Turkey’s vineyards hit hard by the crisis, taxes
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by Ayşegül Sakarya - Referans
Oluşturulma Tarihi: Şubat 23, 2009 00:00
ISTANBUL - Turkey’s wine industry, which is already in distress due to high private-consumption tax, contracts 14 percent in 2008 with the impact of the global economic crisis.
The global crisis, coupled with a high private-consumption tax, has hit entrepreneurs who are invested in wine. The sector contracted 14 percent in 2008, forcing firms in distress to put their vineyards up for sale.
A factory in the Aegean city of Denizli has been put up for sale while Hüseyin Fidan, an entrepreneur, has also put on offer his 500-square-meter vineyard in Çatalca, a rural district of Istanbul, for 250,000 euros. Yunus Mermerci, a businessman who planned to establish a factory in Akhisar, a town in the Aegean region, has suspended construction.
The economic crisis and high private-consumption tax make it impossible to profit, according to Mehmet Bayram İlkimen, who launched a wine business in Denizli nearly three years ago under the brand of Nikfer.
"We are unable to obtain any profit and make forward sales. The private-consumption tax also constitutes a problem. Therefore, we put the vineyard up for sale for 1 million euros. However, we have reduced the figure to 850,000 euros due to lack of interest," he said, adding that the 300-square-meter vineyard has an annual capacity of 160,000 tons.
Tourism season a glimmer of hope for wine producers
The wine sector contracted 14 percent in 2008, according to Yasin Tokat, chairman of the Wine Producers Association. Tokat said many investors who entered the sector in the last five years are now unable to survive due to the crisis and the high tax. Noting that the sector’s only hope is the tourism season, Tokat said exports would be relied on as the Turkish Lira loses value.
Expressing investors’ disillusionment after entering the sector hoping for high profits, Memduh Erdoğan, marketing manager of the Kocabağ brand, said, "Those who entered have become forced to leave almost immediately."
The number of factories in Şarköy of Tekirdağ, in Thrace, has declined from 13 to three or four, said Fehmi Bağcı, owner of the Bağcı brand. "Many firms have closed down and most of them had just entered the wine business recently for pleasure, relying on the money they have."
A substantial proportion of wine firms make forward sales to tourism regions in order to pay taxes, Bağcı said. "We can receive payments only at the end of the season. However, the government demands the taxes immediately. Therefore, many firms take out loans to pay their taxes and face distress in their payments."
Bağcı said the interest in cheap wines has climbed due to the crisis and that cheap wine sales have grown from 50 percent to 70 percent. Can Ortabaş, an investor from the Aegean port city of İzmir who established a vineyard with an investment of 6 million euros in Urla, said many firms have either put their factories up for sale or suspended production.
Stating that the high private-consumption tax has killed the sector, Ortabaş said, "Despite all distresses, we have not given up investments. However, not everyone is as strong as us. Even villagers have started to leave viniculture now."
Many countries do not implement a private-consumption tax on wine, Ortabaş said, adding that the tax is a great error that should be overcome by all means.
Enis Güner, a board member of the Sevilen brand, said, "We have been in this business for 70 years. However, if a foreigner comes now, I would either be involved in a partnership or sell the factory to invest abroad."
Besides the industry, 100,000 families involved in viniculture are also in distress, said Güner, signaling further problems for next year, adding that high wine prices in restaurants also damage the sector. Two types of private-consumption taxes are imposed on wine, namely a lump-sum tax and a percentage tax. Nearly one year ago, the Cabinet reduced the minimum lump-sum tax on fresh grape wine and other fermented beverages by 46.6 percent. With the new arrangement, the minimum lump-sum tax dropped from 3.28 Turkish Liras to 1.75 liras. However, for the fact that no change has occurred in the percentage tax of 62.2 percent imposed on wines that cost more than 5 liras per liter.
A factory in the Aegean city of Denizli has been put up for sale while Hüseyin Fidan, an entrepreneur, has also put on offer his 500-square-meter vineyard in Çatalca, a rural district of Istanbul, for 250,000 euros. Yunus Mermerci, a businessman who planned to establish a factory in Akhisar, a town in the Aegean region, has suspended construction.
The economic crisis and high private-consumption tax make it impossible to profit, according to Mehmet Bayram İlkimen, who launched a wine business in Denizli nearly three years ago under the brand of Nikfer.
"We are unable to obtain any profit and make forward sales. The private-consumption tax also constitutes a problem. Therefore, we put the vineyard up for sale for 1 million euros. However, we have reduced the figure to 850,000 euros due to lack of interest," he said, adding that the 300-square-meter vineyard has an annual capacity of 160,000 tons.
Tourism season a glimmer of hope for wine producers
The wine sector contracted 14 percent in 2008, according to Yasin Tokat, chairman of the Wine Producers Association. Tokat said many investors who entered the sector in the last five years are now unable to survive due to the crisis and the high tax. Noting that the sector’s only hope is the tourism season, Tokat said exports would be relied on as the Turkish Lira loses value.
Expressing investors’ disillusionment after entering the sector hoping for high profits, Memduh Erdoğan, marketing manager of the Kocabağ brand, said, "Those who entered have become forced to leave almost immediately."
The number of factories in Şarköy of Tekirdağ, in Thrace, has declined from 13 to three or four, said Fehmi Bağcı, owner of the Bağcı brand. "Many firms have closed down and most of them had just entered the wine business recently for pleasure, relying on the money they have."
A substantial proportion of wine firms make forward sales to tourism regions in order to pay taxes, Bağcı said. "We can receive payments only at the end of the season. However, the government demands the taxes immediately. Therefore, many firms take out loans to pay their taxes and face distress in their payments."
Bağcı said the interest in cheap wines has climbed due to the crisis and that cheap wine sales have grown from 50 percent to 70 percent. Can Ortabaş, an investor from the Aegean port city of İzmir who established a vineyard with an investment of 6 million euros in Urla, said many firms have either put their factories up for sale or suspended production.
Stating that the high private-consumption tax has killed the sector, Ortabaş said, "Despite all distresses, we have not given up investments. However, not everyone is as strong as us. Even villagers have started to leave viniculture now."
Many countries do not implement a private-consumption tax on wine, Ortabaş said, adding that the tax is a great error that should be overcome by all means.
Enis Güner, a board member of the Sevilen brand, said, "We have been in this business for 70 years. However, if a foreigner comes now, I would either be involved in a partnership or sell the factory to invest abroad."
Besides the industry, 100,000 families involved in viniculture are also in distress, said Güner, signaling further problems for next year, adding that high wine prices in restaurants also damage the sector. Two types of private-consumption taxes are imposed on wine, namely a lump-sum tax and a percentage tax. Nearly one year ago, the Cabinet reduced the minimum lump-sum tax on fresh grape wine and other fermented beverages by 46.6 percent. With the new arrangement, the minimum lump-sum tax dropped from 3.28 Turkish Liras to 1.75 liras. However, for the fact that no change has occurred in the percentage tax of 62.2 percent imposed on wines that cost more than 5 liras per liter.