The cleaning products industry – trends and sustainability

Making soap is a simple process of adding caustic soda to water and mixing it with oil, yet the industry has become one of the most essential and competitive globally. It has evolved from artisanal soap-making in early civilisations to an industry characterised by large-scale manufacturing producing sophisticated skincare ranges, hygiene products, and industrial cleaning. It seems it has come full circle with today’s consumers seeking more natural products that are considered green and environment-friendly.

The role of established brands in the soap manufacturing industry

Major multinationals such as Procter & Gamble, Unilever, Colgate, Johnson & Johnson, and Reckitt have perfected the branding and marketing of their soap and related products and disinfectants. Their brands are easily available in retail stores and mostly considered necessities purchased when needed, without much research being done on which one is the best. Brand loyalty is well-established, although that loyalty is eroding due to the income strain in many households, as stated in the WOW report on the manufacture of soap and cleaning detergents in South Africa.

While the pandemic disrupted supply chains, leading to increased prices, there was a positive spin-off as opportunities arose for artisanal skincare and soap manufacturing and for local brands to develop and increase market share. They used social media and e-commerce to promote their products directly to consumers instead of entering into complicated agreements with retailers for shelf space.

Opportunities for SMEs in niche markets like natural and ethnic personal care products

South Africa’s economy is struggling, and an estimated average real growth rate between 2024 and 2029 of 1.42% is expected, according to Statista. This should be seen in the context of a 1.49% population growth forecast for the same period, indicating a decline in income per capita for South Africans for the next five years. Smaller players can leverage their agility and create niche sustainable products that use less expensive packaging to serve a growing market, and as a result create much-needed jobs and economic activity.

WOW, in its outlook for the industry, states that the home and laundry care category is projected to realise a CAGR of 5.24% from 2024 to 2029. The industrial cleaning industry is also expected to continue experiencing steady growth at a CAGR of 5.7% from 2024 to 2030. So, despite the struggling economy, given that the projections are based on an average inflation rate of 4.5%, real growth in the consumption of soap and detergents is envisaged.

Potential growth areas within sustainable cleaning solutions and eco-friendly packaging.

Increased consciousness of cleanliness and hygiene, in combination with a township shift to buying local and a search for value-for-money products at the expense of higher-priced branded products, offer a favourable set of conditions for smaller players to enter and expand in this market.

It is refreshing to see that this industry is a net exporter, whereas other African countries are net importers. The growing global interest in handmade African wellness products also presents opportunities for exports, providing an opportunity for artisanal producers in international and African markets which are still net importers of soap products, particularly specialised soap products.

Regulatory frameworks and ease of doing business have an influence when it comes to foreign direct investment. South Africa still needs inward investment of major corporations to support economic growth. That investment flow is not a given. WOW reports that Procter & Gamble announced it was exiting Nigeria, while Unilever also announced it was exiting Nigeria partially and Zimbabwe completely, but is expanding in India.

The WOW report cites an example of a company that uses eco-friendly methods of recycling consumable oils to make soap for retail locally. There are other examples of local small-scale manufacturers who have developed their market in the laundry and dry-cleaning sectors using free delivery as a major marketing tool.

Which market segment is still profitable

The insight offered by the WOW report on soap manufacturing reveals that of the various subcategories of branded soaps and detergents, it is upmarket brand prices that have exceeded the inflation rate. The green soap bar price increased by 3% (June 23 to June 24) with sanitary pads increasing by 21% and shoe polish by 19%.

Local manufacturers would do well to invest in niche markets in terms of products for different client segments and offering educational content on the importance of using more natural locally-sourced products.