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R&D and partnerships take Turkish candy to new markets

Interview - October 31, 2015

Already among 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 effect 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 immediately. The second is related to issues we are having with our neighboring countries. 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 also 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 value. 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. When 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 amount 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 more than ours. This, therefore, is an indication of our lack of added value. We do need to increase the added value of our products by giving importance to branding.


Moving more in detail onto high-tech value 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 as well as research and development and branding.

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


What are Kervan Gıda’s strategies for the future?

First 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 countries. But, with Turquality, we said, no, let’s focus and export our goods to 80 countries. Rather than spreading out to too many markets, we are focusing more on markets we consider to be important, to be strategic in the soft candy sector. We built a strategy on having better shelf locations, understanding the expectations of the consumer, and building a brand name. We are moving forward in that direction. And also 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, when 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 quite drastically.


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

We are among the first 10 soft candy producers in the world. Our goal is to be among the first five by 2023. Every year, we are making serious investments; we are developing with that intention. In fact, in the future, 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 future as well. These are the four important 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 also have very good business partners, especially from Europe. We have consultants, we collaborate with universities. We have a lot of scientific support in that respect. We also 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 when the exchange rate is not stable, we do not know what to do. Also, our sector has the fact of the shelf price, which is crucial. Since it is very important, you cannot change that price every day. You can change the shelf price of a cell phone every 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 also 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 directly but slowly, calmly. Also you can’t just think of Haribo as the only competitor, since the other leading four or five companies are also 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 most. But later we saw there was a serious 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 also 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 global 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 countries where we have taken a position, the countries I’ve just mentioned, the States, the UK, South Africa or the Far East. Yet, these countries are quite big countries and it will take time for us to get settled there. We will start out slowly and after a while we will accelerate the growth. 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 meeting, tomorrow it is going to be the G20 summit. Now, if the world wants to solve these problems, what needs to be done is to state problems transparently and to solve them in a fair manner. Peace should be promoted instead of war. The UN should undertake a much more 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 many 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 quite 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 important. I think perhaps these are the factors that carry us to success.