Foodnews Tomato Forum Rome 8 - 9 June 2011

1. Turkey Destining for Global Growth andExpansion inProcessed Fruit &Vegetablestartingwith Tomatoes Ümit Güvenç June 9, 2011 Tomato Forum 2011, Rome/ITALY

2. FreshFruit & VegetablePotential of Turkey Turkey is a rich country for fresh fruits and vegetables. Having the advantage of differentseasonal conditions in her seven different climatic regions, she benefits by producing alarge variety of fruits and vegetables throughout the year. In the year 2010, Turkey’s total fruit and vegetable production was realized as42.6million tons.

3. FreshFruit & Vegetables PRODUCTION (million tons)‏ EXPORT (million tons) 44.5 42.6 37.6 43.9 2.9 2.8 17.7 16.7 16.6 14.0 2.3 1.5 26.0 27.2 26.7 23.6 2002 2008 2009 2010 2002 2008 2009 2010 FRUIT VEGETABLE

4. Turkey is the nearest candidate to supply a full range of processed fruit and vegetables in many forms including processed tomato products into Europe, MENA and GCC, Africa, Russia, among many others. FreshFruit & Vegetable Exports Turkeyexported2.976.572tonsof freshfruitandvegetables in 2010.

5. Tomatoes Lemon Mandarin Cherry Sour Cherry Grape Orange Grapefruit Pepper Peach Top 10 Fruit & Vegetable Exports Tomatoeshave a significantplace in total exportswith a share of 14 %, whichcorrespondsto US $ 483.179 million. (2010)

6. ProcessedFruit & Vegetable Exports(1000 $)

7. 4,0 9,0% AnnualAverage Growth Rate (2008 - 2023) x 4 1,1 1,0 2008 2009 2023 ProcessedFruit & Vegetable Export Target 4 billion $ in 2023 (billion $)

8. ProcessedFruit & Vegetable Exports(1000 $)

9. Processed Fruit&Vegetable Exports(1000 $) (Jan-March)

10. Processed Fruit&Vegetable Exports (1000 $) (Jan-March)

11. Processed Fruit&Vegetable Exports(1000 $) (Last 12 months)

12. Processed Fruit&Vegetable Exports(1000 $) (Last 12 months)

13. Global Tomato Production Areas

14. Global Tomato Production Source: FAOSTAT

15. Global Tomato Production2008 8% of global production. Source: FAOSTAT

19. Almost3 million tons of overall production goes to processingindustry annually. Processing tomatoes are mostly produced in contract basis.

21. Global Tomato ProcessingIndustry The main production regions are located in temperate zones, close to the 40th parallels North and South. However, most of this production is based in the Northern hemisphere, where an average of 91% of the world’s crop is processed between the months of July and December. The remaining 9% are processed in the Southern hemisphere between January and June. In commercial terms, exchange volumes and commercial results also position the tomato processing sector among the main players of the global food industry. For the industrial market, tomato paste is the most important ingredient because it is used as the basis for a wide range of other products such as ketchups, sauces, soups, salsas, tinned meat and fish, etc.

22. Tomato ProcessingIndustry in Turkey Tomato processing industry is the pioneering sector in food processing industry. Although the dominant traditional processing line is tomato paste processing, peeledand diced tomatoes are the other promising products. Tomato paste processingplants are also suitable to process other fruits and vegetables during off season. Production capacity of the tomato paste factories was 145 000 tons/year in 1982, jumped to 300 000 tons/year in 1990 and reached to 430 000 tons/ year and 495 000tons/year respectively in 1997 and 1998. Currently production capacity of tomatopaste processing factories is over 650 000 tons / year. Actually over 70 plantsprocess tomatoes and most of them are located in Bursa, in the Marmara Region.

23. TomatoPasteProduction in Turkey Turkey currently ranks fourthin the world production of tomato paste afterChina, USA and Italy. Modern tomato paste production in Turkey was initiated in1967. Source: TUIK , Turkish StatisticalInstitute

25. Theproduction of this very important ingredient was 343 thousand tons and about 105 thousand tonnes were exported in 2008.

26. Export revenue from this sector in 2008was realized as $150 million.

27. Turkish TomatoPasteExports Tomato paste exports started in 1967 with a symbolic amount of 3,5 tons but insubsequent years it has rapidly increased. It was about 19 thousand tons in 1980,rose to 154 thousand tons in 1989, 173 thousand tons in 2000 and 183 thousandtons in 2004 which was the highest level ever attained and dropped back to 87thousand tons in 2007 and increased to 105 thousand tons in 2008. In theyear 2009Turkish tomato paste export reached the highest value 181 996 015 $. Source: Republic of Turkey Prime Ministry Undersecretariat for Foreign Trade

29. Ultramodern progressingtechniques,

30. Deliveryin time,

32. TomatoProduction Evolution EU (1000ton) Source: Tomato Land

33. Stable Production (Record Years: 2004-11.612 MMT; 2011 - ~8800 MMT) Lower Volume,Less growers Low Concentration Products Processors in Agric.Operat. Efficiency(Proc; Growers) Food Safety Regulations Environment Regulations High Quality; Innovation Major Trends in EuropeanTomatoProduction

