Required Report - public distribution

**Date:** 11/1/2005

**GAIN Report Number:** TS5011

T

**Tunisia**

**Retail Food Sector**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Michael Fay

U.S. Embassy

**Prepared by:**

Abdelkarim SMA

**Report Highlights:**

The Tunisian food retail sector is shifting from traditional
distribution patterns based on small neighborhood grocery shops carrying
limited assortments to modern distribution based on supermarkets and
most recently hypermarkets displaying larger food assortments including
imported items.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Tunis \[TS1\]

\[TS\]

Table of Contents

[Section I Market Summary 3](#section-i-market-summary)

[Section II Road Map For market Entry
4](#section-ii-road-map-for-market-entry)

[II-1: Modern retail outlets: hypermarkets, supermarkets and superettes
4](#ii-1-modern-retail-outlets-hypermarkets-supermarkets-and-superettes)

[Entry strategy 4](#entry-strategy)

[Market access 5](#market-access)

[Market structure 5](#market-structure)

[Distribution channel flow diagram
7](#distribution-channel-flow-diagram)

[Company profiles 7](#company-profiles)

[Magasin General 7](#magasin-general)

[Group UTIC (Ulysee Trading and Industrial Companies)
7](#group-utic-ulysee-trading-and-industrial-companies)

[Group Mabrouk 8](#group-mabrouk)

[Promogros 8](#promogros)

[II-2 Small grocery shops 8](#ii-2-small-grocery-shops)

[II-C Souks (open markets) 9](#ii-c-souks-open-markets)

[Section III COMPETITION 9](#section-iii-competition)

[Section IV BEST PRODUCT PROSPECTS
10](#section-iv-best-product-prospects)

[Section V POST CONTACT AND FURTHER INFORMATION
11](#section-v-post-contact-and-further-information)

# Section I Market Summary

In Tunisia, the retail sector (food and non-food) is boasting an annual
growth rate of 6 percent outpacing GDP growth rate. This performance is
largely fuelled by the expansion of modern distribution (supermarket and
hypermarkets formats) at the expense of the traditional food retail
carried out in small grocery shops. Modern distribution commands nearly
10 percent of total retail sales. Fresh fruit and vegetables as well as
fishery products are sold either in souks (open markets) or in
specialized small shops.

According to the latest INS[^1] household consumption survey, Tunisian
households devote about 38 percent of their total spending to purchase
food items. This translates to an estimated total food spending at the
retail level of nearly 7 billion Tunisian Dinars (equivalent to 5
billion USD).

Although the market share captured by modern retailing is still
relatively low, its expansion is set to continue at a steady pace as
major retail players are posting double-digit revenue growth. French
retailers (Carrefour and Casino) constitute the only foreign presence so
far. More foreign retailers are expected to enter the market in the
medium run enticed by a sector poised to expand more aggressively over
the next decade displacing traditional grocery shops and capturing an
estimated 30 percent of the overall food retail market.

A higher disposable income due, in part, to an increasing number of
households with dual income, increased urbanization and increased
exposure to western lifestyles are all factors underpinning this ongoing
reshape of the Tunisian food retail landscape.

Currently, the country has only about 210 modern food retail outlets: 2
hypermarkets, 120 supermarkets and 100 superettes, self-service food
outlets with a selling area of less than 500 sq meters.

The major players in modern food retailing are: Group UTIC (Carrefour
hypermarket and Champion supermarket fascias licensed by the French
retailer Carrefour), Group Mabrouk (Geant hypermarket and Monoprix
supermarket fascias licensed by the French retailer Casino), Magasin
General, a state-owned supermarket chain, Promogros, a privately owned
supermarket chain, and Bonprix, a chain of superettes.

Although modern outlets have changed the purchasing habits of some
consumers, the bulk of food retailing is still undertaken by small
neighborhood grocery shops, the so-called 'Attar'(independently
family-run food outlets having a selling area smaller than 50 sq meters
and often selling goods on credit). The country has over 250,000 such
outlets.

