This is free marketing research on the cosmetics – South Africa industry and can include information on the background, market structure, definitions, competitors, trends and developments of cosmetics in South Africa and is related to other topics such as beauty, fashion and retail.

South Africa: Cosmetics and Toiletries Market

Table of Contents

1 Market Demand 
2 Market Data 
3 Best Prospects 
4 Key Suppliers 
5 Prospective Buyers 
6 Market Entry 
7 Market Issues and Obstacles 
8 Sources

The South African cosmetics industry is competitive and sophisticated. The sector has recently recorded its fastest growth since the country’s first democratic election in 1994, which marked the end of Apartheid. Industry sources claim that the South African cosmetic and toiletries industry grew by approximately 45 percent during the last two years. Currently it has an estimated value of over $ 3.4 billion (R24 billion) and it is predicted that it will grow by 15 to 20 percent in the coming year.

As a consequence of the end of Apartheid and the lifting of sanctions, a considerable number of multinationals came into the South African market for the first time in the last decade, bringing new brands and increasing competition to the local market. On the high-end of the consumer market, there is a trend towards premium products, especially those with anti-aging properties. At the same time, with the growth of the middle class and increased spending power across many socioeconomic groups, there is now demand for affordable but reliable quality ethnic skin care and hair products.

Market Demand

South Africa has a population of approximately 44 million people of which the adult population is over 29 million, 14.7 million are adult females and 14.04 million are adult males. Consumer demand for cosmetics and toiletry products has created a robust local industry and manufactures are emphasizing more and more products specifically geared for local skin and hair types. The industry is set to grow continuously for the next five years particularly in the following market segments: cosmetics, sun care products, hair care and treatment products (particularly hair pieces and wigs) and specialized facial creams for the ethnic skin/hair market. According to industry sources, there are over 15 million potential consumers in the ethnic hair (maintenance) market alone.

There continues to be a growing interest in international brands, but for the most part, imported products remain unaffordable for most South Africans. Consequently, price rather than brand loyalty is still the biggest deciding factor among lower income consumers. There is therefore a demand for cost-effective but quality products. New entrants (especially those not known to local consumers) are usually most successful with a significant advertising budget, adequate sales promotions and strategic pricing to ensure successful market entry.

Cosmetic, toiletries and fragrances imported into South Africa cater primarily for the local market, but Increasingly, cosmetic companies are expanding their business to the greater SADC (Southern African Development Community) region. The SADC is comprised of Angola, Botswana, Lesotho, Namibia, Mozambique, Malawi, Mauritius, Democratic Republic of Congo, Tanzania, Swaziland, Seychelles and Zimbabwe .The SADC has a population of over 180 million people and countries such as Zambia (5.3 percent) and Angola (16.3 percent) are showing rapid GDP growth.

Market Data

The United States currently faces a cosmetic and toiletry trade deficit with South Africa. Cosmetic imports from the United States grew by almost 15 percent for the period 2006-2007, while South African exports to the United States for the same period increased by 47 percent. According to the South African Department of Customs, the United Kingdom is the largest exporter of cosmetics and toiletries to South Africa (in value terms), followed by Germany, France and the United States. Imports are growing from the East also.

Best Prospects

Listed below are some of the products presenting best prospects for the country:

• Anti-aging beauty products
• Hair color and maintenance (after care) products for ethnic hair
• Hair care maintenance products for hair pieces (wigs)
• Ethnic skin care products
• Spa products

Spa products are mentioned since the South African Spa and Beauty Salon industries have experienced a one thousand four hundred percent growth rate over the past two years, with more than 140 spa venues presently in operation (from the original ten spas a few years ago) countrywide, offering half-day, full-day and evening spa facilities to consumers. These locations offer luxury treatment options to middle and high-income consumers, and specially to corporations who offer incentive packages to their employees.

Key Suppliers

The principle U.S. and international cosmetic brands available to the South African market include:

• L’Oreal
• Colgate-Palmolive
• Estee Lauder
• Revlon
• Reckitt Benckiser
• Wella
• Ladine
• Unilever
• Maybelline
• Sally Hansen
• Clinique
• Max Factor
• Elizabeth Arden
• Avon
• Gatineau

High-profile local cosmetic manufacturers include Dermaxime, specializing in anti-aging treatments and SDK Agencies, a contract color cosmetics manufacturer. Direct selling has become popular in South Africa in the last decade. The following cosmetic Houses who sell directly through beauty consultants and agents offer a full spectrum of beauty and personal care products: Annique, Environ, Avroy Shlain, Nimue, and Virgin Cosmetics (recently launched in South Africa).

