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Beauty & personal care in SA

Poor economic growth

South Africa continued to experience sluggish economic growth in 2013 coupled with high unemployment, high inflation, poverty and income inequality. Rising utility costs, particularly electricity and fuel, continued to add further strain to consumer disposable incomes. Despite the sluggish overall economic climate, the market for beauty and personal care products remained relatively resilient in 2013, reflecting value growth of approximately 10%. This may be attributed mainly to aggressive competition and price promotions across various product categories.

Private label adds further competition to mass segments

Consumers, particularly cash constrained consumers, are increasingly seeking value in terms of price and quality; grocery retailers and parapharmacies/drugstores have responded to the increasing demand for value offerings and expanded their private label portfolio across the vast majority of margin-attractive beauty and personal care categories. Optimal positioning on in-store shelves is increasingly being used by retailers to position private label products alongside leading branded goods. It is anticipated that over the forecast period, the market is likely to witness increased activity and penetration of private label products, mainly due to the high margin and branding opportunities that exist.

Consumers remain value-conscious

Manufacturers continue to acknowledge and respond to consumer demand for value offerings by providing products that give value in terms of price and quality. Cash constrained consumers continue to look for both value for money and added value products in an attempt to maximise their disposable incomes. The expansion of private label offerings across the vast majority of beauty and personal care categories has resulted in increased competition amongst industry players and provided further incentives to players to continually improve product quality so as to maintain their market positions.

Grocery retailers continues to lead the segment

Grocery retailers continued to play a key role in the distribution of beauty and personal care products, particularly towards the end of the review period. This owed mainly to the expansion of product portfolios, expanding audience reach, an increase in the variety of private label products offerings and extensive price promotions. The consumers of mass beauty and personal care products continually turn to supermarkets and parapharmacies/drugstores for beauty and personal care products, while upper-middle and high-income earners tend to favour beauty specialist retailers and department stores, where premium products are listed.

Steady growth anticipated over the forecast period

The beauty and personal care market is anticipated to witness fairly stable growth over the forecast period owing mainly to the anticipated rise in average disposable income, coupled with the anticipated decline in inflation levels. Product innovation and price promotion are expected to drive overall growth over the forecast period.

Skin care in South Africa

Skin care in South Africa continued to perform well in 2013, reflecting value growth of 10%. Leading mass players continued to innovate within the category, launching new products over the review period; the demand for value-for-money and value-added products drove consumer consumption within the category.

Skin care continued to be dominated by Unilever South Africa, which held 24% of current value sales in 2013. Avon Justine and Beiersdorf Consumer Products ranked second and third with value shares of 13% and 11%, respectively. Other players included and are not limited to Tiger Consumer Brands, Johnson & Johnson, L’Oréal South Africa, Procter & Gamble and Amka Products.

Skin care is anticipated to witness a value CAGR of 2% at constant 2013 prices over the forecast period. Leading players are expected to dominate with each player attempting to differentiate their products and meet and exceed consumer expectations. The category is likely to see further development of products targeting skin care needs such as hyperpigmentation, excess oil, ageing and hydration.

Hair care in South Africa

Ethnic consumers in South Africa are increasingly demanding products that are less damaging to their hair; women particularly are shifting towards natural hair styles that are chemical-free and are trying to grow their hair out. These groups of women are looking for solutions that allow them to treat damaged and broken hair and stimulate overall hair growth in the least harmful way possible. As a result, products are increasingly specifying sulphate-free formulations on packaging.

L’Oréal South Africa led hair care with a value share of 28% in 2013, followed by Procter & Gamble, Unilever South Africa and Amka Products with value shares of 17%, and 14% each for the latter two. Each of the leading players holds extensive product portfolios, including heritage brands, and competes aggressively to maintain their positions.

Hair care in South Africa is anticipated to witness a negative value CAGR of 1% at constant 2013 prices, over the forecast period. This may owe to the mature nature of hair care, coupled with aggressive competition and rising average unit prices that are anticipated to continue over the forecast period.