Baked Goods in Algeria

TRENDS

Bread in general is the primary staple food in the Algerian diet with it being consumed on a daily basis with all meals throughout the day. Thus, so long as the population continues to grow, so baked goods will witness healthy growth due to steady and sustained demand for flat baguettes (listed under flat bread), which is the main driver of the category’s growth. Indeed, volume sales of flat baguettes represent an overwhelming majority of the total sales of baked goods. In addition, like milk, in order to ensure affordable prices are maintained for all of the population, the Algerian government subsidises the price of baguettes as the production depends heavily on imported cereals and the cost of these is increasing due to the declining exchange value of the Algerian dinar. On the other hand, the category has also been witnessing a new trend with increasing purchases of products that used to be traditionally homemade, such as cakes and pastries, which is further contributing to the category’s growth. However, sales of these products are still not significant at this stage as flat bread represented 90% of retail value sales in baked goods in 2017 and 99% in volume terms.

COMPETITIVE LANDSCAPE

The competitive landscape has been historically dominated by artisanal bakers in Algeria with these players holding a value share of 98% in 2017, as they are the main producers of the primary staple food in Algeria, which is the flat baguette. Artisanal bakers are not only the main producers, but they are also the main retailers as well, as there is a strong tradition in Algeria for buying fresh bread directly from artisanal bakeries. Moreover, the administered prices of subsidised unpackaged traditional flat bread means that traditional bakers do not face any real competition from any other types of bread as they are much more affordable to all consumer groups. Indeed, the government’s controlled prices on this bread will not allow for any changes in the competitive landscape in baked goods. Aside from artisanal bakeries, the remaining share of baked goods is highly fragmented with several players holding value shares of less than 1%. There were no changes or shifts amongst these players in 2017.

PROSPECTS

Flat bread is an essential element of the Algerian consumer’s food basket and this trend is not expected to change over the forecast period despite changing eating habits and lifestyle patterns. For this reason, the government will continue subsidising flat baguettes which are eaten on a daily basis by all Algerians without exception and this will allow unpackaged bread to remain unbeatable despite the rapid growth of industrial baked goods. The Arab spring and all of the revolutions seen by the region, mainly in neighbouring countries, were driven essentially by the declining purchasing power of citizens. Therefore, the Algerian government, fearing such movements, is not willing to take the risk of stopping or even reducing the subsidies for essential food products such as bread and milk. In fact, any other decision might drive political unrest. Consequently, the demand for unpackaged flat bread is unlikely to face any real competition over the forecast period. The other categories – pastries, cakes and also packaged bread – are predicted to continue their strong growth as they are being supported by many new trends such as the modernisation of the country’s retailing outlets, the rise in on-the-go consumption and convenience trends, the rising number of women entering the workforce and increasingly hectic lifestyles. This will continue to drive growth for these categories although their overall impact on the category will remain relatively insignificant over the forecast period.

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