If you’re looking to forge a business in the world’s emerging markets, there is plenty of promise beyond the BRICs.
The six nations that make up the CIVETS – Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa – offer immense potential and one leading food multinational is putting some of its emerging-market dollars in one of these countries.
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US spice giant McCormick & Co. is investing once again in Turkey, a market it first entered in 1996. Fourteen years ago, McCormick started to sell condiments and seasonings to industrial and foodservice customers in Turkey in a venture with local firm Kutas.
Last month, McCormick announced plans to build consumer herbs and spices brands through a new venture with Yildiz Holding, the owner of local food group Ulker. Herbs and spices are sold in bulk in Turkey through local markets and small stores but McCormick intends to develop a range of “high-quality branded herbs and spices” targeted at Turkish shoppers.
Turkey, a country of 73m people, saw its economy grow at 4.3% a year between 2002 and 2009, according to the Turkish government’s investment support and promotion agency. The country has potential but can McCormick convince consumers used to buying bulk to switch to branded spices?
Jean-Francois Cauvi, commercial director for developing markets at McCormick, believes so. Speaking to just-food at the SIAL food-industry expo in Paris last week, Cauvi acknowledged that spices are part of the fabric of Turkish cuisine but insisted that consumer habits are changing.
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By GlobalData“The Turkish people are a huge consumer of spices. Before they have been using spices for centuries and centuries. Spice is a culture. Cauvi said. “[But] Turkey is going from bulk to European standards of safety, packaging. People are expecting more and more sophisticated products.”
McCormick intends to meet that need by selling branded spice products in sachets, a packaging format that Cauvi says Turkish consumers are becoming more familiar with. However, Cauvi said McCormick recognised that to build a category that needed a strong local partner, which is way the company has joined forces with Ulker, Turkey’s largest food group.
“In the Turkish market today, there are small players but there is not a national leader. We are able to become this but it was not possible to do this by ourselves. It needs the expertise and the strength. And for that we join the expertise and know-how McCormick has in spices with the strength of sales force of this company as they are the strongest organisation in retail.”
Turkey, however, is not the only emerging market in which McCormick is stepping up investment. At the other end of the Mediterranean, McCormick has launched its French spices brand Ducros into three markets with an historical connection to France – the Maghreb markets of Morocco, Algeria and Tunisia in north Africa.
McCormick says Ducros is the first European herbs and spices brand to launch simultaneously in the three countries and the move will see the company sell 20 sachet lines and 24 products in jars in the markets.
“Maghreb – Algeria, Morocco and Tunisia – is about 80m people with a French culture,” Cauvi says. “The brand is well known because they speak French. With satellite, they receive French TV, so they see the Durcos advertising.”
Unlike in Turkey, McCormick has not formed a full venture in these markets but has instead decided to appoint a distributor in each market. Cauvi, however, does see similarities between the Maghreb markets and Turkey.
“Maghreb and Turkey are very similar in terms of spice consumption because they use a lot of spice. And, like in Turkey, they have only smaller players with simple sachets,” Cauvi says.
Investment in markets like Turkey and the three north African countries are very much medium- to -long-term plays, with all the attendant risks that operating in the developing world. But, for Cauvi, the fabled first-mover advantage really does ring true.
“If you are the first to do it, you’re here forever,” he says. McCormick will hope such investment does bring some spice to its business overseas.
