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Market watch: Africa credit: istock Regional overview The next frontier Sub-Saharan Africa has been designated the new emerging market to watch. BW Confdential analyzes the market’s potential, as well as the challenges companies are facing there by Alex Wynne he challenges are manifold, but the leader in the region, while Germany’s Beiersdorf population growth coupled with consistent Topportunity is there—such is the message and US-based P&G also have strong positions; GDP increases over the next decade—namely, being put out by the world’s beauty players however, there are a also a large number of Uganda and Mozambique—will be the ones to when it comes to Africa. Sub-Saharan Africa local brands and Indian companies, and in watch in the coming years.” currently accounts for around 3% of the global recent years, more Chinese players have entered beauty industry, and the market is estimated the market. Haircare dominates, but room for growth to be worth €2.7bn, according to L’Oréal. While South Africa represents the lion’s share Haircare is reportedly still the category with the (Euromonitor International, however, puts the of the market, beauty companies are beginning most potential—and even though it already size of South Africa’s market alone at $3.7bn, in to invest elsewhere on the continent, where accounts for the majority of the market in most terms of retail sales.) the market is expected to accelerate, due to countries, there is still plenty of room for growth, With growth slowing in other markets, beauty increasing purchasing power and urbanization. according to Benoechea. Haircare accounts players are looking to tap into the continent’s “The most promising markets are either high for around two thi rds of L’Oréal’s sales in the potential for the years to come. The middle class in population density and/or have reached region, for example. in Sub-Saharan Africa counts 300 million people, the lower middle income bracket,” says Meanwhile, deodorants, including body around 34% of the population, and could reach Euromonitor International research analyst sprays, are popular for their low price points in one billion by 2060, according to the African Izaskun Benoechea, citing Nigeria, Angola and comparison to fragrance. “Skincare and color Development Bank. the Democratic Republic of Congo as markets cosmetics also offer vast potential for consumers The market is highly fragmented, with no to watch. who can afford toiletries, and manufacturers are company commanding more than a 15% share. “Countries starting from a lower base, in quickly increasing the number of skincare and Anglo-Dutch group Unilever is the undisputed terms of per capita income, but expecting huge color ranges,” Benoechea continues. 50 September-October 2014 - N°19 - BW Confidential