Istanbul’s Galata Bridge spans the Golden Horn on the edge of the Bosphorus Strait. It has breathtaking views and is just a short walk away from the city’s old quarter, making it a popular tourist hot spot. Along the bridge, and spilling onto either side, hawkers spend their days trying to pull tourists into seafood restaurants, velvet-clad night spots, and shisha bars. Ample competition means that few of these venues are ever crowded. Only one shop seems to keep relatively full throughout the day and night, without any help from local hawkers. Standing out from the Middle Eastern décor of the bars and restaurants, the iconic green and white Starbucks is a beacon of Western comforts in the thriving tourist district. The shop is just one of 29 branded cafés Starbucks has opened in Turkey in the past year, most of which are in Istanbul. The American coffee giant says it plans to open 250 locations in the country by 2016. Starbucks is not alone in finding a receptive crowd in Turkey. With 1331 branded coffee shops, Turkey is the third largest market in Europe. And it grew by almost 20 per cent in 2013, according to the latest report by UK-based market research firm Allegra Strategies. Jeffrey Young, Managing Director of Allegra Strategies, tells GCR Magazine that Turkey has all the pieces in place to secure the successful development of its market. To begin with, the country has a young population. Around a quarter of its population are under 14 years old, and around 40 per cent are under 24. Young says that this booming young population is receptive to Western brands. Fortunately, this youth should have an increasing number of dollars in their pockets, as Turkey has a relatively strong economy. The International Monetary Fund (IMF) classifies Turkey as an emerging market, joining the ranks of India, Brazil, China, and Indonesia. The country recorded strong real GDP growth of 9.2 per cent in 2010 and 8.8 per cent in 2011. Although those figures dropped to under 3 per cent in 2012 – 2012, they are expected to lift up to over 3 per cent again in 2015, and move towards 4.5 per cent in 2018, according to the latest IMF forecasts. “Turkey is a reasonably advanced economy. It’s been a star market for some years now,” he says. “And it’s an important market in terms of its positioning in the world. It is a safe haven for many Middle Eastern countries to put their money into. It’s a quite strategic part of the world, and it always has been.” Turkey’s position, straddling both Europe and the Middle East, dates back thousands of years. From passing through Persian hands and the Greeks’, Turkey’s history is coloured by the clashes of civilizations. “We see this history playing out in the modern day,” says Young. “Turkey is on the edge of both worlds. It has access to both Western and Eastern economies.” Coffee shops from either side of the fence are finding success in the country. Leading national chains include Kahve Dunyasi with 110 outlets, Kahve Diyari with 109 outlets, and Gonul Kahvesi with 56 outlets, according to Allegra’s Project Café 13 Europe report. Foreign chains that have staked their claims include Mado Café with 295 outlets and Caffè Nero with 47, meaning Starbucks still has a ways to go. Although the factors for success are there for branded coffee shops, Young says that challenges still remain. At present, the current market potential is fairly limited to Istanbul. The large country has vastly different cultures from the east to the west, and the north to the south, not all of which are receptive to foreign brands. With varying income levels, dropping especially as one leaves the cities, many locals couldn’t afford these Western comforts, even if they wanted to. “With the economic conditions of places outside of Istanbul, it would be impossible to have price parity across the country,” says Young. He suggests chains look at different entry points to attract customers with varying levels of wealth. Also, while locals are receptive to foreign brands, it can be challenging for foreign suppliers to crack this market. “Istanbul has a robust economy, but it can be a challenge breaking through the existing partnerships,” he says. “It’s harder for Western suppliers to get into this market. People tend to think and buy domestically. They want what the West has got, but they tend to have strong local imitators.” Young’s advice to companies looking to break into the Turkish market is to “not take anything for granted”. While relatively Westernised, local trading customs need to be respected. One existing custom that Young doesn’t see as a challenge to Western coffee shops is the long-standing tradition of Turkish coffee. Although Turkish coffee is well-known throughout the world, Young says it doesn’t overlap with what branded coffee shops are looking to do. “Turkish coffee exists as an established coffee culture, but only to a point,” he says. “An overwhelming majority of people drink tea… Turkish coffee has been there, but it’s more of a ceremonial beverage.” Young explains that tea is traditionally drunk out on the streets, meaning that the country has an established out-of-home consumption market. This is great news for branded coffee shops, as out-of-home consumption is not something that can easily be introduced. This culture is also highly beneficial to the branded coffee shop industry because, as a Muslim country, there is less competition from alcohol. “A coffee is a perfect excuse to be out,” says Young. Allegra estimates that Turkey’s branded coffee shop market will grow at an impressive rate of 10.4 per cent a year over the next five years, to exceed 2000 outlets by 2018. The city makes the perfect setting, then, as the location for its 2014 European Coffee Leaders Symposium this November. Still technically in Europe, as the conference is being held at the Intercontinental Hotel on the European side of Istanbul, this will be the closest that the event has ever made it to the Asian border. Young says that the timing is perfect, as Istanbul as a city is shining on the world stage. “Istanbul is one of the most prime cities. It’s really starting to have its day,” he says. “Alongside New York, London, Paris, Rome, and Tokyo, Istanbul is really up there.” European Coffee Symposium
“Beyond Borders: From Home Markets to Globalisation”
24 – 26 November 2014
Intercontinental, Istanbul
www.europeancoffeesymposium.com
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