entering December toSpecific the country rules for - EU harmonization regulation, 854/2004/EC 17, 2011 animal products - Based on 5996 law, veterinary services, plant health, food and official feed law inspections - Approval of premises - General hygiene rules - Raw meat inspections - Role and duties of official veterinarian and his/her assistant - Live animal inspections and animal welfare

Food & Beverage Sector Report, Turkey | 2015 43 December Veterinary checks - EU harmonization regulation, 97/78/EC 17, 2011 on products - Based on 5996 law, veterinary services, plant health, food and entering to feed law: the - Pre-notification and veterinary checks at the border inspection country post - Issuance of veterinary check form - Frequency of veterinary controls - Physical criteria of border inspections post December Veterinary checks - EU harmonization regulation 97/794/EC 17, 2011 on live - EU harmonization regulation, 91/496//EC animals - Based on 5996 law, veterinary services, plant health, food and entering to feed law the country - One day before arrival, importers should inform amount, variety and expected date of arrival to veterinary border inspection - Veterinary controls should contain documentary checks, physical checks, - First veterinary checks should be done at the border inspection posts December Domestic animal - Based on 5996 law, veterinary services, plant health, food and 17, 2011 and animal feed law products - Issuance of veterinary health certificate on animal movements movements - Define vehicle criteria on animal and animal products movements December Animal hospital - Based on 5996 law, veterinary services, plant health, food and 21, 2011 Regulation feed law - Criteria to setup animal hospital including staff qualifications December Veterinary checks - EU harmonization regulation 97/78/EC 21, 2011 on animal and - EU harmonization regulation, 91/496//EC animal - EU harmonization regulation, 2007/275//EC products - Based on 5996 law, veterinary services, plant health, food and entering to feed law the country - Attached list of regulation classifies which products are animal and animal products December Animal welfare - Based on 5996 law, veterinary services, plant health, food and 23, 2011 Regulations feed law - Defines criteria of animal farms including barns, cages for chickens etc. December Protection and - Based on 5996 law, veterinary services, plant health, food and 23, 2011 combating feed law measurements - Vaccination to leucosis cattle is prohibited against cattle - Animal movements to herds that have leucosis cattle restricted leucosis December Protection and - Based on 5996 law, veterinary services, plant health, food and 23, 2011 combating feed law measurements - Diagnosis, notification and combating measures. against cattle anthrax

44 December Surveillance of - EU harmonization regulation 97/78/EC 23, 2011 zoonosis and - Based on 5996 law, veterinary services, plant health, food and zoonotic agents, feed law related - Surveillance of Brucellosis, antimicrobi al resistance and food borne December Criteriaoutbreak of - Based on 5996 law, veterinary services, plant health, food and 24, 2011 livestock feed law markets registration, December Animalinspections welfare - Based on 5996 law, veterinary services, plant health, food and 24, 2011 during feed law animal - Criteria of animal transportation vehicles including ships and transportati trucks on - Responsibilities, training, inspections and reports December Animal by - EU harmonization regulation 1069/2009/EC 24, 2011 products that are - Categorization of by-products not intended to - Collection and transportation criteria use for human consumption December Semen, Ovum - Registration, approval and certification of centres 24, 2011 and Embryo production centre establishments regulations December Special hygiene - EU harmonization regulation, 853/2004//EC 27,2011 regulation for - Based on 5996 law, veterinary services, plant health, food and animal products feed law - Defines criteria for animal slaughtering and animal products processing facilities December Feed hygiene - EU harmonization regulation, 183/2005//EC 27,2011 - Based on 5996 law, veterinary services, plant health, food and feed law - Registration and approval of feed premises December Placing on the - EU harmonization regulation, 767/2009//EC 27,2011 market and use - Based on 5996 law, veterinary services, plant health, food and of feed feed law - Principles of labelling and presentation December Methods of - EU harmonization regulation, 767/2009//EC 27,2011 sampling and - Based on 5996 law, veterinary services, plant health, food and analysis for the feed law official control of feed December Turkish food - Based on 5996 law, veterinary services, plant health, food and 29,2011 codex, maximum feed law residue limits of pesticides

