Investing in South Africa's Cosmetics and Personal Care Sector - South AfricA Factsheet
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South
Africa
Factsheet
2020
Investing in South Africa’s Cosmetics
and Personal Care Sector
South Africa’s Cosmetics Cosmetics & personal care
revenues (US$bn), 2010-23f
and Personal Care sector 2.7 2.7 2.8 2.9 3.0
3.1 3.2
3.3 3.3 3.4 3.4
2.5 2.5 2.6
> South Africa is Africa’s largest market for
cosmetics and personal care products. In 2018,
US$bn
the sector recorded close to US$3.2bn in revenue.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019f 2020f 2021f 2022f 2023f
> Household spending on personal care products is
expected to grow by 25% over the next five years.
> The manufacturing of cosmetics contributes Cosmetics & South Africa US$3.2bn
about 1% to South Africa’s manufacturing personal care Nigeria US$3.0bn
output in 2018. revenues in Egypt US$2.5bn
Africa, 2018 Kenya US$1.5bn
> Hair care is the largest sub-category within the
Morocco US$1.4bn
cosmetics and personal care sector.
> Large multinational companies dominate the
Revenue by
personal care market in the country, accounting 9%
for 90% of sales.
category, 22%
2018 14% Hair care
Personal hygiene
US$3.2bn annual revenues Skin care
Fragrances
20%
17% Cosmetics
companies in
250 the formal sector 19%
Oral care
Why Demand
for organic Strong R&D
invest? natural products capabilities
South Africa has strong research and
South Africans have become more
development (R&D) capabilities in the
inclined to consuming organic skin
cosmetics industry. Companies have in
and hair products, with close to
Rising import one-quarter claiming that natural,
particular invested in R&D capabilities
related to African hair and skin care
demand organic or environmentally-friendly
products. Local expertise present
Imports of cosmetics have considerations influence their
opportunities for manufacturers to
almost doubled in the last purchasing decision.
supply the global multi-billion
10 years, presenting
dollar African hair and skin
opportunities for localising
production.
+US$ care market.
13bn Multi-billion
US$ global organic
personal care
dollar African
Access to skin and
639m market hair care
cosmetics natural ingredients market
imports South Africa is rich in natural plants
Well-established
in 2018 generally required to produce organic skin/
retail network hair products. Locally produced ingredients
South Africa has the most established include: Aloe ferox, buchu, marula, baobab,
retail network in Africa. The three honey bush, rooibos etc. Given the current
dominant retailers in the sector high dependency on imported raw
1000+ operate more than 1 000 drugstores
and pharmacies. This provides
materials, indigenous ingre-
dients present an opportunity 80%
drugstores ready access to consumers and to reduce this import
and simplifies distribution across of raw materials
dependency. are imported
pharmacies the country.
Where to invest?
> Key manufacturing and distribution hubs are mainly located in Gauteng, Western
Cape, KwaZulu-Natal, Eastern Cape and North West provinces, where major areas
of economic activity and consumer markets are located.
gauteng
• Largest share of
> Urbanised Johannesburg, Pretoria, Cape Town and Durban have relatively high
South African
purchasing power and population concentration, making them attractive markets
population
for cosmetics.
• Population:
14.3 million
north west
• Population:
3.9 million LIMPOPO
GAUTENG MPUMALANGA
Pretoria
Johannesburg
NORTH WEST
FREE STATE KWAZULU
-NATAL
Durban
NORTHERN CAPE
kwaZulu-Natal
• Second largest
EASTERN CAPE share of South
African population
• Population:
WESTERN CAPE 11.1 million
Cape Town
Average individual income
eastern cape
Western cape Johannesburg R446 838
• Population:
• Population: 6.5 million Pretoria R371 691
6.6 million Cape Town R340 802
National average R315 768
Durban R303 409
1 st in
L’Oréa 2016:
Resea l opened it
rc s
Cente h & Innova
r in So tion
the fir uth Af
st in A rica, Key investors in South Africa’s cosmetics industry:
the 6 th f r i c a and
globa
lly.What support exists?
> South Africa offers a forward integrated value chain, including distribution, packaging and
supplying finished products to retailers.
