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Jerusalem, Israel David Rosenberg – Diageo, the world’s biggest liquor maker, is making an unlikely bet on Turkish tipplers.

The British company agreed on Monday to pay 1.3 billion pounds ($2.1 billion) to buy Mey Icki, Turkey’s biggest distiller and the country’s leading maker of raki, an anise-flavored beverage downed by Turks more than any other alcoholic beverage except beer.

Diageo is looking at the shot glass half full – Turkey’s strong economy, rising prosperity and urbanization to encourage more drinking. But others, like Seyfettin Gürsel, a professor at Istanbul’s Bahcesehir University who conducted a study of tax policy and consumption trends, sees it half empty – and draining fast. He contends that Turkish Prime Minister Recep Tayyip Erdogan is determined to deter drinking in conformance with Islam’s ban on alcohol.

Erdogan’s alcohol policy strikes at the heart of the debate among Turks as to whether the prime minister and his Justice and Development Party (AKP) want to preserve Turkey’s democratic institutions or are they gradually putting it on the path to an Islamic state. Often termed “mildly Islamist,” the AKP’s rule in Turkey is being held up as a model for Egypt and other countries seeking a balance between democracy and religion.

Like other Muslim countries, Turkey has never been a nation of big drinkers. The World Health Organization (WHO) put Turkish alcohol consumption at a mere 1.7 liters per person per year in 2005, about the same as its Muslim neighbors Syria (1.1) and Lebanon (1.7). But across Turkey’s European border, drinking is many times that level. The typical (Christian) Greek imbibes 9.2 liters and Serbians 10.1 liters each, according to WHO figures.

Turks are near teetotalers by European standards, and the amount of alcohol they consume has probably dropped since then, according to a study by Bahcesehir University Center for Social and Economic Research. The government has boosted taxes on alcohol by 129 percent since 2003 – a year after AKP took power – boosting prices after subtracting for inflation by 28 percent.

Turkey’s special consumption tax (SCT) on spirits was introduced in 2002, replacing an 18 percent value-added tax that had been imposed on alcohol. The SCT rate rose under the AKP to a peak of 63 in 2009, when public protests caused it to retreat. However, the government replaced the lowered SCT with other taxes. In October last year, the government slapped a 30 percent increase on raki. Other rules ban sports teams from being named after alcoholic drinks.

The latest barrier to be erect between a Turk and his drink was a new rule announced in January that will ban alcohol from appearing in advertising and place further limitations on licenses. That prompted a Facebook group “Let’s Drink to the AKP” to band together to fight the measure.

Gürsel, the Bahcesehir University professor who led the study, said higher taxes caused alcohol consumption by households to fall 26 percent between 2005 and 2008. And, he doesn’t think Turkey’s tipplers opted to drink at bars instead, because his data show that alcohol production fell by about the same rate, or 27 percent, in the period.

The government denies it is on an anti-drink drive. It says the higher taxes are only aimed at bringing in extra revenue for the government and at discouraging drunkenness, no different than most countries in the West, which discourage excessive drinking as a threat to health and safety.

“I might have a certain attitude against alcohol in my personal life and within my family, but as we are democratic, in addition to conservative, we are very sensitive about not imposing our personal judgments on society,” Erdogan told a conference of the Turkish Industry and Business Association last month.

But Soner Cagaptay, director of Turkish research at the Washington Institute for Near East Policy, doesn’t accept that. He calls the program of higher taxes and other restrictions a “cultural war” against alcohol.

“The [AKP] party is changing Turkey, not by changing laws but through administrative measures,” he wrote in the Hurriyet daily last May. “If the general public can’t afford to buy a bottle of raki or wine, alcohol will diminish first from their daily lives, then from their lives in general.”

A one-liter bottle of raki, which is typically served at meals in middle class homes, now averages about $35.

But Diageo, whose brands include Johnnie Walker whisky and Smirnoff vodka, sees the trends in Turkey differently.

Turkey’s economy is growing rapidly, in sharp contrast to the mature, slow-growth markets of Europe. Turkey’s population of 74 million is the third-largest in Europe and gross domestic product powered ahead 8 percent last year. Diageo cites figures showing the number of households with income of $15,000 or more will grow by half in the next four years to 60 percent of the population.

Moreover, some 800,000 new legal-drinking-age consumers are joining the ranks of Turkish tipplers every year because Turkey’s population is so young. Even as AKP was making the cost of a drink more onerous, the market grew 14 percent in five years to 2010 in volume terms, accord to Diageo. Raki accounts for about a quarter of all Turkish spirits sales and Diageo’s new acquisition controls three quarters of the market for the product.

“What we’re seeing is an emerging middle class opportunity,” Stephen Doherty, Diageo’s director of communications, told The Media Line. “The middle class segment is growing – that’s what’s really driving the opportunity. People are becoming more economically empowered.”

Doherty said the company was confident that Ankara isn’t anti-alcohol. “We believe Turkey is an attractive predictable market with stable government that is interested in supporting growth,” he said.

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