The market leader across the Middle East, Eastern Europe, and Africa is planning more state-of-the-art technology, a rebound to premium products, and new production sites in new countries. TWM Senior Editor Helen Morris met Şahin Civelek, Global Tissue Production Director.
Driving across the magnificent waters of the İstanbul Boğazı (Bosphorus Strait) from the centre of the city’s bustling old town, alongside the Sea of Marmara and onto İzmit – where TWM is visiting Hayat Kimya’s Kocaeli tissue plant to meet Şahin Civelek – offers great insight into just how much Türkiye and its tissue industry have developed since our last report in 2022.
Now, as then, the region is at once modern and traditional, with a thriving business and industrial scene, full of life with its vast volumes of cars, motorbikes, and boats, as locals, businessmen, and tourists jostle for space. During TWM’s September 2024 visit, İstanbul seemed even more vibrant and busy, and the symbolism of its internationally significant waterway taking on a new importance. The İstanbul Boğazı divides the geographical sides of the country, connecting the Black Sea to the Sea of Marmara, forming one of the main continental boundaries between Asia and Europe. An impressive 41,000 vessels of all sizes pass through annually, among them 8,000 tankers carrying 145m tons of crude oil. The Strait remains a vital means of connection for the region’s transport, trade, and tourism.
In İzmit, TWM is warmly greeted by Şahin Civelek, Hayat Kimya Global Tissue Production Director, who has been at the company for 20 years and took on his latest role just a year and a half ago, having previously worked on the converting side of the business. Before a tour around the facility – Hayat Kimya’s first tissue plant, established 20 years ago in 2004 – Civelek explains how his previous responsibilities were to control and check all the company’s global products, and how his new role involves looking over his own and other’s responsibilities.
Speaking in excellent English he says: “It requires you to be multifunctional. The market has seen many changes over the years, so it’s very important to listen to others and take a place among decision makers. We look at exactly what we are saying that will drive another’s decision, so it’s important to select the words carefully to help others make the right decision. In my role now, I ask many questions to learn and understand every alternative possibility.”
In the past decade alone, Türkiye’s tissue industry has changed rapidly, picking up the pace of investment at home and export abroad. The past few years capacity increases show that clearly: In 2021, six tissue machines were either started-up, announced, or scheduled to start-up between 2021, 2022 and 2023 (Aktül Kagit, Eczacıbaşı, Essel, Europap Tezol (delayed until 2023 start-up), Hayat Kimya, Lila Kağıt). In 2023, just the one tissue machine (Europap Tezol) was started up – a quick and significant drop in investment.
Is the Turkish market in a state of overcapacity? “Yes, there is overcapacity in tissue production. Türkiye’s tissue production capacity is around 1.400,000tpy and 750,000tpy of this amount is consumed in the local market, so currently there is excess tissue production capacity of 650,000tpy. At Hayat, we have always managed this process with the following logic in all countries; we consume 80-85% of our tissue production in our converting plants and then sell the remaining tissue papers to other converting companies. However, we manage these transitions with special activities, sometimes by prioritising private label products. Then we manage to keep both the consumer market and converting companies in our hands.”
During the past 10 years, Hayat Kimya has become renowned for its rapid investments in Türkiye and abroad: “Over this timeframe, the market has been consuming more and more tissue, and so there has been a lot of increase in demand that we have reacted to,” he says. “But during the past three or so years, in Türkiye the tissue investment announcements have slowed down, especially during the Covid years. While supply is now much higher than demand – not only in Türkiye, in other countries also because many investments have started up right after Covid – it will counterbalance in three to four years’ time. And so, we are certainly considering this period for new investments. We couldn’t invest more with the supply and demand … that’s why we couldn’t expand or jump into new countries. But now, the time is here! In the next few years, there will be good news.”
Hayat has been expanding organically home and abroad for twenty years, identifying potential markets. This current reassessment of that strategy has put more emphasis on investments in existing campuses: “Our investments showed us that there is high demand for high quality main reel and finished goods. We understand consumer needs and meet our demands with our investments.”
Today, the company is one of the leading global companies in the FMCG sector, the largest tissue manufacturer in the Middle East, Eastern Europe, and Africa, and the world’s fourth largest baby diaper manufacturer. In Türkiye it produces 270,000tpy across four tissue production lines, and it also has five tissue sites outside of Türkiye, as well as two more tissue machines in the construction phase, one in Russia and one in Egypt. Once they are up and running the company will have 11 tissue machines across Türkiye, Iran, Egypt, Russia, as well as a converting plant in Nigeria.
Does it plan to export more, and invest in other countries? “We are exporting jumbo rolls to Europe, USA, UK and Middle East. Our sales are distributed well among the regions, and we are following a diversified strategy,” he says. Because of sanctions towards Russia, Hayat is currently unable to export there: “The Russian market is also big and what we manufacture there is consumed locally. So even if there weren’t sanctions against Russia, we would sell anyway into the domestic market.”
