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‘We are increasingly inclined towards foreign investments in raw materials and factories’

13 December 202316 min reading

“The export of flour from Turkey is highly concentrated in the Southeast Anatolia Region, representing a substantial portion of our overall exports. The main challenge for Russia’s entry into the flour market lies in logistical constraints, freight limitations, and high container loading costs. As a result of these strategic constraints, our company is increasingly interested in foreign investments related to raw materials and factories. This has prompted us to conduct market research focusing on supply and logistics-supported operations. Consequently, we are shaping our strategy for planning wheat and flour supply in different countries based on warehouse facilities and annual agreements.”


Ahmet Demir
Eksim Gıda Group Chairman and
Eksun Gıda General Manager

Eksun Gıda, a prominent player in Turkey’s flour production and export sector, is actively engaging in investments related to energy, storage, and factory facilities. Continuously innovating through ongoing research and development efforts, the company proudly hosts the Sinangil brand and boasts an annual production capacity of 600 thousand tons, securing its position among Turkey’s top 500 industrial companies. During our conversation with Ahmet Demir, Chairman of Eksim Food Group and General Manager of Eksun Food, he emphasized that strategic challenges encountered by neighboring countries, abundant in raw materials, have heightened their inclination towards foreign investments in raw materials and factories. Ahmet Demir emphasized their focus on market research for supply and logistics-supported operations as they navigate the challenges posed by strategic limitations.

Additionally, he mentioned the Sinangil Gluten Yok brand, originally initiated as a social responsibility project, which continues to lead in providing suitable products for celiac patients and those opting for gluten-free diets. 

Dear Mr. Demir, first of all, could you provide us with information about the activities of Eksun Gıda, which encompasses Turkey’s first packaged flour, Sinangil?

Established under Eksim Holding in 1996, Eksun Gıda has been a key player in the industry, continuing its operations as a leading flour producer and the pioneer brand that introduced Turkey’s first packaged flour. Our state-of-the-art production lines cover a total area of 96,000 square meters in our factories located in Tekirdağ and Konya. With an annual production capacity of 600 thousand tons and approximately 52 thousand tons of wheat storage capacity, we cater to a wide range of needs through Eksun Gıda products suitable for both household and out-of-home consumption in industrial and traditional channels. 

We hold the 255th position in the list of Turkey's Top 500 Industrial Enterprises (ISO Top 500). Additionally, we are proudly included in the Top 1000 Exporter Companies of 2022, meticulously compiled by the Turkish Exporters Assembly (TİM). At Eksun Gıda, our diverse portfolio encompasses over 200 product varieties. This year marks the 60th anniversary of our brand journey, during which we maintain a pioneering status with Sinangil, the brand that introduced Turkey's first gram-packaged flour in the flour market. Under the Sinangil banner, we present an array of products in categories such as all-purpose flours, functional flours, traditional flours, low protein flours, instant bread mixes, semolina, cake flours, traditional products, special purpose flours, gluten-free flours, pastry ingredients, baking aids, and a delightful dessert series.

Through the Sinangil Gluten Yok brand, initially conceived as a social responsibility project under the umbrella of Eksun Gıda, we persist in our pioneering role in this domain by offering products tailored for the consumption of celiac patients or those opting for a gluten-free diet. Our diverse range includes palate-pleasing options such as buckwheat baton bread, sliced toast bread, sandwich bread, hamburger bread, turmeric-red pepper cookies, sesame-black pepper cookies, sesame-nigella cookies, currant cookies, coconut cookies, and chickpea cookies. Additionally, we have recently introduced gluten-free pizza to cater to various taste preferences. Ensuring accessibility, we distribute more than 40 types of flour in retail and over 150 varieties in out-of-home consumption to both dealers and end customers.

At the beginning of this year, you successfully went public with your shares on Borsa Istanbul, attracting significant interest from investors. Can you tell us what going public has brought to your company and the responsibilities it has placed on you?

