Efes saw beer volumes drop in Turkey

Turkey | Turkey’s tipplers are a hardened lot. Despite half-yearly tax hikes, beer consumption was up in the low-to-mid-single digits in 2018, according to estimates by Turkish brewer Anadolu Efes.

However, Turkey’s major brewer could not benefit from this turn of events. It saw domestic beer sales decline 2 percent to 5.3 million hl. With exports down 2 percent too, its total beer production only came to 5.7 million hl.

In an effort to hike sales, Efes hopes that a wider portfolio of beer brands will meet consumers’ demand at all occasions. In January 2019, it has added Corona Extra, Leffe and Hoegaarden to its offering in Turkey. Those brands are owned by AB-InBev, which is a minority shareholder in Anadolu Efes, following its takeover of SABMiller. 

So who is giving Efes grief? Step forward Türk Tuborg, Efes’ only other competitor in the market. Turkish beer production has witnessed a gradual decline – from 11 million hl in 2012 to 9.6 million hl in 2017 – according to data from the Brewers of Europe, a trade group. Still, Türk Tuborg has managed to perform very well and take market share away from Efes, forcing Efes to look on almost helplessly.

At the end of 2018, Türk Tuborg had a 46.4 percent market share, while Efes had 53.6 percent, according to analysts at Reperio Capital. In 2015 the split was 30 percent for Türk Tuborg versus 70 percent for Efes. 

As says Reperio, there have been no other market participants for some time given that the barriers to entry within the Turkish brewing industry are high, and future prospects far from rosy. A two-way distribution system is required to compete in the market, because more than half of the beer sold is in returnable bottles and kegs. Moreover, there are restrictions on advertising that prevent new entrants from educating consumers about their products. Assuming that 80 percent of the population does not drink alcohol, there is also not going to be a significant growth from increased per capita consumption

Türk Tuborg was founded in İzmir in 1967 and production started in 1969 through a partnership between Tuborg and Yasar Holding. Carlsberg took a majority shareholding of Türk Tuborg in 2001, increasing its stake from 2.24 percent to 50.01 percent, after buying out Yasar Holding. The transaction valued Türk Tuborg at roughly USD 110 million.

Carlsberg continued to increase its stake until it reached 95.69 percent in 2003. In 2008, Israel Beer Breweries Ltd, a Carlsberg partner in Israel, purchased the 95.69 percent stake from Carlsberg for USD 44.5 million. This valued Türk Tuborg at USD 80 million.

Israel Beer Breweries is owned by CBC, an Israeli bottler of Coke. After the purchase, Türk Tuborg retained the licences to the Carlsberg and Tuborg brands. The 4.31 percent of the shares not owned by Israel Beer Breweries are in free float. The company is listed on the Istanbul stock exchange.