We Have Moved Beyond China, The Target Now Is The Pacific

Tuncay Özilhan is CEO of the Anadolu Group. He says that they are continuing on the offensive, particularly in beer and soft drinks. He says that they will develop abroad in particular. “In drinks our plan was to reach as far as China. Now we are moving beyond China and targeting an area stretching from the Adriatic to the Pacific.” This is not all. He says that in the technology field they will grow with Samsung, while with McDonalds they have steady targets. He lists the fields they are eying as automotives, finance and health sectors.

In recent years growth has been the area to which the business world has devoted most attention. Because, as the result of changing business conditions and increasing competition, growth is no longer as easy as before. The growth of the Anadolu Group, which over 35 years has made Efes Pilsen a global brand, has recorded in drinks and automotives is an example to the rest of the business world.

In the last year in particular the Anadolu Group has made considerable progress. In the second half of last year it opened the most modern hospital in Turkey under a single roof. It persuaded McDonalds, which had decided to withdraw from Turkey, to reverse its decision and took over its Turkish operations. The group also secured the Turkish distribution rights for the global electronics giant Samsung.

The developments will not stop here. Tuncay Özilhan says that they are able to establish good communications with consumers and that they see consumer goods as a sector. He says that there may be mergers and acquisitions in this field and that they are evaluating opportunities. The group is looking for openings and growth in all the fields in which it is active. As it makes plans to expand Efes Pilsen and Coca Cola into even more countries, in partnership with Isuzu its automotive group is targeting Europe. In finance it is formulating plans for a partnership with a compatible bank. In addition to drinks and automotives, the group is working to add the energy sector to its main fields of activity. Anadolu CEO Tuncay Özilhan explained the group’s new growth plans to Capital.

Your group focuses on foodstuffs and automotives in particular. You also have a presence in fields such as finance and stationery. What growth strategy will you follow in the future?

Our main growth will be in drinks, which is one of our main fields of activity. We have two businesses in the drinks sector, brewing and soft drinks. In the drinks sector our product portfolio is continually expanding with new categories such as fizzy fruit juices, and mineral water. Turkey is growing very slowly in beer. As a result, we are only investing in renewal here. We are continuing to grow rapidly abroad and in neighboring countries. We are planning significant growth here.

I would imagine that in beer you are very close to your target of “From the Adriatic to China in Beer.” What will be the next step?

The target was to reach as far as China. Now we are going beyond China. Our target is a region stretching from the Adriatic to the Pacific. As a result, we have not yet reached our goal. Russia is a major country in this region. We are strong here and in a good position. In order for us to protect this position we need to go on growing.

We should acquire new companies. We need to invest in the plants we already have and, most importantly, in branding. There are still countries in the region we haven’t reached. For example, one of them is Ukraine. It is a very important country. In the past we made two attempts. We shall continue to try. Whenever there is an opportunity in a country where we are not established then we shall evaluate it.

I believe that in beer there will be opportunities in the Caucasus. Of course, China is more important than everything else. China is a giant in its own right. But in China one has to think regionally. When we see the opportunity we shall invest in China on a regional basis.

Of course, it is to our advantage that Muhtar Kent has gone there and become regional boss. I see this as having a number of benefits for us. I mean, to summarize, there is a lot of ground to cover in the beer group. Because a rapid consolidation is taking place in our target regions and the world as a whole. As a result, we should continue to grow by taking advantage of this consolidation.

In fizzy drinks you are the leader with Coca Cola. Are there new opportunities here?

There are very important opportunities there. There is a region which starts from Jordan and includes Iraq, Syria and Pakistan. This is a region where we can expand in soft drinks. I believe that there are very significant volumes here. We shall take important steps in this region with Coca Cola.

Another of the main areas in which you are active is automotives. What opportunities do you see there?

In automotives our partnership with Isuzu is healthy. It is an important brand, an important product and an important company. As a result, we are increasing our business with Isuzu and we shall continue to expand. In Europe we have set up distributorships in countries such as Germany, Austria, Italy and France. We are exporting the buses we manufacture here.

We have begun to slowly develop a distributorship network. I believe that this will continue to develop. Isuzu can use Turkey as a production base. Our talks are continuing. If this happens, then the growth potential of Anadolu Isuzu will increase considerably.

What kind of growth strategy have you developed for your business in the finance sector?

Abank is a small bank. But it emerged healthy from the crisis. When we come together with other bankers and I say “We are not bankers, we are industrialists” then they kindly rebuke me by saying “You must be an important banker if you survived the crisis.”

What was important was to survive the crisis. Today we have achieved a healthy structure in terms of the bank’s capital and profitability. We have developed a number of strategies. We have withdrawn from retail banking. We have turned completely to corporate banking. In corporate banking we have focused on medium- and small-sized enterprises.

