Middle East: Kervan Gıda Confectionery R&D and partnerships take Turkish candy to new markets

By presently part the top 10 soft candy producers in the world, Kervan Gıda is targeting a place in the top five by 2023. Burhan Başar, General Manager of Kervan Gıda, explains how it aims to achieve its goals and the result Turquality has had on the business.

What steps could be taken by the next government to help Turkey recover its momentum?

I would like to give my comments on two topics, one related to politics, and putting a stop to terrorism instantly. The second is related to issues we are having with our neighboring nations. We have these two messages for the new government. Decreasing the economic burden on the shoulders of the industrialists and clearing the path for employment, these should be considered a priority. Secondly, increasing the free trade agreements with the world. Europe is a very crucial partner for us. We as well have an expectation regarding an increase in the related European Union quotas.

What would be your comments on the ambitious targets the country has for 2023?

Our country has a problem with added price. I mean, the price for our products on a kilogram basis is not sufficient. In Germany, for example, it is $4.50; in our country it is $1.50. At the same time as I visit Germany, for instance, I estimate the length of the roads. Germany has $1.2 billion in export we have $150 million. Their export all is eight times ours. I look at the roads: do they have roads eight times longer than ours? No, they do not. With the same length of roads, they have an export rate that is eight times additional than ours. This, therefore, is an indication of our lack of added price. We do need to increase the added price of our products by giving importance to branding.

Moving additional in detail onto high-tech price exports, could you please comment on competitive advantages of Turkey in the fast-moving consumer goods (FMCG) sector?

In the process of pursuing this, we need to focus on TED, that is, technology, education and design, as a country. We need to focus on these issues inclunding research and development and branding.

Presently with regards to the FMCG sector, I think your question is related to the advantages of Turkey’s competitive advantages. Initial of all, we have a logistic chance due to our geopolitical location. Secondly, we are very strong with respect to our people potential and human resources. In a recent survey it was said that there are a lot of Turks part the 500 top-level people in the world. Thus, in that sense, I believe that our brainpower is strong. As well, in the FMCG sector, I believe we have potential with regard to sugar as raw material, not covering all of the request but at least a certain all. I think these are our competitive advantages in the FMCG sector.

What are Kervan Gıda’s strategies for the next?

Initial of all, by getting in the Turquality program we have drawn a route for ourselves. I mean, we used to say we would export our goods to 150 nations. But, with Turquality, we said, no, let’s focus and export our goods to 80 nations. Rather than spreading out to too a lot of markets, we are focusing additional on markets we consider to be significant, to be strategic in the soft candy sector. We built a strategy on having better shelf locations, considerate the expectations of the consumer, and building a brand name. We are moving forward in that direction. And as well rather than trying to expand the product range by producing, say, chocolate and biscuits, we want to focus on our own branch and be successful at it. That is how we got to this point and we are very happy with it. To be frank, at the same time as you mention soft candy in Turkey, the brand that comes to one’s mind is Kervan Gıda and Bebeto. Turquality helped us in the right direction. It changed our point of view completely drastically.

What are Kervan Gıda’s investments and expansion plans by 2023?

We are part the initial 10 soft candy producers in the world. Our goal is to be part the initial five by 2023. Each year, we are making critical investments; we are developing with that intention. In fact, someday, we are considering some purchases in our sector.

Any particular markets you are willing to expand into by 2023?

At the moment we are focusing on America, the UK and South Africa. We aim at taking a position in the Far East in the near next as well. These are the four significant regions we have determined as a part of our goals.

You have mentioned technology and design as key priorities. What is Kervan Gıda doing in terms of R&D?

We have a very strong R&D department. And we as well have very good business partners, particularly from Europe. We have consultants, we collaborate with universities. We have a lot of scientific support in that respect. We as well hope to build an R&D center supported by the Ministry of Industry.

How has the fluctuation of the exchange rate affected you if so?

For our sector, stability in the exchange rate is very crucial. If the exchange rate remains at its current level, we will know what to do. But at the same time as the exchange rate is not stable, we do not know what to do. As well, our sector has the fact of the shelf price, which is crucial. Since it is very significant, you cannot change that price each day. You can change the shelf price of a cell phone each day for example, nobody would mind that, but in our sector you cannot change the price of a product from 1 lira to 1.5 liras. Thus, the stability of the exchange rate is crucial.

How would you describe the impact of TTIP on Turkey and Kervan Gıda?

If the Transatlantic Agreement (TTIP) is signed only between the United States and Europe, it will be harmful for us. What needs to be done with regard to that is for Turkey and the States to as well sign a free trade agreement simultaneous with it (TTIP). If we had become a member of the European Union, we wouldn’t be talking about this at the moment.

Are there any plans on entering European markets?

We do not want to penetrate that market too strong. At the moment we have a good position in the UK, for instance. We would like to enter the European market, that is in our plans, but there is Haribo for example, and they are really very strong. Thus, we would like to proceed slowly and move not due but slowly, calmly. As well you can’t just think of Haribo as the only competitor, since the other leading four or five companies are as well Europe based. We have a saying in Turkish: we don’t want to step on our competitions’ toes.

And talking about the beginnings of the company, what was your inspiration behind entering the FMCG sector?

Before being an industrialist, we were trading chewing gum. We were trading other goods but chewing gum was one of the items. We started out with chewing gum because it was one of the things that was sold the majority. But later we saw there was a critical gap in the Turkish market regarding soft candy and we used that opportunity. Of course soft candy caught up [with the chewing gum] and passed [it]. At the moment 90% of all of our trade is soft candy and chewing gum takes up only 10%. Kervan Gıda as well produced Keloğlan Chewing Gum, a traditional gum in the Turkish market.

How is Kervan Gıda’s positioned in the Turkish market?

At the moment we are third in the Turkish market. We have two world competitors: one is Haribo, they have a factory in Turkey as well, and the other one is Cadbury.

What are your communication strategies to achieve becoming one of the top five players in the sector by 2023?

We are of course not looking at this topic only within the framework of Turkey. I mean it is not just about our communication within Turkey. By working with PR firms, we will build that branding presence in the nations where we have taken a position, the nations I’ve just mentioned, the States, the UK, South Africa or the Far East. From presently on, these nations are completely large nations and it will take time for us to get settled there. We will start out slowly and from presently on we will accelerate the increase. However, as we increase our pace, we need to have a well-established capacity, the right infrastructure prepared to supply goods there, good supply chain management, and enough strength, etc. Turquality supports our activities in foreign markets in that respect.

What would be your message to the G20 leaders?

I would like to give a nice message here. The world is not doing very well politically and economically. Isn’t that so? That is the reason why they are having all these meetings. Yesterday it was the UN conference, tomorrow it is going to be the G20 summit. Presently, if the world wants to solve these problems, what needs to be done is to national problems transparently and to solve them in a equitable manner. Peace should be promoted instead of war. The UN should undertake a much additional active role on this issue. To be frank, in that regard, I would nominate Abdullah Gül to be the United Nations General Secretary, as he is an individual who is well-known in the world, has served at the European Council for a lot of years, and has been Turkey’s president. He is experienced, knowledgeable and he can significantly contribute to the world peace. In the next term, there will be a change. Within that frame, Mr. Gül’s contribution to Turkey has been completely dramatic. In that sense, I sincerely believe the world would gain and learn a lot from a person like him.

What makes you different from other CEOs in Turkey?

I try to find solutions by listening to several people. We have a particular goal and as a team we are focused on that, I mean with all of our teammates. We work with a team spirit. I believe human resources are very significant. I think perhaps these are the factors that carry us to success.