Iran, he adds, is also still unfortunately on the sanctions list: “What we manufacture in Russia is consumed locally, but in Iran we are unable to increase our production capabilities because of the sanctions. So, for the time being, we have stopped all investments in Iran. If the sanctions are lightened, we will start with additional capacity increases there. The Iranian people have the culture to consume toilet paper, they are accepting what we are providing them and consuming quickly.”
Growth strategy is uppermost for Civelek: “All the possibilities need to be presented in front of you. This is my biggest responsibility, because if you drive the management’s decision the wrong way, it can cost a lot. That’s why we are careful with the necessary steps. This is not a new approach for us, we try and increase this ability amongst our teams. We are also very organised, and we have a deep knowledge. These are the main pillars of Hayat.”
Hayat’s ethos, built over the years, has reinforced its status across the various markets, he says: “Hayat holds either the number one position, or, at the lowest, the second position in each of its markets,” he says. “In Russia, Iran and Egypt, we are number one. In Türkiye, we are also number one. Sometimes, during the year, we are number two. We have a very tough competition in Türkiye. But in terms of market share, we are number one here.”
The company’s brands include the high-quality Papia, and it is also increasing its economic brands as well as its private label offering. It classifies its brands according to the consumers, covering all the market sectors, for all consumer types.
“We have a strong team, and our management is very supportive of our decisions,” he says. “Our investments accelerate because of this culture. The owner of Hayat is always buying state-of-the-art technologies – this is always a must. Whatever the sector requires in terms of technology, we buy it. If it’s improved or developed later, we improve what we have and adapt to our existing capacity. Not only in Türkiye, in Iran and Egypt too. These countries also have the highest speed lines – in the consumer sector, production speed is very important because at the same time, it would cost you more if it wasn’t running at the highest speed. We believe that a slow and cheaper line is more expensive.”
Within the local market, Civelek adds that when compared to 10-15 years ago, consumers are now requiring thicker products: “A lot of 3ply, and the share of 3ply in our production is more than 60%. This means they are focussing on water absorption and also thickness of the paper, and that’s why we started manifesting some of our kitchen rolls from 2ply to 3ply, and for toilet paper too.”
Hayat is also famous for its innovate “6ply toilet roll”, which it launched in 2011: “It doesn’t have a common usage in the market, but still a minority of our customers are asking for this. It showed that if something different was to be done in the market, it must be done by Hayat. It was our reputation, and in that sense, it reached its target. We learned many lessons from 6ply production, and we are still one of the few 6ply manufacturers globally. While it’s a very minor part of our production, everyone knows that Hayat is a 6ply producer. So as marketing, it was clever – a global message that we can do anything.”
Within Türkiye, the tissue market has grown continuously since the day Hayat entered the sector in 2004: “When we start challenging in the tissue sector 20 years ago, tissue consumption in Türkiye was at 1.5 -1.8kg per person per year levels. Now, the consumption has reached 8.5 – 9.0kg per person per year. The market has grown by 10% on average each year until this year. That’s rapid growth. This year, we will also see growth again, we see this from our sales. Maybe not 10% levels, but a 6-7% capacity increase.”
The basis weight of the paper is also lower by 10%, he adds, and so if the market is increasing by 6%, with the previous basis weight, the market would be increasing in terms of tonnage by more than 10%: “It means people are consuming more tissue, but because of the low basis weight of the paper, the increase can’t be calculated as high as in the past. After all, in parallel with the economy, consumers prefer the economic products if they cannot afford the premium one. As a result, we are seeing more and more that tissue is used for cleaning purposes.”
The share of private label products in Türkiye is increasing year-on-year, and the quality is also improving: “Whilst the brands are still dominant here, the share of private label has certainly increased, and in another 10 years I can say the share of private label will be higher than for branded in general within the country. The industry is going in that direction, like in European countries. It is following European market tendencies, so what’s happening in Europe will be happening here in 10-15 years or so.”
The quality of the private label products is good, he adds: “They are really asking us for high quality products. But we and the others are not giving the premium quality for private labels, only the medium level qualities. The premium belongs to our own branded products like Papia. Our competitors are doing the same thing.”
For further expansion, the company is currently negotiating with some industrial zones to buy land for the future and waiting for their decision before making an investment in three to four years’ time. Another reason Hayat is aiming to increase its number of production facilities in Türkiye and the region is to provide better freight costs to the supermarket chains, Civelek adds. “More or less everyone is manufacturing at the same cost level, so only the freight cost is becoming important. We have a co-generation system and that is giving us a cost advantage for energy consumption, as well as our water plant, where from the sea we are supplying our own water and consuming it in our paper production. We are the first company here to use sea water in paper production. This is also good for our sustainability as it helps us respect fresh water sources, which are very limited. We follow an energy-efficient approach in our production facilities which we call ‘produce locally – consume locally’.”
Sustainability – “one of Hayat’s philosophies” – also means the company is lowering its energy supply from fossil-based sources: “We have declared a percentage, but it’s not yet been shared with the press,” he says. However, one aim is to reach a certain level and to lower the fossil-based energy-based sources before 2050. Hayat has been using solar energy at its Mersin plant in southern Türkiye since 2023: “We have looked for renewable energy options such as solar energy and we are now the first company here to use solar energy in paper production, and currently provide 10% of the daily energy needs of our Mersin factory. Now, we want to implement solar energy systems to our other factories by increasing the yield and taking these learnings to other sites. This is the main target for our company – to lower our fossil-based energy use, to reduce our dependence on fossil fuels.”
