With both the private label and own brand sectors of the Turkish tissue market covered, Tül Kagit is set to make its mark
Nine months after the start-up of its 65,000tpy Metso Advantage DCT 200 tissue line at its Pamukova site, Tissue World caught up with its general manager Erkan Tirnavali.
“The next few years ..” is a phrase which is never far from the lips of Erkan Tirnavali, general manager of tissue producer Tül Kagit. Were he not so forthcoming with his assessment of the company’s and the country’s immediate and longer term prospects, it would serve as a handy summary of what lies ahead: a producer poised to grab a bigger chunk of the home and export market, an expanding economy, a greater cultural embrace of tissue, and tempting new regions awaiting urbanisation in the east of Turkey and beyond.
“There is lots of potential here in Turkey,” he says. “The tissue market is still growing steadily. But consumption isn’t currently matching supply, and so we’re experiencing some overcapacity. As a result, all investors here are looking to the future. In the next four to five years we’re expecting to see a 7% yearly increase in tissue demand, that’s an extra 30,000 tonnes per year. That’s what we’re preparing for.”
Tül Kagit is an operating company of parent Ak Gida (Ulker Group), a business that has a significant presence in the Turkish consumer goods market. Nine months ago, the business started up a 65,000tpy Advantage DCT 200 Metso-supplied tissue line, PM1, at its Pamukova mill in the Sakarya province. The tissue plant covers 140,000m2 and the new tissue line will produce 65,000 tonnes a year of highquality napkin, handkerchief, toilet and towel grades at a speed level of 1,600 m/ min to 2,000 m/min. There are now plans for PM2 over the course of the next few years. “Depending on market conditions, we expect PM2 will be up and running within a few years,” Tirnavali says. “All our big competitors already have second machines up and running, but they are struggling due to the tissue capacity already in the Turkish market. We believe that there will be a more level play field in a few years.”
The business produces products in three different categories: its own brand Komili Konfor of premium quality tissue, kitchen towel, hanky and napkin; private label brands Blume and Queen for BIM supermarket chain; and private label brands Yuka and Beyaz Guvercin for the ŞOK supermarket chain. In every segment, it is common to offer three quality products. However, for its own brand it only has the one premium quality. “This is very much a strategic decision,” he says. “One of our main focuses is that our own brand will get bigger in a few years,” he says. “But we will also continue to produce private label brands.” As for Away from Home (AfH), the business currently has no products in this sector, but Tirnavali says that in the next few years more demand is also expected here. “More Turkish tissue producers are certainly looking to go into this area,” he adds. Around 25% of the tissue market is currently AfH, made up mainly of two large players and a few small local players. “We will take part in this market, but only in the next few years. There is potential,” he adds. “But our aim for now is to grow our presence in the consumer and private label sector.”
With Ulker’s significant presence in the retail market, the business will also continue to take advantage of this area. Tirnavali adds: “We are very strong in this area. We are also seeing a big demand for tissue towels, they are used a lot in Turkey. However, consumers here don’t like printed tissue products. They are also particular on white paper products, so they prefer virgin paper rather than recycled paper products which have a low brightness quality to them. The collecting system for recycled paper here is also expensive, and this will take a long time to change.” The business also exports heavily, especially jumbo rolls which it exports more than it sells in local markets. As a result of overcapacity, Tirnavali says: “We are exporting jumbo rolls to some European countries and also to middleeastern countries. The European market has long been open to exports but it is stagnated now. The market in the east is always available, there is lots of potential there.”
Exports to Greece have slowed following the economic crisis there. “It’s a very risky situation. Greece could be a potential market for us,” he says. “The European market keeps going on but it’s a very bad selling price. Transportation cost is very expensive for jumbo rolls. China is also exporting a lot of products into Europe and the Middle East and that’s one of the main reasons why the prices are so competitive.” In the Turkish market, Tirnavali says that tissue producers are facing raw material price increases. “Natural gas is very expensive,” he says. “There is also a high energy cost. As for pulp costs, it’s the same as it is for the Europeans, it’s not a massive problem.”
While tissue consumption in many places is very good, there are also areas where people don’t use much toilet paper or tissue products. “This is changing very quickly,” Tirnavali says. “We expect to see the growth we’ve seen over the past few years continue. This is a big country and it has very good trade options, which we are taking advantage of. We’re looking into some areas of the Black Sea, for example, we have good access to many areas. So in the next few years, we may need to invest in a new machine. And then after that, of course, we want to grow even further.”