With the IPO we carried out entirely in the form of a capital increase, 28.63% of Eksun Gıda’s shares started trading on Borsa Istanbul. The IPO process, which had the highest participation of all time at that time, received about 15 times the demand at a price of approximately 48.90 TRY. This, of course, was a different indicator showing the confidence in our brand, and it made all of us additionally happy. In addition, our investment processes aimed at sustainability principles continued.

We have initiated the installation of a 28 MW renewable energy - wind turbine at Eksun Gıda factories in Tekirdağ and Konya to meet the electricity needs. When this project is completed, about 30% of the energy we produce will be surplus, and we plan to release this excess energy to the market. In addition, for the purpose of increasing our flour storage capacity at our Konya factory, we have completed agreements for the investment in 12 units of 90-ton flour silos. Furthermore, within the scope of our zero-waste production, we are conducting recycling efforts with our R&D center to use organic waste in areas such as fertilizer and packaging, excluding feed.

You have a brand that is one of the most common on the market shelves. Can you provide information about your company’s production for industrial use and export markets?

As of this month, we are leading in the “Brands” category on the market shelves, excluding discounts. Although we hold about a 3.5% share of the total domestic out-of-home consumption (OOH) market, we are industry leaders in terms of quantity. Various OOH uses such as Bread, Corporate, Luxury, and Diversity are decisive with the quality and price factor, targeting brands that sustain quality standards. Our ability to provide continuous and flawless supply at maximum capacity in two different wheat centers and production facilities forms the foundation of our strength. It’s essential not to overlook the experience gained over the years in this regard. In the export market, proximity to the port and favorable wheat conditions play a significant role. However, developing an export strategy based on world geopolitics and changing conditions is crucial for us. 

People’s approach to bread, flour, and wheat has changed significantly after the pandemic. What kind of innovations has the pandemic brought to your sector?

During the period when we stayed at home due to the pandemic, there was a notable shift, especially towards the popularity of home bread baking. This period not only witnessed an increase in home bread baking but also a growing awareness and interest in the quality ingredients necessary for good bread and the production processes essential for the continuity of bread. This era, reflected in increased sales of flour varieties for home consumption, also saw a heightened curiosity about different types of bread. Consequently, it was a productive period in which our target audience organically gained knowledge about our products and production processes. Besides these aspects, there was a renewed recognition of the vital importance of processes such as production, supply, and logistics for the continuity of the food chain. Projects and policies aiming to minimize the impact of events like wars, pandemics, etc., on these stages were initiated.

WE ARE MINIMIZING QUALITY FLUCTUATIONS WITH DIFFERENT MIXES

What kind of impacts does climate change have on bakery products? Particularly, how does the decrease in wheat quality due to drought pose challenges in the production of bakery products? 

When we consider the global halt in production, the world’s current stock is more than 1 year but less than 2 years. Therefore, there are no critical stocks that can sustain the world for long periods. Turkey, being a grain-producing country, is self-sufficient in wheat, and there doesn’t seem to be a threat to the domestic market in the near future. Despite climate change leading to regional variations in quantity and quality, our wheat blends, called blending, minimize fluctuations in bakery product production. These blended flours enable the adjustment of the ratios of different wheat varieties in recipes to meet the necessary standards. Moreover, the opportunities for raw material supply from nearby regions and abroad support the preservation and sustainability of our product quality standards. This supply strategy facilitates our access to wheat with the desired quality and characteristics in the market, ensuring the quality of our flour products post-production.

Wheat is globally used in various fields. As a company, you also have a highly advanced laboratory and R&D team. As a company that opens up to the world from Turkey, what are you doing when producing flour?

Established in 2020 with the approval of the Ministry of Industry and Technology, Eksun Gıda focuses on elevating the quality of flour and developing projects to meet diverse demands through its Research and Development (Ar-Ge) center. At our center, we undertake projects related to gluten-free flour, gluten-free bread, bakery products, new flour diversifications, and optimal blends of wheat bran for high-quality flour production. Throughout these endeavors, we consider the needs of both our country and the foreign markets where Eksun is present. We prioritize projects that contribute to international competitiveness, make significant contributions to the literature, and involve research, collaborations with universities, industry, and public institutions. In our Eksun Gıda R&D center, we have developed a wide range of flour varieties tailored to various consumer demands, including phyllo dough, bread and pastry flour, ideal yellow semolina flour for pasta and pizza dough, antioxidant-rich purple flour, cake flours, and bread mixes. 

