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Why Are They Making Investments?

There are tens of producers in the poultry sector in Turkey. Moreover, the sector is currently suffering from excess capacity. But, even so, there are also some striking examples of companies which...

Son Güncelleme: 01.09.2005

There are tens of producers in the poultry sector in Turkey. Moreover, the sector is currently suffering from excess capacity. But, even so, there are also some striking examples of companies which are making investments and looking to acquire companies. There are companies which, like Sabancı Holding, are looking not at the current downturn but making investments according to potential consumption. Their calculations are based on the fact that per capita consumption of poultry is 25 kilos a year in Europe and only 13 kilos in Turkey. Moreover, poultry is the cheapest way of meeting meat protein requirements. As a result, demand is expected to rise steadily. In addition, poultry exports to surrounding countries have considerable potential. These are the two factors which ensure that the sector has a bright future. Nor has this bright future escaped the attention of businessmen.

There are thus two elements which make the poultry sector attractive for investors. The first is the potential of the ‘domestic market’. Investors are excited by the young population, which accounts for more than half of the total population, and the nearly 973,000 marriages each year. This excitement is amplified by the fact that, in nearly every category of product, per capita consumption is low and the trend is upwards. The parallel increases in consumption and purchasing power, the fact that the consumers are open to innovations, and developments related to demand and expectations are what are affecting investors.

But it is not only the domestic market potential which lies behind the investments that have been made in recent years. The potential of foreign markets is also fuelling  investments. Because many Turkish companies are looking to become ‘global companies’. Moreover, the potential of Russia, the Turkic Republics, the Middle East and even North Africa is another important element which is attracting firms.

Attractive foreign potential in durables

In terms of investments, one of the rising stars is the consumer durables sector. This interest can be seen in the fact that the Anadolu Group has become the Turkish representative for Samsung and the global giant Electrolux’s efforts since 2004 to revive the AEG brand. On the production side, the most significant development came with the purchase of the AUER brand by the Ulubaş Group of Kayseri. The group bought AUER for $8 million in 2003 and is continuing to make investments. The company’s chairman Adnan Ulubaş notes that companies are withdrawing from white goods manufacturing. Adnan Ulubaş says: “Turkey is a doorway to Europe and neighbouring countries. Countries such as Iran, Iraq, Russia, Ukraine and Georgia are very close to Turkey and have an important market potential. What is happening in the white goods sector is the same as occurred in textiles 15 years ago. The white goods sector is undergoing significant growth and this trend seems likely to continue for a minimum of 15 years.”


As a result, export figures are expected to triple or quadruple in volume. The shift of production from Europe and potential of the neighbouring markets is encouraging white goods manufacturers.

Moreover, the young population is an important factor increasing the attractiveness of the market. According to data from the State Institute of Statistics (SIS), in 2004 a total of 672,817 couples got married in Turkey. That means that nearly 673,000 new households are established every year. Marriages mean new purchases and, from the point of view of investments, this is what makes the white goods sector attractive. In addition, renewal purchases also have an important role in the market in Turkey.

Furniture is still very popular

Furniture heads the list of the most popular sectors for investments. The sector leader Boydak Holding is also making new investments in the field. The group invested in increasing  capacity in 2004 and decided to make an extra investment of $80 million in 2005. The new investments are in kitchen furniture, chairs and panel furniture. Hacı Boydak, the company’s board chairman, says: “During the crisis consumers postponed purchases of furniture. This postponed demand was realised in 2004 when there was a boom. In some areas we were unable to keep pace with consumer demand. For this reason we took the decision to made additional investments to increase capacity.”

The increase in demand and the market’s potential for development increase the attractiveness of the sector. One of the firms which want to turn this into an opportunity is Doğtaş Mobilya. In 2005 the company initiated a $10 million in new products such as mattresses, bed bases, chairs and sofas.

Doğtaş Mobilya Board Chairman Davut Doğan says that the sector grew by 27 percent in 2004. He notes that in brand name furniture the increase was as high as 50 percent. The market share of brand name furniture manufacturers rose to 40 percent and the rapid growth encouraged producers to invest.

Merinos entered the furniture sector with an investment of $10 million. Merinos Board Chairman İbrahim Erdemoğlu says: “The growth in the market will continue and we are making investments because we want to be by the consumer’s side during this process.”