Uganda: The Market for Beauty Products & Cosmetics

By on October 23, 2015
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Uganda does not have the same market size as Kenya, its middle class did grow 26% in size between 2010 and 2014. In Market Leadersfact, Uganda expects a population explosion – within the next few decades, the nation is likely to have the highest population growth in the world. According to latest available figures, The Uganda beauty and personal care sales grew at a value CAGR of 16% over 2009-2014 and reached $210 million.

The largest product categories are Hair Care and Bath & Shower products. Per capita expenditure stood at $5.6 in 2013, compared to $13 in Kenya and $4.3 in Tanzania. Sales are led by strong international brands that are mostly distributed out of neighbouring Kenya. In an industry dominated by international brands and further more local sector leaders it is critical that a niche is established coupled with stringent quality controls and extensive advertising/marketing to tap into this lucrative sector.

Market Leaders
The industry as it is dominated by international brands like L’ Oreal, Unilever, Johnson & Johnson et al that have penetration and pedigree world over. If you plan to enter the Ugandan beauty market, these are the big players your product will be up against.

In the last few years, Uganda has seen considerable growth in the cosmetic industry with pioneers like Mukwano Group, Mwana Mugimu, Sleeping baby, Movit and the timeless Samona Jelly making progress and opening up the market space for other local and regional players.

One of the latest entrants in the beauty and skin market is AMAGARA (www.amagaraskincare.com) who in a short time have launched a quality product with a wide range (using natural fruits and vegetables like vanilla, avocado et al). With experience of having rolled out successful household brands in soaps, detergents, cooking oil, bottled water, flour, et al Mukwano Group dwelled into the manufacture of bath (Meditex & Yeyo soap), and laundry soap varieties (Chapa Nyota & Star).

The cosmetic and beauty industry is highly lucrative, but success is hinged on focussing on target markets and categorising of a particular product for sale. The market for cosmetics in Uganda requires a strategic plan that addresses specific needs of the local consumers. This is, by far the crucial factor, that breaks or makes any product in the local market.

Ugandan beauty and personal care sales are, however, fairly undeveloped. Basic economy products such as bar soap, shampoos, men’s razors and blades and toothpaste account for the bulk of sales. More sophisticated products such as liquid soap, facial skin care and depilatories see little demand.

A substantial share of sales are derived from unisex products. Due to the strong price-sensitivity of local customers, counterfeit products from China or Kenya are also popular in open-air markets. Currently, the market is highly dominated by International brands as already mentioned above, but also newer entrants like Oriflamme have
established themselves in Uganda.

This might explain the concentration of local players Samona and Movit on the mass market (lower classes) as opposed to the Middle and Upper class who purchase cosmetics on basis of prestige and luxury. Training beauticians is also big business in Uganda. There are a number of local institutions like the YMCA Comprehensive Institute, Tiner International School of Beauty and the famous Oriflamme’s Beauty Academy, which offer certificate, diploma and advanced diplomas in beauty-related courses.

Short training courses are also offered at the Uganda Industrial Research Institute (UIRI) which has a dedicated skin care section with a fully equipped laboratory and offers free hands on training.

Information dissemination
Our study noticed that information about new cosmetic and beauty products is lacking in Uganda. The cosmetics industry needs to educate customers in Uganda about their latest products through information dissemination. This is a need in Uganda for customers to view the latest products, quality assurance and ways of accessing the product. As the world becomes more of a global village, and particularly for Uganda where the bulk of the population is Millenials (who have grown up with the internet), the internet is a key driver in this regard. Hence, our advise on the urgency for cosmetics and beauty products manufacturers, dealers and traders to have a well-designed websites that communicate the power and message of the brands they sell.

Business Opportunity
A walk through some of Kampala’s major supermarket, markets, reveals that the hair and skin care products like conditioners, lotions, soaps, shower gels, hand washes, and petroleum jellies were all imported. The largest share of beauty and personal care imports comes from Kenya, South Africa, Indonesia and the United Arab Emirates. A quality product backed by superior packaging, and pricing introduced in the Ugandan market is sure to be an instant hit. The Ugandan market will embrace and welcome such a product as long as it meets the international standards of
quality.

There are around two million residents in Kampala, earning on average two to three times higher incomes in comparison to residents of the country’s northern and eastern regions. Therefore, Uganda’s capital city offers the best sales opportunities for cosmetics and beauty products.

Market Leaders3

The Ugandan population is among the world’s youngest and fastest growing. Over half of Ugandans are under 18-years-old. When entering adulthood, these individuals will offer huge potential for all kinds of goods and services. Moreover, growing income levels emergence of new retails spaces like shopping malls and shopping complexes will drive sales of cosmetics and personal care products over the forecast period – recording a CAGR of approximately 11% between 20114 and 2018.

Distribution Channels
The majority of consumer transactions in the country take place in informal channels. Most beauty and personal care products are distributed via supermarkets, convenience stores, chemists/pharmacies, beauty specialist retailers and open markets.

The widest product diversity is however only available in urban areas, while rural consumers can access only a narrow product range. However the number of modern retail stores is expanding, gradually increasing the penetration of official trade.

Market Leaders2

This is expected to prove very positive for nearly all consumer goods categories, sales of which are hindered by unofficial trade. The demand for higher end beauty products is already there, but the retail set-up is not. MTJ Cosmetics started selling through a year ago from a private salon in Kampala. Mostly, beauty shops in Uganda sell a mix of everything but big reputable brands seek exclusivity.

That has left the market open to some unique strategies. Many retailers travel to places like Dubai and bring products back in suitcases. Beautyworld Middle East, a major trade show held in Dubai every year, has seen a four-fold increase in visitors from Uganda between 2012 and 2014.

Others forgo store-fronts entirely, and employ unique selling techniques. For example, in five years, US-based Forever Living, which has a range of cosmetic and beauty products, signed up more than 30,000 Ugandans to sell door-to-door on commission basis. By reaching out to consumers, especially in rural areas, the company is seeing growth and projecting to expand more.

Quality Standards
The Pre-export Verification of Conformity to Standards (Pvoc) program was introduced by the Uganda National Bureau of Standards and covers cosmetics in addition to electronics and food products. The new legislation introduced in 2010 require cosmetics traders to have their goods inspected in their countries of origin. This has created further problems for small Ugandan importers, who are now afraid that bureaucrat delays will make it impossible for small cosmetics companies to conduct business and compete with multinational firms.

With Pvoc, government has already blacklisted several cosmetics dealers. As a result, cosmetic dealers in Uganda fear that the inspection of products would cause them bureaucratic delays and will make it difficult to trade in cosmetic goods and beauty products.To circumvent the stringent Pre-export Verification of Conformity to Standards (Pvoc) laws, certain traders in Uganda have been found to be selling medicated creams solely intended to treat skin diseases and passing them off as skin whitening cosmetics to unsuspecting consumers.

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