Currently, we are actively engaged in intensive work on three R&D projects:

1- Investigation of the impact of dough components on bread quality: With this project addressing the emergence of different bread qualities in the same location, the aim is to elucidate how the quality of crucial inputs such as water in the dough affects the final product and dough quality through numerical data.

2- Research on the added value of by-products or waste generated in food production: This study aims to enhance the value of by-products or waste generated in the food industry, intending to improve the physical characteristics such as taste and aroma of bread and enhance its quality through natural means.

3- Examination of the effects of medical and aromatic plant extracts on dough and bread quality: In this project, various medical and aromatic plant extracts used in food products are experimented with in bakery goods, aiming to naturally enrich the final product. Particularly, certain medical and aromatic plants support dough development and fortification with their contained fibers and antioxidant properties.

We are aware that you produce special flour for Ghana under UN projects. Could you provide information about the flour you specifically produce for this country? In terms of providing more nutritional contributions to the flours produced for needy areas, what kind of enrichment are you incorporating? 

Our productions within this scope are among the projects that were executed during the period and closed afterwards. The past production for Ghana was carried out in a way to meet local needs and align with quality standards in the market. In terms of providing more nutritional contributions, the flour content was presented in an enriched form with vitamins and minerals within the prescription standards set by the UN. 

THE BRAND BORN OUT OF SOCIAL RESPONSIBILITY: GLUTEN YOK

In recent years, with advancements in the medical field and increased attention to people’s health, the production of bakery products for celiac patients has been on the rise. Moreover, many individuals have started incorporating gluten-free products into their diets. The gluten-free market is rapidly growing both in our country and globally. You also have efforts directed towards this market. Can you share details about your efforts related to the Gluten-Free brand? What are your goals in this regard? 

Before answering this question, I would like to briefly share the story of the birth of the leading brand in the gluten-free market, Gluten Yok. Until recently, the preparation processes of gluten-free products were mostly carried out with products coming from abroad. During this period, we received requests from many customers who trust the Sinangil brand to work in this field. We rolled up our sleeves for our gluten-free flour production, which we saw as a social responsibility project. Using our own knowledge, capital, and infrastructure, we focused on R&D studies and conducted raw material trials and recipe development processes. Simultaneously, we completed the line installation works. When we reached a certain stage in the final products, we contacted celiac associations and sent samples to them. Based on the feedback received, we further improved our products. Thus, our products took their current form. We accomplished all of these within just one year. Following Turkey’s first domestic gluten-free flour developed for celiac patients, we simultaneously introduced products such as gluten-free flour plus and buckwheat flour developed for phenylketonuria (PKU) patients. Lastly, under the Sinangil Gluten Yok brand, we produced gluten-free cookies and snacks. 

During this process, we collaborated with associations working on celiac disease, conducting projects to increase awareness in the industry. Going beyond commercial benefits, we took significant steps focusing on people. To raise awareness about celiac disease, we organized the Celiac and Gluten-Free Living Summit this year in collaboration with the Celiac Foundation. In our summit, we featured the experiences of those who need to keep their nutrition program gluten-free or design their lives in this way. We discussed the challenges that celiac patients face during this process and proposed solutions. By doing so, we contributed to renewing public awareness by highlighting the difficulties faced by those fighting against celiac disease. We continue our efforts in this field through both our product developments and our interactions with the celiac community. 

WE PRIORITIZED FOOD SAFETY WITH OUR MACHINE INVESTMENTS THAT ENSURE HIGH EFFICIENCY

Technology in the milling machinery sector is constantly advancing, and the Turkish machinery sector plays a significant role in these developments. Can you provide information about the technologies you use in your factories? 

