International market for essential oils sector in Tunisia : strategies and opportunities

Transcription

1 International market for essential oils sector in Tunisia : strategies and opportunities Hamed Daly 1, Ibtissem Taghouti 2 1 National Institute of Agricultural Research of Tunisia 2 National research Institute of rural engineering, Water and Forests EFIMED Week 7-9 November,

2 Essential oils extracted from stems and leaves of aromatic shrubs (rosemary ( ha) and myrtle (40000 ha)) Harvesting rights are auctioned in public forests (about 120,000 ha each year) Under-valorization of aromatic and medicinal plants : For the period , only 63% and 34% from the potential of rosemary and myrtle are exploited, respectively, Other plant species are identified by their potential of EO, but not harvested, 2

3 What are the drivers and barriers for marketing EO? Are they related to international market? Would implementing new marketing strategies and innovation frameworks increase the EO market share? What is the efficient type of firm to ensure the development of the EO sector? 3

4 : Hypothesis H1. Value chain support would improve export marketing performance. H2. Promoting micro-scale firms can lead to increase export marketing performance. H3. Firm experiences, commitment and size will influence export marketing performance and Mix marketing strategies. H4. Marketing mix strategy is a key factor to enhance export marketing performance. 4

5 To identify drivers and barriers for developing Tunisian EO market. Presenting new strategies to become more competitive in the international market. 5

6 Methodology Market analysis at national and international level PESTLE to analyze external business environment & performance Rivalry forces at national and international level Strategies identification : Mix-marketing & Growth strategies Identification of promoting products Based on trade statistics and Survey with EO firms (different scale) 6

7 Methodology : Questionnaire for enterprises Constraints and difficulties of marketing Barriers for new entrants Value chain integration Measures for improving quality Strategies for marketing Perspectives for developing new products 7

8 Results : Market International buyers (24 clients) Laundry products (Kg) Fragrance houses (Kg) Traders (10ml) Market National buyers :Pharmaceutical companies and consumers for medicinal uses Final consumers (10ml) Therapeutic and massage centers (Kg) 8

9 Results : Main essential oils exports Rosemary (30%), Myrtle (2%) 6000 are the main exported EO after Neroli and Oranges (56%) Tunisia is the main producer of 4000 Rosemary and Neroli in the 3000 EO rosemary World EO Myrtle -High export value growth in , the EO become the main 1000 forest product exports -Increase of the EO exports 0 explained by both increase in quantities and prices, especially in 2014, Main destinations in 2014 : - Rosemary EO : France (51%), Spain (15%), Germany (13%), USA (11%). - Myrtle EO : France (73%) and Germany (24%) EU is a the leading market for Tunisian EO 9

10 Results :Trends of quantities and prices kg /kg EO rosemary EO 2007 Myrte EO rosemary EO Myrte Prices were Rosemary low for the EO period is used , for Industrial then solvents increased for after laundry the reduction products, of and the fragrance production It in has Morocco very specific (drought) components and quality 10

11 Results : International export pattern of EO US$ thousands 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , % 9% Africa Europe America Asia World Source : ITC Expanding market especially in Africa and Asia. Major essential oils in 2015 : lemon (12%), citrus (10%) orange (9%), mint (7%), pepper mint (6%) Similar trend for Tunisia : 11% Tunisia s share of international export : 0.31% in 2015 Tunisia s share of national exports : 0.11% in 2015 This confirms the absence of constraints related to the international market 7% 15% 10%

12 Results : Comparative Advantage EO 4.5 Revealed Comparative Advantage (RCA) EO Tunisia Tunisia displays a comparative advantage with respect to EO products, despite the fluctuations due to the dependence of national production on climatic conditions 12

13 Results : Drivers & Barriers Firms Large-scale Medium Small Micro Harvested area in 2016 (Ha) % % Target Market International National 5% % Barriers Drivers Sales limited by labor force availability and shrub productivity - Strong social relationship at territorial level, - Clients loyalty -Adapted production to market demand High cost of production Limited information about market Low financial capital Niche market control New line of products High prices 13

14 EO sector in Tunisia : External environment analysis Political promotion of the micro-scale enterprises High cost of production for micro firms Price variation by producers strategies and demand Minimum quantity is required Lack of information about international trends High costs of harvesting rights Changing buying trends of consumers Difficulties to find workforce Strong social relationship between firms - local population in some territories Quality certification New technologies adoption for niche market Sales of harvesting rights using auction system : agreement excluding new entrants Degradation of harvested areas : bad practices in collecting plants Shrubs non harvested for long periods have small productivities Forest fire risk 14

15 EO sector in Tunisia: Rivalry forces Potential entrants -Economies of scale -Capital -Access to well established distribution channels - Transaction costs for buyers Suppliers - raw materials supply: Monopoly (public forest ownership) - Packaging material import Rivalry among existing firms -High Storage cost -High cost of raw material Buyers : -Variation of product characteristics - Clients loyalty - Delay sensitivity -Product quality & quantity Substitutes -Synthetic products -Moroccan products 15

16 Promotion Product Place Price Firms strategies : 4P Large Medium Small Micro Price varies according to producers strategies and demand From Direct sale to industries to sale through intermediaries High prices to cover the important production costs Direct sale at national market to end consumers From Label, certification & traceability to simple certification Large line of products Small packaging From No advertisement to sampling and prospection - Sampling - international and national fairs 16

17 Potential Mix marketing strategies Price Place Large Medium Small Micro Interchange of market information Agreement with others suppliers Client diversification and new markets prospection Production cost control to reduce the price Alliances with established marketing partners Product Line diversification Quality improvement & certification Promotion Employing more efforts in advertisement 17

18 Growth strategies Launching new activities Large Medium Small Micro Activity diversification through drying and AMP extracts Vertical Integration Total to partial control of the value chain total control of the value chain Differentiation - Expertise and knowledge - From a very high to low time sensitiveness - From Large line of products (EO, extracts..) to limited EO -Small packaging size -Personalized supply adapted to market trends 18

19 Potential growth strategies Launching new activities Large Medium Small Micro Activity diversification through drying and AMP extracts Developing EO from other plants Vertical Integration Value chain control Development of Value-added Activities : producing high quality extracts, processing flavors and aromas for medicinal and pharmaceutics uses Differentiation Certification and advanced technology to higher quality Fair trade and Appellations of Origin 19

20 Improving firms strategies Reinforcing the role of AMP producers association would improve prices & market control through better informed market decisions Micro-scale firms should focus on Tunisian market where competition is limited (no competition with large scale firms) Improving Marketing mix strategy is not sufficient to enhance export marketing performance, but growth strategies are required (H4). 20

21 Improving export performance Value chain support would enhance export performance through contract arrangements with local communities and improving shrub management (H1) Promoting the large and medium scale firms given their important capacities to overcome production costs, quality control, market control and their impact on valorization (H3). This is not the case of micro-scale firms (H2) Market can be developed by promoting new plants (Thym, Conifer needles, Pistacia lentiscus, Juniper); minimal surface area, yield & quality are required 21

22 Conclusions Valorization of aromatic plants can be enhanced through : Increasing shrub productivity (thinning cut) Value chain support by promoting partnership between local communities / international & national firms Market development : Targeting the fragrance market and small packaging type Looking for more domestic buyers : Alliances with established marketing partners (ecotourism, hotels ) 22

23 Thank you for your attention 23