1 .STUDY OF VEGETABLE OIL SECTOR
1.1 Introduction Food sector takes its source from the beginning of the human life so it has an agelong past, and it keeps its existance. The acceleration of food consumption rises in connection with the growing world population and that threats the adricultural activities and the foodstuff potentials. To get one step forward in this market; while the searches for new technologies and new methods have been developed to increase the productivity, some of them are trying to be seperated from this competition by different alternatives like organic agriculture. With the fluctuation in the market, especially in raw materials the challenge is getting tougher. One of these raw materials are the oilseeds that contains sunflower, corn, olive, soybean. In vegetable oil business even the variations don’t be observed, the comsumption is growing up. In the world market the vegetable oils are seperated into three groups as olive and nut, sunflower and corn, and cotton. The agriculture characteristics and production types change from one country to another. For example in USA and Italy soybean is the major vegetable oil but in Turkey and Spain sunflower takes the first place. Besides; USA, Brasil and China are leading the oilseed production in all over the world.

In Turkey the oils that has produced are mostly from the sunflower(nearly 50%). Nearly 35% of the vegetable oils are produced from the cottonseed and remains are produced from the olives and the others. But in the recent years the production quantities in oil seeds has been decreasing and in 2007 it has declined 23,6 % while it is expected to be nearly 854000 tons. In this decline, the price parity and the competition between sunflower and wheat has been effective. On the other hand the oil consumption especially the sunflower oil consumption is increasing year by year. However Turkey can produce only 30% of its oil need and imports nearly 70% of it.
Table: Oil seeds production quantities in Turkey Total Sesame Sunflower Flax (seed) Cotton seed Groundnuts Soybeans (Tons)
1990 2 181 157 39 000 860 000 1 570 1 047 360 63 000 162 000
1991 1 933 885 43 000 800 000 1 440 895 082 60 000 110 000
1992 2 061 082 34 000 950 000 758 905 350 67 000 95 000
1993 1 882 085 30 000 815 000 488 899 868 70 000 63 000
1994 1 859 052 34 000 740 000 650 929 902 70 000 70 000
1995 2 391 660 30 000 900 000 390 1 287 527 70 000 75 000
1996 2 165 632 30 000 780 000 228 1 219 579 80 000 50 000
1997 2 254 767 28 000 900 000 228 1 193 286 82 000 40 000
1998 2 407 398 34 000 860 000 185 1 334 778 90 000 60 000
1999 2 308 577 28 000 950 000 227 1 157 583 75 000 66 000
2000 2 253 448 23 800 800 000 173 1 295 066 78 000 44 500
2001 2 171 314 23 000 650 000 155 1 353 888 72 000 50 000
2002 2 514 827 22 000 850 000 130 1 457 122 90 000 75 000
2003 2 387 925 22 000 800 000 110 1 337 065 85 000 85 000
2004 2 501 419 23 000 900 000 80 1 425 850 80 000 50 000
2005 2 421 338 26 000 975 000 86 1 291 180 85 000 29 000
2006 2 789 149 26 545 1 118 000 84 1 476 556 77 454 47 300

Table: Imports and Exports in 2008 year:2008 Imports Exports value: 000$ Total January February Total January Ferbuary
Oil seeds and oleaginous fruits 246 441 115 834 130 607 31 991 10 909 21 082
Animal or vegetable fats and oils 245 514 98 129 147 386 125 990 64 760 61 230

1.2. The Contribution of the Sector to GNP GNP is 399,673,000,000 $ for year 2006 with 10,8% increase in current prices . Vegetable Oils sector imports cost 739,739,000 $ and exports cost 322,411,000 $. Automotive sector has commercial deficit with -417,328,000$. It means that vegetable sector contributes negatively to GNP with 0.1044% share. As seen from the vegetable oils sector’s effect on GNP, this sector has a significant role in a country’s economy.
1.3. Exportations Almost all Vegetable Oil exportation of Turkey is formed by sunflower, corn, soy and cotton. Also the same products and palm forms 90% of importations. The most important export markets are Iraq, Libya, Syria, Israel, South Korea and Yemen. Furthermore, the major countries that Turkey imports from are Argentina, USA, Ukraine, Russia, Brazil, China Romania and especially in palm Indonesia and Malaysia. The table can be seen above.

