Beauty Industry in East Africa

By on October 23, 2015
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HAIR CARE
Beauty Industry in East AfricaThe hair care products category is the largest and most assorted segment of the cosmetic market in our study area with several competing formulas, products and brands. The hair care sector in the study area of five countries was valued at $282.2 million in 2014.It is believed that one region that could really push the global hair care market in general and the natural hair care sector specifically in the beauty industry in East Africa – as it has very strong potential for growth, which is still not fully explored in the market for cosmetics in Africa.

The trend among women in East Africa is not to use too many commercial products on their hair. As very strong, harsh chemicals are used to straighten the hair, they prefer hair care products that are more natural, less harsh and offer smoothing benefits. There is a dearth of such products in Africa and videos have appeared on YouTube of women using local natural ingredients to make their own hair care mixes.

This is an ideal case of consumers looking for something but not finding it on retail shelves. Manufacturers who can catch the fancy of this specific market, there is very strong potential for growth as Kenya and Uganda, for example, are fast qualifying as middle income countries. In more mature markets, meanwhile, the black haircare arena also received a boost with the launch of two new brands.

UK based Noir Essence is a four step hair care regime for natural or relaxed Afro-Caribbean locks. The shampoo, conditioner, lotion and elixir in the range are free from sulphates, mineral oils, silicones and parabens. In the US, meanwhile, Brian Marks, the hair care guru behind Dr. Miracle’s and African Pride, created Nene’s Secret, named after his wife Nene.

The seven-sku line-up features African derived ingredients (Nene herself grew up in Africa) including baobab oil, used in the Strengthening Serum Treatment; Kalahari melon seed oil, which provides nutrients for hair growth in the Gorgeous Gro product; and macadamia oil, which is used in Cute & Curly Crème to combat frizz. All in all, hair care is a category that has grown on the basis of novelties and new launches and, to an extent, segmented benefits. But there is still a wide pool of consumers who could benefit from even more targeted products.

According to general estimates, up to 35% of cosmetic products sold in the study area in East Africa are hair care products. This category includes shampoos, pomade, hair gels, conditioners, colouring and dyes, relaxers and hair styling products. The biggest spenders in this category are beauty salons and barbershops. Expectedly, women are the largest consumers of these products although recent fashion trends have also increased the amount of spending by men in this category with the growing popularity of dreadlocks, Sporting Waves and ‘afro’ hair styles which require more hair care products.

While still largely based in the informal economy, the African haircare business has become a multi-million dollar industry and has drawn global giants such as L’Oreal (OREP.PA) and Unilever (UNc.AS) (ULVR.L). Hairdressers are a ‘must’ fixture of most markets and shopping malls across East Africa, reflecting both the continent’s rising incomes and demand from hair-conscious women.

In our field study and consumer survey of Kenya, Uganda, Tanzania, Ethiopia and Mozambique the most popular hair care brand seems to be Dark & Lovely – which outdid most brands to take the biggest market share of over 15 per cent. ‘Miadi’ and ‘Venus’ tied in second place with a market share of approximately 8 per cent followed by Haco Tiger brands ‘TCB’ at six per cent.

‘Venus’ hair care brand is a product of UK based PZ Cussons plc. The company operates locally under the name of East Africa Ltd company and has its factory in Ruaraka, Nairobi. Dark & Lovely’s initial success was as a result of value based appeal that impressed and convinced the average East African consumer of its efficacy.

The takeover by L’Oreal of Interconsumer Products Ltd. has further helped boost the popularity of the product. The survey predicts even tougher wars and hostile takeovers due to the profitable nature of this category and the presence on new global companies in addition to the new players like Revlon who made their entry into the market recently. Given the highly lucrative nature of this category, we can be sure that the competition for market-share will not be pretty.

While reliable East Africa-wide figures are hard to come by, market analysts estimate $282 million of shampoos, relaxers and hair lotions were sold in Kenya, Uganda, Tanzania, Ethiopia and Mozambique alone last year. The liquid haircare market is expected to grow by about 5 per cent from 2015 to 2018 in Tanzania, Uganda, Mozambique and Ethiopia, with a slight decline for the more mature Kenyan market.

This does not include sales from more than 40 other sub-Saharan countries, or the huge “dry hair” market of weaves, extensions and wigs crafted from everything from synthetic fibre to human or yak hair. Some estimates put Africa’s total dry hair industry at as much as $6 billion a year. L’Oreal is looking to build on its “Dark and Lovely” line of relaxers and other products with more research into African hair and skin and has factories in South Africa and Kenya producing almost half the products it distributes on the African continent.

Unilever is also promoting its “Motions” line of black haircare products, and niche operators are springing up in the booming dry hair market and the beauty industry in East Africa. Much of the hair sold is the cheaper synthetic type and comes from Asia. Pricier natural hair is prized because it lasts longer, retains moisture and can be dyed.

