MARKET DEVELOPMENT
Turkish Soap-maker Evyap Breaks With Tradition in Malaysia
Turkish Soap-maker Evyap Breaks With Tradition in Malaysia
15/04/2016 (Nikkei Asian Review) - Breaking with tradition is a difficult decision, but that is what Evyap did in 2010.
The Turkish soap-maker changed its feedstock from tallow to palm oil, overturning a practice in place since the company's establishment in 1927. But it maintained quality products at affordable prices, because soap is in high demand in a country known for its bathing culture, called hamman.
The decision had led the family-run business to Malaysia, where it set up a sprawling $200 million soap production and oleochemicals complex in 2014. Crude palm oil is sourced from Indonesia and Malaysia, which account for over 80% of global production.
Animal fats have been used for centuries in the production of oleochemicals for food and energy. Since the 1980s, though, palm oil emerged as an alternative.
"It is much cheaper," Vice President Martin Rudolph said on March 23 during a media tour of the 225,000-sq.-meter factory in Tanjung Langsat, Johor, bordering Singapore. Evyap, pronounced e-v-yap, also receives tax incentives, which is common for export-oriented companies with capital-intensive operations.
The plant is capable of producing 150,000 tons of soap, 175,000 tons of fatty acids and 25,000 tons of glycerin annually. Nearly half of this is used for the company's retail products, which are made at two other factories, one in Tuzla, Turkey, and one in Alexandria, Egypt. The rest is shipped to over 100 countries.
Evyap, one of Europe's largest privately owned soap-makers, said it will centralize soap production in Malaysia this year due to cost factors and to expand its footprint in Southeast Asia.
"We want to be closer to customers in the region," said Rudolph, adding that growth in Evyap's home country has nearly reached the limit.
In Malaysia, Evyap's products fall into two categories. One is peanut-sized soap noodles, from which bar soap and other personal hygiene products are made. The other is the byproducts, which can be produced only from palm oil, in the form of various fatty acids.
EXPANSION STRATEGIES
Evyap will begin looking for local distributors in the region in a year or two and attempt to penetrate a mature personal care goods retail market dominated by established companies such as Colgate-Palmolive and Unilever. But it is confident that its midrange products will do well in Indonesia and the Philippines, where most people use bar soap.
The company is doing market research in areas that are not served by multinational companies. "It is imperative that we understand the markets that we are entering and tailor our offerings to their needs," Rudolph said.
Evyap caters its products to different consumer behaviors. For example, mothers in Italy like diapers, which the company also makes, that are long enough to cover the belly button.
The company is also doing well in the fatty oils business. When Evyap made the decision to switch to crude palm oil, the commodity was in high demand. In 2011, crude palm oil futures were trading at nearly 4,000 ringgit ($1,027), a historical peak. They have fallen to around 2,700 ringgit, declining along with the price of crude oil.
But Evyap is not worried, because almost half of the Malaysian production, which is running at 75% capacity, is consumed internally, and the company is confident demand will increase in the near future.
"We are very optimistic of the Malaysian operation's contribution to the group in the long run," said Rudolph. He added that the company has plans to increase plant utilization to 85% by launching new products in the region.
Evyap is known for brands including Arko, Aromel and Duru, which are household names in Turkey, Egypt and Eastern Europe. Its wide range of personal care products include soap, shampoo, hand cream, perfumes, shaving gel and toothpaste.
Evyap, led by third-generation CEO Mehmed Evyap, also runs Turkey's fourth-largest port, Evyapport, in the Sea of Marmara, east of Istanbul. The company traces its roots in Erzurum, in eastern Turkey, but founder Mehmet Rifat Evyap moved it to Istanbul in 1943 for easier access to raw materials and customers.
The company was built on three golden rules laid out by its founder, one of them being the importance of winning loyalty by offering the best products. This is reflected in a famous tale about how Evyap began selling soap in the former Soviet Union. When the company learned that miners were having difficulty obtaining soap, it began visiting mines and selling large quantities of soap products directly.
Today, Ukraine and Russia are key export markets.