The stocking of shelves at the supermarkets and hypermarkets levels is
done through two channels: either through importers or directly by the
retailer using its own local and international procurement subsidiary ,
the so-called 'Centrale d'achats'. Small grocery stores source their
goods from wholesalers for the large part of their assortment and from
certain importers having their own distribution fleet to supply goods at
the retail level.

  ----------------------------------- -----------------------------------
  **Advantages**                      **Challenges**

  A relatively high household         High customs duties levied on
  disposable income                   consumer-oriented food products.

  Fast growth of modern distribution  Higher freight cost as compared to
  channels                            goods sourced from nearby Europe

  US food products' quality is well   Hypermarkets and some supermarkets
  perceived                           tend to procure food products
                                      through their European franchisers.

  A favorable US dollar exchange rate Lack of awareness of the U.S. food
  against the Euro                    products brand names compared to
                                      the European brands

  An increasing sophistication of the Fewer business ties compared to
  consumption patterns driven by      those with the EU
  modern food retail                  
  ----------------------------------- -----------------------------------

# Section II Road Map For market Entry 

## II-1: Modern retail outlets: hypermarkets, supermarkets and superettes

In Tunisia, hypermarkets, supermarkets and superettes are referred to as
modern distribution outlets. These three formats are defined as follows:

-   Hypermarket: a store with a sales area of over 5,000 sq meters,
    located out-of -town as the anchor store in a shopping mall, and
    offering more than 30,000-item assortment.

-   Supermarket: a store with sales area between 500 and 5,000 sq meters
    with an assortment of nearly 10,000 items.

-   Superette: a store with a sales area of less than 500 sq meters
    displaying a limited assortment.

### Entry strategy

The best way to introduce new products to these outlets is to identify
the suitable importer, i.e. the importer having already the experience
of handling the targeted products and having direct relations with
supermarkets. Such Importers are able to negotiate shelve space and
promotional activities with the supermarket chain. In any case U.S.
exporters are encouraged to check the credentials of the importer.

Another alternative approach, especially for big exporters, could be to
contact retailers directly as some of them have subsidiaries dealing
with local and international procurement. USDA/FAS' post in Tunisia
offers its assistance for matching new-to-market exports with
appropriate potential business partner or conducting specially tailored
inquiries for U.S. companies seeking to conduct business in this
emergent market.

### Market access

Tunisia is a party to a variety of free trade agreements (FTA). Chief
among them is the Tunisian European Association Agreement. This FTA is
diverting a significant portion of agricultural trade at the expense of
other trade partners including the U.S.

In the absence of preferential access, US-origin processed food items
are faced by relatively high MFN tariffs.

Following is the current taxation system applying to a selection of
grocery items.

  ------------------------ ---------------------- ------------------ ------------------
  **[ITEM]{.underline}**   **[HS                  **[Customs tariff  **[VAT
                           CODE]{.underline}**    %]{.underline}**   %]{.underline}**

  Ketchup                  2103 20 2000           60                 29

  Canned Tomatoes          2002 10 0000           73                 6

  Whole Peeled Tomatoes    2002 10 0000           73                 29

  Tomato Sauce             2103 20 4000           60                 29

  Tomato Paste             2002 90 0060           100                6

  Mayonnaise               2103 90 9020           60                 29

  Peanut Butter            2008 11 1000           150                18

  Cereal                   1904 10 0040           73                 29

  Hot Sauce                2103 20 4000           60                 29

  Canned Vegetables        2005 51 2040           73                 29

  Honey                    0409 00 0055           150                18

  Mustard                  2103 30 0000           60                 29

  Vinegar                  2209 00 0000           73                 18

  Canned Beans             2005 59 0000           73                 29

  Jam                      2007 10 0000           73                 18
  ------------------------ ---------------------- ------------------ ------------------

Source: Tunisian Customs service

### Market structure

The following table presents the significant players in the modern
segment of the Tunisian food retail sector:

