Ülker plots geographic expansion with new parent pladis
Ülker Biskuvi Sanayi A.S became part of pladis, a newly created global confectionery unit of Yildiz Holding in June last year.
Pladis is made up of United Biscuits, Godiva and DeMet’s Candy. Around 33% of pladis sales come in the UK & Ireland, 31% in Turkey and 9% in the Middle East.
London-based pladis recorded £2.2bn ($2.7) in 2016 revenues. It aims to double chocolate and biscuit sales by 50% to £3.2bn ($3.9bn) in the next two years.
Ülker released in full-year results and annual report last week in which it laid out its own plans for expansion.
It hopes to captalize on rising chocolate and biscuit consumption in its home market with 7% increased investment in R&D this year.
Ülker Fiscal 2016
+3.4%, TL 3921.7 m ($1.04bn)
-3% to 598,285 MT
-21.1% to TL 230.4 m ($61.4m)
The company also hopes to use production bases in Egypt, Saudi Arabia and Kazakhstan as launchpads to expand its geographic reach.
Egypt biscuit leadership
Around 28.5% of company revenues came from outside Turkey in fiscal 2016.
In Egypt, Ülker is aiming to become the market leader in biscuits, number two in cakes and a top five player in chocolate.
According to Nielsen, it was third in Egypt’s biscuits market by sales volumes in 2016 with an 11% share.
Ülker said its acquisition of Egyptian firm Hi Food last year gives it a production hub to cater to the entire North African market.
Ülker’s Hi Food biscuit facility near Cairo has an annual biscuit capacity of 44,000 metric tons (MT) a year.
Egyptian firm Ocean Foods - owner of the Lambada brand - led the Egyptian biscuit and snack bar market in 2016 with a 16% value share, according to Euromonitor International.
Saudi Arabia and Middle East expansion
Ülker also hopes to become to become a strong challenger in Saudi Arabia’s biscuit & confectionery market, it said in its annual report.
It was the number two player in the country’s biscuit market last year with a 18% share, according to Nielsen.
Ülker owns a biscuit, chocolate and cake factory near Jeddah through 55% stake in local firm the Food Manufacturers Company.
The Jeddah plant has an annual capacity of 57,000 MT, which Ülker hopes will allow it to expand in other Middle Eastern markets.
Ülker is also aiming to secure MENA sales and distribution rights for McVitie’s from fellow Yildiz subsidiary United Biscuits.
Ülker is also in talks to acquire a 100% stake in the Hamle Company in Kazakhstan from its parent company Yildiz Holding.
China e-commerce & Ivorian cocoa plant
It said in its annual report that Hamle would give Ülker a base to access Central Asia, Russia and China, reaching new consumers.
Parent company pladis is also investing in e-commerce to appeal to Chinese consumers as it plans wider distribution of McVitie’s products in Asia-Pacific.
Pladis owner Yildiz Holding is also planning to acquire a cocoa processing plant in Côte D’Ivoire, according to a release.
Ülker market share in Turkey
Ülker was the leading confectionery company in Turkey in 2016 with a 36% market share. According to Nielsen, it increased its leading volume market share in the Turkish chocolate market by 0.5% in 2016 to 42.1% with brands such as Metro, Dido and its namesake brand. However, it lost a 0.6% market share in Turkey’s biscuit market by sales volumes, making it the number two player with a 33.3% share. Nielsen data shows Ülker was number two in Turkey’s cake market with a 28.1% sales volume share in 2016, but it dropped 1% share compared to 2015.
Turkey: Consumption growth
The company also anticipates growth prospects in its home market - which made up 71.5% of its sales last year - in spite of last year’s attempted overthrow of President Erdoğan.
Turkish GDP is projected to rise 4% between 2015-2018, compared to 1.7% for the EU and 2.4% for the US, according to the Worldbank. Around 61% of the populace are aged 35 or under, compared to a 39.5% average in the EU.
Annual chocolate consumption in Turkey has grown at a 7% CAGR in the last five years to 2.1 kg per capita, according to Euromonitor. It is still below the EU average of 4.1 kg and almost four times lower than Western Europe (7.3 kg).
Turkish annual biscuit consumption stands at 2.9 kg per capita, below the EU average of 4 kg.
Domestic market leader Ülker has six factories in Turkey. It spent TL 258 m ($68.9m) to upgrade lines and add capacity last year.
Ülker will increase its R&D spend by 7% in 2017. It has two R&D centers in Turkey that began operations last year.
The firm launched 94 new products in 2016. This year, it plans to launch DeMet’s products and will produce two products for Godvia in Turkey.
Godiva and pladis synergies
The company said in its annual report it was benefiting from synergies with its parent company’s subsidiaries by selling McVitie’s and Godiva SKUs in Turkey.
Ülker has a 12% stake in Godiva Chocolatier, which was acquired by parent company Yildiz Holding in 2008 for $850m.
“In the coming years, Godvia plans to focus on further expansion in China, Middle East and Turkey. The company aims to open 50 new stores every year,” said Ülker in its annual report.
Godvia has grown sales 10% every year since 2008 after entering new markets such as Turkey, Australia, China, Indonesia, Korea, Macau and Saudi Arabia. International sales account for 60% of the Belgian firm’s business, compared to 43% five years earlier.
Pladis will launch a new Godiva tablet range in supermarkets in Turkey and Saudi Arabia this month, which will move to markets including the UK, the Netherlands and China later this year.
Ulker’s parent pladis also plans to accelerate North America expansion with Godiva and McVitie’s.
“Sales in the US will account for around a fifth of pladis’s market growth in the next two years - predominantly through premium chocolate,” said pladis in a release.