Turkey’s Vegetable Oil Exports and Imports (Amount: Tones, Value: 1000 USA $)

Exportations 2004 2005 2006 Amount Value Amout Value Amount Value
Sunflower 33376 30387 63255 60257 233164 206422
Corn 23272 26973 26681 28095 30252 31244
Soy 3694 3201 3311 2727 2994 2420
Cotton 2281 1750 2823 2315 3473 2980
Margarine 96642 73599 128277 99070 102939 79345

Importations 2004 2005 2006 Amount Value Amount Value Amount Value
Sunflower 76106 49196 200919 133327 398503 235500
Corn 90026 67427 112980 89464 122143 86039
Soy 64145 40981 131789 72339 144623 82272
Cotton 0,31 2,43 4867 2800 10614 4453
Palm 440073 243367 557000 272604 634732 319282
Margarine 13333 11768 13239 11909 14281 12193

Source: Dış Ticaret Müsteşarlığı
1.4. Capital Accumulation This sector includes many international firms in Turkey’s market. Such as Unilever dominates the market. In the recent past, NBK Capital has purchased Yudum Gida. This shows that there is a high competitiveness in the sector. Also Ulker is a big player with scale economy which strategy it applies in all markets.
1.5. Labor Structure and Employment The sector uses all the production technologies, the oldest and the newest ones. In addition, because of the cost of production in recent years, the sector headed towards low cost with high technology and lower manpower cost. By the way, the quality of products increases.
1.6. Level of Technological Development Process : vegetable oil
Capacity : 5-18 kg Net / 16 kg for 250 tin / hour

Nowadays’ technology, the vegetable oil filling is done by this high-tech machine. The side of machine technology in this sector is developing related to machine technologies but the investment is too low because of the low value added. Employees are sometimes just in the process of locking the bottles with cover. But just for this process, hiring employees are too costly so the technology helps the firms and some machines can do all the process without hand touch.
1.7. Research and Development Potential The firms in the vegetable oil sector do not have research and development budget and potential. The sector can not make profit to separate a budget for R&D.
1.8. Expectations for Future Development Developments in the sector will continue as the recent past in the future. The firms in the sector use the last production technologies but the competitiveness of the sector makes it non-profitable. In Turkey, the production of oil is related with imported sunflower weighted day by day so the cost of production of oil increases incredible. Moreover, the firms can not find sunflower to produce oil. So the sector may go into a crisis. In Turkey, sunflower has a big place (nearly 50%) in the production of oil and because of the structure of soil and the recent climate changes of Turkey decreases the amounts of sunflower. As a result of this, nowadays the sector has to import sunflower because of the demand for sunflower oil. The costs are increasing by the imported sunflower. Some experts explain that the demand for alternative oil of sunflower should be created in the future in Turkey’s market. It is expected that Canola will produce by the alternative of sunflower. That’s why it is cheaper and more efficient in the production amount.
2. QUALITY STRATEGY OF YUDUM Yudum has excess capacity and there is an opportunity in market; to use different oily seeds in order to develop new products. So Yudum can use its excess capacity to launch new products to market. By doing this Yudum can reach much more customers and with its new brands firm can attract new customers or satisfy the customers they already have. Firm’s processes are working well but they can renew their machines to make processes much more machine focused instead of man focused. According to its capacity, efficiency is too low for Yudum. In order to increase the performance of the firm,Yudum can build Total Quality Management. Therefore they can use their resources more effective. In order to improve the quality of its human resources firm should connect the students graduate from Ayvalık Meslek Yüksekokulu. Or Istanbul team should convince experienced and talented persons graduates from universities in Istanbul or somewhere else to work and live in Ayvalık.
2.1. The Nature of the Company’s Products and Services
The head office is located in Istanbul and the factory is in Ayvalik. In Ayvalik, a town on the northern Aegean coast in the heartland of the Turkish olive growing region, the factory which is established in an 18000m² area, the annual production capacity is 85000 tons for corn and sunflower oil, 20000 tons for olive oils. Products are manufactured in 76 size and varieties for export and local markets. Today there are over 2.5 million olive trees in Ayvalik which is known with premium quality olive oils having the richest flavor and aroma.
2.1.1. Product Types
2.1.1.1. Yudum (Sun-flower oil) Turkey’s leader sunflower brand Yudum is the most prefered product with a largest distribution channel in its segment in Turkey. Sunflower oil production was first made in Istanbul Halic Factory which was established in 1949 by Komili family. After the factory was moved to Ayvalik in 1984, the production capacity increased in accordance with the new investments. Yudum sunflower oil, that is identified with “Lightness” is the leader and most consumed brand in the market for long years. Yudum sunflower oil is produced in 1lt., 2lt. and 5lt. pet bottles, 3lt. pvc bottles and 4lt., 5lt., 10lt. and 18lt. tin boxes in the market.
2.1.1.2. Sırma (Corn oil) Sırma corn oil, is the leading national brand in corn oil segment since 1992 when Komili family passed its shares to Unilever. Sırma corn oil, that is positioned as “Being Healthy” principle, is appreciated by Turkish consumers and has become their first choice. Sırma corn oil is produced in 1lt., 2lt. and 5lt. pet bottles, 3lt. pvc bottles and 4lt., 5lt., 10lt. and 18lt. tin boxes in the market.
2.1.1.3. Riviera (Olive Oil) Riviera branded olive oil is Yudum’s olive oil brand which is threw on the market after Unilever sold the firm. Riviera olive oil is produced in 500 ml., 1lt., 2lt., 3lt., 5lt. and 10lt tin boxes in the market.

