Alcoholic Drinks in Turkey: Raising a Toast or Lighting the Molotov Cocktail?
As the much vaunted dynamism of the Turkish alcoholic drinks market is obfuscated behind a thick, toxic cloud of tear gas, the simmering tensions between the country’s opposing secular and religious identities are proving more inflammable than international manufacturers’ explosively optimistic forecasts.
Creeping religious fundamentalism, autocratic governmental attitudes, a widening generational divide and the diverging socio-political perspectives of urban and rural populations were more than enough to undermine the country’s otherwise enviable macro-economic fundamentals and favourable demographics. A sobering reminder that pragmatic analysis goes beyond top line GDP figures and investment-attracting birth rates. How did it all come down to this then?
The introduction of a new, draconian and decidedly conservative framework controlling the sales of alcoholic drinks in Turkey was not of course the reason behind the ongoing uprising that is currently shaking the country to its core. Intriguingly though, it was one of the primary triggers, so much so in fact that demonstrators in Taksim square symbolically imbibed beer in order to underscore their secular leanings. Who said that alcohol and politics do not mix?
The legislation, adopted in May 2013, bans the sale of alcoholic drinks between 10 p.m. and 6 a.m., prohibits them anywhere close to mosques and educational centres, bans drink companies from promoting their brands and forces the blurring of images of alcoholic drinks on television while bringing stricter penalties on drunken driving.
While the Turkish president Abdullah Gul attempted to diplomatically strike a reconciliatory note by suggesting that he may have to review the highly controversial bill, prime minister’s Erdogan’s uncompromising stance does not provide much room for negotiations, let alone backtracking.
Does all this then herald the demise of Turkey from its pedestal as the poster child of emerging nation buoyancy? The short answer, is no.
While the tension and chaos of recent weeks and the new legislation itself will undoubtedly take a heavy toll in the short term, the country’s medium and long term prospects remain bullish. Turkish drinkers, aggressively forced into a corner, will not obediently change their lifestyles or aspirations overnight. The lessons learned in the aftermath of the Arab Spring – eventually high jacked by hard-line Islamist elements in most cases – underscore the validity of this argument.
The Arab Spring’s ripple effects
Egypt and Tunisia are both cases in point. According to Euromonitor International, Tunisia’s alcoholic drinks market appears to be enjoying a sustained renaissance that is practically impossible to derail despite the raise in duty by the Islamist-led ruling coalition. The cultural ostracising of domestic drinkers under the previous regime is hence proving to have been a greater disincentive for consumption than monetary pressure in the form of taxation brought forth by the current one.
In Egypt, a complete collapse in alcoholic drinks sales for 2011 has already given way to renewed sales momentum. The spectre of Islamist restrictions is indeed hovering over Cairo. The government doubled beer tax to 200%, with taxes on other alcoholic drinks rising from 100% to 150%.
As if all this was not enough, In February 2013 the New Urban Communities Authority said it would stop issuing alcohol licenses to new housing developments, and in March Aviation Minister Wael al-Maadawi announced plans to ban alcohol in the duty free shops his ministry runs. While such moves might at first glance appear to sound the death knell for the alcoholic drinks industry in Egypt, they should rather be viewed as symbolic knee jerk reactions by the newly formed establishment to placate their ultra-conservative voter base. Young, westward gazing, urbanites will continue seeking out, experimenting with, blogging about and embracing alcohol with fervour.
The key learning in all these cases is as straightforward as it is sobering. Emerging markets do provide a huge scope of opportunities in the medium and long term however that potential comes with the inescapable cost of short term volatility and socio-political pitfalls. Winning hence requires a strategic vision stretching beyond the daily tracking of share prices.
In the meantime, there is always non-alcoholic beer. A look at the category’s stratospheric growth rates in ‘dry’ Iran is after all, intoxicating indeed.