TBY talks to Aydın T. Veyseloğlu, Director of Veyseloğlu Holding, on becoming a FMCG producer, brand imports, and the potential of the confectionary sector.
TBY Can you tell us about your company and how you came to Azerbaijan?
AYDIN T. VEYSELOĞLU The company was established in 1994. It was a difficult time, just after the end of the Soviet Union. Starting in 1994 we were baggage traders. We bought confectionery overseas, in countries like Turkey, packed it in luggage, and sold it in Russia or Azerbaijan. Then we gradually started growing. From 1994 to 1997 we bought trucks and expanded our trading volume. Then we acquired a Turkish partner. Our trade volume slowly grew. Until 2002 we only imported goods from Turkey. After that we expanded into Russia and other countries in Eastern Europe. Today about 40% of our imports are from Turkey, with the rest from other countries. We also do our own distribution now. We learned a lot from our experience in Turkey. We now manage trucks and three warehouses in different parts of Azerbaijan, and our facilities are on a par with those in Turkey. We also have serious plans to branch out overseas.
Can you explain your shift of strategy from being just a wholesaler to becoming a producer and distributor of brands as a modern trade holding?
We are proud to have become producers. We produce Sirab mineral water and we’re one of three equal partners companies producing this product. We also produce chocolate under the brand name Ulduz. However, most of our income is still through importation. Our products Sirab and Ulduz together only account for 10% of our total annual revenues.
What consumption trends can you identify in Azerbaijan in terms of product origin?
That’s a difficult question. There are certain tendencies that you find with Azerbaijani consumers. First off, Azerbaijanis place a lot of importance on European products. That’s the biggest challenge for local producers. European products are the most esteemed, followed by Russian and Turkish products. Azerbaijani products are generally not preferred, because the brand name is very important here. This is a major challenge. Local producers may actually make the same product as the Russian or Turkish producer, but they have to undersell those imported products to be competitive in the local market.
How many brands do you import?
We work with 84 producers. That will drop to about 70 soon. From Turkey specifically we work with Eti, Ülker, Sütaş, Şölen, Bifa, Piyale, Başparmak, Hayat, and Can Bebe, among others, and some of our other international partners include Heinz, Rittersport, and Haribo, to name a few. We also export our products to various countries including Georgia, Russia, and Mongolia. Currently, we’ve increased our chocolate production capacity to 1,300 tons per month, and so exports are more important than ever for us.
What potential does Azerbaijan offer foreign investors in the confectionery sector?
The Azerbaijani market isn’t a big one, with a population of just 9 million. But if you’re looking to produce in Azerbaijan with an eye to exporting to Central Asia, the trans-Caucasus, and Russia, then there is huge market potential. Also we do not pay VAT or other extra taxation in trade between these ex-Soviet countries, and so when you produce here and export to other CIS states, you have an advantage.
© The Business Year