2.1.2. Production Process Every product in the firm is being follow almost the same process. Briefly we can explain the process like below by considering Yudum 10lt in tin box which is one of the main product of the firm:
 Raw oil is tested by quality control department, before accepting to the factory..
 Raw oil which pass the tests is stored in raw material tanks.
 Raw material is refined.
 Refined oil is stored in semi product tanks.
 Soap stock which is the main churn of the firm is got rid of
 Refined oil is filled and packed to be prepare for market.
 Products are stored by shipping department and when a client order products are sent by transporting them with vans.
2.1.3. Capacity Below there is a table which demonstrates the max capacity, used capacity last year and capacity usage rate of Yudum Gıda: Total units sold (tone) Max capacity (tone) Capacity Usage Rate
Ronchi-1 Line;
Sızma 1L Pet Bottle 670,9 40060,98 0,016747
Sızma 2L Pet Bottle 777,724 58270,51 0,013347
Riviera 1L Pet Bottle 875,22 40060,98 0,021847
Riviera 2L Pet Bottle 1052,568 58270,51 0,018063
Köy Sızması 2L 475,956 58270,51 0,008168
Ronchi-2 Line;
Yudum 1L 4527,28 50986,696 0,088793
Yudum 2L 5664,744 65554,32 0,086413
Sırma 1L 1150,62 50986,696 0,022567
Sırma 2L 2298,984 65554,32 0,03507
Zacmi Line;
Yudum 3L PVC Bottle 2938,014 54628,6 0,053782
Sırma 3L PVC Bottle 1611,63 54628,6 0,029502
Ocim Tin Box Line;
Yudum 4L 531,552 65554,32 0,008109
Yudum 5L 22618,105 81942,9 0,276023
Sırma 4L 276,464 65554,32 0,004217
Sırma 5L 10228,805 81942,9 0,124828
Sızma 3L 84,96 46980,6 0,001808
Sızma 5L 395,66 78301 0,005053
Riviera 3L 266,808 46980,6 0,005679
Riviera 5L 1902,3 78301 0,024295
Köy Sızması 5L 296,06 78301 0,003781
Ocim Plastic Line;
Yudum 5L Pet Pot 6100,28 40060,976 0,152275
Sırma 5L Pet Pot 1002,64 40060,976 0,025028
Oluşum Tin Box Line;
Yudum 10L 6759,18 36419,07 0,185595
Sırma 10L 1842,05 36419,07 0,050579
Riviera 10L 1071,6 36419,07 0,029424
Yudum 18L 3883,068 38240,02 0,101545
Sırma 18L 281,808 38240,02 0,007369
Dolum-2 Line;
Yudum 500ML 308,64 24279,38 0,012712
Riviera 500ML 288,246 24279,38 0,011872
Soğuk Baskı 500ML 11,07 24279,38 0,000456
0.3 Sızma 500ML 11,118 24279,38 0,000458
Taş Baskı 500ML 15,306 24279,38 0,00063
İlk Hasat 500ML 14,334 24279,38 0,00059
Halis Ege 500ML 19,998 24279,38 0,000824
Sızma 250ML 45,879 58270,51 0,000787
Sızma 750 ML Glass Bottle 13,077 14162,97 0,000923
Organik Sızma 9,762 24279,38 0,000402 We can say that Yudum has excess capacity and this makes the firm’s efficiency to be low.
2.2. Principal Customers The principal customers of Yudum Gıda is Unilever, key accounts (such as Migros, Carrefour, etc.), groceries and local oil traders. Distribution of products made by Unilever’s distribution channel and Yudum’s 42 intermediares and 132 key accounts.
2.3.Major Markets
Yudum Gıda is a leading enterprise in the edible oil sector. Yudum Gıda manufactures the most preferred seed oils, Yudum sunflower oil and Sırma corn oil in Turkey. Yudum Gıda is one of the most distinguished and important producers in Turkey of olive oil serving both in domestic and international markets. In brief, Yudum Gıda is basically serves to Turkish vegetable oil market, but besides, Yudum is toll producer of Komili olive oils for Unilever and takes part in export markets.
2.4. Key Customer Quality Requirements Our production and quality policy is, to meet our clients needs and high service level expectations for today and tomorrow at the highest and qualified level. In Ayvalık factory the production is realized in two refineries at 10 lines which can fill into pet, pvc, glass and tin packages. All raw material is tested in Yudum’s advanced quality laboratories from its delivery to the factory until shipping. Yudum Gıda has ISO 9001 Quality Management System Certificate and ISO 14001 Environmental Management System Certificate since 1997. Yudum acquired HACCP Food Security Management System Certificate in 2005.

