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Industrial Development
 

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Cosmetics Sector Desk

Industry Overview

The South African cosmetic and personal care industry is vibrant and dynamic, comprising an interesting mix of multinational giants, entrepreneurial companies, and small, medium and large local brands.

The total size of the South African cosmetics and personal care products marketfor 2010 was estimated at R25.3 billion at retail level and contributes 1,0% to the gross domestic product (GDP). The following have been identified as the top five trade categories in 2010 in South Africa:fragrances, hair care, skin care, deodorants, and bath and shower, accounting for nearly two-thirds of the total market.

The total exports amounted to R2.8 billion, equivalent to 0,53% of total exports, while imports amounted to R4 billion, equivalent to 0,63% of total imports. The major export categories for 2011 were:

HS Code Categories Percentage
330499: Other - creams, sunscreens 28,2%
330590: Haircare - Other 11,6%
340111: Toilet soap 11,1%
330510: Haircare - Other 8,5%

These four tariffs account for nearly 59% of total exports. The major destination countries for these exports are as follows:

HS Code Countries Export Percentage
330499: Zimbabwe, United Kingdom, USA, Holland, Zambia (42% of total exports)
330590: Ghana, Angola, France, Zimbabwe, Mozambique (59% of total exports)
340111: Zimbabwe, Mozambique, Angola, Zambia, Malawi (81% of total exports)
330510: Zimbabwe, Zambia, Angola, Belgium, Mozambique (57% of total imports)

Generally, the bulk of cosmetic and personal care product exports are to SADC countries such as Zimbabwe, Zambia, Mozambique and Angola.

Key Opportunities

The growth in products that cater for the specific needs of the male market have been identified as an area of great opportunity for the local cosmetics and toiletries industry:

  • Men's grooming;
  • Skin care;
  • Multiple Single Product Benefits;
  • Natural, organic, environmentally friendly products that do not do any animal testing or contain any animal products;
  • Multifunctional products with a focus upon 'Wellness';
  • Black hair care products (with no hair damage); and
  • Raw materials production.

Constraints

Major constraints that have been identified as a hindrance to companies in cosmetics, toiletries and personal care industry are:

  • Tax policies, specifically Ad-valorem;
  • Market access, both locally and internationally;
  • Rising inputs costs;
  • Inflow of cheap imports and counterfeit goods;
  • Critical skills deficit;
  • Technology intensity;
  • Poor productivity and onerous labour legislation; and
  • Capital finance access.

Sector Economic Data

Variable Contribution
Market value (at retail level) 2010: R25.3 billion
Market value (at manufacturing level) 2010: R18 million
Growth rate 2005-2010 12% per annum
Manufacturing value add 2011: 1%
Manufacturing Employment 2011: 50 000

Financial Support to Industry (the dti)

12i Approval Tax Allowance Incentive to Cosmetics Companies (2012-2014)

Category Total figure
Total Investment R 1 725 935 008
Total Training Allowance R 16 632 000
Jobs Created 244

Manufacturing Enhancement Programme Incentive to Cosmetics Companies (2012-2013)

Category Total figure
Total Grant R 142 575 772.00
Total Investment R 454 494 952.00
Jobs Created 11 260

Interventions

The cosmetics sector desk launched industry and economic development workshops in all provinces to educate businesses, particularly SMMEs, about the industry in which they operate.

The first workshop was held in Johannesburg in May 2013 and the second in Durban in September 2013. The cosmetics sector desk hostedanother workshop in the Western Cape in March 2014.

The workshops aim to promote networks between companies, agencies and Government. The Cosmetics Export Council of South Africa (CECOSA) works with the Department of Trade and Industry (the dti) and assists business with export advice and opportunities in the industry.

SMMEs learn about the Cosmetics Toiletries and Fragrances Association (CTFA) and incubation centres based in their respective provinces, youth and women incentivesas well as black economic empowerment schemes. The workshops also serve as a training platform for businesseson cosmetics industry regulations and financial and non-financial support availablefrom government agencies, industry associations and organisations. Training is provided by the Small Enterprise Development Agency (seda) on business management skills, marketing and branding as well as the barcoding of products by the Consumer Goods Council of South Africa (CGCSA).

Useful Links:

South African Government Incentives - www.investmentincentives.co.za
Toxicology Society of South Africa (TOXSA) - www.toxsa.co.za
Small Enterprise Development Agency (seda) - www.seda.org.za
Consumer Goods Council of South Africa (CGCSA) - www.cgcsa.co.za

Incubators

Technology Station in Chemicals- www.tut.ac.za
EGOLIBIO - www.egolibio.co.za
South African Chemical Technology Incubator (Chemin)- www.chemin.co.za
Chemcity - www.chemcity.co.za
South African Essential Oil Business Incubator (SEOBI) - www.seobi.co.za