India’s Godrej Consumer Products (GOCP.NS) acquired South African firm Kinky in 2008 and sells synthetic and natural hair, including extensions, braids and wigs. Buhle Braids, like its rivals, sources much of its natural hair from India, which has a culture of hair collection, particularly from Hindu temples or village “hair collectors”. The hair is then sent to China where it is processed into extensions and shipped to Africa. Hair from yaks, to which some people are allergic, is now used less. Africa’s demand for hair products, particularly those made from human
hair, is only growing.

SKIN CARE PRODUCTS: BEAUTY INDUSTRY IN EAST AFRICA

In the overall study area of East Africa (Kenya, Uganda, Tanzania, Mozambique and Ethiopia), the largest share of the skin care market is held by L’Oréal East Africa Limited, Unilever Kenya Ltd, Revlon, Haco Industries. PZ Cussons East Africa and Beiersdorf East Africa Limited. The needs of different types of human skin – normal, dry, oily and sensitive skin – is largely responsible for the size and variety of skin care products in the East African market, and there are lots of local and international brands introducing new and more attractive products every year.

According to our research in the study area, nearly 25% of all cosmetic products sold in this market every year are in the skin care category – which includes body lotions, skin moisturisers, cleansers, toners, anti-acne, anti-ageing and facial products. The growing trend of using skin lightening or ‘bleaching’ products among young African women and men is also feeding the frenzy of demand that has made the skin care products category a multi-billion dollar business. According to the World Health Organization, Africans are some of the highest users of skin bleaching products.

COLOUR COSMETICS

The combined Kenyan, Tanzanian and Ugandan market is estimated at $115 million, and projected to grow to $161 million by 2018. The market for colour cosmetics in Mozambique is estimated at $16.2million and the fast-growing market for colour cosmetics in Ethiopia is valued at $26.8million in 2014. The big names like L’Oréal, and Estée Lauder dominate the market in the beauty industry in East Africa.Beauty Industry in East Africa2

Recent entrants to the East African market include Sleek, Flormar, Revlon, Maybelline, SuzieBeauty Cosmetics and House of Tara. And last year, Estee Lauder brought in their third biggest brand, MAC Cosmetics, to Kenya, the
first outlet in East Africa. House of Tara’s business model is the Avon Lady door to door client service with four to five products sold apiece and a glimpse into product use.

House of Tara already has 14 outlets in Nigeria and its business model is similar to the newest international cosmetics company Tyra Beauty. Tyra is already a brand name in Kenya. Traditionally, women of colour have, since before Iman’s 1998 launch, struggled to find cosmetics that suit them. This category is so segmented that there are very many niches catering to several specific needs. The common products in this category are: lipsticks, concealers, foundation, face powder, blushes, mascara, eyeliners, nail polish and make up removers.Beauty Industry in East Africa3

In addition to many international designer brands in the market (such as Mary Kay, Maybelline, Clinique etc), several African-grown and promising makeup brands like Darling and Kenya’s Suzie Beauty line are becoming very successful. The number of African brands with a reasonable quality/price ratio is set to increases in the region’s colour cosmetics category. With improved economic conditions, consumers are now demanding higher-quality and more premium colour cosmetics.

Although there is saturation in the mass segment, there is still a lot of room for growth in premium colour cosmetics. There is increasing competition among direct selling and store-based companies. While the former increases the number of consultants and announces frequent discounts, the latter try to attract more customers by offering discount cards and implementing numerous promotions, as well as promoting their Internet stores.

L’Oréal Groupe lead sales in colour cosmetics with almost 27% value share in the study area. The company maintained its lead position through a wide product portfolio comprising brands from all price segments for the changing face of the African market.

FRAGRANCE & PERFUMES

Beauty Industry in East Africa4The fragrances category of the cosmetics market may sell the least volumes but surely makes the most profit of all the product categories in this market. ‘Fragrances’ include all mixtures of essential oils and aromatic compounds that give the human body a pleasant scent. Common fragrance classes in the market include – Perfumes, Eau de Toilette, Eau de Parfum, Cologne and aftershave. Of all the cosmetic groups, the fragrances category is tightly dominated by major designer and celebrity brands.
Beauty Industry in East Africa5
Unilever’s Kenya division is the country’s market leader for personal care products. The company has a long standing presence in East Africa and the company’s success lies in aggressive advertising campaigns backed by a comprehensive range of quality products at an affordable cost. According to our survey, Kenyans alone spend about $60million a month on beauty products including soaps, cosmetics, fragrances, skin and hair care, and oral care products. According to L’Oréal East Africa, Kenya’s annual sales on hair products alone are worth over $230 million.

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