Yudum’s policies are like below:

2.5. Position in Market and Competitive Environment In Turkey, in vegetable oil market there is only 4 big firm including Yudum, Unilever, Ülker and Edirne Yağ Sanayi; and approximately 100 small firm takes place. Yudum Gıda is current market leader however new players can enter the market so Yudum has to continue its development. Competitors are not highly differentiated in vegetable oil sector but Yudum has a giant brand loyalty and strong distribution channels which make them to survive successfully.
2.6. Facilities and Technologies Yudum has only one but big facility in Ayvalık, Balıkesir. Its address is “Tellikavak Mevkii İzmir Yolu Üzeri”. And also in Içerenkoy, İstanbul, there is a center department. Its address is “Degirmenyolu Cad. Huzur Hoca Sok. No: 84 Kat: 23”. Firm has only one plant with 110 permanant and 65 temporary employees, and in the center department in İstanbul there is a team including 15 managers. If we consider the place of the plant, it is obvious that a different choice from rivals. However this situation has its own advantages and disadvantages. Far away from market but close to main raw oil sources. Providing water is easy but providing energy is difficult because there is no sufficient infrastructure like in industry regions have.
2.7. Suppliers
2.8. Regulatory Environment Instead of being established in industry region, Yudum Gıda is established in a place which is famous for tourism of Turkey. So this forced the firm be more sensitive about environmental pollution regulations. Also it is very difficult to send churn to licensed firms. However, Yudum set up an Environment Management System in its constitution in 1996 and after a year of work Yudum got Environment Management System Certificate from TSE in July of 1997.
2.9. Other Factors In Yudum Gıda there must be a R&D team in order to make researches for alternative technologies both for quality tests, for refinery techniques or machines, or for filling and packing processes, etc. Yudum Gıda only focused on producing and selling, but under today’s competitive conditions success with these understanding won’t last forever. Working for TSE certificates is not sufficient, companies will increase their quality by using an approach suitable for them like total quality management, six sigma, etc.
2.10. SWOT Analysis
2.10.1. Strengths -Yudum is the market leader in vegetable oil sector.
Although there is strong rivals like Unilever and Ülker, Yudum takes the first place in vegetable oil sector. In 2006 and 2005 Yudum was market leader too; in 2006 it was 278th in ISO’s first 500 Enterprise List with 150,658,702 YTL endorsement and previous year it was 254th with 136,229,344 YTL. -Firm built great brand loyalty.
Firm has a rooted and successful history, so people used to its products since they see them for years. Also when we look at its products, they have high quality and unique taste. Also marketing efforts has to be appreciated, everybody can remember the flying guy in the kitchen after eating meatball with Yudum sunflower oil. -Firm has great product range.
Firm has various types, volumes and bottles of products. As types there are olive oil, sunflower oil, and corn oil. As volumes products are packing 500 ML, 1LT, 2LT, 10LT, etc. As bottles they use glass bottles, plastic bottles, tin boxes, etc. -Firm is close to raw olive oil sources.
As mentioned before the firm establish its plant to the place where the most delicious raw olive oil sources take place in Turkey. So transportation of raw oil and nearness to suppliers are making stronger the firm among its rivals.
2.10.2. Weaknesses -Firm hasn’t got a settled quality approach.