The business is using an AI programme developed to manage its energy needs by considering the grid, solar energy and a Cogeneration system: “Now, AI is in the learning phase and in the near future AI will manage our complete system logic.”
He adds: “Hayat aims to be the most energy-efficient producer in the sector by making improvements in all its processes to enhance energy productivity. We are committed to developing the most efficient methods through our own engineering studies and focusing on the implementation of the latest global technologies. We use a technology called trigeneration, which converts natural gas into electricity, heat, and cold water for use in our production processes, achieving energy efficiency rates of up to 85%. With a single energy input, we meet all the energy needs in the production processes and administrative operations of our smart factories.”
Are local consumers asking for sustainable tissue products? “A small majority do care about sustainably, but for most the price is more important because of the economic situation here.”
One trend he says he was a little surprised to see was the recent interest in colourful and fragrant products, which has increased in rolled products: “I wasn’t expecting to see such high demand for scented products!” he says. “In Türkiye, and also in Russia, only the density is different. The Turkish like more density compared to the Russian consumers. It’s a fresh scent for the bathroom. So many of our products are manufactured like this now.”
Due to problems in Türkiye’s economy, the company is seeing “a significant increase” in demand for economic group products: “The Turkish tissue market’s demand trends have shifted from the premium to the medium and economical segments, and a low basis of the paper. Previously we were manufacturing 17-18gsm, and now it’s 15-16gsms. The share of our premium quality product had been 35%, and now this rate decreased to 28%. So it has affected our tissue production capacity in terms of tonnes. At the end of the day we are manufacturing the same amount of paper, and we believe the market will rebound in time and go back to mainly premium products. We do see this as a temporary period and from the beginning of next year, the product mix will get structured as it was in the past subject to economy power.”
Post-pandemic, tissue has returned to pre-Covid levels: “During Covid it was terrible, but the pandemic caused various changes in consumer behaviour. There was an increase in demand for tissue products due to concerns and restrictions, leading to a tendency to stockpile. During this period, there was a temporary increase in consumer habits. However, as time passed, people’s shopping behaviour has gone back to normal and thus tissue purchases returned to normal levels. The consumer market is still good, and the AfH market has now gone back to pre-Covid times. There was also an increased demand for alternative products such as hygiene products and dry/wet wipes. These trends are expected to continue in the future, as hygiene and cleanliness remain important factors. Market conditions, general public health awareness and other factors may also continue to influence consumer habits.”
Türkiye is now experiencing “a serious demand” in the AfH market: “There has been a significant increase in demand especially for V Fold and Z Fold product groups. In these product groups, the share of economic products has increased too. By revising our machines as per the new needs, we covered the needs very quickly. As companies, we must provide ways to understand our consumer and to integrate innovation and technology into our DNAs to meet our needs.”
Hayat will soon launch a soft pack V-fold product into the market: “These are becoming popular and being substituted with napkins, while rolled products are still dominant, claiming 75% of the market. Napkin and handkerchief products are not so common, although the napkins market is stable but not increasing.”
Towards the end of 2024, its latest tissue machine investments in Russia and Egypt will be completed and running into production simultaneously, meaning all 11 TMs will be in production: “Now the work of feasibility is in the pipeline for two more countries that have come to a certain stage,” he says. “It has reached a certain level to the studies and is progressing positively. Soon we will announce two new tissue plants in two more countries – in Africa and the Far East and our territory. We have not yet decided and are preparing feasibility studies for some countries. They are showing positive figures and now we are making a deep dive into the financial figures. The countries will be disclosed with our industry towards the end of this year or by latest beginning of next year. This is our regular investment policy. So now we start looking for alternative countries, not only paper machine but also a converting site, and in one country will be a base and feed the other sites with a converting plant.”
“We have been monitoring innovation since day one in the business and kept on upgrading machinery as well as continued investments in the ‘smart factory’ infrastructure in all of our production premises. The infrastructure provides a common platform where the factories ‘speak to each other’, which enables precise recording of raw material management, momentary follow up on the production efficiency and intervention.
The company’s marketing strategy for the next two years will be global: “We take our actions in parallel with these strategies. According to these, we started to revise/upgrade our machines. We have determined our strategies by taking into account the expectations of consumers and sectoral tendencies. Very detailed U/A research was conducted in all countries. This is a great opportunity because we are already ready for the future.”
As for the difficulties, he says that cost increases in production inputs and the shortage of competent technical staff are the most serious problems of the coming period for production companies: “Companies that control their costs in the most accurate way will be one step forward. Thanks to our very competent and strong technical team, we achieve to keep our production costs as minimum by running our machines in the most efficient way.”
“The tissue sector is always very dynamic, and in some countries is a sector where competition is very high. We are market leaders in almost all of the countries we are. As Hayat Kimya Tissue Department, we exist in four countries, and we see the expectations and market differences between countries very clearly. We think globally and act local.”