+-----------+------------+-----------+-------+---------+-------------+
| *         | **O        | **        | **N   | **Loca  | *           |
| *Retailer | wnership** | Estimated | umber | tions** | *Purchasing |
| name and  |            | Sales     | of    |         | Agent       |
| Outlet    |            | (2004).** | Outl  |         | Type**      |
| Type**    |            |           | ets** |         |             |
+-----------+------------+-----------+-------+---------+-------------+
| C         | Group UTIC | \$ 100    | 1     | Tunis   | Imports     |
| arrefour, | (80 %) and | million   |       |         | directly    |
| Hy        | Carrefour  |           |       |         | and buys    |
| permarket | France (20 |           |       |         | from local  |
|           | %)         |           |       |         | importers   |
+-----------+------------+-----------+-------+---------+-------------+
| Champion, | Local      | na        | 3     | Tunis,  | Relies on   |
| su        | (Groupe    |           |       | Sousse, |             |
| permarket | UTIC)      |           |       | Sfax    | Carrefour   |
| chain     |            |           |       |         | for its     |
|           |            |           |       |         | procurement |
+-----------+------------+-----------+-------+---------+-------------+
| Géant,    | Group      | na        | 1     | Tunis   | Imports     |
| Hy        | Mabrouk    |           |       |         | directly    |
| permarket | under the  |           |       |         | and buys    |
|           | license of |           |       |         | from local  |
|           | French     |           |       |         | importers   |
|           | retailer   |           |       |         |             |
|           | CASINO     |           |       |         |             |
+-----------+------------+-----------+-------+---------+-------------+
| Monoprix, | Local      | \$ 110    | 50    | All     | Imports     |
| su        | (Groupe    | million   |       | major   | directly    |
| permarket | Mabrouk)   |           |       | cities  | and buys    |
| chain     |            |           |       |         | from local  |
|           |            |           |       |         | importers   |
+-----------+------------+-----------+-------+---------+-------------+
| Magasin   | Local      | S 100     | 45    | All     | Imports     |
| General,  | (St        | million   |       | major   | directly    |
| su        | ate-owned) |           |       | cities  | and buys    |
| permarket |            |           |       |         | from local  |
| chain     |            |           |       |         | importers   |
+-----------+------------+-----------+-------+---------+-------------+
| Promogros | Local      | \$ 50     | 4     | Tunis,  | Imports     |
|           |            | million   |       | Sousse, | directly    |
|           |            |           |       | Gabès   | and buys    |
|           |            |           |       | and     | from local  |
|           |            |           |       | Djerba  | importers   |
+-----------+------------+-----------+-------+---------+-------------+
| Bonprix,  | Local      | \$ 40     | 42    | All     | Imports     |
| s         | (Groupe    | million   |       | major   | directly    |
| upérettes | Zouari)    |           |       | cities  | and buys    |
| chain     |            |           |       |         | from local  |
|           |            |           |       |         | importers   |
+-----------+------------+-----------+-------+---------+-------------+

Source: AgTunis estimates partially based on news reports and retailers
disclosed information.

![](media/image2.wmf)Source: Tunisie Valeurs

### Distribution channel flow diagram

The following distribution channel flow diagram shows how imported food
items are passed from exporters to the modern retail outlets.

![](media/image3.wmf){width="6.018055555555556in"
height="3.8520833333333333in"}

### Company profiles

#### Magasin General

Magasin General is a state-owned supermarket chain established in 1920.
It has 45 supermarket-type outlets present in all the country's 25
provinces as well as a wholesale subsidiary. In 2004, it generated about
\$ 100 million of food and non-food sales. This retailer, which has
recently embarked on a remodeling program for all its stores, is
expected to be privatized in the next future. This retailer is
experimenting the E-retailing concept on its web site at
[www.smg.com.tn](http://www.smg.com.tn/).

#### Group UTIC (Ulysee Trading and Industrial Companies)

A private group having established in 2001 a joint-venture with the
second world's largest retail Carrefour under the name Ulysee Hyper
Distribution. The local partner has the majority stake (80 percent).
This hypermarket, operated under the banner Carrefour, is located at La
Marsa, a northern suburb of Tunis. It has a selling area of nearly
10,000 sq meters and carries a product assortment of nearly 36,000
items. One third of its assortment is made up of food items. It has an
outstanding produce department, bakery, deli and food-to-go sections.
This was the first such deal in the highly regulated retail sector as
foreign investment in this sector remains subject to the Government's
prior approval. More information can be found on the following website:
www.utic.com.tn

#### Group Mabrouk

This Tunisian private group owns a supermarket chain operating under the
French retail banner, Monoprix. This chain comprises nearly 50
inner-city outlets located in all big cities across the country. It
generates sales of nearly \$110 million. Procurement is done by
Monogros, its wholesale subsidiary. Recently this group teamed up with
the French retailer Casino to open a hypermarket under the Geant banner
at the outskirts of Tunis. This retail outlet has about 12,000 sq meters
of selling area.

