Raki comes to the table

Hamish Smith investigastes the resurgence of an old spirit

Unrush Your World and Slow is Our Luxury could only be the campaign slogans of a raki brand. The laid-back anise category doesn’t hurry – it is 500 years old and only recently became restless. Geographically, it’s not easy. West of Turkey raki finds anise spirits ouzo, sambucca and pastis. East is vodka and arak country, and a whole body of nations that don’t drink much. If ever there was to be a home-bird spirit, it would probably be raki. But now – with Diageo shaking the tree – there could be flight.

But first things first – raki has been quiet for too long to not set the scene. From 1944-2004, when other categories were looking to stake a claim in a new global marketplace, raki was produced under state monopoly. Without market pressure to raise quality, innovate or diversify, the industry was defined by two major brands, Yeni Raki and Tekirdag – plus two smaller players, Kulüp and Altınbas. 

Back then these brands were hardly brands. They were produced by the same distiller to largely the same recipe – dried grapes, fermented and distilled. They came in bottles that would make designers surrender their pencils in despair. They were basic by every measure and there was little to choose between them.

Raki may be a 500-year-old spirit but it is a 10-year-old product. When the market liberalised in 2004, the previously state-owned Mey Içki, emerged dominant (to this day it produces more than 80% of all raki.) But still there was much work to be done. 

“In 2004 it was very challenging,” says Galip Yorgancioglu, now CEO of Mey Içki and Diageo Turkey, its owner since 2011. “The packaging was a challenge – the bottle was very ugly. The state monopoly had no marketing department. Raki was seen as a very boring fathers’ drink. It was dying.” 

Yorgancioglu’s first job was to refresh and premiumise. “We were able to make it relevant to young people,” he says. To cut a 10-year story short, it worked. “Raki is considered the national drink [whereas] in Greece young adults have rejected the culture of drinking ouzo,” says Yorgancioglu.

Meanwhile Efe raki entered the market and started to build share (12% of the market today) with a strategy of innovation. “We have recreated raki,” says Egemen Demirtas, Efe’s CEO. “Our company came up with the idea of using fresh grapes [for distillation] and innovating with oak barrels, triple distillation and using organic aniseed to create premium products. We had to come up with something for the consumer that was different.”

Mey Içki, too, diversified and a number of smaller players emerged to eventually take about 5% share of the market. In 2011 Diageo bought Mey Içki. People said the move was about distribution not raki – but, lest we forget, Mey’s major brand is the biggest in the anise category. It makes up 3.7m cases of a 4.7m 9-litre case category. 

Turkey today

The liberalised domestic market is still young so, for most brands – other than perhaps Yeni – there is still much work to do in building brands. Turkey is a dark market though. Only on-trade point of sale is permitted in the way of advertising so, while the population is culturally entwined with the spirit (an estimated 70% of all meals are eaten with raki, says Yorgancioglu) trading is tough. The status quo is hard to unsettle. Efe’s Demitrus says though his brand is seeded in 25 international markets the priority remains at home.  

Mey’s portfolio’s (Yeni, Tekirdag, Kulüp, Altınbas, Izmir Rakisi and Yekta) has an almost insurmountable dominance of the domestic market. This has prompted an intervention by the Competition Board, which has issued a €14.5m penalty for “the misuse of the dominant market position in order to create difficulty for competitors’ activities”. Mey has the right to oppose what Efe’s Demirtas says is the largest fine issued to any FMCG company this year, but its leader Yorgancioglu seems resigned. “I don’t think we will be successful with appeal because nobody has before,” he told DI

Demirtas is ambivalent. On the one hand he says it is very difficult to compete with Mey in the on-trade, which represents about 20% of total sales but is inversely important for establishing a brand. Mey’s portfolio has built brand loyalty over many years so new names struggle to gain a foothold. 

