October, 1995
Power Dergi / Haluk İmeryüz

The hazelnut king embarks upon retailing

Azizler Holding, which is among Turkey’s giants with its turnover of almost four hundred million Dollars, is not that well known by the public due to the “conservative” structure of the family. However, the process of being recognized which started off with Capri-Sun will continue with Balsu hazelnuts and the BIM chain stores. And Cüneyt Zapsu, the “hazelnut king” is behind these breakthroughs.

Azizler Holding is a “conservative” family company which has never considered going public and making its name heard. The holding, which is known abroad for its investments in the field of food, is also partners with Uzel Makine, which has 52 percent of the tractor market in Turkey. The public knows them more for Capri-Sun which they introduced to the market only last year. But there is almost nobody who knows that the primary business of Balsu company which produces Capri-Sun is actually “hazelnuts”. And the holding’s total turnover reaches 383.6 million Dollars.

Although they share their powers with the other eight members of the board of directors, there are two brothers running the holding, Aziz and Cuneyd Zapsu. The “hazelnuts affairs” which is run by the younger brother Cuneyd Zapsu has been in a breakthrough nowadays. Balsu, which is one of the names that first come to mind when one hears hazelnut, is among the biggest ones in the world with its export of a total of 70 thousand tons of over 110 million Dollars. Cuneyd Zapsu, the “hazelnut manager” of the Holding, is the name behind this success. By “imitating” the breakthrough that Turkey achieved in the textile industry so to speak, that is, by realizing hazelnut production from the raw material to the intermediary goods, and to the branded products from there, Zapsu earned his title of being the “hazelnut king”, and says that they will conclude a new investment of 10 million Dollars in the next month.

But Balsu’s real surprise will be in the retailing field. Stating that they will be conquering Istanbul soon with their chain stores called BIM, Cuneyd Zapsu says that they will open tsores that will “make the cheapest sales” by taking the Aldi chain in Germany as an example. So, here are the aspects of Cuneyd Zapsu, who got many reactions with his surprise assertion and who appeared before the public for the first time, and Azizler Holding which you want to know about:

Azizler Holding is a group that is not that well known by the public, could you introduce it briefly with its operations and partnership structure?

Azizler Holding is one hundred percent a family company, but it does not operate like one. There is a board of directors consisting of 10 people and there are only 3 family members in it. And the other 7 are my late father’s dear friends and people whom he recommended, we are on the same level as them, we do not have a right to veto. Surely, we could gather the general assembly and change the board of directors, but that will not happen, we would have to convince the others. An executive board of four people have been elected from this board of directors, and there is a task distribution among them. And there is only the brother Aziz Zapsu and myself from the family. Everyone is the “leader” of one or two companies.

And the reason why we have not become much known out there so far is because there has been no need for that. We have not become well known so far because we have not had many products that have been sold in Turkey or the products have not required ads.

And we are against promotion on a personal basis. We are a pretty “conservative” group.

What are the companies within the group?

Now, we have some partnerships, there are some companies that we control, and there are companies that we entirely own. There is Uzel Makina Sanayi as a partner. İbrahim Uzel is my grandfather and our partnership there still goes on.

What is your share?

Our partnership is 10 percent but because it is also one hundred percent a family company, it is a pretty effective 10 percent. For instance, not even the vice manager can change without our approval. The Uzel status is a recognized one, our famous teachers have achieved it. The tractor does not need to be advertised today in Turkey, Massey Ferguson already has a market share of 52 percent in Turkey currently. I am also the deputy chairman of the board of directors of Tarman, our tractor sales company. We get plenty of orders. On the one hand we are thankful, but on the other hand we say what a shame. Because you lose the market when there is waiting. Indeed, there is a wait of almost 5 months in tractor, the only sector that moves forward properly in the automotive industry. We produce sub-industry products such as springs, rims, brakes in addition to tractor. 90 percent of the rims are ours today from Tofaş to Renault. And as for the issue of recognition, there is no need for advertisement there, either.

Balsu is a bit different, I guess…

Yes, we have our Balsu group on the other hand. We went over 90 million Dollars in export last season. There are several companies within the group. Balsu Gıda Sanayi, Balsu Pazarlama, Balsu Marketing, Balsu Nakliye, Balsu Gıda Sanayi will most probably appeal to the consumers as well in the years to come. We do everything about hazelnuts at Balsu Marketing from a to z. We do everything about it: obtaining it from the farmers in their shells to breaking them, sifting them, roasting them and making them into spread.

You don’t have your own trees?

We have trees that can produce 5 – 10 tons of hazelnuts in the area around our Hendek factory. But there is no such plantation thing for the hazelnuts, we get them from the farmers. 6, 7 million people live on hazelnuts in Turkey. 500 thousand tons of hazelnuts are produced. The hazelnuts that our group produces is 70 thousand tons. We export all of it.

