Overview of the African Cosmetics industry and opportunities for European companies

The South African cosmetics industry

The South African cosmetics industry is one of the largest personal care markets on the African continent. The industry employs about 50 000 people and contributes about €1.4 billion to the retail market and more than €280 million to the manufacturing industry. The fragrance, eye, face and lip make-up cosmetics sectors are considered the most promising industries in South Africa over the forecast period.
The opportunities for your business are multi-faceted.
In terms of channel trends, the E-Commerce sector is expected to see strong growth, supported by increasing internet usage and the growing focus on the online presence of existing brands. As potential African buyers gain greater access to the internet, the online market for the purchase of consumer goods in South Africa has already seen rapid growth over the past four years. With the unexpected increase in online presence due to the COVID-19 pandemic, further growth is predicted in the future.
Products that specifically cater to the needs of the male consumer market are seen as a sector with great opportunities for the local cosmetics and toiletries industry. According to CNBC, the male beauty industry has a billion-dollar growth opportunity. Globally, the number of men who routinely spend money on beauty products increased to 17% in 2015, with the South African market showing similar growth rates.

Local demand for cosmetics is strong in South Africa and the government is supporting companies in this sector to grow and buy locally rather than import. The global and local shift towards organic or natural cosmetics, as well as the availability of a range of natural raw materials, also provide good investment opportunities.
There is a shift in preference towards cosmetic products made from natural ingredients. According to a Euro News report, this shift in preference is particularly prominent for skincare products, organic and eco-friendly products, "wellness" products, African hair care products and the use of raw materials.
It is also important to note that companies are increasingly avoiding any form of animal testing, which includes avoiding the manufacture of products that contain animal products.
The export strategy for natural South African ingredients encourages producers to use natural ingredients from South Africa, which currently include aloe ferox, buchu, marula, baobab, honey bush, rooibos and devil's claw, all of which are indigenous to South Africa.

Key factors in South Africa

  • Revenue in the Personal Care segment is expected to reach €224 million in 2021.
  • Revenue is expected to grow at a compound annual growth rate of 8.2%, which is forecast to lead to a market volume of €271 million by 2025.
  • User penetration will be around 10.7% in 2021 and is expected to reach 15.5% by 2025.

The cosmetics industry in the rest of Africa

The industry in Africa is considered the "next frontrunner" in the beauty and cosmetics industry and it is therefore no surprise that the key players in the industry want to make the most of the predicted boom.
Of the global beauty and cosmetics industry value of €329.8 billion, Africa currently contributes only 3%, yet there is money to be made. It has been noted that consumer spending on cosmetics in Africa will increase, encouraging players such as L'Oréal and BASF to expand their presence on the African continent.
The cosmetics sector in Africa is expected to grow further in the coming years. Overall, the African beauty and personal care market was estimated at €9.2 billion in 2018 and is currently growing between 8% and 10% per year, with a global market growth rate of almost 4%.

Key figures of the cosmetics industry in Africa:

As consumer spending in Africa continues to rise, it is not surprising that big companies like L'Oréal are starting to invest in their own factories and laboratories in Africa. The German chemical company BASF has recently opened its personal care application technology laboratory in Lagos, Nigeria. This further emphasises the fact that the industry offers more business potential than just the market for finished products.

In Nigeria in particular, the beauty and personal care industry sector has the potential to reach a turnover of €3.2 billion by 2022, making Nigeria the rising star of the sector in West Africa.

Kenya is also showing promising opportunities in the beauty and cosmetics sector for greater expansion. The country has a well-developed infrastructure, ranking third in sub-Saharan Africa behind South Africa and Nigeria. Cosmetics brands such as Victoria's Secret, Freeman and Mary Kay are already using Kenya as a regional hub that provides access to the larger East African market.

According to 2018 statistics, the African beauty and personal care industry is expected to exceed €12 billion by 2022. The likelihood is high as Africa has one of the fastest growing populations and is estimated to have a population of 1.5 billion by 2022.
According to the African Cosmetics Directory, given the existing demand for local and international products, African consumers generally expect high-quality products that are both reliable and affordable.