Market Overview
The global oils and fats growth is directly linked to population growth and market size is growing as oils and fats. In Algeria, oils and fats are considered as an essential ingredient in Algerian cuisine and homemade meals for all households. However, the COVID-19 pandemic had quite a mixed impact on sales of edible oils in Algeria. Despite a severe decline in foodservice volume for this category as consumers were more anxious about their risk of infection in food outlets, strong retail value growth provides some compensation for suppliers. Since edible oils are considered essential by many consumers, sales were quite resilient and boosted by the increased amount of cooking at home during pandemic times. Vegetable oils domestic demand amounts to $583 million, that is a quantity of 1 MMT/year and $600 million of soybean residues, with a quantity of 1.4 MMT/year. The government of Algeria intends to grow groundnuts on 200,000 ha, soybeans on 200,000 ha, rapeseed on 100,000 ha, to reduce the import bill by $983 million, i.e., 80% of imports of these commodities.
Algeria is one of North Africa’s fastest-growing markets for the food and beverage processing and manufacturing sectors. The country has one of North Africa’s highest per-capita expenditures on food attributed to relatively high disposable incomes and consumers’ strong preference for convenient, quality, and premium food and beverage products. Although the local food manufacturing industry is burgeoning and unsaturated, the sector is fundamentally dependent on imports for ingredients and raw materials because of the country’s limited agricultural resources. Under these conditions, demand for F&B ingredients will continue to soar, creating an environment for greater MPO expansion into the Algerian market. Main factors enhancing the food manufacturing industry in Algeria include rising populations, growing demand for convenient processed foods, increasing per-capita incomes, and improved production capacities.
Oils & Fats Scenario in Algeria
Algeria’s domestic consumption of oils and fats can only be fulfilled through imports. In 2020, domestic production is estimated to cover only 16% of the total consumption and the remaining 84% was fulfilled through imports. The liquid oil market is the biggest segment in the oils and fats market in Algeria, as it represents around 83% of the market size in Algeria. Soybean oil is the most consumed oil and most imported oil in Algeria. In 2020, soybean oil imports are estimated at 765,000 MT, which is 77.7% of the total oils and fats imports, followed by palm oil at 130,000 MT with the share of 13.2% and sunflower oil at 52,000 MT or 5.3% of the total imports estimates in 2020.
Palm Oil Situation and Growth Drivers
While soybean is the dominant oil in the market, palm oil is in a particularly superb position for the remaining 18% of the market (Margarine 13%, biscuits & cheese 3% & vegetable ghee 2.7%). Although it may be difficult for palm oil to penetrate the liquid oil market due to dominance of the soybean oil as the preferred oil, it is much easier to expand the market share of palm oil in the margarine market as the vegetable ghee market is already dominated by palm oil as 100% of the vegetable ghee (around 30,000 MT) produced in Algeria is palm based.
Palm olein potential as a solid fat sector is feasible and has excellent potential as palm oil can be promoted to be technically and economically better than the other hydrogenated oils. Margarine is very popular in Algeria among consumers and the industry and is also leading the sales in its category compared to butter and cooking fats for the past six years and it is forecast to continue to lead and grow until 2025. The main reason is the affordability of the margarine compared to the expensive butter (about 5X the margarine price) for most of the Algerian people as they are price sensitive.
Industry Overview
Cevital is the leading edible oil player in the market, due to its long-standing presence in Algeria. Cevital has been present in this industry for 30 years and has a wide variety of products including vegetable and seed oils. Afia International Algeria, in second place and Société Oléicole d’Algérie is third in the category. Domestic players dominate the fragmented edible oil market with affordable prices which is due to their long-established presence in the category, and their competitive, affordable prices. There was little room for international players given the strength of local production, which was able to meet demand adequately, and fulfilled consumer expectations in terms of price/quality ratio. Fragmentation will continue to shape the competitive landscape of edible oils in Algeria. There will be no major changes in the rankings of the leading players in 2020.
Malaysian Palm Oil Performance
Malaysian palm oil exports to Algeria witnessed severe drop in 2020, it declined by 39% compared to the previous year which can be mainly attributed to the negative impact of COVID 19. Nevertheless, it cannot be denied that total exports of Malaysian palm oil and its product are on an uptrend since 2017 and in 2020 was probably a glitch in demand due to COVID 19. As a matter of fact, in the first five months of 2021, Malaysian palm oil exports to Algeria has increased by almost 5,000 MT or by 54.4%. If the rate of exports continues, it is very likely Malaysian palm oil exports to Algeria will exceed the figures recorded in 2020.
Exports of MPO oleochemicals increased significantly in 2018 amounted to 8,009 MT compared to 3,606 MT in 2017 and reached the highest point since 2013 and it is slightly increased in 2019 to reach 8,166 MT which shows consistency. Also, both exports of palm oil and finished products increased noticeably in 2019 compared to 2018, as palm oil reached 34,661 MT in 2019 compared to 28,903 MT in 2018 and the finished products reached 23,078 MT in 2019 compared to 15.327 MT in 2018.
| Malaysia Exports to Algeria by-product (Tonnes) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Product | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
| Palm Oil | 17,016 | 34,661 | 28,903 | 29,976 | 32,101 | 31,292 | 30,910 | 37,147 |
| Oleochemical | 5,911 | 8,166 | 8,009 | 3,606 | 2,490 | 5,080 | 3,761 | 2,152 |
| Finished Products | 17,163 | 23,078 | 15,327 | 6,951 | 12,576 | 15,183 | 13,966 | 14,843 |
| Total | 40,090 | 65,905 | 52,239 | 40,534 | 47,166 | 51,555 | 48,637 | 54,142 |
Market Challenges
- Misconceptions and Western media Influence
The anti-palm oil campaign from France has its impact in Algeria. The second language in Algeria is French which is the language of education and business, thus French media and the negative perspectives on palm oil influenced consumers’ perception.
- Palm oil solidification during winter
It is challenging to convince consumers in Algeria to use palm oil as a cooking oil due to its cloudiness appearance especially during the winter season, coupled with the perception of palm oil because of the anti-palm oil campaign in the French media.
Prepared by Lamyaa El Enany
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