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ITE Transport and Logistics

A cold revolution: four factors driving Turkey’s cold chain

Turkey is currently enjoying exciting growth in its cold chain sector. Though not as developed as nations, such as those in the EU, there are a number of important factors pushing Turkey towards becoming one of Eurasia’s leading cold chain countries.  
 
Investment and growth in key food and beverage areas
 
A number of food and drink sectors that rely on cold chain for distribution have grown in recent years. For example, dairy, fruit and vegetables plus meat and poultry have seen significant investment since the global financial crisis in 2008.
 
A 2014 report by the Republic of Turkey Prime Investment Support and Promotion Agency (ISPAT) revealed which of these areas enjoyed the highest levels of investment. 2010 investment levels, as detailed in the 2014 report, for key cold chain supported agricultural sectors included:
 
• TL 1.4 billion ($506.6 million) – Dairy
• TL 307 million ($104.9 million) – Fruit & Vegetables
• TL 200 million ($68.3 million) – Poultry
• TL 139 million ($47.5 million) – Meat Poultry
 
This is coupled with a growing demand for food amongst Turkey’s growing population. Food demand grew 14% p.a. during the period 2007-2012 and this is estimated to maintain a growth rate of 6% 2012-2017. 
 
An increase in food demand should be countered by an expanded distribution network – something that Turkey has reacted to by exhibiting growth in its cold chain sector. Many projects are taking the form of railway expansion. The BTK railway, linking Turkey via Kars to Tbilisi in Georgia and Baku in Azerbaijan is one example. DHL has also pledged itself to a new trade-corridor from Turkey’s European borders in Istanbul to Lianyungang in North-East China. 
 
Population and urbanisation continues to grow
 
The rapid urbanisation of Turkey is simultaneously driving up food demand and growth in the cold chain sector. In 1950, only 25% of the country’s population lived in urban areas. Fast forward to the present day and over three quarters of Turkish citizens live in areas of high urban development.
 
Turkey has well over 50 cities with a population of over 100,000 people, including the country’s largest Istanbul with over 14 million citizens. Other major cities, such as the capital Ankara, Izmir and Bursa, all have populations of over a million people and show little signs of slowing. 
 
The current population of Turkey is close to hitting 80 million people. As of February 2016, Turkey’s population stands at 79,262,160 based on United Nation estimates. Population growth is forecast at around 1.3% by the World Bank. A larger population means a greater demand for fresh food, as outlined above. Therefore, it is only logical to say that Turkey’s cold chain sector will increase in size alongside the general population.
 
An almost untapped cold chain market
 
The cold chain market structure in Turkey is different when compared with other developed nations. A prevailing trend is food companies operating their own cold chain. However, inefficiencies and delays often means they are willing to outsource this to dedicated operators.
 
Logistics players, in the past, have been fragmented with subscale and substandard offerings, according to the ISPAT. This has left a gap in the market to be exploited by more professional outfits and has allowed for greater expansion. 
 
Cold chain has been regarded as an important area for development by the ISPAT. As such, a number of incentives have been developed. One of these has been an increase in funding towards the development infrastructure in agriculture. 
Another factor at play is the Turkey 2023 initiative. This was established in 2010 as a set of economic, foreign policy, transport, energy and tourist industry goals. One of the key economic targets was to increase exports to $500 million by 2023. 
 
The food industry is playing a huge role towards achieving this. As one of the world’s largest producers of food and agricultural products, Turkey requires a strong cold chain sector in order to make sure its perishable products are distributed quickly and efficiently, in particular to Eurasian destinations such as Azerbaijan, as well as EU member states.
 
A growing supermarket sector
 
The food retailing landscape in Turkey is evolving more towards Western models. The major supermarket chain operators, including BİM, Migros Ticaret and Yildiz Holdings, all posted double digit growth and an increase in both store capacity and revenues from 2014 onwards. 
 
One aspect of the Turkish supermarket market that remains important for cold chain operators is the desire amongst customers for fresh products. Food is regularly purchased and eaten on the day, in preference to taking it home and storing it, in Turkey. As such, major and minor stores require stock to be delivered in top condition for customers to consume. This is one of the key areas influencing cold chain growth in the country. 
 
According to a report from international research firm Euromonitor, Turkish consumers have developed a growing taste for imported products. As such, many items from domestic companies are being replaced on the shelves by multi-national branded alternatives. An increasing taste for international products means cold chain operations have had to step up to cope with growing demand.
 
Growth, growth and more growth – the future of cold chain in Turkey
 
The story of growth in Turkey is actually the story of growth in a number of societal and economic sectors, as outlined above. If these areas continue to enjoy growth, then so too will cold chain in Turkey making it a hot destination for cold business.

 

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