Turkey – Netherlands Business Forum17 April 2012, Amsterdam

THE TURKISH DAIRY INDUSTRYHASAN GİRENES – Yaşar Group, Turkey

DAIRY FARMING in TURKEY

Investing in Turkey...

“Turkey will be one of the best countries to invest in over the next three years”

“If I was an investor with a huge sum of money with me, I would definitely invest half of my money in one of the emerging economies. For example, investing in a farm in Turkey, I would personally not even think for a minute.”

Marc Faber – Investment Guru, December 16, 2010

Dairy Farming in Turkey

• Blessed with one of the very best climates for dairy farming

• Many large-scale dairy farms established or rapidly increased in scale

• Many of state-owned farms being privatized• Joint ventures and foreign investors• Seasonal milk production: rises from

January, decreases from June• Demand following an opposite trend to

production• Production-demand imbalance: price

instability

WDS Report-2011

Dairy Population

• Number of bovine animals: 11,4 million heads

• Number of dairy cows : 4,2 million heads

• Av. milk yield/year : 2.803 kg/cow – Breeders Ass. Members : 6.000 kg/cow – Modern farms : 10.000 – 12.000 kg/cow

• Number of animals recorded in pedigree: • 2002: 178.000 heads• 2011: 2.682.000 heads

• Number of sheep & goats: 29,4 million heads

Milk Production - 2011 (tons/year )Total Milk Production13.6 million tons/year

COW MILK

12.480.416 - 91,7%SHEEP MILK

816.832 - 6,0%GOAT MILK

272.811 - 2,0%BUFFALOES MILK

35.487 - 0,26%

Consumed in Farm2.745.691 - 22%

Animal Feeding & Loose Milk2.496.083 - 20%

Modern dairy establishments3.244.908- 27%

Mandıras3.993.733 - 32%

22%

20%27%

32%

consumed in farmanimal feeding&loose milkmodern dairy estab.mandıras

Source: National Milk Council

The most dynamic countries are expected to be China (3,5%), TURKEY (3%) and Argentina (3%) in the next decade...

Comparison: Turkey / The Netherlands (2010)

• Milk production volumes are similar• Cow herd in TR is 2,5 times the size compared to ND; differences in

average yield due to:– Fragmented production base– Cow genetics– Feeding patterns– Varying management systems

WDS Report-2011

DAIRY MARKET in TURKEY

Dairy Processing

• One of the world’s major milk processing countries

• Rapid growth in capacity, technological infrastructure and number of modern dairy plants

• Amount of milk collected by integrated dairy facilities in 2011: 7 mln tons– 1,2 mln tons processed to drinking milk– 519.000 tons to cheese– 1 mln tons to yoghurt– 459.000 tons to yoghurt drink

2007 2008 2009 2010 2011850,000

900,000

950,000

1,000,000

1,050,000

1,100,000

1,150,000

1,200,000

987,526

1,045,119

1,097,309 1,090,605

1,164,748

Drinking Milk Production (tons)

2007 2008 2009 2010 20110

100,000

200,000

300,000

400,000

500,000

600,000

233,484260,399 271,704

473,491518,850

Cheese Production (tons)

Source: National Milk Council

2007 2008 2009 2010 20110

200,000

400,000

600,000

800,000

1,000,000

1,200,000

723,571 758,571 777,134

908,2691,006,791

Yoghurt Production (tons)

Source: National Milk Council2007 2008 2009 2010 2011

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

241,167265,268 283,195

397,935

459,075

Yoghurt Drink Production (tons)

WDS Report-2011

• Milk is consumed mainly as white cheese, yoghurt drink and yoghurt • 26 grams/capita/day of animal protein consumption: 51% from dairy

products• Drinking milk consumption is low: 26 lt/year• Pastorised milk constitutes of 10% of processed milk• Demand for UHT milk and low fat milk is rising• 75 % of the milk consumed by children• Ready-to-drink flavored milk consumption growing with an annual av. of 20

%

Dairy Consumption

THE ROADMAP for TURKISH DAIRY INDUSTRY

Strenghts & Opportunities

One of the largest markets in the region with a young population of 70mn Rising incomes and changing consumer habits fuel domestic consumption Favorable ecological conditions and climate; one of the world's strongest

livestock sectors Government made development of the sector a priority, ensuring

continued levels of investment Food industry is better developed than many neighbouring countries,

creating strong export opportunities Good location for trading with EU and Middle East countries Benefits from a large pool of cheap labour

Challenges and Critical Success Factors for Turkish Dairy Industry

• Boosting supply for growing population combined with economic development: availability of sufficient milk

• Fragmented production base• Land ownership and regulations• Feed price and water resources/availability• Logistics• Availability of cows/heifers• Quality issues (raw milk&processing)• Animal diseases• Stronger cooperation in the chain

YASAR GROUP

• Initiation of today’s YAŞAR dates back to 1945

• One of leading and most respected consumer products group in Turkey• 22 companies, 2 foundations, 18 facilities, 6,500 employees• Consolidated Revenue of TRY 2.03 bn in FY10• Food &beverage net sales 1,5 bn TL

• Core businesses “Food & Beverages” and “Coatings”

• Well established and widely recognised leading brands: PINAR and DYO

• Six companies listed on the Istanbul Stock Exchange with a combined market cap of TRY 1.5 bn**

• Joined the UN Global Compact, world’s largest corporate citizenship initiative, in 2007

Profile

*EBITDA is operating profit before depreciation and amortisation expenses, and other non-cash/non-recurring income and expense items** as at 31 May 2011

Founded in 1975 – two production plants Production and sale of dairy products , fruit

juices, mayonnaise, ketchups, powdered products

Introduced the concept of wholesome milk and dairy products in Turkey

Raw milk processing capacity: 400.000 t/year

Net sales in 2010 : 577 million TL Works with 250 farms based on contracted

farming model• Market leader in milk and specialty cheeses • Exports to 20 countries with 29 million USD

export earnings

PINAR SÜT – Dairy Business

Founded in 1983 as a dairy feed company Main activities: Feed production, dairy farming, turkey farming, fish

farming and processing, plant nutrition Net Sales : 150 million USD Export value: 10 million USD

Agribusiness Division of Yaşar Group

Turkey – Netherlands Business Forum17 April 2012, Amsterdam

THE TURKISH DAIRY INDUSTRYHASAN GİRENES – Yaşar Group, Turkey