By Adrian Atterby
The growth in tissue products mirrors wider economic growth in
Turkey, as positive economic developments throughout the country
and a significant increase in purchasing power dramatically affected
consumption trends. There has also been a significant fall in
inflation, down from 55% in 2002 to a mere 8% in 2007. Moreover
it is predicted to fall even further, to a mere 4% in 2009, which
will help to stabilize prices.
Growth in tissue product has also been aided by the urbanization
of Turkish society, with almost 70% of the population now
living in towns and cities. Coupled with improved distribution,
as multi-national chains have acquired local chains, such
as the acquisition of the Gima chain by Carrefour SA, the
consumer base for tissue products has increased significantly
in recent years.
These changes are reflected in the share of tissue products
revenue claimed by supermarkets/hypermarkets and discounters.
This stood at little more than 60% in 1998, but by 2007
combined these two channels claimed almost 90% of revenue.
The growing influence of supermarkets/hypermarkets also
benefits larger brands, which are helped by strong relationships
with retailers and have greater power to ensure that more
shelf space is allocated to them.
TOILET PAPER LEADS
One of the effects of the urbanization
of the population is the promotion of better hygiene habits.
This has had a dramatic affect on per capita usage of toilet
paper, driving it up by 30% since 2005. However, the actual
level is still very low, at slightly less than 1 kg per
person annually, meaning there is still much room for volume
growth. The main method of cleaning in Turkey continues
to be water, with only an estimated 25% of Turkish households
using toilet paper.
Ipek Kagit AS (Georgia-Pacific) is the dominant player
in the Turkish toilet paper market, accounting for just
less than 50% of revenue, with its Solo, Selpak Aqua and
Silen brands. Ipek Kagit's Selpak Aqua brand targets upper-income
consumers with its high price and good quality. Solo, on
the other hand, offers both high quality and good value,
and is the favourite brand in Turkey. Silen was launched
for middle to low income consumers by underlining its affordable
price, combined with the quality of the product.
No matter which category consumers shop in, though, they
are extremely price sensitive, meaning that brands are constrained
in terms of introducing price rises, as they run the risk
of losing sales to the private label category, which has
seen sales steadily increase over the past few years to
stand at 8% of the market. This is still a small share when
compared with more developed European markets such as the
UK, Germany and France, where private label can claim up
to 60% of the category. To combat the threat from private
label products, brands introduced a number of promotions
during 2007, such as 25% extra free, whilst disposable income
growth allowed consumers to purchase products in bulk, and
as a result 10 and 12-roll pack sizes increased in popularity.
This emphasis on price does not mean that the market sees
little innovation. In 2007, for instance, Ipek Kagit launched
Selpak Pudra Kokulu under its premium range - a product
incorporated with talcum powder, drawing attention to its
pleasant scent and its pink colour.
TABLEWARE A SURPRISING SECOND
Innovation is not really
a factor in the second largest tissue products category,
paper tableware. The importance of the paper tableware market
in Turkey, in the context of the wider tissue products market,
is in contrast to the vast majority of other markets, not
only in Europe, but also globally, where it is generally
of much less importance.
In Turkey sales of paper tableware products are concentrated
in the paper napkins sub-segment and produced revenue of
$104m during 2007. As well as being used for their intended
purpose, Turkish consumers view paper napkins very much
as multi-purpose items, using them as substitute products
for kitchen towels and more expensive wipes. However, with
disposable incomes rising quickly, averaging 17% growth
since 2002, consumers in the more affluent social groups
are now able to afford task specific products such as kitchen
towels and wipes, and as a result growth in the paper tableware
category has been stagnant since 2002.
Growth in the kitchen towels market has picked up considerably
in the past two years, averaging almost 10% annually. Aside
from higher levels of disposable income, growth in the kitchen
towels market stemmed from a greater number of products,
increased importance given to advertising and superior awareness
of the convenience and hygiene benefits of using the product
compared to traditional rags and cloths.
The development of half-sized kitchen towel sheets also
proved a hit with consumers, allowing them to tear a sheet
in half if they so require. Innovations of this nature promoted
greater convenience as well as value, meaning that products
would appeal to price sensitive consumers as well as those
more affluent shoppers in Turkey who have traditionally
purchased kitchen towels.
The market for kitchen towels in Turkey is competitive
and characterized by extremely low brand loyalty among consumers.
Low prices and promotions such as buy one roll get one free
directly affect consumer purchasing decisions. Ipek Kagit
is the current market leader in Turkish kitchen towels,
claiming almost 50% of the market. It has been able to establish
such a dominant position thanks in part to its premium brand,
Selpak Havlu, and its mid-priced brand, Solo Havlu.
Ipek Kagit's brands, particularly Selpak, are very well
recognized and trusted. The company has invested heavily
in advertising its brands on television, emphasizing the
extra quality and absorbency properties of Selpak, and the
economy and quality properties of Solo. Also, at the end
of the review period, Ipek Kagit offered the deal of buy
one pack of kitchen towels and get the second pack half
price.
In 2006, the company launched its Selpak kitchen towels
with a device which can be used as both a kitchen towel
holder and a hanger. This emphasized the premium image of
the Selpak brand.
Distribution and gaining shelf space in supermarkets/hypermarkets
were important determinants of growth, due to the increasing
importance of this retail distribution channel. The top
four companies had a substantial presence in supermarkets
and hypermarkets. Private label kitchen towels experienced
a small growth in 2007, due to a higher number of retailers
having their own products. However, private label kitchen
towels in Turkey face a number of difficulties when trying
to compete with branded products. In the main this is due
to their inferior quality compared to branded products,
but also because in terms of price they are usually equal
or sometimes even more expensive when compared to brands.
Although kitchen towels are expanding rapidly, household
penetration is still less than 10% in Turkey, meaning that
significant room for growth still exists.
TISSUES STALL
Although not the smallest category, facial
tissues have, like paper tableware, struggled for growth
in the past five years, with total revenues remaining static
since 2002. Sales of tissues generally increase in winter
months, due to the dominance of pocket handkerchiefs, which
are mostly used when consumers suffer from colds, allergies
or 'flu. Sales also increase when schools open in September,
as students are one of the core consumer groups of this
product.
Although much the smaller of the two tissue categories,
boxed facial products recorded positive volume growth in
2007. This was due to packaging developments which offered
greater convenience to consumers. Packaging which offered
convenient usage both at home and in cars (dual opening
packages), smaller packages for easy storage at home and
packaging with Disney characters targeting children are
examples of the developments. Also, boxed facial tissues
have been well advertised on television during the last
few years, particularly the Selpak brand from Ipek Kagit,
helping to increase awareness, thereby stimulating growth.
BACK TO THE FUTURE
Looking forward, Euromonitor International
forecasts that many of the current dynamics helping to shape
the Turkish tissue products market will continue to do so.
Therefore while sales of toilet paper and kitchen towels
will move ahead positively, facial tissues and paper tableware
sales will suffer.
Toilet paper sales will continue to account for the largest
proportion of tissue
product revenue, with growth being driven by higher disposable
income levels. Greater exposure to western living standards
and practices, as well as increased advertising, will help
to increase hygiene awareness, which in turn will lead to
enhanced toilet usage, obviously leading to great volume
sales. In combination these factors will result in a Turkish
toilet paper market which is worth $290m by 2012. TW