Although firm has many certificates, it has not got a settled quality approach like total quality management, etc. With the light of that approach firm can follow technological developments and last its success. -Firm has excess capacity. -Firm has really great capacity but firm uses very little of it. And this decrease efficiency. -Firm’s employee’s are not sufficient in terms of education -Firm’s employee’s are not sufficient in terms of education, so this make HR less effective than any other firms’. This is because of the distance of universities from the place factory was established.
2.10.3. Opportunities -Increasing consumption of vegetable oils in Turkey: With the increasing population vegetable oil consumption is increasing too. In addition to that factor oil is one of the basic nutrients and that demand does not decrease with unexpected actions. That provides a strong advantage in this sector. - Expanding the product variations by using different kinds of oilseeds:
However it is suitable to seed different kind of oilseeds in Turkey, seeding sunflower is the most popular kind among the vegetable oil sources. In spite of that tendency there are some oilseeds that provide the same, even more efficiency comparing sunflower like colza. Besides colza can be planted in the months that sunflower cannot be. And this decreases the demand for sunflower and helps suppliers to find the raw material to produce oil. - The convenience of the agricultural structure of Turkey:
Turkey has sort of fields that are ready to be planted oilseed. If the fields can be brought to the appropriate conditions and the farmers are encouraged there will be no need to import oilseeds. -Junior technical collage that has begun to operate in Ayvalık:
The college operating in Ayvalık will educate young people who are needed in production operations. This is an advantage for the factory to have qualified employees.
2.10.4. Threats -The inefficiency of oilseed production against the increasing oil consumption:
Since there is a price parity between the oilseeds and the other agricultural vegetables it is not preferred to plant oilseeds. On the other side the vegetable oil demand does not decrease but increase day by day. That cause a scarcity for the oil producers and most of them are constrained to work with excess capacity. - The similarity of competitors:
Because the vegetable oil business is not a complicated and a changing procedure all the companies have nearly the same products. There is no chance to make diversification or to follow differentiation strategy. That constraints the product variations and the competition is getting tough. - The regulations that make Turkey to import sunflower soybean and colza oil cheaper from EU countries: By the time the regulations that let Turkey to purchase vegetable oil from the EU countries with no or a little duty taxes have accepted, domestic companies had no chance to compete with them. So the importation became preferable in vegetable oil consumption. -New entrances in the sector:
Although there are a few big firms and lots of small firms in this sector reentrence of some big firms can cause losses in the market share. For example Aymar was the market leader before it has been passive in the market. And it has reentered the market after years in 2002. There can be risks like that in the future.

References
Türkiye İstatistik Kurumu, 2008. Bitkisel Üretim / 2007. T.C. Başbakanlık Türkiye İstatistik Kurumu Haber Bülteni, 53
Hotan, Tolga; Fiiling and Packinging Expert, Personal Interview; tolga.hotan@yudum.com.tr Altiparmak, Feza; The board of director of refinery department; Personal Interview feza.altiparmak@yudum.com.tr www.gidasanayii.com www.kobifinans.com www.tuik.gov.tr.
www.yudum.com.tr