Where do you currently stand in the hazelnut business as a product and a brand?

We are abroad as Balsu Marketing. I can say that there are no major chocolate makers in the world to whom we do not provide hazelnuts or hazelnut products. But we need new markets, and we are striving for that.

What about Capri-Sun?

On the other hand, Balsu Gıda Sanayi started making Capri-Sun. We imported it at first. With our importing company called Teksu. Teksu is the Turkey representative of the most well-known 36 brands in the world. And we saw that Capri-Sun, one of these brands, was a niche, something that children and young people between the ages of 4 – 15 did not have in Turkey. It was number one in Germany among that age group, it was consumed even more than cola. The cost was really high when we imported it, it was being brought in for a certain group. So, we thought a larger audience could buy it if we did the research and could sell it for a lower price by being relative, and we started with its licensed production. We have been making it for about a year and it is number one in the 0.2-liter fruit juice market. I believe we are in the third place in the whole market after Aroma and Meysu.

How much have you invested?

 We have had an extra 2.5 million Dollar investment in addition to our current factory. Normally, it would be more but it cost that much because we only brought in its own machine and packaging machine in addition to our hazelnut business factory which was already there with its building and substructure.

All in all, this investment of yours was made during a year of crisis, were you able to achieve your expected sales chart?

It was not bad even though we were in a year of crisis, we are satisfied.

And you got in with a higher price compared to your rivals.

 Sure, we got in with a quite high price for last year, with 15 thousand Liras. When you look at its pricing in the whole world, it is between cola and fruit juice. Although fruit juice is really cheap here, and it is not because it is “fruit juice”. The prices are low, just like their quality. I think that the Turkish people are looking for quality products now and buys it when they find it. We are going full-capacity with Capri-Sun. We moved on with 0 percent raise in a year in terms of price, it still costs 15 thousand Liras. Because the other fruit juices do this, so we have to follow their lead.

Has there been a loss with 0 percent price increase in return for one hundred percent inflation?

In a sense, yes, but the market share matters greatly in such matters. When the market exits one day, you exit with that market share.

Are you planning on introducing new products?

The new products will be about hazelnuts. We have been doing this business in the entire world for 15 – 16 years. We thought about why we never provided any products to Turkey. We will be introducing our products in 30-gram packs with the Balsu brand to the market in several weeks as a trial run. Balsu is well-known abroad, but not in Turkey. There will be a chance to eat a different hazelnut in Turkey. Today, the hazelnuts at the nut shops are Fiskobirlik’s 92, 93 crop hazelnuts. Ours will of course be the hazelnuts of 95. Gıda Sanayi will introduce a couple of more products as “consumer products” again from now on.

In which field?

It will be hazelnuts again but different products in the field of “snacks”.

Are you not considering using hazelnuts in the field of chocolate like Sagra?

Not for now. We are considering sticking with snacks. The hazelnut might go into potatoes someday, so we will stop at snack production. Sagra does it as a “confectionary”.

How do you get the competitive edge in Europe?

The competitive edge in Turkey cannot be found anywhere else. There are no alternatives to producing hazelnuts in Eastern Black Sea. Turkey can give this product for much, much cheaper if necessary.

We had a reverse start as Balsu. I took the textile industry as an example when I was in Germany in 1979. Turkey was a cotton exporter at first, then in the 60’s, cotton yard factories were founded, and their export began, then raw fiber, fabric, then Turkey has now become one of the biggest readymade garment exporters in the world.

CHEAP GROCERY STORES TO BREAK GROUND

You are going into a new market with the BIM chain stores…

These stores are “discount stores”, that is, real “hard discounters” (meaning stores that sell with major discounts). There has not been such a thing in Turkey so far. What we mean by that is, the prices are the cheapest, when you look at it. Our people get the prices of the other retailers, look at the cheapest one, and declare a lower price. The system is that simple and some make loss and some profit; the average margin of profit is pretty low. Thus, cost per person is kept really low. For instance, the ambiance is not a luxurious store. 

How do you manage to be the cheapest?

Firstly, your style is pretty harsh. Our general manager has made it to being a member of the board of directors of Aldi, world’s number one “hard discounter”, in Germany. The mindset about costs is really different, there are absolutely no such things as cars for the company employees or anything. Secondly, the expenses made for the store are only for what is mandatory. The shelves are not luxurious. There is no store manager like the system at McDonald’s, everyone works. Goods circulating as fast as possible, a low margin of profit, and thus giving the lowest prices. Surely, this can only be achieved in great amounts.

How many has been opened so far?

We open 1 – 2 of them weekly. Until Istanbul is full of them, but we do not think it will be all that easily. It does not need any ads, either, the audience that shop promotes it verbally. If the same brand can be bought for 25 percent cheaper from here, this reaches gigantic figures on a yearly basis.

