Interview: Moncef Belkhayat
What distribution trends have you observed in the Moroccan FMCG industry?
MONCEF BELKHAYAT: The FMCG segment is a Dh120bn (€11.1bn) market in Morocco, and is roughly composed of 50% food and 50% non-food products. With regard to overall distribution trends, FMCG principally pass through either traditional or non-traditional trade channels. On the traditional side Morocco boasts more than 100,000 bakkalas (small high-frequency shops) as well as 800 weekly souqs (markets) – a popular distribution channel, particularly in rural Morocco. These traditional channels account for roughly 80% of overall distribution channels in the kingdom. In non-traditional terms 20% of consumer goods go through 350 modern retail outlets, out of which chains such as Acima, Carrefour, BIM or Marjane constitute the key players. In terms of geographical consumption Casablanca accounts for 25%, Tangiers for 11%, Agadir for 10%, Marrakech for 6%, Fez for 5% and Oujda for 4%. Nonetheless, it is important to analyse the dynamics behind these consumption trends. Over the course of the past 20 years Tangiers has risen from fifth to second, while Fez fell from third to sixth. Tangiers has boomed, outpacing the Fez-Meknès region. The FMCG segment can hence also be taken as an accurate barometer for overall consumption trends in Morocco, as it shows the very slow development of modern trade.
What do you consider to be the major challenges faced by consumer goods companies in Morocco?
BELKHAYAT: The sector is faced with a number of challenges. First, informal business trading now constitutes a major issue, with vast amounts of brands being smuggled through Ceuta, Melilla, Guerguerat and the Canary Islands. Nearly 7000 cars filled with high-quality brands pass through Ceuta or Melilla and enter Morocco every day, offering products with a minimum 23% price difference. Second, numerous FMCG importers now use counterfeit products imported from China. In this regard Morocco’s judicial system has not acted sufficiently, which has had a severe impact on international brands and legal patent regulations. Third, the current tax framework constitutes an additional obstacle. At a rate of 1.5%, average margins in FMCG business lines are very low and minimal tax contributions currently amount to 0.75%. The decision by tax authorities to tax every trade in cash bigger than Dh20,000 (€1852) at 6% also seems incompatible with the reality of the market. These three reasons explain why modern trade in Morocco, which only makes up 20%, has not performed as well as markets such as Dubai or Saudi Arabia, over the past 20-25 years. With wholesalers preferring to pay in cash, these challenges will also affect the development of e-commerce in Morocco, which is unlikely to become a reality until 2025. It has become paramount to fix the basics first.
How do you assess the role of associations in modernising the FMCG segment?
BELKHAYAT: Tijara 2020 is the association of FMCG companies in Morocco and boasts 35 members, has Dh15bn (€1.4bn) of annual turnover, employs more than 15,000 people and works in close collaboration with the National Office for the Safety of Food Products. The government’s Rawaj 2020 vision seeks to significantly increase the number of modern retail outlets and aid consumer goods distribution, the latter having been previously dominated by private sector players such as Lavoie and SDTM. For the private sector distribution was solely linked to the consumer, while logistics companies primarily deal with supply-chain services, stocking products, transporting and warehousing. Later on, however, the public sector became more involved, with the National Transport and Logistics Company (Société Nationale du Transport et de Logistique, SNTL) attempting to modernise the sector. One of the major issues with the SNTL, however, was that it engaged in unfair competition and weakened the private sector.
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