Turkey’s Massive Tuna Firewall A Peak At An Industry’s Life Behind The Wall

Huge duties levied on the import of tuna products into the Turkish market have meant the national government has encased the country with a powerful firewall, protecting the market from encroaching competition.

While up until now the taxes have proved beneficial for the growth of domestic production, some believe the market is stagnating, and the high duties may in fact deter future foreign investment into the sector.

The total volume of canned tuna and precooked tuna loins combined entering the Turkish market throughout the whole of 2015 totaled just 588 tons, largely due to a huge 80 percent and 65 percent duty levied on these products respectively.

This massive tax addition has created a situation where hardly any finished product reaches the Turkish border annually, but instead imports of whole round tuna, (duty free) largely from EU flagged vessels enable a relatively strong production rate on the country’s own soil.

Now, the main focus from the inside is to bolster foreign exports of Turkish tuna, and get the country’s brands increasingly onto international shelves.

Dardanel is the largest processing firm in the country, and Mehmet Onen, Director of Procurement and Global Sales told Atuna that the national government levied these huge duties in order to increase domestic production, therefore creating a significant number of direct and indirect jobs. High duties, he explained, are also levied on many other foodstuffs and products entering the Turkish marketplace.

Onen explains that Dardanel can boast being the first company to introduce canned tuna into the Turkish diet, and over 30 years, consumption of the product has risen from non-existent to a per-capita rate of 70-75 grams. The nation has a total population of nearly 75 million people.

While the growth is substantial, he is the first to admit that the Turkish tuna market is not massive, and in fact believes that without millions of dollars of further marketing investment, it has probably met its maturity. However, most Turkish companies do not have the ability to invest on such a big scale. And with little competition hitting the market from both domestic and international firms too, it seems that innovation and stimulation could be lacking in this fairly isolated market.

Despite Thai Union recently noting that Europe provides a very good opportunity for overseas acquisitions, mentioning Eastern Europe and Turkey specifically, Onen suggests that it would be very difficult to expand the Turkish market, with even the leading firms in the nation having to focus more heavily on exports in order to grow their business.

For Turkish people, Onen believes that tuna is not seen as a staple foodstuff, or even a regular purchase when supermarket shopping. Instead he calls the product a luxury, and Dardanel’s branded products mostly consist of premium solid pack yellowfin tuna, caught in the Indian and Atlantic Oceans.

Turkish consumers are much more inclined to eat fresh fish, he explains, while eating fish from a can is not something they are used to. Where consumption of this product has risen is among white collar workers, Onen notes, who want to eat healthily, but also desire something quicker to prepare.

More recently, consumption in the region has seen a slight incline, with Turkey bordering Syria, and a growing refugee community demanding shelf-stable foodstuffs. But this is mainly shipped in the form of care packages, having little impact on sales.

In other areas, investment into advertising has worked for Dardanel to get tuna consumption up, even in the face of a mature market. According to Onen, every time the firm has directly pumped funds into nationwide TV and radio commercial campaigns, it has immediately seen increased sales. The problem is, he notes, if this is not continuous, which requires huge sums of money, most people forget about canned tuna.

With a daily production rate of around 70 M/T, Dardanel is also supplying canned skipjack tuna for the private label market in Turkey, which makes up around 35-40 percent of national tuna sales.

Overall, Dardanel is dominating canned tuna with around a 75 percent national market share, while Kerevitas, the only other major player, holds around a 20 percent stake in market volume. With just two players ruling this market, it seems that it could definitely be a place for newcomers, with a potential shake up needed in the Turkish canned tuna arena.

While around 65 percent of Dardanel’s production is still destined for the domestic market, its branded products are also being increasingly shipped internationally to around 30 destination countries, and the EU representing the largest chunk of sales.

This exported chunk of business has to be focused on Dardanel’s mostly yellowfin brands, Onen says, as it’s impossible for Turkish companies to compete on private label skipjack outside the domestic market. Strong competition on price from countries like Thailand, who have much lower labor costs, is one of the main factors.

This is where tuna tariffs within the country can also benefit Turkish buyers, as pre-cooked loins can be imported duty free only when they are destined for re-export as canned finished product, following domestic processing. However this can also have the counter effect of limiting domestic production too.

Onen stated that there are just two EU approved canneries in Turkey, of which one is owned by Dardanel and the other by Kerevitas. Another four or five facilities are canning tuna on a seasonal basis, but production is not significant.

Most of Turkey’s whole round tuna imports, believed to have totaled around 16,000-17,000 tons last year, come from Spanish and French flagged vessels, Onen explained. That way finished product qualifies for zero duty import into the European Union under the origin fish rule. He also said that Tri Marine was one of Dardanel’s major partners, supplying raw material and pre-cooked tuna loins to the firm.

For Onen, the tuna market in Turkey can have a bright future, but it will take aggressive marketing, and educating consumers on the quality of canned tuna, while also promoting its health benefits. He also said that consumers need to know how to prepare meals with tuna, as at the moment their knowledge of creating a meal around this fish is limited. For now, Dardanel seems assured by a current stable market, teamed with a rise in exported products to other nations.

Asking Onen if he was concerned over the overfished status of Indian Ocean yellowfin stocks, and the potential for fleets to cut catches by up to 20 percent, he said that if serious problems occurred in sourcing the fish, the firm would look at increasing sales of skipjack tuna in the Turkish market instead.

Despite maturity in the market in Turkey, the key for brands and retailers is to continue to invest in promoting canned tuna as a convenient and healthy product for Turkish consumers, with focus on attracting new customers. However, with just two firms dominating canned tuna in the country, it leaves that job down to limited resources, as the nation’s tariff firewall continues to potentially keep foreign companies out.