Africa Is Ready to Roar

For years, multinationals have looked to Asia for growth, but as economies in that region sputter, it's time to take another look at Sub-Saharan Africa, according to a recent study by Companies and Markets. The cosmetics market in this region is expected to grow 8-10% during the the next two years, compared to the global average of 4% growth. Forecast to reach a total of $11 billion by 2017, the growth in the African cosmetics market is largely due to the rapidly growing populations , the continent's population is set to surpass 1.2 billion inhabitants in 2017, and the relatively undeveloped economies which offer an area of large market potential. Seven of the world's 10 fastest growing economies are from the African continent with Ghana and Rwanda's growth outpacing some of Asia's fastest growing economies. By 2030, Africa is expected to account for 40% of the world's population, 60% of which will be under 25, offering a large and ready market for the sale of cosmetics products. The middle class population of Sub-Saharan Africa is also growing, currently over 300 million, 34% of the continent's population, offering an increasing consumer base for cosmetic companies expanding in Africa.

L'Oréal aims to add 1 billion new customers by the year 2020, to double its existing user base, and it is expected that the majority of that growth will come from consumers in Africa, Asia and Latin America. Africa and the Middle East are the company's fastest growing geographical segments, growing at around 15% each year. L'Oréal's revenue grew 2.3% in 2013 to reach $25 billion; 2.3% of this revenue came from the Africa and Middle East region.

In order to facilitate its expansion in Africa, the L'Oréal Group created a specific zone structure for Africa and the Middle East in 2011 including commercial hubs in South Africa in the South, in Ghana and Nigeria in the West and in Kenya in the East. It also has three plants in the region, one in South Africa and one in Kenya, from where almost half of the products distributed throughout the region are sourced. With the goal of providing cosmetics particularly suited to the needs of the diverse African consumer, L'Oréal has looked to combine its existing international product and knowledge set with those of local cosmetics companies. Acquisitions have included Interbeauty, the local leader in the domestic skin care market, and Dark and Lovely whose expertise is in hair care. In response to the African consumer's tendency to visit hair salons frequently and rely greatly on the knowledge of their hairdresser, L'Oréal has opened its own specialist hairdressers on the continent – The L'Oréal Professional African Salon Institute – which operates as a training center for locals on global trends, and for internationals on local knowledge and expertise.

Cosmetics consumption in Africa is still 10-20 times lower in African countries than in developed countries around the world and so there is great potential for growth in the African cosmetics market. To be successful, companies like L'Oréal and other international players, must cater to the diverse range of beauty needs by employing local talent and learning local expertise, according to Companies and Markets.