You have announced that you are interested in the National Lottery and energy privatizations. But you sprung surprises with Samsung and McDonald’s. Will there be new surprises?

The business with Samsung is something we had worked on for years. Samsung is one of fastest growing companies in the world in this business and has become one of the largest in the field. It has surpassed companies such as Philips and Sony. It is creating very important technology and expanding and developing. For this reason everybody’s eyes are on it. We entered into a dialogue with Samsung within the framework of the general strategy we had developed of production or exports, forming partnerships or distributorships with foreigners. We secured the distributorship for Turkey. Electronics is a sector which is developing extremely rapidly all over the world. Samsung has a broad product range, including consumer durables, telephones, cameras and computers. We think that Samsung can achieve a much better position in Turkey. We believe that it can open new stores and its goods be distributed better. I mean, we look at it as a business in which we can grow. In the next 3-5 years, it can easily become a company with a turnover of US$500 million. With the experience we shall acquire here, we can then think about surrounding countries. We entered the field because we thought that it was one with a bright future and a potential for growth. Of course, I must also add the strength of the brand itself.

To date you have grown through licenses or organically. Will this strategy continue in the future?

We have one or two core businesses. We shall continue to grow and invest in these areas without interruption. We are creating brands. We shall make these brands regional and grow in stages. Today Efes is exported to at least 40 countries. Its brand awareness is increasing. Our investments in this regard shall continue on the basis of production and developing a brand. In addition to this, we have a very deep relationship with Coca Cola. It is growing very rapidly. The pace of our growth is such that it can easily reach billions of dollars. This is one of our core businesses. In addition, we want to grow soundly and profitably in accordance with the conditions of the time in the sectors in which we are active. We have a number of projects. Another sector we are looking at, and which could become one of our core businesses, is energy. In energy, the turnovers and figures are large. You can get a return for the effort you put in. If we are successful in privatization we want to take a piece of both production and distribution. But in the end it is a competition. You get it or you do not.

The Anadolu Group has a very strong desire to develop business, do business and expand business. We have very important experience when it comes to starting up a business and bringing it into a healthy condition. When a number of opportunities appear before us then we shall evaluate them. Every day consumers buy some of our products. As a result, we are a company which can establish good relations with the consumer. When major opportunities arise in this kind of business then we sit down and think. Because I see consumer goods as a sector. We can distribute them well, develop them and, over time, expand them. There may be mergers or acquisitions there. We shall evaluate any opportunities that arise.

WHERE SHOULD ENTREPRENEURS INVEST?

HEALTH HAS A BRIGHT FUTURE I think that on a personal level the health sector has a bright future. I believe that the state will move out of the sector and that a general insurance scheme will be introduced. I saw that the Turkish people need a better health service after entering the business.

INFORMATION TECHNOLOGY CAN DEVELOP WITH PROJECTS I think that information technology is very important. Turkey has a great potential here. It has a young population and we are still just beginning. Today small countries such as Estonia and large countries such as India develop and export billions of dollars worth of IT.

TOURISM CONTINUES TO BE ATTRACTIVE Turkey has a very important tourism potential. Turkey has realized this and is developing it. 15-16 million tourists are coming. Tourism revenue is US$20 billion. In the next 5-10 years the number of visiting tourists can easily increase to 40-50 million.

WATCH LAND PURCHASES IN CONSTRUCTION I believe that in the future land development will be an important field in the construction business in Turkey. Good planning and good land development will lead the construction sector forward. I believe that the development of a mortgage system will create an important potential.

EVERY AREA OF AGRICULTURE IS ATTRACTIVE There is significant potential in agriculture. I think that if Turkey can develop its agricultural system during the process of adaptation to the EU then it is an area which can easily grow. Animal husbandry, organic agriculture, fruit, vegetables, and flowers, every field can develop.

WE ARE OVERCOMING LOW MARGINS THROUGH PRODUCTIVITY

There is fierce competition in a number of fields. Profit margins are falling. In which of the fields in which you are active are profit margins being squeezed? How are you overcoming this contraction?

Profit margins have fallen in automotives. In oils they were already low. In stationery they follow a seasonal trend. I mean, profit margins have fallen in all of the fields in which we are active. At the same time competition is increasing. In order to overcome this we are working on raising productivity. We have concentrated on productivity. We are trying to secure higher sales through a more productive workforce. We are being careful in procurements. We have reduced out distribution costs to a minimum. We are trying to compensate for falling profit margins through internal improvements. In addition, we are increasing volume. We are trying to protect our profit levels through the momentum we have gained from high volume.

EBRU FIRAT
efirat@capital.com.tr