Food & Beverage Sector Report, Turkey | 2015 45 December Turkish food - EU harmonization regulation, 1337/2008//EC 29,2011 codex, flavourings - EU harmonization regulation, 2065/2003//EC and certain food - Based on 5996 law, veterinary services, plant health, food and ingredients with feed law flavouring properties December Turkish food - EU harmonization regulation, 1333/2008//EC 29,2011 codex; food - Based on 5996 law, veterinary services, plant health, food and additives feed law December Turkish Food - Based on 5996 law, veterinary services, plant health, food and 29,2011 Codex feed law December Turkish Food - Based on 5996 law, veterinary services, plant health, food and 29,2011 Codex feed law preparation December Turkish food - Based on 5996 law, veterinary services, plant health, food and 29,2011 codex, feed law Microbiological - EU harmonization regulation, 2073/2005//EC criteria for foodstuff December Turkish food - Based on 5996 law, veterinary services, plant health, food and 29,2011 codex, labelling feed law - EU harmonization regulation, 2000/13/,/79/112/,2002/67,/608/2004,/90/496,87/250,1924/2006 EEC December Turkish food - Based on 5996 law, veterinary services, plant health, food and 29,2011 codex, feed law contaminatio - EU harmonization regulation,1881/2006/EC December Turkishn food - Based on 5996 law, veterinary services, plant health, food and 29,2011 codex, materials feed law and articles - EU harmonization regulation,1935/2004/EC intended to come into contact with December Turkishfood food - EU harmonization regulation, 41/2009/EC 4, 2012 codex, composition and labelling of foodstuffs suitable for people intolerant to gluten

46 December Turkish food codex, - EU harmonization regulation, 1881/2006/EC 4, 2012 sampling, testing method for dioxin and similar products

Turkish food codex, indications or - EU harmonization regulation, 89/396/EC marks identifying the lot to which a foodstuff belongs

14.10 Copyrights and Trademarks

Companies must apply to the Turkish Patent and Trademark Institute for trademark registration. A separate application is required for each brand name. After the initial inspection and check, the trademark is announced in the Official Trademark Gazette for three months. If there are no objections during this period, the trademark can be registered. The process takes about four months.

14.11 Import Procedures

Regulations

Imports of food products into Turkey are allowed only if they conform to regulations related to import controls and Turkish Food Codex. Turkey is harmonizing its food import regulations and Turkish Food Codex Regulation with those of the European Union. If the product in question is not covered by the Turkish Food Codex, officials can refer to the international regulations such as International Organization for Standardization (ISO), Codex Alimentarius or relevant EU Directives if it is not harmonized yet, on a case-by-case basis.

Process

Before December 2011, the majority of food and non-food imports required a “Control Certificate” which is an import license that states whether or not the product is eligible for import. However, according to the new import regime in December 2011, control certificates are required only for animal, animal products, and certain plants.

According to new import control regulations for food and feed of plant origin and materials and articles intended to come into contact with food, there is a pre-notification system in place in Turkey. The importer should register the required information for each product in the electronic system which is called Food Safety Information System (FSIS) of General Directorate of Food and Control (GDFC), which is accessible by the importer. Required information contains product name, product category, country of origin, name of importer, name of exporter or manufacturer together with ingredient list and label of product. This information is evaluated and approved by the Provincial Directorate (PAD) if it complies with the legislation in force. Later, the importer notifies the PAD about shipment details by filling the shipment notification form through FSIS and uploads the certificate related to product to be imported within a minimum 3 days and a

Food & Beverage Sector Report, Turkey | 2015 47 maximum 20 days before arrival of commodity. When the product arrives at customs, the importer makes an application with the original documents to PAD. Inspectors of PAD check the documents and product. If the result of these checks is positive then inspectors take a sample. Frequency of sampling is determined by PAD. If the results of the analysis comply with the legislation, PAD sends a conformity letter to customs to release the product in question. The process normally takes up to one week depending on the type of analysis. Analysis is carried out by the official control laboratories and private laboratories which are authorized by GDFC. The cost of analysis for both official control laboratories and private laboratories is determined annually by GDFC and it is published in the GDPC’s website.

For animal and animal originated products, a control certificate is required to be approved prior to import. The importer should apply to PAD together with following documents for approval of control certificate:

. Filled control certificate Form . Pro forma invoice or invoice . Sample veterinary health certificate . Document of country of origin . Ingredient List . For food supplements, food for special dietary purposes and for products and feed where national legislation does not exist, specification document . Label/draft label . Commercial Activity Certificate or Trade Registry Gazette where importer is registered . Other documents where MinFAL requested

After approval of the control certificate within one or two weeks by PAD, it is registered to FSIS for animal sourced food products. Control certificates are valid for a period of between 4 and 12 months, depending on the product. Control certificates are sometimes used as an instrument to deny or delay the importation of some products. After receiving a control certificate, the importer should inform the border inspection post and PAD about the arrival of the shipment at least one working day before arrival by filling and submitting the Veterinary Entrance Document. When the commodity arrives at port, the importer fills out an application with the control certificate and the originals of documents which are approved before by PAD. Inspectors of PAD check the documents and product. If the result of these checks is positive, then, inspectors take sample. Frequency of taking sample is determined by PAD. If the results of analysis comply with legislation, then PAD sends conformity letter to custom to release the product in question. The process normally takes up to one week depending on the type of analysis. Analyses are carried out by official control laboratories and private laboratories which are authorized by GDFC.

