Tensions have been high in Hammamet over the area's spring water.
Thirteen people were wounded Sunday when shots were fired during a demonstration in eastern Algeria to demand better access to drinking water, a security source said.
The incident happened when an employee opened fire on dozens of protesters in front of the Youkous mineral water factory in the town of Hammamet, the source said.
The official APS news agency said 13 wounded people were taken to hospital in Hammamet before police intervened to take control of the situation.
Tensions have been high in the town since authorities granted the company the right to exploit and bottle the area's spring water.
The demonstrators set fire to tyres and a water sales truck in front of the plant, according to the security services.
State television broadcast images of part of the factory in flames, without providing further details.
The demonstrators had previously gone to the town hall to demand better drinking water and to seek the reversal of a decision to allow spring waters to be exploited.
Mass protests have rocked Algeria since February 22, pushing long-time ruler Abdelaziz Bouteflika to step down earlier this month.
Protesters have since kept up their rallies, calling for a complete overhaul of the country's political system.