> South Africa provides a favourable enabling environment for the cosmetics and personal
care industry. The South African government and industry players offer support through
various incentive programmes and skills development support for the industry:
Innovation Support Financial Support Skills Development Export Support
Innovation support The 12i Tax Incentive Support the dti’s Export
is available through is designed to support A number of institutions Marketing and
programmes such as Greenfield investments offer skills development Investment Assistance
the Support Programme (i.e. new industrial programmes and training (EMIA) and the Sector
for Industrial Innovation projects that utilise courses for the sector. The Specific Assistance
(SPII), the Technology only new and unused institutions include: Scheme (SSAS) as well
and Human Resource manufacturing assets), • Chemical and Allied as the Cosmetics Export
for Industry Programme as well as Brownfield Industries Association Council of South Africa
(THRIP) and the SEDA investments (i.e. (CECOSA) provide
• UCT’s Hair and Skin
Technology Programme expansions or upgrades support for exporters to
Research Laboratory
(STP). The Technology of existing industrial develop and succeed in
in the Division of
Innovation Agency projects). The incentive export markets.
Dermatology
(TIA), CSIR and various offers support for both
universities support capital investment and • Society of Cosmetic
research and development training. Chemists (COSCHEM)
efforts in cosmetics- Other sources of finance • Cosmetics Toiletry
related fields. include the Industrial Fragrance Association
Development Corporation (CTFA)
(IDC), National • South African
Empowerment Fund (NEF) Association of the
and the Small Enterprise Flavour & Fragrance
Finance Agency (SEFA). Industry (SAAFFI).
What are the opportunities?
> South Africa’s cosmetics and personal care industry has a strong focus on R&D, with recent innovations including
reducing the environmental footprint of packaging and introducing natural organic products and eco-friendly/
biodegradable packaging. Existing opportunities in the industry make South Africa an attractive investment hub.
Investment opportunities include:
• Fragrance-free and high quality fragrance products • Production of ingredients that comply with international
for distinct niche segments market requirements in the production of organic or
• Personal care products for the male market natural cosmetics products
• Development and production of ethnic skin and • Production of multifunctional products with a focus
hair products upon wellness
• Manufacturing of cosmetic products, packaging • Safety testing of cosmetic products produced locally
and distribution across retail stores • Supply of quality affordable beauty productsHow to invest?
Opportunity Go Investment Investment
identification ahead preparation execution
Conduct • Decide on geographic • Acquire/lease site,
1 feasibility study location most suitable rent office space
for your products for investment • Apply for municipal
and services • Consult property services (e.g. water,
Location specialists, real estate electricity)
identification agents to identify
Evaluate
2 outcome of
suitable offices for
operations
feasibility study
• Conduct site visits of
suitable locations
Take investment
3 decision
• Consult with HR/ • Conduct interviews,
recruitment agencies hire staff
Decide on
4 investment
about staff requirements • Apply for work permits
• Determine immigration for expatriate staff
strategy in order
Resourcing requirements • Open a bank account
to best align
requirements • Determine funding • Apply for finance
to the market
(HR, capital, model (e.g. self-funding,
• Set-up IT infrastructure/
opportunity debt, equity)
finance, IT) systems
• Consult with IT systems
providers
• Determine corporate • Register company
structure • Apply for licenses
• Determine licensing and and permits
permit requirements • Apply for National
Compliance • Consult with labour Level Incentives
and legal affairs lawyers Schemes, Skills
• Consult with InvestSA and Other Support
to identify eligibility for Programmes
incentives, skills and
other support initiatives
InvestSA ready to assist
2 0 15: the
1s in huur and own
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o o t e Sc f Cape ’s
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first kin cos
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andKey contacts for more information
InvestSA
+27 861 843 384
Investsa@thedti.gov.za
http://www.investsa.gov.za/
the dti
contactus@thedti.gov.za
http://www.thedti.gov.za/
Rashmee Ragaven
Director: Advanced Manufacturing
Invest South Africa
Department of Trade and Industry
+27 (0)12 394 5929
RRagaven@thedti.gov.za
Paulina Mamogobo
Deputy Director: Cosmetics and FMCG
Invest South Africa
Department of Trade and Industry
+27 (0)12 394 1211
KPMamogobo@thedti.gov.za
Information sources
BMI, various years; the dti, various years; EIU, 2019; GlobalData, 2019; Grand View
Research, 2018; Insights Survey, 2018; MarketLine, various years; Statista, various years;
Technology Innovation Agency, various years; Unilever, 2017; Who Owns Whom, 2017 Research partner |You can also read