A control certificate is required also for seeds prior to import. A control certificate is valid for 6 (six) months and such time period cannot be extended. An individual preliminary permit application is required for each control certificate. For the approval of a Seed Control Certificate, the following documents are required;

. Letter of Application . Control Certificate Form . Original copy of invoice/pro forma invoice or its copy certified by importer and its Turkish translation. Items required to be included in invoice/pro forma invoice: o Invoice/Pro forma invoice date and number (such date cannot be older

48 than 6 (six) months); o Type and variety of seed to be imported; o Quantity, lot/batch number and monetary value of seed to be imported; o Name, authorized signature and seal of importer company; o Contact details of importing company. . A document certifying that respective seed is not a genetically modified organism (GMO): o Letter of Undertaking III (Annex-6) shall be required from importer company. o Importer company can declare it on pro forma invoice or with an individual document. In case such document is a copy, it must be approved by importer company. o In case it cannot be documented by importer company, an analysis report certifying that it is free from GMO shall be required. . Preliminary import permit; bank receipt evidencing that application fee has been paid. . Seed Certificate 14.12 Sending Samples

Requirements for shipping product samples are slightly different than for products intended for consumption. For the importation of samples, there is no pre-permission or control certificate required. Technically, there are no documentation requirements, if the sample is for an exhibit or scientific research. For commercial samples, the importer needs to fill out a special form from the PAD and provide a copy of the pro forma invoice (if it is free of charge, this is simply stated on the invoice). Once the PAD has that form, they prepare a letter to relevant custom to notify them to release the sample. Note - there is no health certificate requirement.

Customs Inspection and Documentation

Upon entry of the product at the customs offices which are specified for food and agricultural products, the importer should be prepared to present the approved control certificate (if required) together with originals of invoice, ingredient list, certificate of origin, veterinary health certificate or plant health certificate, etc., as well as other import documentation such as the bill of lading. Inspectors from the PAD take samples of the product and send it to the MinFAL’s official laboratory or a private laboratory authorized by MinFAL for physical, chemical and microbiological analysis. Import of the foodstuff is allowed if the results of the analysis are found to be acceptable and consistent with related regulations, and imports have been approved by PAD. If the inspection results do not comply with Turkish legislation requirements, the importer may request secondary sample tests. In the case that the secondary test results are also against the Turkish import requirements then the shipment is rejected by PAD.

In addition, if the foodstuff is a bulk or semi-processed commodity, it is checked by plant quarantine specialists or veterinarians for consistency with the appropriate law and regulations.

14.13 Latest in Regulation

As of November 2014, Turkish officials now require an official attestation that imports utilising enzymes or microorganisms are free from genetically engineered enzymes or microorganisms. The attestation must be provided by the government of the producer or exporter’s government. The documentation has to be completed in the exporting country prior to the export of products.

According to Ministry of Food, Agriculture and Livestock (MinFAL) the requirement applies to the import of enzymes, microorganisms, and products that utilize them in their production. MinFAL

Food & Beverage Sector Report, Turkey | 2015 49 suggests that import officials may also require a government attestation for products “known” to utilise enzymes or microorganisms. The lack of clear guidance from MinFAL means implementation at the ports will likely be inconsistent (USDA Gain Report, Food and Agricultural Import Regulations and Standards, 2015)

50 15 Duty Rates on Agricultural and Dairy Products

As Turkish import duties on several agricultural and food products tend to be high and thus highly impact the profitability of exports of products from Flanders, we list the export duties for a number of categories here below.

