Mansci at Libya 2014

It’s been an interesting start to 2014 in Libya and our time spent there earlier this year was most memorable for the upbeat mood that prevailed across the country. While Libya is still in a state of flux, political stability threatens to take hold and the nation is ready to make the most of it once that happens.

With population estimates far below what they were pre-2011, its encouraging reading to see so many categories in both dairy & beverage approaching, and in some cases exceeding, what they had been, pre-civil unrest.

Given the notable lack of investment over the last number of years, most roads have fallen into a state of disrepair, electricity outages are common and supply issues to the market abound. The lack of chiller facilities in both factories and retail outlets creates a barrier to the introduction of fresh dairy & juice products. They provide chilled storage space for meats and cheese though this has not yet extended to beverages and liquid dairy products.

 

juiceSome building work is in evidence as companies look to Libya for investment opportunities. Despite the ongoing distribution challenges and supply difficulties, this is an attractive market for many. We met with a number of manufacturers and distributors who are looking at increasingly more creative ways of incentivising their sales teams to grow their market share. One company we met with now provides cars for their distributors to reach less urban consumers. This might explain some of the more jovial moods we encountered on our trip and is an encouraging sign for growth in the market. A number of investors we had spoken to previously about the market in Libya are still holding off on committing and have indicated that late 2014 will be the earliest point for investment. While the overall mood is positive and we were lucky to have a peaceful trip to the region, the week after we left the Parliament Building was attacked, resulting in the death of a security guard as well as numerous injuries to other workers – a stark reminder that peace is still a longer term goal.

 

Over the last few years we’ve seen 3 of the country’s dairy companies close down, due to the ongoing political situation. Imports bridged the gap in local supply and production with only short term delays experienced. For dairy in particular, now that people can return to some semblance of normality, we expect to see strong growth in local dairy production. Luxury products are also expected to make a return to the market, with categories such as cream having all but disappeared over the last few years.

Liquid milk and concentrated milk saw the biggest fluctuations over the period of unrest. As local supplies of milk became irregular, people substituted usage with concentrated milk creating a spike in 2012 figures. The total drop in liquid milk consumption was almost 40% in 2011, though this has now recovered to exceed pre-2011 figures. By the end of 2013 liquid milk accounted for 146 million litres in local consumption.

The beverage market is also recovering exceptionally well across the country. Many categories are almost back to pre-2011 consumption figures with some segments even seeing strong growth beyond this. Juice products account for the largest category in the non-alcoholic beverage sector. Across juice, nectars and still drinks, they have performed well over the review period. Though they experienced a huge drop in 2011, juice products are now being consumed at an annual rate of 57 litres per capita – the highest per capita consumption across all product areas that we cover in dairy & beverages. This reflects an 8% CAGR over the last 5 years, despite the 2011 difficulties. Other categories, such as plain packaged water, have experienced consumption changes in line with population fluctuations over the review period, in the region of -5% CAGR. We forecast good recovery and strong growth over the next five years, if the political situation stablisies.

While uncertainty reigns it’s difficult to predict what might happen going forward, but we are hopeful for the market and look forward to bringing you further updates from Libya. Our Libya dairy & beverage reports, with full updates from 2013, are now available

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