#### Promogros

A private company operating 4 outlets in Tunis, Sousse, Gabes and
Djerba. Its stores have selling areas ranging from 2,000 to 5,000 sq
meters. They are more of a hybrid format carrying an assortment similar
to the one normally carried by a hypermarket but in a relatively limited
space. Promogros is catering to small grocers in the way cash & carry
stores do while drawing household shoppers.

## II-2 Small grocery shops 

Despite the fast growing supermarket industry, small grocery shops still
retain an estimated 90 percent of food retail sales.

A typical outlet has a selling area between 20 and 50 sq meters, carries
a hundred or so food items, and draw shoppers from an estimated
500-meter radius. In general, the shop owner, referred to as 'Attar',
knows very well his clientele and often accepts to sell goods on credit.
In Tunisia, this distribution channel is made up of a relatively dense
network of more than 250,000 outlets.

This type of retail is expected to lose market share facing competition
from modern retail outlets due to a wider product choice, merchandising,
pricing and other factors. However, traditional retail will remain an
import segment, as Tunisian shoppers tend to buy food items on a daily
basis in nearby grocery stores and go to larger outlets once or twice a
month.

Small grocery stores stock some imported groceries provided by
wholesalers.

The following chart depicts the path followed by imported goods from
exporters to the grocery shop's shelves.

![](media/image4.wmf){width="6.019444444444445in"
height="4.674305555555556in"}

## II-C Souks (open markets)

In Tunisia all big and medium size cities have their weekly souk. A souk
is a type of out-door market where rural and urban households alike can
buy fresh produce, fishery products as well as some dry groceries. Souks
and street venders are the main feature of food retailing in the rural
areas. Cities in urban areas have retail venues called municipal
markets, which open daily and offer fresh produce and fishery products.

# Section III COMPETITION

Annual agricultural, fish and forestry imports amount to US\$ 1.2
billion on average. The U.S. market share is hovering around 10 percent.

The Tunisian market size for consumer-oriented food products (COP)
cannot be precisely quantified due to the lack of detailed data. However
based on trade statistics locally available from INS (National Institute
for Statistics) we are able to estimate the imports of all-origin COP at
around US\$ 100 million per year on average. The US-origin COP are
facing strong competition from European products and therefore capture a
mere 3 percent of this total. Imported goods are generally perceived as
of higher quality but, in the same time, more expensive and thus of
limited affordability.

Tunisian demand for COP is experiencing an up-ward trend, which is
likely to continue and strengthen due to structural changes related to
the consumption and the distribution patterns. In the long run, US will
likely benefit from this trend especially due to favorable US\$/Euro
exchange rate.

Owing to an expanding middle-class and the consequent change of both
consumption patterns and distribution channels, the Tunisian market is
evolving in a way creating real export opportunities for value-added
consumer-oriented products (COP).

# Section IV BEST PRODUCT PROSPECTS

In order to single out the best high-value product prospects we relied
on the list of the currently imported Consumer-oriented product which
are likely to be sourced from the U.S. These products are:

+-----------------------------------------------------------------------+
| 1)  Tree nuts                                                         |
+-----------------------------------------------------------------------+
| 2)  Dried fruits                                                      |
+-----------------------------------------------------------------------+
| 3)  Cacao powder                                                      |
+-----------------------------------------------------------------------+
| 4)  Cookies                                                           |
+-----------------------------------------------------------------------+
| 5)  Sauces, condiments and mixed seasoning                            |
+-----------------------------------------------------------------------+
| 6)  Potato chips                                                      |
+-----------------------------------------------------------------------+
| 7)  Breakfast cereals                                                 |
+-----------------------------------------------------------------------+

The list is fairly short as Tunisia is importing mainly bulk and
intermediate US Ag products.