34. Decrease in tomato production -> estimated reduction of 10% Production will be more specialized and centralized Strengthening standards on theenvironment, food safety,animal and plant health and animal welfare. …yet dependent on: how global tomato consumption will develop …and how much final consumers will pay for tomato if consumption continues to raise and prices to increase,production in EU may very well continue. Source: World Processing Tomato Council Implicationsfor EUTomato production to fall in EU…maybe

35. REG. CE nº 1234 / 2007 (New COM) 2008-2011 : Fixed Amount ( Acreage) 1200-1500 EUR/ha 2011-2013: Fixed Amount, dislinked/Hist.R Fixed Amount:1600-1800 EUR/Hectare No Obligation to Grow Tomato to get subsidy 2013 + : No More Crop Subsidies… Attention: EU agricultural production subsidies are expected to be entirely phased out by 2013. Andthis new lack of the EU subsidies may offer opportunities! EU CAP POLICY: Subsidies

36. EU Future Scenarios Future Tomato Price with no Subsidy: + 25-30%. Larger and More EfficientProcessorsandGrowers Possible Reduction/Adjustment on Volumes Produced (Mainly Paste). Shift Toward High Quality; Value Added Products World Tomato Consumption, increases by 3-4%/Year Who is going to Capture EU’s possible loss ?

38. Turkey is the largest producer and exporter of agriculture products in the Near East and NorthAfricanregion.

40. Turkey's vast agricultural potential, offers an extensive range of fruits and vegetables, especiallytomatoes.

41. Rapid growth occurred throughout the 1980’s, led by manufacturing but also by agroindustryand a resurgence of both domestic and foreign investment in Turkey. Trade policies, which includedexport credits and credit subsidies, also enhanced the export performance of the sector.WhyTurkey?

42. Foreign Direct Investments in Turkey

43. FDI in Food & BeverageSector

44. Emerging Food And Beverage Business Environment Ratings Turkey has a high score mainly due its large population, lack of market maturity or saturation, and favourable long-term economic structure and GDP per capita. As a major agricultural producer with an increasingly positive food and beverage trade balance, Turkey offers easy access to raw materials. Turkey ranks in 5th place according to theBusiness Environment Ratings. The analysis emphasizes the food and beverage industry’s attractiveness to investors by taking into consideration the market size, current consumption levels, future potential growth and the legislative and political environment.

46. Turkey also will get synergies out of this business, as Turkey is also producing around 45 million tonnes of fresh F&Vs whereas the exports lie ataround 1,3 billion USD as 2010. Our target to expand to 4 billion USD.

47. There are opportunities for processors of freshF&Vs from all over the world to invest and get a decent return on investment in this land where a lot of fertile land and water is available.Advantages for Investorsin Turkey

48. Advantages for Investorsin Turkey Access toMultipleMarkets The geographical location of Turkey presents the country a very advantageous ininternational trade. Turkey's proximity to Europe, the Middle East, North Africa, Central AsiaandRussiaprovides an easy access to large markets.

50. SomeInternationalInvestorsin FMCG andRetail

51. Tomatopasteindustrywasestabilished in 1967withthetechnicalhelp of the most global U.S.-based food company, Heinz;andwithpartnership ofMigros / KonservenfabrikBischofszell AGfromSwitzerland, andFelix (Procordia) fromSwiss. Thesepartnershipslastedfordecades, until 1980s. Foreign Investments in Turkey

52. Coca-ColafirstenteredtheTurkishmarket in 1965andinvested in Marmara Region, Istanbul. Manufacturing is concentrated on 5 plants.There are 5 regional warehouses. Production, sales and distribution are managed by Coca-Cola Icecek(CCI), formerly known as Coca-Cola Bottlers of Turkey (CCBT), which is a joint venture betweenTCCC (40%), Anadolu Holding (also 40%; EfesPilsen, the largest brewer in Turkey, is one of the corebusinesses of this major industrial group) and the Ozgorkey Group (20%). CCI manufactureandsell Coca-Cola, Fanta (fruitjuicecarbonate), andCappy (juicenectar). Foreign Investments in Turkey

53. In Nov ’09, a JV-called Anadolu Etap (AEtap)- has been established to constituteTurkey’s largests agro-business investment in fruit framing and juice concentrate manufacturing, with participation of; SucocitricoCutraleof Brasil, one of the world’s largest Juice Producer, Anadolu Group, the owner of EFES beer brand and exclusive bottler of Coca-Cola in nine countries, and Özgörkey Holding, partner of Anadolu in Coca-Cola bottling business. Foreign Investments in Turkey

55. For the time being, AEtap manages 1,000 Ha of land in threedifferentregions.

56. Apart fromtwoexistingplants in Mersin and Balıkesir, AEtapplanstoactivatethethirdplant in Antalya before2012 season. Foreign Investments in Turkey

