It may be the Chinese New Year, and growth in China still does much to excite beauty executives, but in recent months some of the industry’s big players have become a lot more vocal about other new markets, namely Africa. Just this month, P&G ceo Bob McDonald commented that Africa was the “next frontier” for the group and underlined that this is a key market for reaching its goal of serving five billion consumers by 2015. He added that business had come back “very strongly” in North African markets, such as Tunisia and Libya following revolutions there.
This talk is remarkably similar to that at rival L’Oréal. The French group said that it would begin to accelerate its development in Africa this year and created a new managing director position for the Africa and Middle East zone in October 2011. It also opened a new subsidiary in Kenya in December to develop East African markets, a move that came just two months after the inauguration of another subsidiary in Nigeria. These initiatives are part of L’Oréal’s objective of adding one billion new consumers over the next 10 to 15 years.
In the region, South Africa is an example of a high-growth market. Between 2005 and 2010, sales of beauty and personal-care items grew by more than 75% to 25bn rand ($3bn), according to market-research group Euromonitor. Growth has been driven by the entry of new brands and the launch of innovative retail formats by major department-store operators. There is also a whole new generation of home-grown and natural brands coming onto the market, such as Savane Organic Skincare or Malee bodycare.
South Africa, however, is very different to the rest of the region. And although the continent’s demographics may get marketers excited, growth at least in short term and in most countries there is likely to be limited to mass-market cosmetics and haircare products. Prestige may have to wait a little longer, but at least the groundwork is already being laid.
For more analysis on upcoming trends in the beauty market go to BW Confidential’s website: www.bwconfidential.com