The global argan oil market is anticipated to grow at a 19.6% CAGR in terms of volume, over the forecast period (2016-2024). It had a worldwide demand amounting to 3 kilotons (KT) in 2015. This market should generate nearly USD 2 billion by 2024. Argan oil is a low-fat vegetable oil containing fatty acids, such as palmitic acid, stearic acid, linoleic acid, and oleic acid. It improves skin texture by strengthening the epidermis and maintains membrane fluidity. The skin can thus, store high levels of vitamin E, which prevents future ageing. This oil has a high sterol content that act as a viable substitute for cholesterol in cosmetic applications. Also known as ‘liquid gold,’ argan oil contains five types of triterpenic alcohols. These alcohols possess anti-inflammatory properties.
Widespread applications in the medical sector and the surging demand for argan-based beauty products will propel the market. It Positive regulatory scenario will have a favorable impact. Furthermore, various technological innovations to improve microbiological & chemical quality can drive industry demand. But, the lack of government support to encourage further use of the product could be a key challenge.
Demand for this oil is proving beneficial to Moroccan women who depend on it for their livelihood. Fair trade cooperatives are partnering with cosmetic companies to ensure decent wages for women. The FLO/Max Havelaar label by the Tighanimine Cooperative is an ideal example of a successful partnership. Countries benefitting significantly from argan tree plantations are Ethiopia, Senegal, Ivory Coast, Ghana, and Democratic Republic of Congo. This has helped over 16 million women in Africa, working within the ambit of the Global Shea Alliance (AGK). Sustainability of the market would depend on the availability of argan fruits. An argan sapling takes nearly 20 years to mature into a full-grown tree. The tree bears fruit only after 25 years, and once every three years.
The global market is divided on the basis of applications and regions. Key applications are healthcare, food, and cosmetics. Cosmetics dominated the argan oil market with over 40% demand in 2014. This application segment will witness substantial growth owing to the demand for personal care products. The booming personal care industry will spur the segment of cosmetics over the next eight years. Manufacturers such as L’Oreal and The Body Shop are incorporating argan oil in their skincare products. This can boost the market size of the personal care & cosmetics industry to cross over USD 100 billion.
Since this oil prevents skin dryness and makes it supple, it is a key component in most anti-ageing products. The anti-ageing products industry is expected to grow at a 7.5% CAGR from 2016 to 2024. The food & health care segments will expand robustly over the estimated years. Ability of the oil to reduce cholesterol levels and provide additional energy would boost demand in these segments. It acts as an energy booster for people with vitamin deficiency, heart problems, and low metabolism. Global initiatives to tackle malnourishment and high obesity rates in developed countries; such as Europe and North America will work favorably for the global market.
Argan oil could also have future prospects in cooking. It could be used as seasoning in non-vegetarian foods. It has the potential to keep cancer, inflammatory problems, and indigestion at bay.
Regions covered under the global market are Middle East & Africa (MEA), Central & South Africa, North America, Asia Pacific, and Europe. Geographically, the MEA will continue to register highest growth over the forecast period. Morocco is a prime producer in this region. It produces nearly 4 KT annually with an export capacity of 700 tons per year. Demand for organic products from North America and Europe is driving the Moroccan industry to increase its production volume to 10 KT by 2020. The e-commerce platform enables cooperatives to compete with multinational companies on a global level. Additionally, the preference for organic products will continue to drive the worldwide market.
North America is poised to grow at a CAGR over 20% during the forecast period. This owes to the demand for the product in beauty & cosmetics and the healthcare sectors. Efforts by research institutes are underway to identify the usefulness of argan oil in the medical sector. Prominent celebrities trust and promote argan oil-based products. This can ensure a continuous revenue stream for the industry from this region.
However, it is the Asia-Pacific (APAC) region that is exhibiting a high growth potential in the global argan oil market. This is because of rising application in health care and food industries. The growing geriatric populace in Japan, South Korea, and China should be a favorable driver in this region. New medical breakthroughs that strike a balance between traditional and modern treatments will aid this market as well. The Indian government permits the use of low-fat vegetable oils as a vital component in the chocolate industry. This can benefit both industries.
Major players within the argan oil industry are Nadifi Argan Oil, Zineglob SARL, Sidi Yassine, and OLVEA Group. Only a few refiners in this market supply the oil through sellers, traders, and distributors owing to limited production. Some of these players function as retailers while others as distributors. The market holds a tremendous growth potential on account of a large number of end-users. It is sold under different prices by traders due to lack of market regulations. For instance, Sidi Yassine has branches in Switzerland, while Marogonia produces it for the OLVEA Group.
The OLVEA Group has branches in Morocco and has recently opened a branch in Burkina Faso, Africa. The production facility has an eco-friendly outlook with most of its equipment being powered to process Shea kernels. This aids women workers in this region who are dependent Shea cultivation for their livelihood. The company sells three versions of argan oil, namely virgin & toasted, virgin & deodorized, and virgin. Shea butter, a product made from shea kernels, is an important component in chocolates, margarine, and cooking oil. But the quality of the crop and long processing hours hinder its industry growth prospects.
Research Support Specialist, USA