Population growth and the popularity of cheese are expected to be the main growth drivers over the forecast period in Algeria. The share of local products is likely to increase as domestic manufacturers are seeking ways to differentiate their products and to compete against the leading international brands.
Fluctuations in the international price of powder milk remains the biggest challenge for cheese manufacturers in Algeria. Indeed, due to the limited availability of locally produced milk, which is the most important raw ingredient in cheese, local cheese production is highly depending on milk imports.
Processed cheese dominates sales of cheese in Algeria with by far the most popular type being spreadable processed cheese. Within this category cream cheese is the most popular option being regarded by many Algerian consumers as tastier than any other product.
Unibel SA continued to lead cheese in 2019 due to its strength in spreadable processed cheese, which remains the most popular, cheapest and widely consumed cheese type in Algeria. Unibel enjoys a large product portfolio of very popular internationally recognised brands such as La Vache Qui Rit, Kiri and Picon.
Although the competitive landscape within cheese remained fragmented in 2019 there was little change in the standings of the leading players, with companies focused on ensuring their positions through strong distribution and maintaining prices where possible. Although local brands are more affordable, international brands account for a stronger share in cheese.
Very few international brands are present in unprocessed cheese in Algeria. Indeed, growing restrictions on imports and the rising costs of imports, driven by the depreciation of the local currency, continues to restrict the share of imported premium cheese, such as unprocessed hard and soft cheese.
Drinking milk products continued to see steady retail volume growth in 2019, although much of this was down to strong population growth, with the category being relatively mature. Fresh milk is still seen as the cheapest protein, especially as it is subsidised by the state.
The price of shelf stable milk is not fixed and therefore the category offers more opportunities for growth, especially during periods of milk shortages. The category is far from reaching maturity, with many potential households not consuming shelf stable milk yet.
Although consumers in Algeria are becoming more health conscious flavoured milk drinks is expected to see strong growth over the forecast period. The Candia Choco brand, which dominates the category, is seen by some parents as a nutritious product despite its sugar content, with it being high in calcium and protein as well as being fortified with 10 vitamins.
Drinking milk products in Algeria is led by the state-owned Complexe Laitier d’Alger (COLAITAL), a subsidiary of GIPLAIT group. Its lead is down to its high production capacity, strong reputation and high level of consumer loyalty towards its brands.
As fresh milk is subsidised, the category is not very profitable and so many private companies are diversifying into yoghurt, cheese and other dairy products. Many smaller dairies are also looking to expand their production of shelf stable milk, although the purchase of specialist machinery, particularly for packaging, and the training of the workforce remains expensive.
In Algeria, domestic manufacturers lead subsidised fresh milk, with these players targeting mostly lower- and middle-income consumers. On the other hand, international players such as Candia Tchin-Lait, Nestlé and Groupe Lactalis dominate the smaller categories which carry higher unit prices, for instance shelf stable milk and premium powder milk, and thus target the middle and higher-income population.
Yoghurt and sour milk products is predicted to continue witnessing healthy growth in Algeria over the forecast period. As traditional products are reaching maturity, growth is expected to be driven by other more dynamic and innovative areas of dairy such as pro- and pre-biotic yoghurt, enriched and fortified yoghurt, drinking yoghurt in other pack sizes, and unusual flavours for spoonable flavoured yoghurt.
Yoghurt and sour milk products is expected to register slower value and volume growth over the forecast period in comparison with the review period. Ongoing economic uncertainty is set to continue impacting household incomes and the cost of imported materials, with unemployment also set to rise.
Drinking yoghurt is expected to remain the most dynamic category over the forecast period with these products offering consumers both health benefits and convenience. Several yoghurt producers also introduced pourable plastic bottles towards the end of the review period, which are easy to store in small fridges.
Laiterie Soummam remained the clear leader in yoghurt and sour milk products in 2019. This can be attributed to the ongoing popularity of its brands, with the company using more raw milk than powder milk in its products.
Danone Djurdjura, which was ranked second behind Soummam earlier in the review period, had dropped to fourth place by the end of the review period. Danone cannot compete with Soummam in terms of either production capacity or distribution.
Hodna Lait witnessed the largest increase in value share in 2019 with it offering popular brands both in yoghurt and in sour milk products. The company focused on promoting the health benefits of its products at the end of the review period, with it using a range of media, including social media, to put its message across.
Other dairy continued to see strong growth in current value and retail volume terms in 2019, with growth and sales being largely generated by chilled dairy desserts. Within this category there are a number of large local and international players offering a wide range of tasty and indulgent options, with chocolate puddings being particularly popular.
Cream is projected to record the most dynamic growth in retail volume terms over the forecast period, albeit from a low base. Demand for cream is projected to rise thanks to the growing interest among mid- and high-income households in cooking international dishes at home.
Fromage frais and quark is the second largest category of other dairy with it benefiting from a healthier image than some other dairy products. Fromage frais and quark is used in cooking as well as being eaten on its own and is seen to be a good source of calcium, protein and vitamin B12, among other nutrients.
Laiterie Soummam remained the leading player in other dairy in Algeria in 2019. The company’s leading position is due not only to the high equity of its brands but especially to its strong network of refrigerated distribution allowing the company to be present in every single independent small grocer across the country and giving it an additional competitive advantage over other players.
Domestic players such as Soummam, Trefle and Danone Djurdjura performed very well against their international rivals at the end of the review period. Indeed, local dairy players are offering good quality products at more affordable prices which is helping their brands to be very competitive.
Danone Djurdjura remained one of the three leading players in other dairy in Algeria in 2019 thanks to the strength of its flagship brand Danette in chilled and shelf stable desserts. The company lost share earlier in the review period after it took the decision to align its local portfolio’s flavours with those of Danone globally.
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This industry report originates from Passport, our Packaged Food market research database.