# Section V POST CONTACT AND FURTHER INFORMATION

The Office of Agricultural Affairs (OAA) at the American Embassy is the
USDA/FAS' post in Tunisia. It provides trade servicing and market
intelligence. For further information on the Tunisia retail market
please contact:

**US Embassy/ USDA-Foreign Agricultural Service Contacts**

##### Michael Fay, Regional Agricultural Attaché

E-mail: <Agrabat@usda.gov>

Phone : 212 3 776 5987

Fax  : 212 3 776 5493

##### Abdelkarim SMA, Agricultural Specialist

E-mail: [abdelkarim.sma@usda.gov]{.underline}

[Agtunis@usda.gov]{.underline}

Phone: 216 71 107 486

Fax  : 216 71 107 101

Adresse : Zone Nord-Est des Berges du Lac, Nord de Tunis, 2045 La
Goulette, Tunisia

Reports that might be useful to US exporters of consumer-oriented food
products to Tunisia can be found at website: http:/www.fas.usda.gov)

  ----------------------- ----------------------- -----------------------
  **Report**              **Log number**          **Date issued**

  Food and agricultural   TS5008                  8/29/2005
  Import regulations and                          
  Standards                                       

  Exporter Guide          TS4001                  4/7/2004
  ----------------------- ----------------------- -----------------------

**[Other contacts:]{.underline}**

> **Directorate General for Veterinary services (DGSV**)
>
> Ministry of Agriculture, Environment and Hydraulic Resources
>
> 30, rue Alain Savary, 1002, Tunis, Tunisia
>
> Phone: 216 71 786 833
>
> E-mail: : <mag@ministeres.tn>
>
> **Directorate General for Crop Protection and Quality of Agricultural
> Products** (DGPCQPA)
>
> Ministry of Agriculture, Environment and Hydraulic Resources
>
> 30, rue Alain Savary, 1002, Tunis, Tunisia
>
> Phone: 216 71 786 833
>
> E-mail: : <mag@ministeres.tn>
>
> Directorate of Quality and Consumer Protection (DQPC)
>
> Ministry of Commerce
>
> Address: 37, av. Keireddine Pacha, 1002 Tunis\
> Phone: (216) 71 890-070 / 890 337\
> e-Mail: <mcmr@ministeres.tn>
>
> **Institut National de Normalisation et de Propriété Industrielle
> (Innorpi)**
>
> Standards setting and intellectual property enforcement authority
>
> BP 23 - 1012 Tunis Belvédère
>
> Phone: 216 71 785 922

######### Fax: 216 71 781 563

> E-mail: inorpi@email.ati.tn
>
> **Institut National des Statistiques (INS)**
>
> Trade and demographic statistics
>
> Phone: 216 71 891 002
>
> Fax (216) 71 792 559
>
> E-mail E-mail : [INS@mdci.gov.tn]{.underline}
>
> [**http://www.ins.nat.tn**](http://www.ins.nat.tn/)
>
> **[Other relevant websites]{.underline}**

-   [www.cepex.nat.tn](http://www.cepex.nat.tn/): The website of the
    Cepex (Export promotion agency) which has the full list of has le
    list of the domestic and international trade shows of interest for
    Tunisian businessmen

-   [www.Tunisie-commerce.com](http://www.Tunisie-commerce.com/): A
    directory of trade Tunisian companies

-   [http://www.tunisianindustry.nat.tn](http://www.tunisianindustry.nat.tn/):
    the website of the Industry promotion agency

-   [www.bct.gov.tn](http://www.bct.gov.tn/): The website of the
    Tunisian Central bank

-   [www.smg.com.tn](http://www.smg.com.tn/): the website of the leading
    Tunisian retailer: Magasin General

-   [www.TunisiaOnline.com](http://www.TunisiaOnline.com/): a digital
    gateway to news and information\
    resources on Tunisia, Tunisia\'s history, government, culture and
    environment.

[^1]: Institut National des Statistiques: national institute for
    statistics