Duty Rates (%) HS Code Product description VAT(%) EU, EFTA 0406.10.20.00.11 Fresh cheese 8 138 0406.10.20.00.12 Whey cheese 8 140 0406.10.20.00.13 Curd 8 140 0406.10.20.00.19 Other 8 140 0406.10.80.00.00 Other 8 138 0406.20.10.00.00 Glarus herb cheese (known as Schabziger) 8 138 made from skimmed milk and mixed with finely ground herbs 0406.20.90.10.11 Gruyere cheese 8 43 0406.20.90.10.12 Chester, Parmezan, Dutch (Flemeng) and 8 43 similar cheese 0406.20.90.90.00 Other 8 138 0406.30.10.00.00 In the manufacture of which no cheeses other 8 138 than Emmentaler, Gruyère and Appenzell have been used and which may contain, as an addition, Glarus herb cheese (known as Schabziger); put up for retail sale, of a fat content by weight in the dry matter not exceeding 56 % 0406.30.31.00.00 Not exceeding 48 % 8 138 0406.30.39.00.00 Exceeding 48 % 8 138 0406.30.90.00.00 Of a fat content, by weight, exceeding 36 % 8 138 0406.40.10.00.00 Roquefort 8 43 0406.40.50.00.00 Gorgonzola 8 43 0406.40.90.00.00 Other 8 43 0406.90.01.00.00 For processing 8 138 0406.90.13.00.00 Emmentaler 8 138 0406.90.15.00.11 Gruyere 8 43 0406.90.15.00.12 Sbrinz 8 43 0406.90.17.00.00 Bergkäse, Appenzell 8 138 0406.90.18.00.00 Fromage fribourgeois, Vacherin Mont d'Or 8 138 and Tête de Moine 0406.90.19.00.00 Glarus herb cheese (known as Schabziger) 8 138 made from skimmed milk and mixed with finely ground herbs 0406.90.21.00.00 Cheddar 8 43 0406.90.23.00.00 Edam 8 138 0406.90.25.00.00 Tilsit 8 138

Food & Beverage Sector Report, Turkey | 2015 51 0406.90.27.00.00 Butterkäse 8 138 0406.90.29.00.00 8 178 0406.90.32.00.11 Cheese encased in a skin 8 180 0406.90.32.00.12 White Cheese 8 180 0406.90.32.00.91 Cheese encased in a skin 8 180 0406.90.32.00.92 White Cheese 8 180 0406.90.35.00.00 Kefalo-Tyri 8 138 0406.90.37.00.00 Finlandia 8 138 0406.90.39.00.00 Jarlsberg 8 138 0406.90.50.00.00 Cheese of sheep's milk or buffalo milk in 8 138 containers containing brine, or in sheepskin or goatskin bottles 0406.90.61.00.00 Grana Padano, Parmigiano Reggiano 8 138 0406.90.63.00.00 Fiore Sardo, Pecorino 8 138 0406.90.69.00.00 Other 8 138 0406.90.73.00.00 Provolone 8 138 0406.90.75.00.00 Asiago, Caciocavallo, Montasio, Ragusano 8 138 0406.90.76.00.00 Danbo, Fontal, Fontina, Fynbo, Havarti, 8 138 Maribo, Samsø 0406.90.78.00.00 Gouda 8 138 0406.90.79.00.00 Esrom, Italico, Kernhem, Saint-Nectaire, Saint- 8 138 Paulin, Taleggio 0406.90.81.00.00 Cantal, Cheshire, Wensleydale, Lancashire, 8 138 Double Gloucester, Blarney, Colby, Monterey 0406.90.82.00.00 Camembert 8 138 0406.90.84.00.00 Brie 8 138 0406.90.85.00.00 Kefalograviera, 8 138 0406.90.99.00.11 Cester, Parmezan, Felemenk and other similar 8 43 cheese 0406.90.99.00.12 String cheese 8 138 0406.90.99.00.19 Other 8 138

0401.40.10.00.11 Milk 8 150 0401.40.10.00.12 Cream 8 150 0401.40.90.00.11 Milk 8 150 0401.40.90.00.12 Cream 8 150

0704.10.00.00.11 Cauliflowers 8 19,5 0704.10.00.00.12 Broccoli 8 19,5 0704.20.00.00.00 Brussels sprouts 8 19,5 0704.90.10.00.11 White cabbages 8 19,5 0704.90.10.00.12 Red cabbages 8 19,5 0704.90.90.00.00 Other 8 19,5 0706.10.00.00.11 8 36,9

52 0706.10.00.00.12 Turnips 8 36,9 0706.90.10.00.00 Celeriac (rooted celery or German celery) 8 36,9 0706.90.30.00.00 Horseradish (Cochlearia armoracia) 8 36,9 0706.90.90.00.00 Other 8 36,9

