Skin care market in Africa, Middle East to grow

(Image: Vicki Francis, via Wikimedia Commons)

"In the main markets of Saudi Arabia, the United Arab Emirates, Iran and SA, this trend is likely to be particularly pronounced, simply because these are the largest and most robust markets, both in terms of size and volume," Euromonitor International said.

Crimped consumer spending amid deteriorating macro conditions and uncertainty in Europe has seen a steady stunting of growth in developed economies, triggering multinationals to turn their attention to emerging markets.

Last month, Jean-Paul Agon, chairman and CEO of the world's largest cosmetics and beauty company L'Oreal SA, told the European Commission's Innovation Convention in Brussels that between 95% and 100% of new growth was coming from outside Europe.

The French cosmetics maker reported a 1.8% rise in revenue to US$6.79bn in the three months from July to September last year, or 4.8% on a like-for-like basis.

"In the dismal economic context which has left no country unscathed, consumer confidence is weak and markets are proving difficult," the company said of its eastern European zone.

More difficult in southern Europe

"The situation remains more difficult in southern Europe, particularly in Greece and Portugal," it added.

Late last month, Swiss bank Credit Suisse reduced its target price for L'Oreal shares to €76 from €79.

Credit Suisse said that L'Oreal had seen "a structural slowdown in its sales over the last decade," because of a market slowdown in Western Europe exacerbated by market share losses and a narrowing of the group's relative outperformance in emerging markets.

"Due to the deteriorating macro backdrop, we believe that Western Europe... will be a brake on growth in 2012," said the bank.

Meanwhile, at end-September, L'Oreal's Africa and Middle East regions recorded solid growth of 8.9% like for like.

According to Euromonitor International, between 2005 and 2010 skin care value sales in Africa and the Middle East rose from an estimated US$1.4bn to US$2.4bn, equating to a compound annual growth rate (CAGR) of 12%.

This is strong growth by any standards, particularly when compared to the performance of the global skin care market, which expanded from US$63bn to US$88bn over the same period, equating to a CAGR of 7%.

According to the market intelligence firm, the skin care market in SA grew by 12% in 2010 to reach US$0.5bn.

Strong growth

"The South African skin care market is enjoying strong growth on the back of an expanding economy.

"Skin care manufacturers are making moves to elaborate product claims, while facial moisturisers, whitening, body care and products targeting specific functionality such as firming or treating acne are all tipped for further growth," it said.

Growth of skin care in SA is expected to grow at a 3.7% CAGR over the 2010-2015 forecast period, Euromonitor International said.

Wasting no time is cosmetic company, Elizabeth Arden who is already using its factory in Elsies River, Cape Town to expand its African web.

From the mother city, Elizabeth Arden distributes its luxury lotions, potions, creams, fragrances, and gels across the country and to other parts of the African continent like Ghana, Kenya, Zimbabwe, Zambia, Angola and Tanzania.

Executive vice president and international general manager Dirk Trappmann told I-Net Bridge/BusinessLIVE that Nigeria was one of Elizabeth Arden's largest African markets outside SA.