Evyap had a turnover of about $750 million in 2014, nearly half from personal hygiene products, a quarter from diapers and the remainder from shaving and skin care products. It employs about 4,000 workers, including 340 in Malaysia.
The Turkish soap-maker changed its feedstock from tallow to palm oil, overturning a practice in place since the company's establishment in 1927. But it maintained quality products at affordable prices, because soap is in high demand in a country known for its bathing culture, called hamman.
The decision had led the family-run business to Malaysia, where it set up a sprawling $200 million soap production and oleochemicals complex in 2014. Crude palm oil is sourced from Indonesia and Malaysia, which account for over 80% of global production.
Animal fats have been used for centuries in the production of oleochemicals for food and energy. Since the 1980s, though, palm oil emerged as an alternative.
"It is much cheaper," Vice President Martin Rudolph said on March 23 during a media tour of the 225,000-sq.-meter factory in Tanjung Langsat, Johor, bordering Singapore. Evyap, pronounced e-v-yap, also receives tax incentives, which is common for export-oriented companies with capital-intensive operations.
The plant is capable of producing 150,000 tons of soap, 175,000 tons of fatty acids and 25,000 tons of glycerin annually. Nearly half of this is used for the company's retail products, which are made at two other factories, one in Tuzla, Turkey, and one in Alexandria, Egypt. The rest is shipped to over 100 countries.
Evyap, one of Europe's largest privately owned soap-makers, said it will centralize soap production in Malaysia this year due to cost factors and to expand its footprint in Southeast Asia.
"We want to be closer to customers in the region," said Rudolph, adding that growth in Evyap's home country has nearly reached the limit.
In Malaysia, Evyap's products fall into two categories. One is peanut-sized soap noodles, from which bar soap and other personal hygiene products are made. The other is the byproducts, which can be produced only from palm oil, in the form of various fatty acids.
EXPANSION STRATEGIES
Evyap will begin looking for local distributors in the region in a year or two and attempt to penetrate a mature personal care goods retail market dominated by established companies such as Colgate-Palmolive and Unilever. But it is confident that its midrange products will do well in Indonesia and the Philippines, where most people use bar soap.
The company is doing market research in areas that are not served by multinational companies. "It is imperative that we understand the markets that we are entering and tailor our offerings to their needs," Rudolph said.
Evyap caters its products to different consumer behaviors. For example, mothers in Italy like diapers, which the company also makes, that are long enough to cover the belly button.
The company is also doing well in the fatty oils business. When Evyap made the decision to switch to crude palm oil, the commodity was in high demand. In 2011, crude palm oil futures were trading at nearly 4,000 ringgit ($1,027), a historical peak. They have fallen to around 2,700 ringgit, declining along with the price of crude oil.
But Evyap is not worried, because almost half of the Malaysian production, which is running at 75% capacity, is consumed internally, and the company is confident demand will increase in the near future.
"We are very optimistic of the Malaysian operation's contribution to the group in the long run," said Rudolph. He added that the company has plans to increase plant utilization to 85% by launching new products in the region.
Evyap is known for brands including Arko, Aromel and Duru, which are household names in Turkey, Egypt and Eastern Europe. Its wide range of personal care products include soap, shampoo, hand cream, perfumes, shaving gel and toothpaste.
Evyap, led by third-generation CEO Mehmed Evyap, also runs Turkey's fourth-largest port, Evyapport, in the Sea of Marmara, east of Istanbul. The company traces its roots in Erzurum, in eastern Turkey, but founder Mehmet Rifat Evyap moved it to Istanbul in 1943 for easier access to raw materials and customers.
The company was built on three golden rules laid out by its founder, one of them being the importance of winning loyalty by offering the best products. This is reflected in a famous tale about how Evyap began selling soap in the former Soviet Union. When the company learned that miners were having difficulty obtaining soap, it began visiting mines and selling large quantities of soap products directly.
Today, Ukraine and Russia are key export markets.
Evyap had a turnover of about $750 million in 2014, nearly half from personal hygiene products, a quarter from diapers and the remainder from shaving and skin care products. It employs about 4,000 workers, including 340 in Malaysia.