Libya – One of the stranger countries I’ve encountered….

Dear all

Although we’ve covered Libya for several years personally I’ve never been, but this was remedied a few weeks ago – owing to idiosyncratic visa regulations that preclude several of our team from travelling to the country I found myself going down to the researching grindstone in Tripoli. As official travel warnings are clearly keeping many of you from descending on Libya, I thought I might give you an overview of my own impressions. So here goes….

Old-fashioned distribution

One of the first things that really did surprise me is how wholesaler-heavy distribution in Libya clearly is. In Tripoli commercial life for fmcg products is invariably centred around the vast Al Krimiyyah wholesale market. Direct distribution led by brand owners or importing agents is still in its infancy. Al Krimiyyah is crammed full of wholesalers and, more rarely, semi-wholesalers, acting as the commercial centre not only for Tripoli itself but also as a springboard to distribution in outlying areas. Although I was kept from travelling to Benghazi for security reasons I was assured that the situation there is virtually replicated – wholesalers may deliver to retail and food service outlets, but more likely than not do you see outlet owners actually going to the heart of the wholesale market for pickup of products. This has obvious implications for any company’s strategy – the design of margin structures based on packaging configurations is absolute key.

The strength of the wholesale sector leads to another issue in the Libyan market – that of fragmentation.



I always know that market analysis is in trouble if during a store check one can pick up 60-odd different brands within a single category. If you find juice products from Peru and Mexico and Thailand and South Africa on a Libyan shelf one knows that something is not quite right with market structure. The few larger supermarkets (I wouldn’t go as far as saying they qualify as hypers) all have a dedicated section near the checkouts for ‘near expiry’ products – that should tell you something…. Local beverage and dairy companies complain bitterly about the inactivity of the (admittedly very young) new government of the country in commercial matters, with no meaningful barriers to importing currently imposed. Enterprising wholesalers – who have only recently been encouraged to be enterprising after Ghadafi’s abandonment of strict socialist principals and of course the sweeping aside of the Ghadafi regime in 2011 – have turned the country into a bit of a dumping ground for products from absolutely wherever. Nevertheless, there seems to representation arrangements with domestic outfits. Although of course many of these ‘agents’ may not be  be some inkling of a respite – some foreign brand owners seem to have come to more or less reliable the sort of calibre of importing agent you might be used to in other countries, with several very clearly leaning towards the ‘Al Krimiyyah side…..’. But the appearance of foreign brand owner-sponsored advertising, and the presence of branded chillers in the market, is at least a sign of some sort of consolidation of importing activity. The ever-present Austrians Rauch and Spitz, Spaniards Juver and Don Simon, Dutch Friesland Campina, Turkish Hamidiye, CLC Delice from Tunisia – all companies who clearly have taken an interest in market development in Libya.  And of course, there are strong domestic manufacturers like Al Rayhan, Judi, Al Mazraa or Al Naseem who still give imports a run for their money.

libya-one-of-the-stranger-countries-2The Dreaded Price Point

Libya is another one of those markets in the region with a price point culture. The Dinar is divided into 1000 sub-units (I believe they’re called dirhams) but the most common coins in circulation are Quarter Dinars and Half Dinars. 100 and 50 dirham coins do exist, but it is common (and comical) practice in the trade to bundle three of them together to make a nice little parcel with sticky tape, making a Quarter Dinar coin package. In a country where modern retailing barely exists, and where payment by debit or credit card is consequently not an option, this means that fractional pricing is never applied. And that means that suppliers have to play the margin pressure game – keeping retail prices stable for so long until pressure becomes too great and action is required, in a game of ‘who blinks first’. The ubiquitous wholesaler of course plays this issue to his advantage….

Outdoor Advertising

Outdoor advertising for dairy and juice brands in Libya

Outdoor advertising for dairy and juice brands in Libya

Unusually for any market in the region, outdoor advertising for dairy and beverage products seems to outweigh that of the traditionally heaviest advertisers – carbonated soft drinks producers. While for poster and MOPI advertising this might be an issue of being in town for only a brief time, the fact that more permanent advertising fixtures – bagalah frontage, food service parasols etc. – are dominated by brands such as JUDI, AL MAZRAA, AL RAYHAN, AL MOROOGE and RAUCH, but also JUVER, DON SIMON or DELICE outdoor ads might well point to the underlying issue why carbonates consumption in Libya does lag behind that of juice products. Both domestic producers and their importing counterparts simply appear to be significantly more active in the market than our fizzy friends. I like it when things are different….

Pack it for me

This leads neatly to the next point – co-packing abroad. It has become something of a Libyan speciality, especially in the dairy sector. It is not enough that foreign brands are found everywhere in the country – additional imported brands are actually created by domestic brand owners who have products filled for them elsewhere. A common practice in concentrated milk for some time, this has now spilt over into other product areas as well such as UHT milk, with particularly Germany the favoured source at present (perhaps the results of a joyful visit to Anuga, one asks oneself?). Business for the Germans must be booming – even brands that are not co-packed brands, often from the more obscure German dairies, have started to have dedicated export packaging designs. With a typical print run for an aseptic carton design in Arabic not for the faint-hearted,

Co-packed, imported UHT white milk brands in Libya

Co-packed, imported UHT white milk brands in Libya

and the brands to my knowledge not available elsewhere in the Arab world, what other explanation for their presence can there be? And it does get even more interesting – even a company who does have its own filling equipment, Al Aseel/Al Mazraa, has elected to end, or at least suspend, its own domestic recombining, replacing their own output with German co-packed fresh milk instead, to supplement its own domestic filling of juice products. Will it last….?

Lift the travel ban!

I lost count of the beverage and dairy producers who complained that the continuing travel ban by mainly European companies has a big impact on their existing processing and packaging capabilities, let alone on any diversification or capacity increases. Several intended factory extensions or greenfield investments have laid dormant since the revolution, for the simple fact that no qualified engineers can be found to install them. It is disheartening to see factory floors with extensive pieces of kit still in their original crates, waiting to be unpacked, installed and put to good use. One can only imagine the dead capital that had been bundled up since before the 2011 revolution. I am hoping that this issue can be resolved soon – experience tells me that the more domestic producers there are, the less mess can wild mixed-consignment imports make simply by squeezing them out of the market. So there is me hoping…..

An interesting market, but a market that still feels a little bit like Wild West territory. So change is most probably afoot – and I do hope that your own companies will soon remove your own travel bans, so you can go and make up your minds yourselves on what can be done in what still is very much a virgin market.

With my best wishes, Thorsten

Libya dairy and beverage market analysis and update figures for 2013 will be published this summer. For information please email marketing@mansci.netVisit our website for more information.

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