Key growth drivers in Nigeria’s personal care industry
Despite that the Nigerian personal care sub-sector has been badly beaten by challenges such as smuggling and unbridled import, absence of functional petrochemical industry, high energy and infrastructure costs, among others, the industry is beginning to wear a new look and see some growth. Key growth drivers in the sub-sector include the country’s population estimated to have reached 173.6 million (World Bank and the United States Census Bureau), rise in disposable income, internet-based advertising that influences spending on beauty, growth in retail outlets and competition, among others, Real Sector Watch can confirm.
Personal care (also toiletries) is the industry that manufactures consumer products used in personal hygiene and for beautification, according to Wikipedia.
“Competition and advertising were major factors in the performance of beauty and personal care in 2013,” said Euromonitor International, a global research firm, in its recent research on the 2013 performance of Nigeria’s personal care industry.
“With the increase in the construction of shopping malls in the country across different cities, hypermarkets and supermarkets are continuing to gain share of distribution in beauty and personal care,” Euromonitor said.
The research firm said internet penetration rate was also increasing through internet-enabled mobile phones, direct advertising and marketing, which also influence spending on beauty and personal care products in the forecast period.
Online retail outlets like Konga and other large outlets such as Shoprite and Spar also help to drive sales of personal care products manufactured locally or imported from other markets, checks have shown.
Key players are also ramping up investments to tap into the better outlook and prospects in the industry. Procter & Gamble (P&G) is investing $300 million at its plant at Agbara, Ogun State, to ramp up production of Always, Ariel, Bonux and Pampers, among others.
Similarly, Unilever Nigeria plc is also on $200 million investment drive for the production of Joy and Lifebouy soaps, Close-Up and Vaseline, among others, as confirmed by Paul Polman, its global CEO, who recently visited the country.
Moreover, PZ Cussons, also a key player, has also invested $130 million in the country, according to Richard Harvey, chairman, PZ Cussons, United Kingdom.
Also, local make-up/cosmetics industry provides huge opportunities for investors as it has an estimated annual value of $1.6 million, according to a research report by CIUCI Consulting, a Nigerian research firm.
The report says the market grosses annual revenue of N258.90 million. Indigenous make-up brands like Tara, BM Pro, Zaron, LISE, Arike and others, are creating interesting make-up lines that are now competing with foreign firms such as L’oreal, Estee Lauder, MAC and Sephora, among others.
More so, Dangote’s $9 billion prospective investment in refinery is expected to prop up this sector and reduce importation of raw materials from other markets.
The Manufacturers Association of Nigeria said in its 2013 sector review that players in this sector lamented the negative effect of double regulation by the National Agency for Food and Drug Administration and Control (NAFDAC) and the Standards Organisation of Nigeria (SON). The association said players complained about high charges for the SON’s Mandatory Conformity Assessment Programme (MANCAP).
The beauty and cosmetics industry is divided into skin care, hair care, make up, fragrance, and others.
The global beauty industry generated $35 billion in 2010, having recorded a yearly growth in excess of 4 percent for four preceding years.
Skin care had a market share of 33 Percent and 34 percent in 2011 and 2012, respectively, while hair care had 25 percent and 24 percent in 2011 and 2012. Make-up had a market share of 17 percent and 16 percent in 2011 and 2012, while fragrances had a market share of 17 percent and 13 percent in 2011 and 2012, respectively, Real Sector Watch gathered.
Face cosmetics is the leading segment of the market, with over $12 billion in sales revenue in 2010, accounting for 35 percent of the overall market value. However, market growth is expected to remain the same until 2015, when it will be valued at $42 billion.
South Africa, Nigeria and Kenya are top three countries with highest demand for make-up products in Africa. The market for face make-up is said to have grown by 35 percent between 2009 and 2014.
“Nigeria is the largest economy in Africa and 26th in the world. That of course means in Africa that when Nigeria sneezes others catch cold. For all the potentials, we have a lot of room for investors to come in and tap,” said Michael Olawale-Cole, immediate past president, Nigerian Institute of Management (NIM), and current chairman of the Trade Promotion Board of the Lagos Chamber of Commerce and Industry (LCCI), in an interview with Real Sector Watch.