MARKET TRENDS AND OUTLOOK FOR SWEETENED WATERS AND BEVERAGES

Are sweetened beverages still all the rage in Algeria? Find out the key figures and immerse yourself in the challenges of this fast-changing market. 3,517 million liters of water and sweetened beverages were consumed in Algeria in 2022, including 2,544.2 million liters sold in stores¹, representing growth of 2.6%. Total value DZD 373.9 billion.

Waters and sweetened soft drinks are expected to perform well in terms of retail value in 23; however, most of this growth is driven by price increases, and volume growth is much more moderate.

Also of note are powder formats for reconstitution or concentrates for self-dilution: 92.1 million-litre equivalents will be sold in 2022 in powder form, compared with 11 million-litre equivalents in concentrate form, with growth rates of around 3.44%! This market is driven by attractive prices.

In detail, here are the different volumes consumed: it's worth noting that more soda and juice are drunk than bottled water, which accounts for just 37.4% of non-alcoholic beverage volumes. This underlines the risks to dental health and overweight/obesity.

Note : Excludes powder concentrates

The algerian economy has been hit by the COVID-19 pandemic, shortages and a major economic crisis: consumers feel or see threats to their disposable income levels and are also confronted with job insecurity. Indeed, the health crisis has led to a surge in unemployment in the country, with the closure of many businesses. As a result of the continuing economic difficulties, which are unlikely to improve any time soon, consumers are becoming increasingly price-sensitive, turning to cheaper budget brands.

Key market trends

Demand for water and sweetened beverages is underpinned by competition as local production expands and develops new products.

Slowly but surely, the health and well-being trend is gaining ground in Algeria. Sugar is being singled out, even though it is still deeply rooted in national taste preferences. The pandemic has heightened consumers' health concerns and, as a result, they are increasingly seeking to avoid sugar and artificial sweeteners and opting for healthier variants of soft drinks, juices and other non-alcoholic beverages.

A few figures² :

• Algeria = world's 7th largest importer of sugar, with 1.53 million tonnes in 20173
• Sugar was subsidized by the state until 2021.
• Big increase in sugar consumption during Ramadan (sweetened drinks)
• In 10 years, the number of diabetics has doubled in Algeria, rising from 2.8 million in 2010 to over 5 million in 2019 (11.2% of the 2019 population). (Vs France 3.5 million or 5.3% of the population 2021)

However, there are significant levels of downgrading due to the economic slowdown in the country, which has reduced disposable incomes and encouraged more cautious spending among consumers.

On the occasion of the International Beverage and Liquid Food Industry Exhibition (BEVALG⁴), the president of the Algerian Beverage Producers Association (APAB), Ali Hamani, told Jeune indépendant "We have started to reduce the sugar content in our beverages since 2016", and producers have committed to gradually reducing sugar down to 105 g/liter. Of course, the organization is discussing with the Minister of Commerce the method of calculating this sugar and the legal denominations that follow. A technical meeting is in preparation to amend the laws on this subject, which are expected in June and November 2023.

The competitive landscape

Domestic products continued to dominate the market for sweetened beverages in 2022, thanks to the development of local industry and Algeria's protectionist trade policies. Imported brands, which are perceived as high quality, faced serious economic problems, including prohibitive prices due to the devaluation of the dinar and lack of availability. Local manufacturers have invested in product innovation and updated their offerings in line with changing consumer trends. They have also benefited from restrictions on imports, and have therefore continued to gain ground and enjoy a strong reputation among local consumers.

Leaders' market shares

• Ibrahim & Fils Ifri: 17.3
• Hamoud Boualem SpA: 6.4
• SGEM Société Guedila des Eaux Minérales SARL: 5.5
• Fruital Coca-Cola SARL: 5.3
• Groupe Castel Algérie: 5.2% France
• ABC Atlas Bottling Corp.: 4%
• N'gaous Conserves SpA: 3.8%  
• Cevital SpA: 3.4% of sales
• AquaSim: 3.3%
• Source Taberkachent: 3.3%
• Nestlé Waters NCA Rouiba SpA: 3.2

The leading player in 2022 was Ibrahim & Fils Ifri, with its bottled water, soft drinks and fruit beverages. The company has the advantage of being long-established and having strong production capacities compared with its competitors. Another local player, Hamoud Boualem, came second, also with bottled water, soft drinks and fruit drinks.

Retail development

Despite the threat posed by the COVID-19 pandemic, there has been no significant move towards e-commerce in Algeria, and the channel remains insignificant in the distribution of water and soft drinks in 2022, as consumers continue to prefer to shop in-store rather than online. The distribution of soft drinks via modern grocery stores continues to improve in Algeria, with new supermarkets and other hypermarkets frequently opening in the neighborhoods of Algiers and other major cities. Nevertheless, the bulk of sales (63%) take place in small local outlets offering ready-to-drink cold drinks.

Main sales outlets⁵

• Grocery Retailers: 99.3
• Supermarkets: 30.7
• Hypermarkets: 4.2%
• Food/drink/tobacco: 2%
• Small Local Grocers: 62.4%
• Vending 0.3%
• Retail E-Commerce 0.4%

A North African peculiarity is that the main beverage outlets remain direct, with small local grocers selling fresh beverages directly: over 62% of beverages are bought there for immediate consumption. On the other hand, the distance trade has very little place (< 1%).

Breakdown between foodservice and retail

As the Algerian out-of-home catering market reopened and pandemic restrictions were lifted, foodservice sales recovered in almost all non-alcoholic beverage categories. Able to dine in again, it's likely that there will be significant demand for drinks from Algerians keen to get out and about again. Less at home, more out and about: this is the direction we can expect to see over the next few months, provided Algerians' economic means don't devalue.

What does the future hold for sweetened beverages?

The outlook for non-alcoholic beverages in Algeria is positive over the forecast period (2022-2027), although constant-value growth (1.1%) is likely to be lower than in the period under review, as the economic fallout from the pandemic and the international crisis will continue to affect purchasing power in the country. Rising inflation and the continued devaluation of the local currency will lead to high levels of consumer price sensitivity in the future.

Consumers are likely to consume beverages outside the home more frequently as the foodservice industry recovers over the forecast period, and players are expected to penetrate foodservice with larger bulk offers to increase their volume sales.

Brands will continue to innovate for products with less sugar, or with additional nutritional benefits, as the health and wellness trend continues to influence consumers.

Conclusions

Sweetened waters and beverages are highly appreciated by Algerian consumers, even if the pressure of sugar on overall health (diabetes, overweight) or dental health is very strong. The threat to this market remains essentially economic, both in terms of the purchasing power of Algerians and the pressure of prices for glass, PET, plastic or certain beverage components (flavoring, fruit, etc.). The future will lie with the most agile companies, who will save their margins and market share through innovation that respects product accessibility. At Djazagro, they will find ingredient and process solutions to better adapt their ranges to the aspirations of new generations.

Article written by NutriMarketing for Djazagro

Sources :

• ¹ Euromonitor international from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
• ²Data presented at Béatrice de Reynal's "Tendances Sucre" conference at Djazagro 2022.
• ³International Sugar Association (ISO)
• ⁴March 2023 in Algiers
• ⁵Euromonitor 2022
• ⁶Algex, Association des producteurs algériens de boissons APAB, Jeune Indépendant March 2023