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L’Oréal’s African heartbeat

With the transfer of L’Oréal’s Research and Innovation Centre for African hair and skin to Johannesburg, Geoff Skingsley, Vice-President for Africa and the Middle East, tells us about the strategy followed by the world’s leading cosmetics firm in Sub-Saharan Africa.

Tapping into the potential of Africa’s beauty market

“The African beauty market is hard to measure exactly, but the continent’s emerging middle class is made up of around 100 million consumers with an average age of 24”, says Geoff. The total market is worth €5 billion and is growing by about six percent every year. Inexpensive mass products dominate the field, as luxury, pharmacy and professional ranges remain fairly underdeveloped so far. L’Oréal is a challenger in Africa – just behind Unilever – but has posted extremely sustained growth in recent years. “Africa is one of the regions where L’Oréal has enjoyed its strongest growth in the year to date.”

Aside from the rapid expansion, what are the defining features of the African market? For starters, the beauty needs and routines of Africa’s consumers differ from those elsewhere in the world. Understandably, local brands are in position of strength, since they address these specific needs more effectively than international brands. “We reckon that local brands command a 66% share of the haircare market.” Strict economic rules and punishing customs barriers are another factor in Sub-Saharan Africa. “On average, customs duties put an additional 60% on the cost price of our products.”

Reasons for an African hub

In response, L’Oréal has invested in local brands as part of the drive to tailor its consumer line-up to the African market. In 1998 and 1999, it bought two African haircare brands, Softsheen and Carson, which were merged into a single L’Oréal company renamed SoftSheen-Carson in 2000. “SoftSheen-Carson is a pioneer in African women’s hair, particularly in the area of relaxing. This is a real strength for L’Oréal.” Today, the two flagship brands are Dark & Lovely by SoftSheen-Carson and Nice & Lovely, a local Kenyan brand acquired by the Group in 2013. “Dark & Lovely’s relaxer kits rank among the continent’s best sellers, while Nice & Lovely is a skincare and haircare leader in Kenya. It is a popular and affordable brand with products priced at under €0.50 on average.”

To go even further in adapting to the local market, in 2016 L’Oréal is inaugurating a brand-new Research and Innovation Centre for African hair and skin, which it has chosen to establish in Johannesburg, South Africa. “The research is primarily intended to serve our African brands, but the Group’s other international brands will be able to make use of the findings too.” The centre is tasked with evaluating and designing beauty products for African consumers and will be joined over time by International Marketing Divisions to ensure the Group stays close to consumers. Also in Johannesburg, the Group has set up the L’Oréal Professional African Salon Institute. “This is a unique initiative that will enable us to train the next generation of hair stylists and lay the foundations to grow our professional networks, which are still at an embryonic stage in Africa.”

Cluster-based development

“Africa cannot be treated as a single block”, Geoff goes on. Accordingly, L’Oréal’s development strategy captures the continent’s breadth and diversity. To move forwards in Africa, the Group is counting on its subsidiaries in each region. Back in 1954, it set up a South African subsidiary, which supplies all the territories south of the rainforests. In West Africa, L’Oréal is present in Côte d’Ivoire, Ghana and Nigeria and looks after neighbouring countries from those locations. And in 2011, L’Oréal opened a Kenyan subsidiary to serve East Africa. Each region is backed up by production capacity. “We have three plants in Sub-Saharan Africa: one in South Africa, one in Kenya and one in Côte d’Ivoire. Producing locally gives us a stronger foothold and also reduces customs barriers. In Kenya, for example, we benefit from the preferential tariffs of the East African Community (EAC), which is East Africa’s common market.”

The last word

“The digital market will be our next challenge in Africa. With brands such as Dark & Lovely and Maybelline we have already begun our digital transformation through different initiatives, including YouTube hair tutorials for example. While e-commerce is on a small scale for now, it will be a key market within five to ten years, and we want to stay one step ahead.”

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L’Oréal

French industrial group, global leader in cosmetic products.

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