Turkish beverage packaging firm seeks greater export opportunities after domestic sales slump

Speaking to FoodNavigator-Asia​ at Gulfood Manufacturing show, Vakur Kutay, managing director of Thermonox, told us his strategies in coping with economic instability at home. 

The firm’s core business lies in producing beverage packaging machines, which makes up around 90% of its total portfolio.

Its flagship product is Slimcup, a beverage packaging machine which is able to save 40% of packaging material.

Since its launch in 2014, the firm had witnessed double digit growth yearly.

However, sales in the domestic market had nosedived since the lira had plunged in the previous months.

Investment activities ended abruptly, as though it was being “cut away with a knife”​, Kutay described.

“In the previous year, I sold 2m euro worth of machines in Turkey and now I am only selling spare parts. The business fell to nothing. We can’t sell anything in Turkey. Just the beginning of the year, we sold one or two machines, then the currency fluctuation came and everything stopped."​

“People stop investment whenever there is an economic fluctuation, that’s why the machinery industry is the most affected.”​

Amid bleak economic outlook in the domestic market, the firm is adopting an even more aggressive export strategy.

“The buying power in Turkey dropped suddenly so people don’t want to invest, so we focus on exports to Africa and the Middle East to recover the loss in Turkey, and that’s why we are so aggressive in joining fairs to expand our export market.”​

It also appears that Iraq is enjoying a brighter prospect than Turkey.

Kutay revealed that Iraq was now the firm’s biggest market and had brought in 85% of overall sales this year.

“Iraq is still attractive. In the last Istanbul fair, we sold a lot of machines to the Iraqi people."​

“In Iraq, the people are still investing, they are not afraid of the political situation. Their money is strong so that’s why the people can invest. In Turkey, the currency rate fell suddenly, and everybody is thinking, what can I do?”​

The Turkish lira has recovered strongly from a plunge to a record low of 7.24 to the dollar in August. However, it remains down nearly 30% against the US currency this year, according to Reuters.

Africa a priority​

Africa will be a priority for Thermonox’s export strategy.

It aims to expand its percentage of African business from the current 10% to 40% in three years’ time.

Algeria, Mali, Senegal, Ivory Coast, Ethiopia, and Kenya are some of the key markets in the Africa continent.

“We are focusing on growing Africa, because it is an expanding market,”​ Kutay explained.

Besides Africa, he also hopes to grow the business in Saudi Arabia and has found distributing agents in Jordan.

Plans to enter new markets are also in the pipeline, he revealed.

For instance, it is planning to enter Dubai and establish a new office in two years.

“We want to build new office in Dubai in two years because everybody is coming to Dubai for business. Dubai is a very hot market,” ​he said.

“Maybe India, Malaysia, and Indonesia are good markets for us too, we will investigate what we can do there,”​ he added.

Making a material-saving machine​

Established in 1999, Thermonox started out as a bottling firm. Since 2007, it began to produce form-fill-seal (FFS) cup machines for packaging beverage.  

However, Kutay soon observed that the industry is using large amounts of packaging material and came out with a solution in 2014. 

“After we started making water cups machine, we see that the market is losing lots of material because they are making cups with a lot of material. So we established Slimcup, which is also our trademark now. It saves up to 40% of the material than the old type of cups,” ​he said.

“We are now saving lots of material for the industry and the environment."​

“The design of the Slimcup, the machine’s property and technology allow liquid to be distributed well in the cup with less packaging material used. Other than that, there is no differences in the packaging material used, the same PET material is used.”​

The production cost is also more efficient as a result. Previously, producing a box of 60 sixty cups will cost USD$1.10, while producing a box of 60 Slimcups will cost USD 0.70 cents.

The new technology led the firm to a 200% growth during these four years.

“After this innovation, we grew bigger, our sales suddenly went up by around 200% within four years. We are growing double digit every year. In the first year, we grew 100%, then 70% in the second year, 30% in the third year, and 15% this year,” ​Kutay said.

Some of its top export destinations are Iraq, Pakistan, Kuwait, Afghanistan, Iran, Senegal, Morocco, Oman, and Bahrain.