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World Wide Watch: Turkey

With over 24 million young women between the ages of 15 and 20, Turkey is a market with great potential for beauty firms.

The history of international beauty brands in Turkey is relatively short. It was only around 25 years ago — when today’s savvier beauty consumer was still in cloth diapers — that foreign brands were allowed in during the economically liberal 80s that followed the dark days of a military coup. But Turks are learning fast. When even the sultry male performers of the country’s myriad pop channels won’t get out of bed without a smudge of black eyeliner and mascara, you know the beauty industry must be onto a good thing.

According to Euromonitor International, the cosmetics and toiletries industry in Turkey reached sales of $1.4 billion in 2009, up from $1.36 billion in 2008 and $1.29 billion in 2007, an average increase of about 5 percent per year.

That still leaves a tiny market for a country with a population of more than 70 million.

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“When we opened here, interest exceeded expectations,” says Beyhan Figen, general manager of Sephora, which entered the Turkish market in 2007. “But in terms of usage, we’re still way behind Greece, so the market is nowhere near saturated. That makes the potential for growth enormous.”

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“The market will grow steadily, we believe,” says Nergiz Oney, store coordinator at MAC. “I don’t think there will be a sudden jump, more a consistent growth that sometimes goes up into double-digit growth.”

With potential comes problems. Issues such as political volatility and widespread financial corruption mean that Turkey has yet to join the ranks of First World economic powers. Despite the modern metropolitan look of cities such as Istanbul, Ankara and Izmir, much of the country is rural and poor, with an average gross domestic product of $10,400.

On the positive side, Turkey’s population is young — with about 24 million females in the 15-20 age group. This partly explains why, in recent years, the U.S.-based market analyst firm Kline has successively singled out the country as one of the key global developing markets for cosmetics and toiletries.

“In countries such as France, the United Kingdom and Germany, the comparable figure is about 19 million females,” says Ron Griffiths, general manager of Avon in Turkey.

“The [Turkish] market is growing much faster than Western Europe — that is in the low-single digits and is an intensely competitive market,” continues Griffiths. “Also, in Europe the average spend per capita is $140, whereas here it is still very low, at $22.”

Generally, as women become better educated, spending figures rise — and in Turkey, the education
level for women is low but growing. “So you have two attractive propositions, a much larger, younger, increasingly affluent and better educated female population,” says Griffiths.

No wonder there’s been an influx of foreign brands into the country. Largely benefiting from the massive expansion in mid-to-luxe shopping markets, especially in Istanbul, retailers have clamored to open stores here. Perfumerie Douglas and Harvey Nichols entered the market in 2005, Debenhams and Watsons in 2006 and Sephora and Lush in 2007.

In terms of brands, the market leader is Procter & Gamble with 20 percent market share, followed by Avon with 14 percent, L’Oréal with 11 percent, Beiersdorf with 8.5 percent and Unilever with 7.4 percent, according to Euromonitor.

Turkish brands such as Arko Nem have also been trying to capitalize on the new interest. While Turks for years relied on small pharmacy-type outlets or local grocers for their beauty products, the expansion of supermarkets and hypermarkets, with their large shelf spaces, has taken supply to a whole new level.

“An improved retail infrastructure means that the products are more widely available throughout Turkey, and they also triggered competition among cosmetics manufacturers to capture better shelf space, have better shelf designs and widen the variety of products available,” Euromonitor stated about the country’s industry.

“Moreover, the opening of new grocery outlets in smaller cities, especially in Anatolia, enhanced the introduction of products into areas such as those where they had previously been unknown,” according to the report. “An increased number of such distribution channels led to a larger number of consumers and greater opportunities for consumers to reach products and track the latest launches.”

Few brands have become as widely available as Avon, which claims it is able to reach the most remote parts of this sprawling country with is direct-selling approach.

“We have 60 percent market penetration, which means that when people see our brochure there is a 90 percent chance that they will buy….So we make sure they see our brochure,” says Griffiths. “We deliver to the smallest village, and we make sure that we go to these villages at least twice a week.”

Turkey, like the rest of the world, has been reeling from the effects of the global economic crisis, which Avon is looking to capitalize on. With unemployment figures on the rise — a record 13.6 percent according to the latest figures released in March — applications to be Avon representatives have exploded. The relative lack of female economic activity is also a draw. Women here consider being an Avon representative an aspirational job that enables them to learn and enter the labor market.

Overall, the economic downturn has not yet signifi cantly impacted other beauty sectors. “We did have some difficulty in October and November, but that’s sorting itself out now,” says Sephora’s Figen. Sephora has an outlet in Istanbul’s smart Istinye Park mall, where Yves Saint Laurent and Celine recently shuttered their doors for lack of business. “[Fashion] has been hurt, but while people’s wardrobes do fill up eventually, cosmetics run out and need replacing,” he says.

Hair care is the biggest market segment in Turkey, accounting for 26 percent of sales, followed by skin care at 13 percent, fragrance at 10 percent and color cosmetics at 9 percent, according to Euromonitor.

The most popular products are shampoo and liquid soaps, according to Avon, and, makeupwise, mascara and eyeliner. “Turkish women like to concentrate on their eyes,” says Figen.

When women buy makeup for the skin, they favor all over coverage rather than the barely there look favored increasingly in Western Europe and the U.S. “If they pay money for foundation, they want to make sure their blemishes are covered up, says Figen. “Otherwise they see little point
in it.”

Antiaging skin care is a big growth area. In Turkey this is hardly surprising, given the much-ogled television celebrity world of Botoxed ladies — and men. Celebrities are now such an obsession even farmers in remote southeastern regions were found to have named their cows after the latest Turkish model or actress or celebrity.

But even as the market grows, it is largely confined to the urbanized parts of the country, with Istanbul taking the main slice, and capital Ankara, coastal Izmir and a handful of other city centers making up most of the rest. Much of geographical Turkey still consists of small villages, with the very issue of survival in harsh conditions getting in the way of the latest line of blushers.

“Consumption of cosmetics products in our country is still very low compared to European countries,” says Seyfettin Unler, chief executive of the Turkish firm Miray Cosmetic, which has begun to make inroads into the market. “But we can definitely see that wherever living standards rise, there is a parallel rise in demand for cosmetics and toiletries.”

Over the past few years, Turkey has seen sociocultural change as never before, with socially conservative families from central and eastern Anatolia making it big in trade and starting to move in circles hitherto only populated by a small number of Western-looking elites. This is bringing a more bourgeois outlook to provincial cities and towns, raising interest in beauty products and attracting the building of shopping malls in regional outposts.

While the mothers in these families are slow to embrace modern values, their daughters — even those who wear traditional Muslim headscarves — hungrily embrace a more contemporary look, and seek out the beauty products to go with that.

Another reason marketers are optimistic is the increased role eduction is playing in Turkish life. While female illiteracy has always been a problem, thanks to recent campaigns women are increasingly getting an education — and research shows that the more educated a woman, the more likely she is to be interested in beauty.

Still, it’s a slow process. Million-dollar growth market it may be, but there is a long way to go before Turkish awareness and usage of beauty products is anywhere near Western levels. But therein lies the attraction. “A European woman will probably reach for the moisturizer as soon as she gets out of the shower, but a Turkish woman won’t necessarily do that yet,” says Sephora’s Figen. “There is potential for growth in so many areas, such as men’s cosmetics and perfumes…. There is no reflex yet about buying beauty products, which means that there is a lot that can still be done.”