“It is expected to reach €10 billion (about $11.2 billion at current exchange rates) in 2017 when the continent’s total population, the fastest growing in the world, will reach 1.2 billion inhabitants.”
Those two-year-old estimates may be too modest. The website goes on to admit the disparities in the different levels of growth in the different sub-regions of the African markets and how that calls for a different approach based on the particular market, comparing South Africa’s structured €3 billion in revenue market (in 2012) versus Kenya’s market where only 15% of the beauty and personal care products are sold in supermarkets. In Nigeria, the beauty and personal care market was estimated to reach €2.5 billion by 2017 making it the rising star of the sector on the continent.
Hair and body care products dominate the sub-Saharan Africa’s beauty market. Face products and makeup remain marginal although they have strong potential. There is demand for both local and international products.
African consumers generally expect high quality products that achieve good functionality but are also reliable and affordable. Consumers very often alternate between local brands and international ones depending on local lifestyles, customs and affordability.
In fact, Coppieters.biz website predicts that by next year, sub-Saharan Africa is expected to have an economy that is worth around $2 trillion, which is the same value as the Russian economy today.
East Africa alone has a combined population of over 350 million people, and consumer spending is predicted to grow to $150 billion in 2020. South Africa and Nigeria are the obvious market leaders by population and GDP size, but they will be followed by five key frontier markets of Kenya, Ethiopia, Tanzania, Ghana and Cameroon.
Attracting Global Players
So big is the opportunity that, as Africa Business Pages points out, “L’Oréal was quick to recognize the need for Afrocentric hair care and body care products specifically dedicated to meet the specific needs of the African consumers. After a detailed study and in-depth market research L’Oréal launched the famous Softsheen-Carson brand, the first worldwide brand targeted towards African consumers.”
Africa Business Pages goes on to report the expected boom in the East African markets is drawing in the industry’s big players like Unilever, Procter & Gamble, Colgate Palmolive and L’Oréal. Some of these companies have been in the East Africa market for a long time, but are now scaling up in the cosmetic space like never before. In addition, Revlon, PZ Cussons and Beiersdorf are also making inroads into the sector.
Indian groups like Marico and Godrej are also joining the beauty sector frenzy. Godrej Consumer Products (GCP), a key consumer goods player in its home market, has made key acquisitions in Kenya as well as South Africa. In 2014, GCP acquired a 51% stake in Darling Group operations in Kenya, a market leader in Africa’s hair extensions market. The Emami Group of Companies, another big player from India, is planning to acquire a skin care business in sub-Saharan Africa and is planning to expand aggressively into the region. This company is already exporting to Nigeria, Kenya and Ethiopia and other African countries, which are already contributing 8% to their total revenue. The motivation to manufacture within the region is a way of cushioning the business from currency volatility, a factor that affected the business in 2016-2017, according to a release in the New Dheli Business Standard. They are looking for companies with either strong brands or strong distribution.
Revlon also entered Kenya through a franchise deal with the Nakumatt supermarket chain. It was yet another example of multinational companies rushing in to meet local demands of the East African consumers for quality cosmetics.
“This growing middle class is a clientele that is getting more sophisticated in taste and need for quality products,” explained Suzie Wokabi, chief executive of SuzieBeauty. “The access to the world through the internet also helps the African woman raise her standards and expect the same from product providers.”
SuzieBeauty’s focus has been on cosmetics and makeup products. After that success, the company launched a skin care line to compete in a wider realm and became a significant player in Kenya and surrounding markets, until it grew the attention of Flame Tree Group, who acquired them in 2018.
In 2014, Estée Lauder partnered with Joyce Kigunda, to open the first MAC store in Kenya. Kigunda is a trained pharmacist who established her own cosmetic business, Lintons Beauty World, during the past decade.
In 2013, L’Oréal acquired Nice & Lovely Brands from Kenya’s Interconsumer Products Ltd, in a multi-billion dollar transaction. L’Oréal made the move with the intent to expand into East Africa’s low-end cosmetic market. Paul Kinuthia had built Interconsumer Products from scratch in Nairobi in the mid 1990s into a major player in the beauty market which today rivalled the industry big players like Unilever Kenya Ltd, Beiersdorf East Africa Ltd, Haco Tiger Brands and PZ Cussons East Africa Ltd. Paul Kinuthia kept the hygiene side of the business.
Men’s grooming is also growing.Patricia Ithau, former L’Oréal managing director East Africa, explained that East African men are becoming more beauty conscious and looking for products designed for men.
“You see this in the number of lotions for men, deodorants for men, even shower gels for men. This has extended to hair and beauty salons, especially in the upper-middle class, where the clientele has become a very even mix of women and men,” she told Happi.
Understanding the Market
Manufacturers have come to understand the need to tailor their products for African skin tones as well as adapting the hair care formulas to the unique requirements of African hair, as a way to best meet the consumers’ expectations.
According to Roland Berger Consultants, as a pre-requisite to effectively deliver the right products to African consumers, manufacturers needed to better understand African skin and hair specificities. To gather more insight on these specificities, L’Oréal initiated the L’Oréal Institute for Ethnic Hair and Skin Research in Chicago and also established an evaluation center in South Africa dedicated to consumer insight and development studies.
According to Kosmeticaworld website, a black woman takes, on average, three times more time than a white woman to take care of her hair. She consumes more hair care products as well as more makeup and skin care products, too. These consumer realities are hard to ignore.
In November 2012, L’Oréal organized the 4th edition of the “African Hair and Skin” workshop in Kenya in association with the Kenya Association of Dermatologists, as a way boost their understanding on ideal care for African hair and skin. It demonstrated the company’s strong commitment to develop the knowledge and consumer insights on hair and skin of African consumers. Unilever also made some good investments in learning more about black skin pigmentation and hair biology to complement their research. Both Unilever and L’Oréal are investing in building close ties with local dermatologists and hairdressers who play a critical role in East African consumers’ day-to-day life and are viewed as “trusted advisors” by consumers and knowledgeable partners by manufacturers.
Adapting to Market Needs
African Business Pages also shares how the big cosmetics companies applied strategies to adapt to operating in East Africa. They design smaller packaging sizes to address and bring down the price point and adapt to the price sensitivity in the local markets.
“By launching scaled-down versions and reduction of pack sizes, manufacturers are able reach more consumers, given the level of income in Africa,” explains Chudi O. Uwandu, director of planning, research and documentation, Federal Ministry, Government of Kenya.
Counterfeits and fake products are a big challenge in Africa, as in other parts of the globe. It is estimated that almost 30% of cosmeceuticals in East Africa are counterfeit or has substandard active
ingredients. This fact forces consumers to buy the more expensive offerings on the market as a way to ensure that they get a high quality and, more likely, the real product.
The low number of trained pharmacists in Kenya also does not help to improve the sector. Kenya has only 2,800 pharmacists working in the cosmetic industry, versus the required 8,000 that would allow for the efficient production of quality products and efficient running of the sector.
Moreover, these 2,800 pharmacists have little or no on-the-job training that is demanded for a smooth production process.
Despite these drawbacks, the African beauty and personal care sector will be an interesting space to watch for at least the next few years.
Raymond Chimhandamba is founder and director of Handas Consulting (Pty) Ltd. He has 20 years’ experience in the FMCG sector in Africa region and experience in launching and building FMCG cosmetic and personal care brands in Africa. Chimhandamba is an internationally published FMCG expert and a thought leader in the hygiene sector in Africa, an international speaker and a mobile tech enthusiast. He is based in Johannesburg, South Africa. Contact him at email@example.com