Beauty and personal care saw strong growth in retail volume terms across most categories in 2024. However, value growth remained weak due to a drop-in prices as more suppliers entered the market and the local currency strengthened compared to pre-2023 levels. Demand continues to increase across all categories of beauty and personal care as income levels and the quality of life in Iraq continue to improve.

The population of Iraq is predicted to increase by 35.1%, due to changes in net migration and natural change, standing at a total of 62.2 million citizens by 2040. The birth rate in Iraq is anticipated to fall between 2024 and 2040. By 2040, young adults (aged 18-29) will make up the largest cohort of the population. Generational cohorts in Iraq will continue to influence consumer expenditure based on their specific purchasing habits and unique demands.

Tissue and hygiene products saw a slight increase in popularity in Iraq in 2024. Consumers displayed growing interest in higher quality products that offered added value. However, price remained a key factor in purchasing decisions, with the increasing number of smaller players offering low-priced products leading to increasing fragmentation in the competitive landscapes in categories such as nappies/diapers/pants, wipes and retail tissue.

Weakness in the rule of law and endemic corruption hinder economic freedom, whilst the budget deficit is widening. Economic progress has been lacklustre owing to oil production cuts, with oil playing a disproportionate role in the economy, but inflation is well contained. As a young and increasingly urban nation, Iraq’s consumer market is ripe for growth, but the dominance of lower social classes could depress incomes. Internet and mobile use is rising, but innovation is the lowest regionally.

Demand rose across home care in 2024 boosted by population growth, urbanisation and long-term economic development, along with the shift towards more modern housing and the increasingly Western lifestyle habits of affluent urban dwellers. Numerous small and mid-sized local suppliers also entered the market in 2024, with a primary focus on dishwashing, bleach, surface care, and laundry care products. In regions where local suppliers are active, prices dropped, often at the expense of quality.

Hot drinks saw total volumes rise in Iraq in 2024. Prices remained relatively stable after the high inflation of previous years. However, players faced a more competitive market, necessitating higher spend on marketing and distribution without a corresponding increase in prices. Iraq’s economy is benefiting from high oil prices and investments in infrastructure and real estate. With rapid urbanisation, particularly in the central and southern regions, demand for hot drinks has increased.

Soft drinks saw a strong increase in total volumes in Iraq in 2024. Local products benefit from the government restricting or banning the import of soft drinks into Iraq. The Iraqi economy is benefiting from high oil prices and investments in infrastructure and real estate. Rapid urbanisation, particularly in the central and southern regions, has contributed to increased demand for soft drinks. However, the market remains underdeveloped in terms of product availability and distribution.

2024 has been a year of unprecedented stability in Iraq for consumers and suppliers. This stability is linked to the 10% revaluation of the Iraqi currency in 2023, which has helped keep prices stable and even lowered prices in some categories of staple foods. The Iraqi Government distributes large quantities of rice and flour to every Iraqi on a monthly basis. Although these products are of a lower quality compared to those available in the retail market suppliers are operating on thin margins.

Cooking ingredients and meals in 2024: The big picture

The local currency has strengthened against the US dollar in 2024 making products cheaper and thus boosting sales of consumer health products. Reforms in the banking sector are pushing most of the supply chain to rely on formal financial systems. This is expected to create more integration among players within the supply chain in the long run which should benefit sales. Local production is becoming stronger, especially within OTC, which has helped to keep prices stable.

Local production of dairy products and alternatives in Iraq is rising with government support. This increases the local availability and affordability of dairy products, but imports are needed to meet demand, especially in cheese and butter. Baby food gains impetus from a still high birth rate and new offerings, but high prices and breastfeeding campaigns can brake demand. Meanwhile, plant-based dairy remains a negligible category, mainly due to high prices and a positive perception of dairy.

2024 saw strong positive sales growth across snacks in Iraq despite high inflation and the rather chaotic scene on the supply side. While imported products and international brands are popular among affluent urban professionals, the majority remain loyal to more affordable imports from Iran and Turkey and, increasingly, locally manufactured products, which represent great value for money. Domestic production is increasing, supported by government policy and strong demand for affordable snacks.

The commodities country overview provides comprehensive data on production, consumption and price trends on key commodities markets. The commodities overview in Iraq covers production and consumption trends in agricultural commodities, energy products, electricity as well as an overview of key economic and business environment trends.

Insight into income, wealth and expenditure of consumers and households is vital in helping businesses make strategic decisions with regards to which country (or even which region within a country) to enter, which consumer segment to target, which products or services to market, and at which price point. Other factors such as the size and expansion of the middle class and income inequality are also important in helping companies gauge the potential of a country market.

Alcoholic drinks in Iraq faced huge challenges in 2023 after the Iraqi Government announced stricter enforcement of the 2017 ban on the sale of alcohol. In the KRG meanwhile, strong sales growth is being seen as the alcohol ban is not enforced there. With the entire supply chain controlled by entities close to the Iraqi government with political and militia influence, consumers face numerous issues, including inconsistent supply, the presence of counterfeits and regular huge price rises.

Surging demand for e-vapour products was the main trend in tobacco in Iraq during 2023, as demand for cigarettes and smoking tobacco falls. Notably, new consumers, including women and young adults, tend to find vaping preferable to smoking. Government policy is driving growth in local manufacturing and numerous players have moved some or all of their production into Iraq. Affordability remains a crucial factor for success across the market, with players focusing on their cheapest brands.

The number of households is set to increase moderately, while the average household size will shrink in Iraq over 2023-2028. Couples with children will remain the dominant household type but the fastest household expenditure growth is forecast to be recorded by single person households. In addition, the share of households living in urban areas is projected to expand to 74.2% by 2028.

The report examines the economic landscape of Iraq and provides information on major monetary indicators, foreign trade and government finance. The economy contracted in real terms in 2023, dragged down by private consumption, government spending, investments. Furthermore, global economic slowdown, rising geopolitical tensions and economic fragmentation as well as tight financial conditions pose risks to the country’s economic outlook.