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Challenges Aplenty, But Opportunities Exist Too: Morocco's Argan Oil Industry

Challenges Aplenty, But Opportunities Exist Too: Morocco's Argan Oil Industry

A woman at an argan oil factory in Morocco.

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You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

With large cosmetic brands integrating argan oil into their product lines, this natural product endemic to Morocco has now become a “must-have” in the beauty business. The oil is known to have great properties- people around the world have taken advantage of its many benefits to treat everything from skin infections to bug bites. Today, it’s used by both men and women seeking an effective, all-natural moisturizer for their skin and hair- its popularity can be gauged by the number of YouTube influencers who swear by the product and recommend it to their fan bases.  But take a step back, and look beyond the hype: how does the argan oil industry actually fare in Morocco?

It is, of course, clear that argan oil has benefited from the global drive toward using more organic products- today, more and more people are keen on using natural and cruelty-free products in their day-to-day lives. But despite the frenzy for argan oil, what’s especially fascinating about this in Morocco is that the process to make it in the country remains, for the most part, traditional. In contrast to large corporations that use machines to make their products, most of the argan oil in Morocco is produced by hand by women belonging to cooperatives. These organizations have been created to meet the surge in demand for argan oil, with these co-ops providing women with an income, as well as a social experience and improved statuses in society. These co-ops also provide a great financial opportunity for women to become independent, manage their income, help their families and send their children to school.

The story touches the heart of many. Zohra Mellouk, founder of Souss Safran, explains that in order to tackle competition in this space, her company put forward the friendly, family side of the business to tap into new markets. A few months ago at a Dallas conference in the US, Mellouk’s simplicity and down-to-earth approach captivated the attention of the crowds. Her message was clear: “I am here to help people in my village.” By offering a “high quality, certified organic product,” Souss Safran doesn’t feel intimidated by the big players, and it guarantees short delivery and clean production processes. Badr Mansour, a Moroccan graduate student living in Germany, saw the opportunity inherent in this sector, and decided to launch Argan Street, an e-commerce website specializing in selling argan oil and other argan oil-based natural products targeting the German population. Mansour says that he doesn’t have any quantifiable objectives right now, but he believes that it’s still a huge opportunity, since “most Germans have never heard of argan. The e-commerce site will help promote it and promote its benefits.”

But that is not the case for every small argan enterprise in Morocco. A lot of enterprises that want to tap into the international market suffer from a number of elements- for instance, for those companies eager to tap into the U.S. scene, they often have little knowledge of the American market, the regulations or the business ethics, notes Rabia El Alama, Managing Director of American Chamber of Commerce in Morocco. For the past five years, Morocco Taswiq, a public bureau working under the Ministry of Foreign Trade, has played the role of incubator for cooperatives for the promotion of local products, the creation of added value and job creation. The cooperative network currently has 15,000 units, against 4,000 in 2006. Argan oil now has its own brand name, "Treasure,” and a unique package for export. Najib Mikou, director of Maroc Taswiq, notes that a new digital platform being put in place for the industry as well. “It’s like a stock market, where people and companies can bid on a price for argan oil, as well as other products and receive an offer,” Mikou says.  The online marketplace targets large users of argan oil and related products, including the pharmaceuticals, cosmetics and food industries. They can make their purchases at a price fixed by the market that will improve the incomes of cooperatives, which, for the most part, earn very little.

Given the enormous opportunities, some manufacturers are already profiting from this trend and branding their products with the words Morocco, Moroccan oil, etc. These words seem to be very sellable. An example of that is a product being sold in most beauty salons in Europe, which deceive people by thinking they are buying a Moroccan product, when in fact it’s an Israeli one. Only a small proportion of the raw oil is in their products combined with lots of the components that go into most other mainstream cosmetics, making it contrary to the organic and natural product that Morocco is thriving to put ahead. Keeping this in mind, Morocco’s argan oil industry’s biggest weaknesses may be the absence of research and development initiatives by the government. The absence of further laboratory work in the country empowers external countries to exploit the argan nut more. What seems to be left for the small and medium Moroccan argan oil companies to succeed at export is to focus on the quality of their products, be able to tell their story and work on a niche approach, rather than a strategy for the masses, explains El Alama. But despite its current low economic weight in the country, argan oil remains an important social change-maker, and for that reason, this industry remains worth keeping an eye out for. 

Related: The Changing Face of Entrepreneurship in Morocco