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The Cosmetics Industry
The cosmetics manufacturing industry has been under pressure from challenging economic conditions. Multinational companies such as Unilever, Johnson & Johnson and Procter & Gamble account for the majority of sales in this sector, and may outsource the manufacture of their products to contract or third party manufacturers. There are around 250 players operating in South Africa’s formal cosmetics sector, with the growth over the past two years coming mainly from the SMME sector.
The sector is characterised by change, some of it brought on by technology and social media which affect buying choices and force legacy brands to reinvent and renew their products to remain relevant. Cosmetic companies have become more aware of diversity and representation, consumer concerns about sustainability and the use of organic products, and the growing interest in cosmetics by male customers. A large number of cannabis-infused cosmetic products have also been developed.
There has been an increase in the number of start-ups that cater for niche markets such as natural products or ethnic personal care products. The industry offers great scope for SMMEs in line with the growing demand for affordable home and personal care products, as the manufacture of products on a small-scale is a relatively simple process. Manufacturers also have the opportunity to make private label products, which are steadily making inroads. Stakeholders believe that small-scale entrepreneurs can compete effectively if they provide superior customer service, serve a specific local community, or cater for the needs of a specialised niche market.
This report describes the cosmetics industry and the factors and trends that influence it. There are profiles of 69 companies including dominant players such as Unilever, which is the subject of corporate action by 25.7% shareholder Remgro, and Indigo Brands, the person care and beauty products division of AVI. There are profiles of companies such as Avon Justine and Avroy Shlain, members of the direct selling industry, which plays an important role in this sector, and numerous niche manufacturers such as Oh-Lief Natural Products.