Market Concentration / Product Usage: East Africa
MARKET METRICS OF THE EAST AFRICAN MARKET
The beauty and cosmetics market in the study area of Kenya, Tanzania, Uganda, Mozambique and Ethiopia is worth approximately US$1.3 billion and is projected to grow to $1.8billion by 2018. Hair care and skin care
products are by far the most sold items in the study area except for Mozambique, where bath and shower products like soaps and shampoos emerge as the leading sellers in the cosmetics and personal care sector, The value of the total Sub Saharan African beauty and cosmetics care market is estimated to be around $8.8 billion in 2014 and is expected to grow to $11.3 billion by 2017 with an expected annual growth rate of 8%-10%. Comparatively, the global beauty industry growth rate is around 4%.
Perhaps an added advantage for sub-Saharan Africa is that 70% of its population is under 30 which means that most of the people are young and provide a ready market for luxury goods which includes cosmetics, toiletries and perfumes. The westernisation of African consumer preferences, advances in aggregate economic conditions, and projected reduction in dependency ratios (the proportion of the total number of dependents in the country – i.e. those younger than 15 and those aged 65 and older – to the working-age population) all point towards a future growth engine of luxury goods demand – such as beauty products, cosmetics and perfumes in the overall East African market.
More and more women in the study area of East Africa are overcoming the fear of powdering their face and have hence embraced the use of cosmetics for their personal grooming. Men have also followed suit and are frequently seen in beauty parlours for manicure, pedicure and haircuts.
Cities attract and concentrate about 40% of the total African population and are expected to exceed 500 million individuals by 2016. This urbanization represents a positive trend for the Beauty and Personal Care market, since urban consumers are wealthier (urban incomes per capita are on average 80% higher than those of countries as a whole, according to Canback Global Income Distribution Database), their spending trend is twice as fast as rural spending and they are more easily reached by brands thanks to their geographical concentration in specific areas.
The tripling in the size of East Africa’s middle class over the last 30 years, coupled with increased urbanisation, are driving the growth of the region’s cosmetics industry and markets
On the other hand, the size of the beauty industry in the combined Middle East and Africa region is valued at US$22 billion in 2014 (which translates to around 4.5% of the global total), with South Africa contributing US$3.4 billion, while Nigeria and Kenya have the second and third largest industries in Sub Saharan Africa, respectively.
On a global scale, toiletries account for around 30% of total sales while skin care and hair care each contributes a further 20%, and make-up and fragrances 10% each. The skin care category saw the biggest increase in its share of the global market between 2008 and 2012, followed by men’s grooming. However, the category seeing the largest decline in its share over this period was fragrances.
In our study area, however, the trend was more towards skin care and hair care products – which were clearly the most popular products with consumers. Only in Mozambique, the sale of Bath & Shower products exceeded the sale of hair care and skin care products. We predict that the market in Mozambique will also fall into the pattern of sales similar to other countries as the market for cosmetics and beauty products expands in size and stature in the country in the coming years.