If you know a woman who has traveled to Africa, ask her what she always brings. She will almost certainly mention two items: soap and toilet paper. If you are in the laundry business, you will miss out on Africa’s rising fast-moving consumer goods (FMCG) sector if you do not comprehend this.
Today, we’ll discuss how soaps and laundry detergents profit you in Africa. Let’s get started.
Is Soaps and Detergent Market Profitable in Africa?
There is one unifying statement across soap and detergent players. Emerging regions, particularly Africa, are where all the growth prospects lie.
Africa and Asia contributed 20% of Colgate-revenues Palmolive in 2011. Soaps and detergents are essential consumer items that have been in short supply in Africa for many years. International corporations have switched their attention to the continent’s expanding needs. It is because the developed markets have become saturated.
According to sellers of detergent ingredients, sales have increased across Africa. This is the result of international corporations increasing their efforts on the continent.
Based on most market analysts, Africa is divided into four regional markets: north, south, east, and west. Market participants forecast double-digit growth in Africa’s northern, southern, and eastern sections.
Moreover, some participants indicate as much as 16 percent growth in East Africa. According to most forecasts, Southern Africa grew 6-8 percent in 2012. Although it is a lower figure, it is still difficult to dismiss.
Besides, the Middle East and African laundry detergents market has achieved USD 8.1 billion in 2022. It is forecasted to grow at an estimated CAGR of 4.3% in 2023-2028 and is projected to attain USD 10.4 billion by 2028.
What are the Factors of the Fast-Growing Consumer Goods Industry in Africa?
Many factors are pushing the laundry detergent market in Africa to a new height. It includes urbanization, taxes and pricing, regional preferences, and branding.
Urbanization
Urbanization is changing the nature of soap and detergent demand and distribution. By 2050, urbanization will have reached 60% of Africa’s population. Urbanization is critical to this industry since most urban customers use manufactured detergents.
But, prominent rural people still make their soap from locally accessible resources. When the rural population shrinks and urbanizes, their tastes shift due to more working time and changing lifestyles.
Taxes and Pricing
Local governments have imposed increased import taxes for the last two to three years. International traders and investors hampered their efforts to penetrate Africa.
Several producers have mentioned duties higher than 20%. It results in diverse prices and costly import taxes. Hence, the pricing of detergents has become highly fragmented.
This position presents both opportunities and difficulties. Input prices can fall dramatically. It is the case where to increase the use of local raw materials and/or acquire reduced local import duties on raw materials. Value is unlocked when low-cost production is combined with sales in high-priced marketplaces.
Regional Preferences
Understanding the manufacturing of soaps and detergents in Africa requires understanding local needs. If the countries differ slightly culturally, such local preferences can be a barrier to export.
North Africans, for example, use more detergent powders as they have more access to washing machines.
On the other hand, washing machines are not widely used in East Africa. Hence many East Africans prefer products that are more effective for hand washing. In various countries, sales figures for different laundry detergents varied dramatically.
Branding
Like their Western and Eastern counterparts, African consumers appreciate particular brands. They desire to carry their brands wherever they go.
Suppose you stand in a Tanzanian market and witness White Dent toothpaste being snatched off the shelf one by one. In that case, you’ll understand why Catalyst Private Equity invested significantly in Chemi & Cotex.
Who are the Key Market Players in the Laundry Detergent Industry?
You can look for a few examples of successful detergent companies to get in deeper. Below are some key market players in the laundry detergent industry.
The Procter & Gamble Company
The Procter & Gamble Corporation (P&G) is a global American consumer goods firm based in Cincinnati, Ohio. It is mainly devoted to consumer health, personal care, and cleaning supplies. P&G’s fabric and home care division accounted for 32% of total net sales in 2018, the highest of any division.
Owned detergent brands:
- Ariel
- Downy
- Bounce
- Cheer
- Tide
- etc.
Henkel AG & Co KGaA
Henkel AG & Co. KGaA is a German multinational chemical and consumer goods corporation headquartered in Germany. Henkel reported roughly 20 billion euros in sales and an operating profit of 2.213 billion euros in the fiscal year 2021. Persil is Henkel’s most well-known brand, with sales of more than 1 billion euros in 2017.
Owned detergent brands:
- Persil
- Purex
- Zout
- All
- Dynamo
- etc.
Kao Corporation
Kao Company is a Japanese chemical and cosmetics corporation. Since its establishment, Kao has provided consumers with cutting-edge soap and detergent products.
In its continual drive, the company strives to offer ever-higher degrees of cleanliness. Among these items is the powder detergent Attack. Attack commits to research and development to pursue optimal detergents. The brand has earned considerable consumer support.
Owned detergent brands:
- Attack
- Cucute
- Emal
- Haiter
- etc.
Church & Dwight Co.
Church & Dwight is a consumer goods company based in the United States. It specializes in personal care, household goods, and specialty items. Church & Dwight reported $3.6 billion in yearly revenue in 2021. It is well known for its Arm & Hammer brand of baking soda.
Owned detergent brands:
- Arm & Hammer
- OxiClean
- Xtra
Unilever PLC
Unilever PLC is a multinational British-Dutch consumer goods corporation headquartered in London, England. It is the world’s largest soap manufacturer, selling products in over 190 countries.
Unilever recently introduced a laundry capsule. It is designed to decarbonize the washing process without sacrificing cleaning performance.
Owned detergent brands:
- Comfort
- OMO
- Seventh Generation
Bottom Lines
The above information shows that the laundry detergent market in Africa is a potential sector to venture into. However, businesses will always need help. Some problems may appear, including solving infrastructural limits on energy and logistics (even inside significant cities). Besides, pricing constraints on equipment needs (e.g., storage tanks, filling machines, etc.). Last, raw material shortages.
Labor expenses are a concern in conversations. However, African labor is often reckoned to be one-third of Asia, with Ethiopia accounting for one-sixth of Asia. Electricity expenses are frequently a more outstanding issue, especially in Tanzania. Despite the hurdles, it has a high potential to unlock enormous value, especially with the help of private equity investors and strategic international investors.
Interested in establishing your detergent manufacturing? STPP Group has you covered. We are more than a one-stop solution provider in the detergent industry. Our team provides a comprehensive supply chain for your household detergent needs. Just send in your inquiries; our experts are ready to help instantly.