0707.00.05.00.00 Cucumbers 8 29,7 0707.00.90.00.00 Gherkins 8 29,7 0803.10.10.00.00 Fresh: Bananas 8 145,8

0805.10.20.00.00 Sweet , fresh 8 54 0805.10.80.00.00 Other 8 54 0805.20.10.00.00 Clementines 8 54 0805.20.30.00.11 Monreales 8 54 0805.20.30.00.12 Satsumas 8 54 0805.20.50.00.00 Mandarins and wilkings 8 54 0805.20.70.00.00 Tangerines 8 54 0805.20.90.00.00 Other 8 54 0805.40.00.00.00 Grapefruit, including pomelos 8 54 0805.50.10.00.00 Lemons (Citrus limon, Citrus limonum) 8 54 0805.50.90.00.00 Limes (Citrus aurantifolia, Citrus latifolia) 8 54 0805.90.00.00.11 Other fresh citrus fruit 8 54 0805.90.00.00.12 Other dehydrated citrus fruit 8 54

0808.10.10.00.00 Cider apples, in bulk, from 16 September to 15 8 60,3 December 0808.10.80.00.11 Of the variety Golden Delicious 8 60,3 0808.10.80.00.13 Starking apple 8 60,3 0808.10.80.00.14 Starkrimson apple 8 60,3 0808.10.80.00.19 Other 8 60,3 0808.30.10.00.00 Perry pears, in bulk, from 1 August to 31 8 60,3 December 0808.30.90.00.00 Other 8 60,3 0808.40.00.00.00 Quinces 8 60,3

Food & Beverage Sector Report, Turkey | 2015 53 16 Sources

. Agriculture and Horticulture Development Board (AHDB), “Turkey importing beef again” article, September 2015 . Anadolu Efes Investor Presentation 2014 . BofA Merrill Lynch, Consumer and Retails Report September 2015 . Business Monitor International Report on Turkish Food Market 2014 . Canadian Report “The future of the dairy food market in Turkey to 2017” . Canadian Report “Turkey Beer Market Insights July 2013” . Citi, Investment Themes for 2015 GPS Report . Clal Consulting http://www.clal.it/ . Deloitte, Retail Sector Update July 2014 . Die Erde, Journal of the Geographical Society of Berlin, ‘Intermediaries in agro-food networks in Turkey: How middlemen respond to transforming food market structures’, by Alexandra Appel, Martin Franz, Markus Hassler, 2014 . Eurofish, Overview of the Turkish Fisheries and Aquaculture Sector 2014 . Euromonitor Baked Goods Market Research Report, January 2015 . Euromonitor Biscuits Report, January 2015. . Euromonitor Breakfast Cereals Report, January 2015 . Euromonitor Drinking Milk Products Report, January 2015 . Euromonitor Grocery Retailers Report, January 2015 . Euromonitor Spirits in Turkey Report June 2015 . Euromonitor Turkish Beer Market June 2015 . Euromonitor Wine in Turkey Report June 2015 . European Commission, GDP Levels Study http://ec.europa.eu/eurostat/statistics- explained/index.php/GDP_at_regional_leve . Export Promotion Centre of Turkey (IGEME) Report “Turkish Agriculture and Food Industry” . Food and Agriculture Organization of the United Nations, National Aquaculture Sector Overview, Turkey . Hurriyet “Russia, Turkey clear way for milk exports” news article, October 2014 . IMF, Turkey and the IMF country information http://www.imf.org/external/country/TUR/index.htm . Is Investment, Food Sector Flash Note, August 2014 by Ilyas Safa Urganci . JP Morgan, Turkish Beverages Report, 16 February 2015 . Meat Commerce website, http://meatcommerce.com/news “Egg and poultry meat production increases in Russia” and “Russian Ban on EU Agriculture – 12 Months On” articles . Mey Icki, Corporate Website . Ministry of Agriculture of the Russian Federation http://www.mcx.ru/ . Morgan Stanley, Global Analyst Report, January 2015 . OECD-FAO Agricultural Outlook Report 2014-2023 . Ortakalan Sektorel Yayincilik http://www.ortakalan.com.tr/ . Rosselkhoznadzor, Moscow, Federal Service for Veterinary and Phytosanitary Surveillance . The Economist ‘Saved by the well’ article, January 2015 . Today’s Zaman, “Meat prices up 40 percent, speculations mount over shady imports” August 2015 . Turkish Ministry of Economy, Wine Report 2011

54 . Turkish Statistical Institute (TurkStat) . USDA GAIN Report, Turkey Fresh deciduous fruit annual 2014 . USDA GAIN Report, Exporter Guide Turkey 2014 Report . USDA GAIN Report, Turkey Food and Agricultural Import Regulations and Standards, 2015 . USDA Gain Report, Turkey Retail Food Sector 2015 . World Bank, ‘Emerging Europe and Central Asia is On the Rebound’ Press Release, October 2011.

Food & Beverage Sector Report, Turkey | 2015 55