Have you not received any reactions from some chain stores, or from supermarkets like Metro or Migros?

We have received many, many reactions. And more will come. But this is not a hypermarket, you can shop for your daily needs, not your weekly or monthly ones. That is, think of it as a 600-square meter grocery store slightly larger than your local grocery store near where you live. But it is 40 percent cheaper than the grocery store and while you can buy a years’ worth of goods at the grocery store, you can buy 2-3 days of goods there. And I believe that it will break fresh ground in Turkey. There will be many more of these stores to come very soon, we know the big groups are prepared, we will use the advantage of being number one. We think “hard discount” is essential for our people.

ALMOST EVERYONE IS INVOLVED IN HAZELNUT

The hazelnut is an agriproduct which the political environments use as a vote means in Turkey. Cüneyt Zapsu expresses what the sector “suffers” from in this sense as follows:

“The hazelnut is a truly interesting topic. There are such groups and persons within this business, it is an extremely political thing, for one thing. The hazelnut can be a topic of discussion in the council of minister for hours, as if Turkey has no other business. Because there are so many ministers from the Black Sea. Normally, there is one group in charge of a business. And the Undersecretariat of Foreign Trade is in charge of this, because the export is 90 percent; because there is Treasury, finding the money; because there is the Ministry of Industry, and Fiskobirlik is affiliated with it, because there is the Ministry of Agriculture, and it is an agriproduct, and because there are government ministers who have nothing to do with it, because they are from the Black Sea. And you work so hard to get something out of this. But the folks at the undersecretariat have gotten this business pretty well, and hopefully they will succeed.”

MAY GOD HELP BOYNER

How does Cüneyt Zapsu spend a day?

There is someone whom I greatly respect. Mr Korkut Özal told me a story, and I will tell it because I am like him. So, they were in a hard negotiation with BP when he was in charge of Turkiye Petrolleri Anonim Ortaklığı. It lasted a full week, day and night. Mr Korkut said to the Americans, “I go home really late, the wife will get mad, they ask me where are you”. And the English said, your folks ask you where you are but mine ask me “who are you?”. This is like my situation. Unfortunately for my children, I have three daughters, I cannot make the necessary time for them. When you said your day, I thought, my yearly flight time is no less than 800 hours. I can give a THY stewardess as an example who flies 700 hours a year except for overtime so that you can understand what that means. That is, it not exactly a hobby of mine but travelling has become a habit. And when I spend my weekends at home, I do not want to leave home.

How do you like sports?

I snowboard and water ski.

What is your political view?

I support nobody right now. We are a little “opposing”. For example my folks used to support the Democratic Party back in the day, you know, against the soldiers and all. My father used to be an extremely religious person, he supported MSP, the only religious party. Then we tried to support Mr Turgut. Currently, I support Cem Boyner, who is my friend and also whose thoughts I admire. I say may God help him, and that is all I can say because he has his work cut out.

Are you considering joining YDH (The New Democracy Movement)?

Again I have a saying from Mr Korkut, which goes, “I will not oppose”. One should not become a politician just to become one, one needs to do something.

Does this mean YDH will stay in the opposition?

I hope not. I think it will succeed greatly in the long run. But I am not sure if we have enough time for it, because Turkey is moving toward a direction really quickly.

I saw hazelnut similarly, only raw hazelnut went out of Turkey at first. I thought we could at least send it by roasting it first. I spoke with the chocolate companies there to see if we could shred them, crush them and take them as semi-products from Turkey after roasting them. But because they cared about price stability, etc., we decided to make the production for this business ourselves. And we founded the factory in 1985 by consulting to my late father.

Your rivals emerged later on, I believe…

After the unfair competition with the government’s Fiskobirlik for years, we are happy to get into a regular competition with those who have stepped into this business from the private sector recently. As far as I am concerned, there are 12 different hazelnut processing investment that started this year alone. But it is not like we did nothing. We have an investment from scratch that is double our current capacity.

When did it start?

We started last year, and it will end in a month, hopefully. It was a high investment for hazelnut because it started from zero. It is over 10 million Dollars. We are going for some innovations in the processing, packaging and roasting issues as well; we have to, in order to remain the leader.

Do you have foreign partners?

We have a longstanding partnership with the Italian Ferrero at Balsu Gıda.

Where does the name Balsu come from?

There was Balin Şekerleme which we worked together with in 1985 when we founded this business, and we were satisfied with. Memduh Hacıoğlu was running it. He was someone whom we loved and respected, and we thought we would do this business together. We brought together the “bal” of Balins and the “su” of the Zapsus called it Balsu. But unfortunately, they were also a family company and they could not agree with their own partners. So, Mr Memduh could not get into this business but the name stuck.