Edible Oils in Middle East And Africa

Edible Oils in Middle East and Africa

Value for money is key

The majority of consumers in Africa are far more concerned with affordability than health. Value for money is key, and impacts the choice of oil. Palm oil is the most popular in African countries due to its widespread availability and low price, being significantly cheaper than refined oils.

Focus on health in more developed countries

However, in more developed markets such as South Africa, there is growth in “healthier” olive oil due to the rising popularity of the Banting diet, which advocates the consumption of good fats. This is resulting in strong growth of olive oil, albeit from a low base due to the relatively higher price of the product.

Introduction of VAT in Middle East

Saudi Arabia and UAE, the two largest markets in the Middle East, introduced 5% VAT as of 1 January 2018. In countries with no VAT previously, this has made consumers more price-conscious, with edible oil companies and retailers introducing price promotions and bundle offers to attract consumers. There is no brand loyalty within the category, and consumers choose by affordability, except for upper-income consumers, who choose based on health benefits, eg organic olive oil.

Local players dominate packaged oil

Domestic players dominate in Africa due to their proximity to the market and ability to quickly tap into consumer demand for competitive prices and availability. They are also “regulated by government” as they are not subject to high import taxes.

Unpackaged edible oil remains popular

Recession in many countries has a more limited impact on edible oils, which are essential for cooking. However, unpackaged oil remains the most popular form of oil purchased, and this limits the growth of branded, packaged products. Unpackaged oil is widely available, and the small quantities that one can purchase make it far more affordable than packaged oil.