We are in a period where technology is rapidly advancing in the milling machinery sector, and the Turkish machinery sector plays a significant role in these developments. In our factories, the continuous tracking of processes and products holds great importance for the goal of producing high-quality flour. To achieve this, we have made automation and digitization a fundamental part of our milling activities. We have successfully completed the integration of automation and ERP systems by digitizing our production processes. Additionally, as we develop these digital and automation processes, we have prioritized food safety by making machine investments that ensure high efficiency. 

At our factory in Tekirdağ, alongside the 400 tons/day capacity machine park of Swiss origin Bühler, we have the 280 tons/day capacity machine park produced by the Turkish manufacturer Selis, which we commissioned in the past years, and the 600 tons/day capacity machine park, also Selis production, which we will put into operation in the coming period. In our Konya factory, we carry out production with Bühler machine parks with capacities of 145 tons/day, 200 tons/day, and 260 tons/day. This diversity and continuous technological renewal not only increase our production capacity and efficiency but also strengthen our competitive position in the market.

Especially with the increase in energy costs, industrialists are prompted to generate their own energy. Your company also has investments in renewable energy. Can you provide information about these investments? When are these investments expected to become operational? 

As a company, we continue our investment in the field of renewable energy, which we emphasized in our public offering prospectus. Under the scope of Unlicensed Electricity Generation, we are continuing our project planning to meet the electricity consumed in our factories from renewable energy sources. Currently, we have obtained technical approvals from public authorities for the planned 24.6 MW capacity to be generated from wind energy. Within the framework of the procedures, we are continuing process management and aiming to receive call letters for the relevant projects and accelerate the work by the end of February/March 2024. With these planned investments, we aim to source all the electricity consumed by our flour factories in Konya and Tekirdağ from renewable energy sources. Additionally, through our investment, we will contribute to clean energy production by generating renewable electricity over and above our consumption. With the benefits gained from this investment, we plan to work towards increasing our operational efficiency.

TURKEY, A COUNTRY THAT HAS ACHIEVED QUALITY FLOUR PRODUCTION ACCEPTED GLOBALLY

Turkey has been at the top of global flour exports for the past 9 years. However, looking at the export market, we see that a significant portion of this is directed to our neighboring countries, Iraq and Syria. Especially Iraq is focusing on establishing flour mill factories to meet its own flour needs domestically. Russia, one of our major wheat suppliers, is also exploring ways to sell flour globally. What measures should be taken to ensure that the Turkish flour sector does not face difficulties in exports in the coming period? 

Wheat is a critical raw material globally. Turkey stands out among the few countries worldwide that can process and market flour on its own, especially among countries that excel in logistics due to its strategic location. Being close to critical sea routes, which are crucial in terms of cost, plays a significant role in the export of quality wheat products.

Russia is certainly an important market. It possesses significant power to adapt to technological developments. However, having the sole capacity for production does not necessarily provide an advantage in dominating a sector, not only in the flour market but across all industries worldwide. In this context, sustainable logistic activities are of critical importance in all aspects. Turkey, as an agricultural country, has successfully standardized all processes, from supply to production, logistics, and post-sales support, according to globally accepted quality and standards for many years. If Russia aims to grow in this field, it will undoubtedly seek to benefit from Turkey’s experience in this domain. 

OUR APPETITE FOR FOREIGN INVESTMENTS IS INCREASING

Türkiye’s flour exports are particularly concentrated in the Southeast Anatolia Region, which constitutes a significant portion of our overall exports. In this region, our most active flour factories operate. Of course, our exports are not solely dependent on raw materials, namely wheat. Various factors such as by-products in the export process, factory operations, energy, and logistics play a significant role in determining prices and quality. Conditions such as raw material yields and storage in markets like Iraq and Syria can fluctuate under free-market conditions, impacting our export figures.

As for Russia’s entry into the flour market, the most significant obstacles include logistical constraints, limitations in freight and container shipments, and high costs. Such strategic constraints guide our company towards increasing interest in foreign raw material and factory investments, market research with a focus on supply and logistics-supported operations. Thus, we shape our strategy for planning wheat and flour supply in different countries based on warehouse locations and annual agreements.

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