1. Introduction
Turkey has a population of 83.1 million, with a relatively young and growing population. Nearly 67% of the population is within the age bracket of 15 and 64 years oldmaking Turkey a young and dynamic country. 75.7% of the population is concentrated in urban areas, particularly in Istanbul, Ankara, and Izmir.
Turkey’s economic and social development performance since 2000 has been inspiring, leading to an increase in employment and income and making Turkey a top middle-income country. Turkey’s GDP per capita has been rising since 2009 and reached USD7,820 in 2020. The manufacturing sector is the main industrial activity of the country. The secondary sector accounts for 27.7% of GDP and employs 26.1% of the workforce.
Turkey is a net importing country and consumer spending accounts for 70% of country’s GDP and. This sector has been the country’s primary engine of economic growth in the past decade. Food sector is one of the key contributor in consumer spending and its also one of the main user of palm oil and its products in Turkey.
The four main traditional uses of palm oil in food products are cooking/frying oil, shortenings, margarine, and confectionery fats. This article will cover the three most significant segments in food industries using palm oil in their production. These segments are confectionary, Horeca and margarine fats products.
2. Consumption Trends of Palm Oil for Food İndustries
A. Confectionary Industry
The Turkish confectionery sector is showing growing trends and it is supported by Turkey’s young and growing population and traditional consumption habits. In addition, candy confectionery has a significant role in Turkish tradition, widely served as gifts during religious festivals, weddings, and celebrations. It is also a common choice as a present when visiting family or friends. This traditional popularity helps candy confectionery perform much better in Turkey than in most other surrounding countries. Other confectionery productions such as chocolate, biscuits, wafers, and cake have also shown an uptrend growth in Turkey. Several factors support this: the young and rapidly growing population, established distribution channels, improved promotion activities, new product developments, and increasing multinational investments. As a result, manufacturers have successfully diversified their production regarding the number and type of products.
B. HORECA Industry
Demographic growth, changing lifestyles, and the number of foreign tourist arrivals have contributed to the HORECA sector to rise steadily over the last decade.
The number of tourist arrivals to Turkey increased about 70% between 2010 – 2019, supporting the consumption of palm-based fats and oils, such as the hotels and other related tourism industries that use palm-based frying oil and margarine. However, the number of international tourist arrivals decreased sharply in 2020 due to the COVID-19 pandemic and it also affected the consumption of oils and fats among the HORECA sector. Nevertheless, the tourism industry started to improve in 2021 for June – August period and is likely to show strong recovery in 2022.
C. Margarine & Fats Products
Since the introduction of margarine as the substitute for butter and vegetable fats for industrial usage, production has continued to increase. The high population supports the increasing demand and the importance of those products in food items. Furthermore, margarine and industrial fats are made from vegetable oils, and palm oil is the most commonly used ingridient in this sector. Palm oil holds its advantages as a priced competitive product and trans-fat free as compared to butter or other costly alternates.
However, the consumption of margarine for households recorded a drop for the last ten years. The production of consumer margarine was registered 147,784 tons in 2009, down to 119,680 tons in 2019. Consumer margarine production decreased about 19% because of extensive anti- margarine campaigns in the country and less export to its neighbouring countries. The output of ghee dropped by 42% due to the shift of consumption to liquid cooking and frying oils. But obviously, the demand for Industrial fats increased significantly by 65%, as indicated in the chart above.
3. Importers and Users of Palm Oil for Food Industries
Palm oil-based industrial fats are mainly used in food manufacturing, including confectionery and bakery products. It is also used in the food services sector to cater to the local and booming tourism and HORECA sectors.
In Turkey, palm oil is supplied to the users through the traders imported in bulk and later distributed to users according to orders. This is mainly for palm olein, stearin and RBD palm oil which is usually required in large quantities for the food manufacturing industries. As for bulk shipment, three companies that dominated the trade are Cargill, Louis Dreyfuss, and Agritrade. Cargill and Louis Dreyfuss import the products through their offices in Malaysia and Singapore, while the local Agritrade deals with Pacific Interlink in providing them with the supply and shipping services.
In terms of local users of palm oil in food industries, Ulker is the biggest buyer of palm oil in Turkey with a share of 41%, followed by Eti and Nestle at 17% and 12.5%, respectively, as stated in the following table.
| Manufacturer | Market Share % |
|---|---|
| Ülker | 41% |
| Eti | 17 % |
| Nestle | 12.5 % |
| Ferrero | 10.5 % |
| Şölen | 7 % |
Source: MUMSAD
4. Growth Potential
A. Upward Trend of Production and Local Consumption
Turkey’s production of confectionery products increased about 50% between 2010 – 2020. The rise in manufacturing of confectionery products is in line with the increase in population and export trend. Cake production has increased about 70 % in the last ten years, biscuit production went up about 50 %, and chocolate production increased about 40 %.
The consumption trend of confectionery products has increased steadily between the 2010 – 2020 period. Biscuit is the most consumed confectionery product in Turkey. Whereby, the consumption of biscuits increased by 55 % over the last ten years. Consumption jumped from 358,861 tons in 2010 to 556,403 tons in 2020. Chocolate is the second largest consumed confectionery product. Chocolate consumption went up by 25% in the 2010- 2020 period, with 300,970 tons of chocolate consumption in 2010, registered at 375,661 tons in 2020.
B. Export Potentials
Turkey is a net exporter of confectionery products. Turkish confectionery products are widely exported around the globe. Currently, Turkey is exporting various confectionery products to around 182 countries. Iraq, Saudi Arabia, and UAE are leading importing countries.
Turkey’s export of confectionery products increased between 2010 – 2020 by more than 500,000 tons, with 497,000 tons exported in 2010 and reaching 1,000,000 tons in 2020. Cake products’ export received the highest growth by four times in the last ten years. Wafers’ export increased three times, and chocolate and candy export went up two times. Whereby, biscuits’ export grew 30% in last ten years.
C. Growing Usage of Palm Oil
Palm oil usage as the main component for pastry and industrial oils and fats has become the new growth area in Turkish since 2010. In addition, the growing tourism income surpassing 35 billion dollars in 2019 and the increasing number of the shopping mall in the big cities supports consumption of palm-based fats and oils.
Among numerous vegetable oils, palm oil has been widely applied for food industries in Turkey due to its several advantages of palm oil properties. These include high thermal and oxidative stability, which increase productivity, GMO-Free, flexible and cost-effective for producing the fat products and at a competitive price.
The current Malaysia-Turkey FTA gives an advantage to the export of Malaysian palm oil into the country by having a lower import tax than other palm oil-producing countries. Therefore, it is the most opportune moment for Malaysian palm oil players to further penetrate in the confectionary market and establish relationships with the local buyers. MPOC’s regional office in Istanbul can provide information and assistance to the Malaysian palm oil players willing to explore these opportunities.
Prepared by: Hakan Alkan and Mohd. Suhaili Hambali
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