Turkish water company seizes chance to expand
Güncelleme Tarihi:
by Reeta Paakkinen
Oluşturulma Tarihi: Mart 03, 2009 00:00
ISTANBUL- Hayat Su, one of Turkey’s leading bottled water companies, plans to enhance its capacity furtherd by acquiring a fifth water processing plant. The company’s annual capacity is around 600 million liters, of which some 10 percent is exported worldwide
Hayat Su, the Turkish bottled water company, is looking to expand through an acquisition, the firm’s general manager said last week. Hayat Su is currently the second largest player in the Turkish water market, which produced a total of 8.5 billion liters of water at 3 billion Turkish Liras in 2008.
Yeşim Güra, managing director of Hayat Su, said the firm was actively looking to acquire a local water processing plant. "We are particularly interested in a target that would be located in the areas we do not already have facilities at or in the Marmara region near Istanbul," she told Hürriyet Daily News & Economic Review.
Hayat Su currently has four water processing plants around Turkey, Adana, Hendek, Izmir and Antalya. Together with the processing of sparkling water brand Akmina, Hayat Su’s annual capacity stands at some 600 million liters, of which some 10 percent is exported. Around 60 percent of the firm’s domestic business volume consists of home and office deliveries and 40 percent in bottles for individual use.
The Turkish bottled water market currently consists of 237 licensed producers. At present, 10 of the top players hold half of the market’s retail volume.
Hayat Su’s most recent acquisition is Çağlar Su in Antalya, which was acquired in late 2007 after a lengthy evaluation process. Currently half of all Hayat Su sales are in Istanbul and the Marmara region.
"For us, the quality of the water source is of primary importance. Another issue is pH value. Hayat Su water currently has one of the highest pH values in the market while the composition in other products tends to be low in pH," Güra said.
The firm is prepared to take its time in identifying potential targets. "It is part of our strategy to continue to expand geographically and increase our business volume by some 15 to 20 percent a year. For this purpose we will be in a need of acquisitions but are in no rush to find a target," Güra said.
Turbulence reaches water market
Hayat Su’s business volume grew by total 15 percent in 2008. Güra said that the current turbulence in global markets and increasing wariness by consumers was taking its toll also on the bottled water market.
"One would expect that the crisis wouldn’t impact a basic commodity like water. But since October some consumers have started buying larger and more economic bottle sizes. Some are also switching from upper segment producers to lower brand jugs, while others have switched to tap water altogether," Güra said.
Switching to tap water in some areas is not fully risk free. Some lower segment producers have been caught making counterfeit products and were incompliant with existing hygiene regulations, Güra said. "We have come across cases where a water processing plant is using the bottles of, for example Hayat Su or Pınar, but fills them with water from some other source.
Some of these cases have been brought to the attention of the Ministry of Health," Güra said.
In addition to changing consumer habits, the crisis has led to difficulties on the cash side. "We have noticed some collection issues and renewing letters of guarantee is becoming more challenging," Güra said.
The crisis is likely to make competition in the market fiercer in 2009, said Güra. "We will see more competition and erosion of profit margins. Firms will be pressed to price their products in line with the market and accept lower profits," she said.
But the bottled water market still has potential to grow despite current wariness among consumers. In recent years the Turkish bottled water market has been growing by 20 to 25 percent annually. "Bottled water consumption in Turkey, which stands at some 100 liters per capita a year, is still very low in comparison to several other Mediterranean countries such as Italy where per capita consumption is 170 liters a year and France, where it is 140 liters," Güra said. In 2009 the firm expects to grow its business volume by 15 percent. "Even in difficult times it is important to support the business," she concluded.
Yeşim Güra, managing director of Hayat Su, said the firm was actively looking to acquire a local water processing plant. "We are particularly interested in a target that would be located in the areas we do not already have facilities at or in the Marmara region near Istanbul," she told Hürriyet Daily News & Economic Review.
Hayat Su currently has four water processing plants around Turkey, Adana, Hendek, Izmir and Antalya. Together with the processing of sparkling water brand Akmina, Hayat Su’s annual capacity stands at some 600 million liters, of which some 10 percent is exported. Around 60 percent of the firm’s domestic business volume consists of home and office deliveries and 40 percent in bottles for individual use.
The Turkish bottled water market currently consists of 237 licensed producers. At present, 10 of the top players hold half of the market’s retail volume.
Hayat Su’s most recent acquisition is Çağlar Su in Antalya, which was acquired in late 2007 after a lengthy evaluation process. Currently half of all Hayat Su sales are in Istanbul and the Marmara region.
"For us, the quality of the water source is of primary importance. Another issue is pH value. Hayat Su water currently has one of the highest pH values in the market while the composition in other products tends to be low in pH," Güra said.
The firm is prepared to take its time in identifying potential targets. "It is part of our strategy to continue to expand geographically and increase our business volume by some 15 to 20 percent a year. For this purpose we will be in a need of acquisitions but are in no rush to find a target," Güra said.
Turbulence reaches water market
Hayat Su’s business volume grew by total 15 percent in 2008. Güra said that the current turbulence in global markets and increasing wariness by consumers was taking its toll also on the bottled water market.
"One would expect that the crisis wouldn’t impact a basic commodity like water. But since October some consumers have started buying larger and more economic bottle sizes. Some are also switching from upper segment producers to lower brand jugs, while others have switched to tap water altogether," Güra said.
Switching to tap water in some areas is not fully risk free. Some lower segment producers have been caught making counterfeit products and were incompliant with existing hygiene regulations, Güra said. "We have come across cases where a water processing plant is using the bottles of, for example Hayat Su or Pınar, but fills them with water from some other source.
Some of these cases have been brought to the attention of the Ministry of Health," Güra said.
In addition to changing consumer habits, the crisis has led to difficulties on the cash side. "We have noticed some collection issues and renewing letters of guarantee is becoming more challenging," Güra said.
The crisis is likely to make competition in the market fiercer in 2009, said Güra. "We will see more competition and erosion of profit margins. Firms will be pressed to price their products in line with the market and accept lower profits," she said.
But the bottled water market still has potential to grow despite current wariness among consumers. In recent years the Turkish bottled water market has been growing by 20 to 25 percent annually. "Bottled water consumption in Turkey, which stands at some 100 liters per capita a year, is still very low in comparison to several other Mediterranean countries such as Italy where per capita consumption is 170 liters a year and France, where it is 140 liters," Güra said. In 2009 the firm expects to grow its business volume by 15 percent. "Even in difficult times it is important to support the business," she concluded.