In the off-trade brands might ordinarily compete on price but high taxation (the third highest in Europe behind Sweden and the UK, says Yorgancioglu) means price positions have concertinaed. “We feel that there’s unfair competition,” says Demirtas. “We are in favour of fair competition. If our competitors create dynamism in the market then we consider that to be a positive.” 

In the 10 years since liberalisation, volumes in Turkey have dropped 4%. “It is not growing so competition is tougher than it would normally be – everyone is trying to find a place for themselves,” says Demirtas. Despite the challenges at home, the Efe boss believes this is the first battle that must be fought.

Time to fly

Diageo will have seen that raki is not growing at home (there was a 4% drop between 2004 and 2014, despite liberalisation) and must be planning for a Turkish market future that is more fragmented. But irrespective, Diageo doesn’t tend to let brands stand still without building outwards. Its export strategy is big and bold, building on Yorgancioglu’s long-standing vision to make “Yeni raki a global brand”. 

At the moment exports of raki amount to 360,000 cases, according to the tobacco & alcohol regulator in Turkey. But Yorgancioglu has targeted three countries that have both Turkish diasporas and strong or emerging Turkish food cultures. 

The US, Germany and the UK are all set for Diageo’s raki experience so far, but more will follow, if success is found. Spearheaded by Yeni, Diageo has a new distributor in the UK, which will target Turkish and ethnic restaurants and has deals in place with major supermarkets. 

The raki sell is more than about anise-flavoured white spirit. 

As Yorgancioglu says, consumers outside of Turkey must first experience the context in which it is drunk. Here’s Erdir Zat – editor of Encyclopedia of Raki and author of Raki: The Spirit of Turkey, to tell us more: “Raki is a drink that has an entire cuisine devoted to it, unlike any other drink in the world. Wine is chosen according to the food it will accompany, but with raki, the food is chosen to accompany the drink. 

“This meal is also different from the western approach to dining. One doesn’t sit down at a rakı table to fill the stomach – it is about sharing, the long, relaxed conversation that revolves around the raki.”

Raki should be chilled and is often served 1:1 with chilled water, says Yorgancioglu, but adds that most drinkers will have their preferred ratio. Customarily it is sipped once at the start of the meal – after the Serefe (cheers) starter gun – but the emphasis is on slow drinking and slow eating, ideally over a three hour-plus sitting. 

Germany is home to about 160,000 9-litre cases of raki consumption per year (IWSR), thanks to its Turkish-descended contingent. According to Tina Ingwersen-Matthiesen, of Borco, Diageo’s distributor in Germany, Yeni’s positioning was defined in co-operation with consultancy company Effective Brands “to make Yeni raki, a local and traditional brand, a trendy and cosmopolitan beverage”. 

The brand positioning was reconsidered, says Ingwersen-Matthiesen, based on research carried out with 1,000 participants in Germany, England, US and Turkey. “The result: in a world which moves pretty fast, people want to slow down and take a break from the rush. It is important to enjoy small things in life, because they make the life happier and more meaningful,” she says. 

Piloting in Hamburg, Berlin and London, the campaign of ‘unrushing’ people’s lives fits nicely with the slow-food movement that is picking up pace in the west and a wider move among city dwellers to drink authentically. 

Demirtas says international expansion should talk about the category more generally. “We have a lot to do before we talk about brands,” he says and adds that he would be in favour of collaboration abroad. But in truth, with more than 80% of the market and a cluster of raki brands, Diageo has the portfolio, clout and knowhow to go it alone. 

Turkish and possibly Ottoman descendents who have a cultural stake in raki will provide the foothold. But foodies and hipsters who want the authentic experience, and converted returning holidaymakers, will be needed for real traction. Still, it seems a tough ask for raki to ever grow beyond the bounds of Turkish restaurants and diaspora shopping trips. 

But perhaps not every spirit has to compete with vodka or whisky. Even in low volumes, raki can take its place at the table of global spirits and build the conversation slowly, at all times unrushed.