Cosmetic firm MAC to open 20 stores in Africa

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The NYSE-listed Estée Lauderowned make-up label is eyeing fastgrowing emerging markets, including Brazil, India and Turkey.

Dubbed the next consumer hot spot, sub-Saharan Africa is experiencing the second-fastest economic growth in the world, behind AsiaPacific, and is home to 821-million consumers. According to Euromonitor International, in 2020, subSaharan Africa is expected to be a $2trillion economy, the same size as Russia today.

"Despite some notable challenges within the region, Africa is benefiting from its wealth of natural resources, a new era of stability, inward investment and economic development.

"This is laying the foundations for an increasingly important consumer market and, with it, huge opportunities for companies with the right goods and services and an appropriate strategy," Euromonitor International said.

MAC has operated in SA since 2000 and has 24 stores in eight cities across the country.

MAC global brand president Karen Buglisi said the company would double its presence in SA in the next three years.

The brand, whose credo is All Ages, All Races, All Sexes, has appealed to brand-savvy Nigerian consumers and the company opened two stores in the region this year.

Brand presence will be extended to Botswana and Zambia before the end of the year.

"Emerging markets represent 15% of the global business at MAC, which will grow exponentially in the next 10-20 years - this is where our future growth will come from," Buglisi said.

It was only a matter of time before the company entered the rest of sub-Saharan Africa, she said.

"In Nigeria, we had to wait for the retail infrastructure. The consumer knew us already - we have a big following and demand from Nigerians in Saint-Denis, Paris," Buglisi said.

Nigeria, whose economy has grown by an average annual rate of 7% in the past five years, has seen a slew of international brands set up shop this year, including Ermenegildo Zegna, Porsche and Hugo Boss. Nigeria is one of the top 10 biggest markets in the world for LVMH's Hennessy cognac.

One of the main forces behind Africa's growth spurt is the increasing pace of urbanisation, which is improving living standards and growing consumer expenditure.

Among the advantages Africa holds is its young and growing demographic profile, particularly in the context of global ageing - 70% of the population in sub-Saharan Africa is under the age of 30, according to Euromonitor International.

"The stores in Nigeria are exceeding our expectations. We are excited about the potential for Africa ... but we know this is a slow build.

"We will be there as trailblazers," Buglisi said.

MAC, famed for its collaboration with personalities like Rihanna and Lady Gaga, has earmarked Kenya, Ghana, Cote d'Ivoire and Mozambique as potential markets.

Estée Lauder, which has a market capitalisation of about $20bn, is present in Ghana through its Tom Ford, DKNY and Michael Kors fragrances, and intends to introduce Clinique, its third-biggest brand, to the Nigerian and Mozambican markets this year. According to Roze Phillips, a senior managing executive at Accenture, the spending power of cosmopolitan professionals and the affluent in Africa translates into a significant opportunity for luxury products and services.

"As the African economy continues to mature, these segments are likely to grow more rapidly," she said. This month, MAC launched its e-commerce platform in SA.

"E-commerce is one of the fastest-growing channels we have around the world. In SA, it will be a little bit slower, but we are patient ... we don't have high expectations for revenue immediately, but we can use it to raise awareness of the brand in Africa," Buglisi said.

MAC was founded in Toronto in 1984 by Frank Toskan and Frank Angelo. A 51% stake in the brand was bought by Estée Lauder in 1994. The US giant acquired the remaining interest in 1998.

Source: Business Day