Sitting barefoot on blood orange pillows in a village near the seaside resort of Agadir, a dozen Moroccan women in caftans banter while hitting acorn-shaped nuts with stones in metronomic fashion—tap, tap, tap—until they crack, revealing a kernel or two inside. The Berber women earn 40 dirhams ($4) for a day’s work producing about a kilogram of the dime-size kernels, which are ground and pressed to release an oil so rare, so versatile, and so potent that it can sell for the equivalent of $400 a liter in beauty boutiques worldwide.
Dubbed “liquid gold,” amber-hued argan oil is the latest obsession of the $430 billion personal-care market. Fans say it strengthens hair, soothes skin, and even tastes good drizzled on a salad. It’s turning up everywhere, from Oscar week celebrity gift bags to the aisles of Wal-Mart Stores (WMT) and Tesco (TSCO:LN). Last year saw the debut of 588 argan oil hair products, according to researcher Mintel, up from 29 in 2008. “It’s really going quite crazy right now,” says Dana Elemara, a former Goldman Sachs (GS) bond analyst who runs an argan oil import business in London.
The argan craze calls to mind previous beauty fads, like that for jojoba, another gold-tinted oil from arid climates. Jojoba is now found in a wide array of everyday household items, such as liquid hand soap, and its allure has faded. While argan oil risks similar overexposure, its sustainable sourcing and very visible Fairtrade connection to rural Berber women will help preserve its cachet, analysts say.
Morocco’s exports of argan oil have more than doubled in the past five years, to more than 700 tons, according to government data. Much of that has gone to skin- and hair-care makers such as L’Oréal (OR:FP) (its EverSleek Super Sleek Intense Serum with argan oil promises to tame “rebellious and unruly hair”) and Unilever (UN) (whose Dove Hair Nourishing Oil Care line of shampoos and conditioners now includes argan oil).
L’Oréal, the world’s biggest cosmetics producer, this year will buy three times more argan oil than it did five years ago. And argan-based skin- and hair-care brands like Moroccanoil have been fixtures in New York stores for years. U.S. department-store sales of products with argan oil rose 59 percent last year, following a 159 percent increase in 2011, according to researcher NPD Group.
Rising demand has boosted wholesale prices 50 percent since 2007, to $30 a liter, while retail prices can exceed 10 times that. Oil certified under Fairtrade production standards goes for even more. Those prices have led some to resort to less than savory tactics, passing off diluted “Moroccan oil” blends as 100 percent argan. “It’s like the Mafia,” says Afafe Daoud, a project manager who works with a cooperative near Agadir. The group of 60 Berber women produces Fairtrade argan oil under its own brand, Tounarouz, and sells it across Europe.
Records of argan oil extraction trace back to the 13th century, when locals would gather the oil-rich nuts excreted by goats that climb trees to eat the plum-size fruit. Today, argan oil processors use nuts that haven’t passed through a goat’s intestines. Endangered by construction and farming, argan trees—spiny evergreens with 150-year lifespans—have come under United Nations protection, and makers of the oil are seeking the same kind of geographic certification enjoyed by Parma ham and French champagne in Europe.
The trees, which thrive in Morocco’s semi-arid soil, are hard to cultivate elsewhere. But some are trying. Chaim Oren, an agronomist at Israeli argan oil producer Sivan, says he is growing what he calls the “magical tree” on 100 acres in the Negev Desert. “There will be less oil available than demand,” Oren says. “We want to fill this gap.”
The arrival of L’Oréal and Unilever—as well as smaller U.S.-based beauty outfits such as Organix, Shea Moisture, and Aura Cacia—reflects the growing appeal of natural oils. For years, many women were reluctant to put oils directly on their scalp or skin, fearing a greasy residue. Brands reflected those concerns: Procter & Gamble’s (PG) Oil of Olay changed its name to Olay in 2000.
Consumers’ recent embrace of all things natural, from baby foods to cleaning products, has helped argan morph from an expensive salon treatment to a key ingredient in mass-market shampoos, conditioners, and soaps. British beauty boutique Neal’s Yard Remedies today sells a 4-gram argan lipstick in six colors, including Persimmon, Blackberry, and Lychee, for £15 ($23). And the Walgreens (WAG) drugstore chain in the U.S. carries 160 argan-infused products, up from zero three years ago, says Shannon Curtin, a merchandise manager there.
L’Oréal says it gets argan oil from the German chemical giant BASF (BAS:GR), which buys from Berber cooperatives. The company says it’s able to find sufficient supplies, partly because the increasing value of argan has helped persuade people living among the trees to stop cutting them for firewood.
“Before this, the men made everything,” says Belfarah Fatima, a 70-year-old mother of six, as she cracks argan nuts at a cooperative in Tagadirt N’Aabadou, a village of mud-brick houses outside Agadir. Fatima’s cooperative is part of a network founded by Moroccan chemist Zoubida Charrouf. In the mid-1990s, Charrouf began organizing Berber women to produce and sell argan over the protests of men, who claimed Charrouf was only out for their money. Today there are more than 150 co-ops, with the most successful generating sales of $650,000 annually.