Prospective Buyers

Prospective buyers for large volumes of cosmetics, toiletries, and fragrances include major retail chain stores, department stores, pharmacy chain stores and wholesalers - who in turn sell to smaller retail stores. The spa industry buyers seek exclusive - often organic-products, frequently customized for that specific industry.

Examples of cosmetic product pricing in South Africa

Cosmetic product             Brand name                  Volume Market               Price

Foundation creams            Yardley Super Star          30 ml                       R70 ($10)
Lip make up                  Dior Rouge                  15ml – 1 stick              R225 ($32)
Eye make up                  Clarins Color Quartet       1 compact - 4 shades 3.4g   R335 ($48)
Anti-aging facial cream      ROC Retin-Ox                50ml                        R350 ($50)
Nail preparations            Girl2Go French manicure     2 bottles - 10ml each       R35 ($5 )
Hair color L’Oreal           Velvet Browns developer     72ml, color 48ml            R80 ($11)
Hair relaxes L’Oreal         Soft & Sheen                450ml                       R60 ($8.50)
Salon quality shampoo        SAMY Salon Systems          75ml                        R49 ($7)
Self tan suntan lotion       Rimmel Sun Shimmer          50ml                        R80 ($11)
Female fragrances            Jean Paul Gaultier Summer   100ml                       R495 ($70)
Male Fragrances              Hugo Boss                   100ml                       R480 ($68)

Market Entry

For international companies to enter the South African cosmetics and toiletry market it is imperative to find a local representative, distributor or agent. South African industry is extremely brand and supplier loyal, and the quickest road to success in the market is teaming up with a well established, and widely networked local partner.

The U.S. Commercial Service in South Africa offers a number of services enabling U.S. firms to achieve their goals in the Southern African market. For more information on U.S. Commercial Service products and services, contact Luisa.D.Santos@mail.doc.gov.

Market Issues and Obstacles

There are no major issues or obstacles regarding importation of toiletries, cosmetics or fragrances into South Africa. However, if cosmetics, hair care or skin care products claim medicinal ingredients, they will need to be registered with the Medicines Control Council of South Africa (MCC). According to industry sources, the process can be tedious, long and complicated.

The South African cosmetics industry also battles a steady influx of counterfeit “fine” fragrances and cosmetics from the East and neighboring countries. In an effort to minimize counterfeit trading, the local Cosmetics, Toiletry and Fragrance Association (CTFA) established the “Association Against Counterfeit Goods” in April 2006. The Association is tasked with ensuring the tracking, confiscation and destroying of counterfeit fine fragrances and cosmetics.

The South African cosmetics and toiletry industry is largely self-regulatory. Regulatory requirements developed by the CTFA, the South African Government, the South African Bureau of Standards (SABS) and the local cosmetics industry, are based on E.U. cosmetic directives. The advertising of cosmetic products is closely regulated by the Advertising Standards Authority (ASA). ASA regulates the cosmetics industry in terms of false or unsubstantiated product claims, the use of illegal ingredients, and protects customers against the advertising of substandard cosmetic products. South African Governmental regulations relating to the ingredients of cosmetic products are included in the Foodstuffs, Cosmetics and Disinfectants Act 54 of 1972 (for the complete Act browse to http://www.doh.gov.za/docs/legislation/acts/1972/act54.htm).

As mentioned earlier in this report, cosmetics, toiletries, hair care or skin care products containing medicinal ingredients such as for example, Sodium Hyalorunate or Hyaluronic Acid, have to be registered with the MCC under the Schedule 4 of Act 101, Medicines and Related Substances Act. Applications for temporary registration can be accessed via http://www.mccza.com, and completing forms Application for Registration of a Medicine (MRF 1) and fill in Part1, 2 & 3. Also, any product placed in the cosmetic or toiletry trade must include the listing of any of 26 allergens if present in the product. The presence of the allergen must be indicated in the list of ingredients in INCI nomenclature when its concentration exceeds 0.001% in leave-on products and 0,01% in rinse-off products. For a list of the 26 named allergens visit www.ctfa.co.za

Trade Events

Body Beautiful Expo
8-9 March 2008
Gallagher Estate, Midrand
Contact: Dee Reuvers
Tel: +27 (0)11 805 5940
Fax:+27 (0)11 805 5944
http://www.nichepro.co.za

Women Show Johannesburg
25-27 April 2008
Sandton Convention Centre, Sandton, Johannesburg
Contact: David Wolstenholme
Tel: +27 (0)21 671 0935
Fax: +27 (0)21 671 0176
http://www.women-show.com

Beauty Africa
2008 - dates still to be decided
Sandton Convention Center, Johannesburg
Contact: Claire Bowman
Tel: +27 (0)11 549 8300
Fax:+27 (0)11 549 8500
http://www.saconvention.co.za/content/events

Sources

U.S. Department of Commerce