- Title: Kenyan cosmetics entrepreneurs take on foreign brands in growing market.
- Date: 6th October 2016
- Summary: NAIROBI, KENYA (RECENT) (REUTERS) VARIOUS OF FLAME TREE GROUP FACTORY VARIOUS OF BOTTLES ON CONVEYOR BELT PACKAGED BOTTLES OF BODY LOTION (SOUNDBITE) (English) FLAME TREE GROUP CEO, HERIL BANGERA SAYING: "We know what the requirements of the local market are, for example the smells that are there in Kenya might not, or the fragrances that are put in the cosmetics may be popular in one country and not so popular in another country. So being a local brand we look at the requirements of each country, the price points, the colours that are required in the packaging that help sell the product." VARIOUS OF FACTORY WORKERS BOTTLING LOTION FROM MACHINE (SOUNDBITE) (English) FLAME TREE GROUP CEO, HERIL BANGERA SAYING: "We are competing with companies which are over 100 years old, so it's going to take time. These companies have had presence here locally over many years and they have larger resources so the time to become bigger than them or to compete with them fully is going to take time. But we believe that we have a niche, we manufacture products which are competitive and attractive to our consumers, so we are positive that we will grow and we will have market share." VARIOUS OF FACTORY WORKERS LOADING PRODUCTS INTO VAN
- Embargoed: 21st October 2016 15:45
- Keywords: Cosmetics Manufacturing Natural hair Beauty Brands
- Location: NAIROBI, KENYA
- City: NAIROBI, KENYA
- Country: Kenya
- Topics: Economic Events
- Reuters ID: LVA00752VA993
- Aspect Ratio: 16:9
- Story Text: Kenyan entrepreneur Lucy King'ori whips-up handmade hair products and cosmetics at her house in the capital, Nairobi.
In the quest for a remedy to ease her two-year-old son's eczema, Lucy developed natural soap, oil and butter formulas, which she now sells under her product line, Shea by Asal.
The brand has also grown in popularity among women who want to maintain their skin and hair with the least amount of chemicals possible.
"My clients mostly are people who look for natural solutions for their hair-care problems, kink hair issues because most of what we find in the market has about 10 percent to 20 percent organic ingredients and the other stuff is all artificial and most of the stuff costs an arm and a leg for no good reason," said Lucy.
Shea by Asal's range of products - from lip balm retailing at 3 US dollars to body butters for up to 20 US dollars, target middle class buyers with a flexible disposable income, but they are still markedly cheaper than the imported international brands that make up the bigger chunk of the market.
It's a full time job for Lucy to compete with the big brands - she markets and sells her products online and to beauty shops and salons across the country.
She also relies heavily on recommendations and personal contact with her customers - a major selling point that foreign brands don't often provide.
"I like the fact that it is natural. I know what is going into my system, into my skin, and I like the fact that I can call her and say 'Hey, I have this sort of skin and this is reacting, what could be the issue or can we change?' So there is that one on one service and I like that there is an after sale, so... and she is accessible," said Shea By Asal customer, Ciku Karanja.
There has been a proliferation of organic hair and beauty brands growing on the back of a natural movement sweeping across Africa and the rest of the world.
In Kenya, several small businesses are using the shift to provide local affordable alternatives.
So when the finance minister slapped a 10 percent excise tax on imports of cosmetics, the idea that these small businesses could further undercut global industry giants became more of a reality.
According to industry research, the local cosmetic market is worth approximately 53 million US dollars and is expected to grow to 66 million U.S dollars by 2018.
Big players with big pockets are entering the market by acquiring local cosmetic start ups already doing the business in an effort to claim their share of the growing industry.
Local cosmetics company Suzie Beauty was early this year acquired by Mauritian firm, Flame Tree - a Nairobi Securities Exchange listed company that produces and sells a variety of skin, hair and beauty products, for close to half a million US dollars.
Alongside its latest acquisition, Flame Tree already has a list of brands that target Kenya's low end, Fast Moving Consumer Goods Segment (FMCGS).
"We know what the requirements of the local market are, for example the smells that are there in Kenya might not, or the fragrances that are put in the cosmetics may be popular in one country and not so popular in another country. So being a local brand we look at the requirements of each country, the price points, the colours that are required in the packaging that help sell the product," said Flame Tree Group CEO, Heril Bangera.
Analysts predict that bigger, factory based manufacturers like Flame Tree are poised to grow their profits as the industry grows as businesses selling international brands hike prices to recover taxes.
Bangera sees this as the opportunity for local producers, big and small, to compete at a higher level than ever.
"We are competing with companies which are over 100 years old, so it's going to take time. These companies have had presence here locally over many years and they have larger resources so the time to become bigger than them or to compete with them fully is going to take time. But we believe that we have a niche, we manufacture products which are competitive and attractive to our consumers, so we are positive that we will grow and we will have market share," said Bangera.
From small start-ups catering to a growing middle class willing to spend more, to bigger companies targeting a larger low income market, analysts say the playing field is wide open. - Copyright Holder: REUTERS
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