Ethiopia: taking the initiativ

Ethiopia’s personal care sector is experiencing rapid growth and the government is undertaking a number of initiatives to improve access. Jonathan Dyson reports from Addis Ababa

With Africas second largest population (around 85 million) and one of the worlds fastest growing economies (expanding 7% annually over recent years), the potential of Ethiopia as a market for cosmetics products is beginning to be realised by the personal care products industry worldwide. Indeed, sales of a wide range of cosmetics are growing rapidly with both domestic and international cosmetics brands benefitting.

The total value of the cosmetics market in Ethiopia reached $25m in the 12 months up to June 2012, according to figures from the country’s Ministry of Trade and Industry, with the average growth rate over the last three years at 10%. Imported products account for around 90% of the market, with the remaining 10% sourced from domestic manufacturers.

Melkamsew Abate, head of the ministry’s pharmaceuticals and cosmetics industries division, toldSPCthat demand for cosmetics is growing among both women and men. “More and more women, typically from the age of 15 onwards, are purchasing cosmetics products here. In addition men are purchasing cosmetics more aggressively, especially between the ages of 20 and 40,” he said. “For both women and men, young people are driving the growth in cosmetics sales as they now have more disposable income.”

Abate said that hair products are easily the most popular cosmetics products in Ethiopia. “Sales of hair oils are growing a lot, as most people here like to use them to nourish their hair on a daily basis. This is the cosmetics product consumed the most in Ethiopia.” He added that sales of shampoos are also increasing among women and men, with men also consuming more hair gels.

In addition, among women perfumes and body lotions are also proving increasingly popular, while for men sales of deodorants are increasing although using aftershave is still not common.

As the opportunities grow in Ethiopia, an increasing number of major international cosmetics brands are entering the market. LOréal is now one of the leading overseas brands in the country. The growing opportunities in Ethiopia and other east African countries led the company to open a subsidiary in Kenya last year to function as a base for the region.

Eyasu Mekonnen, general manager of Ethiopian cosmetics manufacturer Mekab and an expert on the cosmetics market in the country, toldSPCthat LOréal products have quickly become popular in Ethiopia. “Consumers here feel that the prices of LOréal products are very competitive if you compare them to, for instance, Dior. LOréals lotions are especially popular.” Dior is favoured by the more affluent consumers, he added.

In both urban and rural areas increasing levels of disposable income are allowing consumers to purchase more overseas cosmetics brands. "The growth in the economy here means that people can buy foreign brands as well as Ethiopian brands,” Mekonnen said. “Previously they could only afford local products.” And in rural areas peoples habits are changing. “Most farmers used to use natural cow butter for their hair but this of course carries a very bad odour. Now they can afford hair food, hair oils and so on.”

Along with rising disposable incomes, a key factor in the growth of cosmetics sales in Ethiopia is improved infrastructure. As part of the countrysGrowth and Transformation Plan for 2010/11-2014/15, 72,000km of new roads are due to be constructed by the end of 2015 with plans to ensure every village in Ethiopia is connected to a highway. And there has already been a noticeable improvement in levels of access across the country. “Distribution is much easier now particularly because of the more extensive road network,” Mekonnen said. “Most Mekab products are distributed on trucks and they can go all over Ethiopia now, including the remote areas.”

Domestic brands are also benefitting from rising disposable incomes and improved access. Zenith is the leading Ethiopian cosmetics manufacturer, producing a wide range of personal care products including shampoos, conditioners, hair relaxers, pomade, moisturising creams, lotions, nail polish, baby products, perfumes and body spray. As well as supplying the domestic market, Zenith exports to other East African countries including Kenya, Uganda, Sudan, South Sudan, Somalia and Djibouti. Exports reached $3.64m in 2011-12, with average growth at 24% over the last three years according to the company.

Sales at Mekab, which specialises in hair products for the local market, have also been growing sharply: at 20%-25% over the last three years and Mekonnen expects this level of growth to continue over the next few years. Earlier this year the company launched its new Essence brand, a hair food for women available in six different fragrance variants. Sales of the product proved instantly popular. “Consumers here are always keen to try new products,” Mekonnen said.

A range of government initiatives are helping the development of Ethiopias cosmetics sector, initiatives such as providing land without a lease and not charging taxes on imports of machinery.

The government is also under increasing pressure however to deal with the rapidly growing concerns surrounding counterfeit cosmetics products in the country. There have been several recent reports in the Ethiopian media of counterfeit cosmetics affecting sales of overseas brands in the country, although no firm statistics were made available toSPC. Abate said Ethiopias Food, Medicine and Healthcare Administration and Control Authority is actively working to tackle the issue. According to Mekonnen, counterfeiting has not yet affected domestic cosmetic manufacturers.