From Turkish number one to European player

- Last updated on GMT

Related tags: European union, Europe, Turkey

At a time when Europe's leading brewers are growing bigger and more
international on almost a weekly basis, smaller companies are
finding it increasingly hard to expand their own businesses. We
spoke to Michael Hoffmann of the Turkish brewer Efes about
its plans to turn itself from dominant local player into
pan-European brand.

The news earlier this month that Turkey's application to join the European Union has been turned down again pending further reforms was unwelcome, if not unexpected, news.

But if the Turkish government needs to do more to satisfy its neighbours in the west that it is fit to join the trading bloc, one Turkish company is already well ahead of the game when it comes to benefiting from consumption patterns in the west.

The Efes Beverage Group is Turkey's largest brewer with a 75-80 per cent market share, five breweries and a popular brand in Efes Pilsener, but despite this dominant position, the company is well aware that it needs to do a lot more to ensure its continued success in a challenging beer market outside its home market.

Food and Drink Europe.com​ spoke to Michael Hoffmann of Efes Beverage Group​ at the SIAL show in Paris last week, where he was busy presenting the company and its products to a wide range of buyers from all over Europe.

"We are the major player in Turkey, but that will not be enough in the future, especially when Turkey eventually becomes part of the EU and we will not have the protection of the monopoly system. We already produce Becks and Miller beer under licence in Turkey, as one means of avoiding too many competition concerns when Turkey joins the EU, but we need to do more to ensure our business continues to thrive after that date.

That is why we come to shows such as SIAL, to show off our beers to buyers from all over the world and to grow our business outside Turkey."

While shows like SIAL will certainly help get Efes known to buyers in the west - for example, the French retail giant Carrefour was just one company which showed an interest in the beer at the show - the company has primarily focused its expansion on eastern Europe.

"We have focused on eastern Europe for one main reason - money invested there goes a lot further than it does in the west. Of course, Turkey has also had traditional links with that part of Europe as well, so it makes it the ideal place to start expanding sales of Efes."

The company has already invested heavily in eastern Europe, with breweries in Russia, Ukraine and Kazakhstan, and has signed an agreement with Coca-Cola in Atlanta giving it a share of the rights to bottle the famous soft drink in several eastern European countries, a factor which has helped it expand there faster than expected.

"We need to make Efes an international brand, and we have several factors which can help us achieve this,"​ Hoffmann said. "Firstly, the beer is a pils-style lager, and that is a beer style which is well known and appreciated throughout the world, so we do not have to educate people from scratch. In countries such as Italy, for example, this is a very strong selling point, because it shows the beer is of a certain quality.

"Secondly, Turkey is a popular holiday destination with many tourists from western Europe, who are almost obliged to drink Efes when they are on holiday because our market share is so great. If they like the beer, they will want to be able to buy it when they get back home, and that kind of consumer power is important for retailers."

He continued: "There are substantial Turkish communities in many western European countries - in particular Germany, where there are two and half million Turks - and these communities have their own stores selling Turkish products. In Germany alone there are 15,000-20,000 such stores, and they are obviously a major outlet for us.

"But these Turkish communities have often been overlooked by the mainstream retailers, a fact which many companies are now addressing as they realise that Turks often have a high level of disposable income. German retailers such as Rewe or Metro are now stocking more Turkish products, including Efes, in a bid to attract more Turkish shoppers, but this in turn gives our product greater visibility to consumers as a whole."

The company is also promoting Efes as a Mediterranean product - not so much linking it to other food and drink products which form the healthy Mediterranean diet, but more linking it to the image of sun, sea, sand and fun that the Mediterranean evokes.

"Germany is our biggest market in western Europe, and we have offices in Cologne which testify to this success, but we also have a substantial presence in the UK (where we are stocked in many of the Asian stores there and where we have a strong presence in the cash & carry sector), France, Austria and in the former Yugoslav countries as well."​Although most of the company's efforts have been on pushing the flagship pilsner brand, it also has a number of other products which it has developed to facilitate entry into other markets.

"We have produced a product called Festival which is a zero per cent alcohol beer - in fact a sparkling malt beverage with a strawberry, pineapple or peach flavour - and which allows us to sell our products in Muslim countries where most companies cannot sell even their no-alcohol products because they nonetheless contain a tiny amount of alcohol.

We have already had orders from countries such as Saudi, where production is licensed, but we are going to launch these drinks in western Europe too, because they are ideal for mixers or for consumers who do not want to drink alcohol, a trend which is growing there."

There is also Stary Melnik, a beer produced by Efes' Moscow brewery, that was created to fill demand in eastern Europe, where it is often easier to source products from the east than from the west. "It also allows us to target countries such as Germany or Israel where there are large Russian expatriate communities,"​ Hoffmann said.

With some 10 million hectolitres of Efes Pilsener sold each year, Efes is already a major player, but its strategy of focusing on eastern Europe in particular - a market where most of the major western brewers have been active in the last few years - is likely to help catapult it into the major league. Once Turkey becomes an EU member, it might see some erosion of its domestic market share, but the likely rise in consumer spending power after EU accession should offset most of that.

All in all, the future looks rosy for Turkey's biggest brewer.

Related topics: R&D

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