The beauty industry in the Middle East and Africa was estimated at about $20.4 billion in 2011. Of this figure, South Africa alone represented $3.9 billion, Nigeria was second and Kenya’s market totaling more than $260 million came third on the African continent.
Uganda in the last few years has seen considerable growth in the cosmetic industry with pioneers like Mukwano Group, Mwana Mugimu, Sleeping baby, Movit and the timeless Samona Jelly making progress and opening up the market space for other players.
The older reader might also remember Mekako, Jaribu and Sabuni kanga among the soaps.
The cosmetic and beauty industry is highly lucrative, but success is hinged on focus on target markets and categorizing of a particular product for sale.
What is required to venture into this sector
There are two options for venturing into this business in Uganda:
Being a highly competitive sector in the retail industry,you need to have a very succinct business strategy, particularly as you will also be competing with internally renown brands (like L’oreal, Mac and Clinique) that can be freely imported into the country.
There are two options for venturing into this business,
A strategic plan that addresses specific needs and an audience niche is the break or make of any product in this industry – anywhere in the world, and in Uganda in particular.
There must also be a strong emphasis on brand creation, distribution channel development and quality of the product as the competition is high from well established brands as already noted above.
It being a locally manufactured product, there are bound to be a number of challenges and consumer behavior perceptions that you will need to address first before reaping big.
One of the guarantees however is that once a niche has been created and a loyalty base formed, sales from customers are guaranteed to be continuous as cosmetic products belong to a specific category of goods that create a ‘ life long bond’ between the user and the product.
Once this is understood and placed into practice, like acquisition of a catchy name, use of exquisite packaging and advertising, marketing strategies, this should be enough to give you and the company a detailed understanding on how the Industry operates and the bottlenecks.
1. Education base. A formal education in cosmetology and beautification will equip you (or staff you employ for the purpose) with the necessary knowledge on various skin types and how they relate with the different products that you will be making.
The last thing you would need is to create monsters with your products – read destroying people’s skins and beauties. There are local education institutions that offer relevant courses, but it is recommended that an international course is taken to give your product credibility. Unfortunately many of the courses in Uganda do not keep pace of international breakthroughs – which is critical in this cut throat industry.
One noteworthy institution however is the Uganda Industrial Research Institute (UIRI) which has a fully equipped laboratory and has free hands on training for start-up entrepreneurs.
2. Raw materials. It is critical to establish partnerships with raw material providers in advance. One key advantage of Uganda though is that products like Aloe Vera, Avocado, eggs and Shea butter which are used in many beauty regimens are readily and cheaply available in Uganda. There is therefore a real opportunity to set up a contract manufacturing plant here.
3. Quality assurance. Rigorous testing of the product to meet potentially international standards is crucial. Such testing should be regularly advertised as this assurance is critical for a product that will come into contact with the human skin and is being made in Uganda, where the reputation for quality control by the regulators is not perceived to be stringent. It is therefore suggested to voluntarily subscribe to an internationally recognised programme like the ISO requirements.
4. Cash cushion. Owing to the high marketing need combined with the working capital needs, having a cash cushion is critical in this industry.
5. Return on investment. On the basis of my estimates, from a share capital of Shs.39m a return of 1.11 years can be achieved.