USSEC Helps Launch Branded Soybean Oil for Commercial Distribution in Egypt
- General News
The majority of soybean oil in Egypt, 65-70 percent, reaches consumers through a subsidy system run by the Egyptian government. The subsidized oil is distributed by the national government to ration-card beneficiaries as a bottled oil blend consisting of 50 percent soybean oil and 50 percent sunflower oil. In order to build commercial demand for soybean oil, USSEC has partnered with local crushers and refiners to develop distribution channels for branded soybean oil in order to reduce dependence on the government-controlled distribution channels. USSEC has been providing technical and marketing assistance to key Egyptian crushers and refiners to help launch retail soybean oil in the marketplace. The two-year effort is bearing fruit.
Egypt is already the largest soybean oil consumer in the Middle East/North Africa (MENA) region. In 2013, the consumption of soybean oil in Egypt was estimated at about 600,000 tons, which accounted for about 20 percent of the total vegetable oil consumption. Nearly 50 percent of the domestic demand for crude soybean oil is met by locally crushing imported soybeans (half of which is from the U.S.) and the remaining oil is imported and processed in local refineries. Soybean oil consumption has more than doubled in the last ten years (from 280,000 tons in 2004 to 600,000 tons in 2013) due to the expansion and modernization of the local crush industry. Soybean oil should capture more than a 50 percent additional market share in the next few years when crushing plants that are now under construction become operational.
Alex Company for Seeds Processing and Derivatives (Alex Seeds) is an excellent example of a large-scale transition away from government supply channels toward a commercial/retail market structure. The company has developed an ongoing marketing strategy and promotion campaign to position their new soybean oil retail brand, SOLO, in the Egyptian retail marketplace. The branded/retail promotion of soybean oil has been a catalyst for U.S. soybeans to strengthen customer preference and develop a dominant position in the Egyptian market. Another key buyer of U.S. soybeans, IFFCO Egypt, has made significant progress promoting their branded soybean oil, Suny, in both local and export markets and has become the largest producer of branded soybean oil in Egypt.
Both companies are also refining and bottling about 25,000 tons of branded, high quality, 100 percent soybean oil for use under the government brand, Kheir Baladna. The oil will be delivered for distribution in the subsidy market soon. By focusing on both the retail and government distribution channels, USSEC is helping boost awareness among Egyptian processors and consumers on the superior quality, value and benefits of using oil derived from U.S. soybeans.
USSEC envisioned the branded oil program in 2012 when it proposed bringing crushers from the MENA region to Mexico to learn about the successful branded oil, Nutrioli, which was created in 1997 by the Ragasa company and reached nationwide distribution in 2005. The company successfully markets the health benefits of soybean oil nationally and sells it at a premium, which has transformed the cooking oil market in Mexico. USSEC recognized the opportunity to use the lessons learned in the Mexican market to help expand U.S. market share in the MENA region and can be credited for accelerating the introduction of branded soybean oil in Egypt.