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Bottled waters: Morocco, the most expensive in the MENA region

According to the World Bank, average bottled water prices in Morocco are about 17% higher than those of a group of countries in the MENA region, the OECD and some other peer countries.

By the classification, the World Bank means countries in the Middle East and North Africa (excluding Libya, Iraq and Syria), Guatemala, Vietnam, Thailand, Indonesia, the Philippines, Malaysia, China, Peru, Bulgaria, Hungary, Costa Rica, Croatia, Chile, Turkey, Poland, Romania, India, Spain, Portugal, Ukraine.

According to the IFC, margins in Morocco reveal regulatory distortions, and even a lack of regulatory and supervisory bodies: “Regulatory distortions and lack of competition may result in prices of the main commodities in the consumption basket are significantly higher in Morocco than in the comparator countries”.

In addition, the law gives companies ample leeway to control prices, which undermines the general principle of price freedom. Institutional deficiencies and competition protection regulations favor abuses of dominance that do not speak their name. In the end, private companies and especially consumers are penalized.

The lack of implementation of constitutional provisions and other legal and regulatory provisions that support free competition in Morocco is the most critical problem. Some aspects of the competition law also raise competition concerns, including exemptions “whose potential scope may undermine the effectiveness of the law,” the World Bank says. For example, competition law allows the exemption of practices that constitute an abuse of a dominant position.

According to a Sunergia poll in November 2018, 17% of Moroccans consume bottled water. Whatever the purchasing power or socio-professional situation, bottled water is not perceived as a luxury product in the Kingdom, but rather a consumer product.

Regarding socioprofessional categories, just under half of the wealthier groups consume bottled water compared. Despite the wave of the boycott from April to April August 2018, Moroccans show their preference for the products of the Oulmes mineral water company: Sidi Ali, Ain Atlas and Bahia with 62% of preferences. According to the survey, it appears that the favorite brands of Moroccans after the mineral water products of Oulmes are Ain Saiss and Sidi Hrazem Sotherma company.

Even though the bottled water market is experiencing an increase in supply, it remains highly concentrated. Despite the boycott, the structure of the sector in terms of market share is not about to change. The two major operators, Les Eaux Minérales d’Oulmes and Sotherma alone capture a market share of more than 90%. In 2017, this business weighed MAD 1.9 billion, according to estimates by the Moroccan Association of Beverages.

On the bottling side, manufacturers complain about excessive tax burdens (ICT, VAT, eco-tax, tax markings, royalties, etc.). In fact, the water used is not free but subject to operating taxes. In addition, there are royalties to be paid to the Water Basin Agencies for taking or using water as part of the manufacturing process.

For the year 2017, Oulmès Mineral Waters paid more than 657 million dirhams of taxes (VAT, royalties from the source, domestic consumption tax, eco-tax, tax marking fees) and various other taxes.

In addition, operating taxes increased by 9.8% compared to 2016. The only municipal tax paid by the company to the Commune of Oulmès amounted to MAD 99 million. The royalty from the sources due to the State has, meanwhile, amounted to MAD 48.28 million.

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