57. InTurkeyPepsiCokewasbeganto be bottled in 1964in İstanbul. The Pepsi Bottling Group(PBG)completed the purchase of Fruko, the exclusive Pepsi bottler inTurkey, from the principal local owners and PepsiCo for approximately $100 million in 2002. PBG acquiredFrukotakingoverPepsi-ColaIcecek’s (PCI) 22% stake and purchasing the remaining shares from Tamek Holding. Tamek Holding has held the exclusiverights to produce and distribute all PCI products, alongside with Fruko’s own brands. Fruko used tomanufacture and sell Pepsi-Cola, 7-Up, and a number of local brands of carbonates and juices. There arecurrently 6 major plants for carbonates. Foreign Investments in Turkey

58. JapancompaniesKagomeCo. Ltd. andSumitomoCorp. havepartnershipswith Turkish tomatopasteandtomatoprocessingindustry in bothtechnologyand marketing since 1983-85. Nomikosfrom Greece has become the major shareholder of a Turkish processor of fruits and vegetables in 1994. Foreign Investments in Turkey

59. 63% of the shares of Turkish prominentfruitjuicesproducersandexporters in Turkeybelong to the British food company Gerber Foodssince 2000s. A Germancompany, JahnckeFruchtsäfteundKonz. Kg “SunshineFruitVerwaltungGmbh” is producingfruitjuicesconcentrates in a partnershipwith a Turkish significantexporter since 1998. Foreign Investments in Turkey

60. Morning Star California, one of the world’s biggest players in tomato processingbusiness (accounting for 10% of the World’smarket share with 3 million tonnes of tomato processing capacity), is a strategic investor in HarranovaBesi since 2008. Morning Star California provides valuable know how in efficient organicgrowthforTurkey’ssoutheastboasts, which is much more fertile soil compared to other parts ofTurkey. Foreign Investments in Turkey

61. In 2000sCoca-ColaCompany, the largest juice buyer in the world, entered into a strategic supply alliance with SucocitricoCutraleLtda.fromBrazilwhich is the world's largest grower and processor of oranges, in Turkey. The Coca-Cola Company and Cutrale are working with local farmers around the world to improve agricultural practices. Foreign Investments in Turkey

62. In 2010, The Eckes-GraniniGroup, one ofthe leading fruit juice producers in Europe andYildiz Holding (Ulker), the leadingcompany in the Turkish fast-moving consumer goods market agreed on thefoundation of a joint, full-scale fruit-beverage subsidiary in Turkey. Foreign Investments in Turkey

63. ThisyearBritish Diageo agreed to buy Turkish spirits giant MeyIcki for 1.5 billion euros ($2.1 billion), ramping up its presence in fast-growing emerging markets. Foreign Investments in Turkey

64. A SuccessStory: ALARA-AGRI AlaraAgri Business is located in Bursa, Turkey and was established in 1986. The company is the largest fresh fig exporter in the world and the largest cherry exporter in Europe. Alara’sproducts are distributed to major retailers in 22 countriesacross 5 continents. Strong brand recognitioncoupled with highly sophisticated cherry and fig lineprocesses has enabled the company to continue thegrowth experienced over the last 10 years. VISION: AlaraAgri's vision is to be the "global leader" in the fresh cherry and fig sector.

65. A SuccessStory: ALARA-AGRI The largest fig exporter in the World. The largest cherry exporter in Europe and second In the world. The largest cherry nursery in the World. The largest "high-density planting" cherryorchards in the World. The largest Turkish fresh fruit exporter. The largest Argentinian cherry exporter (Rioalara) manage World's largest Eurepgap Project. (PMO)

66. ALARA is a member of the UNIVEG Group The UNIVEG group of companies is a worldwide supplier of fresh produce, active in the fields of Fruit & Vegetables, Flowers & Plants, Convenience products, Transport & Logistics. The UNIVEG group has operations across 4 continents and serves a global customer base in 25 countries; it generated a turnover of EUR 3.3 billion in 2009 and currently employs some 9,500 people. A SuccessStory: ALARA-AGRI

68. The aim of this project is to form theinfrastructure of processors to invest into Turkey mainly for Agricultural Produce destined for Processors.

69. Main items to be produced are tomatoes, all kind of vegetables, fruitsto be processed and packed for export purposes, whereas the domesticmarket also is in easy grasp for investors.“Invest in Turkey Project”

70. Official partners to be confirmed soon in such turnaround project are(who will be gathering around soon): Presidency of PF&V (www.iib.org.tr) Republic of Turkey Prime Ministry Undersecretariat for Foreign Trade(www.dtm.gov.tr) Ministry of Agriculture (www.tarim.gov.tr) Prime Ministry Investment Authority (www.invest.gov.tr) SİİD (Tomato Paste Producers andExporters Association) (www.siid.org.tr) MEYED (Turkish Fruit Juice Association (www.meyed.org.tr) The latter two organisationshavebeeninvited as observers. Partners

71. THANK YOU! umit.guvenc@tamek.com.tr