Will Africa'S Health Products Market Be A New Growth Point?

As the proportion of population in developed countries is slowing down and the population aging, the disposable sanitary products market such as baby diapers and sanitary napkins is almost saturated. Africa has a very low population density of about 65 people per square mile, lagging behind Asia, Europe and South America. Because there are few or no measures to solve the population problem, Africa, which is on the growth curve, predicts that it will reach 2 billion 400 million people in 2050, that is, doubling the current population base. This will make Africa more important to the global economy than ever before.

More and more overseas investors are turning their attention to the African market. They are promoting their brands in the African market, or setting up factories. They compete with local brands to seize market share.

For a long time, in most parts of sub Saharan Africa, the first and second brands of diaper market are Huggies (Procter & Gamble)'s Pampers (Pampers) and Kimberly (Kimberly-Clark). For a long time, diapers are a synonym for Pampers in most markets in sub Saharan Africa.

But this is changing. In the past few years, Hayat's Molfix has always been the first brand in Nigeria, and Ontex's Canbebe has always been the first brand in Ethiopia. In Kenya, Bouncy of Interconsumer ranks third, second only to Pampers (first) and curiosity (second), but Softcare of Sen Da rapidly became the third brand in some parts of the country.

Sunda, a Guangzhou based Chinese company, International has developed its business in building materials (ceramics), fast-moving consumer goods (baby diapers, women's hygiene products, etc.) and agriculture, and has set up subsidiaries in 9 African countries, including Garner, Tanzania, Kenya, Ivory Coast, Senegal, Uganda, Zambia, Nigeria and South Africa. In terms of health products business, Sen has established production bases in 4 African countries (Garner, Kenya, Tanzania and Senegal).

The brand of Sunda is called Softcare, which includes the standard version and the advanced version. Sam has clearly demonstrated its ambition in this market. They built local manufacturing plants in 4 African countries and established subsidiaries in 9 countries.

Sunda international has recently established a factory in Kenya, one of the largest diaper manufacturing plants in East Africa, at a cost of $39 million. The demand for disposable diapers in Kenya is 800 million. The facility is based on Kenya and serves 120 million residents of the East African community. The factory has 300 employees and will promote the import substitution of Kenya diaper market. President Uhuru Kenyatta put forward the "four largest" agenda, one of which increased the proportion of manufacturing to GDP from 2022 to 15% by the end of 2022.

Interestingly, another ambitious Turkey manufacturer, Hayat Kimya, has factories in two largest African countries and third densely populated countries in Nigeria and Egypt.

In the fourth quarter of 2019, Hayat launched its flagship diaper brand Molfix in Kenya. This fully demonstrates that the company is progressively developing southward on this continent and attaches importance to the key participants in the region.

In Nigeria, Hayat invested $100 million in new factories in 2015 and has managed to occupy the market in the past five years. As the world's fifth largest diaper manufacturer, Hayat certainly has the ability to occupy a market share in the fierce competition in Kenya. Therefore, the role of Kenya's third diaper manufacturers will be in Interco Nsumer (now the third after Procter & Gamble and Kimberly) was born in the Molfix of Bouncy, Sen's Softcare and Hayat.

Interconsumer has clearly followed the market trend. In the second half of 2019, the company launched a better product to attract high-income consumers. Traditionally Procter & Gamble and Kimberly have used this method very successfully.

In my view, Interconsumer missed the chance to offer more cost-effective pants products, but they launched higher price open diapers. Traditionally, Pampers and curiosity have designed a double track magic weapon for the African region. Pampers and Active Baby and Sleep&Play play an excellent role in high-end and economical diaper market, but in recent years, they have changed Pampers Active Baby and Pampers premium products. Curiosity persists in using Huggies Gold and Huggies Dry Comfort to provide quality and super value products.

Hayat's Molfix brand is also eye-catching in neighboring Cameroon (another important Diaper Market). In South Africa, Molfix has been in existence for some time, but only a small part of the informal channels, where the quality B and class A are combined to be repackaged into transparent bags containing 80, 90 or 100 diapers. Consumers there have begun to link transparent bags with better prices.

In 2017, Ontex, the European private label leader, became the first international diaper manufacturer to open baby diaper factories in Ethiopia and launched the Canbebe brand. Ethiopia is the more than 2 largest market in Africa. Today, Canbebe has become Ethiopia's market leader.

Nigeria is the largest population in Africa. Here, Wemy Industries is the first company in Nigeria to produce baby diapers, adult diapers and other hygiene products. The company is ahead of multinational companies and returned to the market in 2019 after three years of interruption. This time, they are market leaders in the field of wipes. But they plan to reoccupy a large part of Nigeria's huge Baby Diaper Market.

Several investments in 2019 showed their determination. They also announced plans to focus on developing the adult diaper market to export to other parts of the economic community of West African States. Earning foreign exchange through exports is part of the company's strategy to offset the high import costs of raw materials for sanitary products.

In Nigeria, P & G closed the newly upgraded factory worth 300 million US dollars, while Kimberly announced that it would close its local business and plan to resume production within 18-24 months.

Another ambitious Chinese diaper brand is KissKids, which has been launched in Nigeria, Kenya and South Africa. As expected, it also provides standard products and advanced products to attract a wider range of consumers.

In Tanzania, in terms of market share, the higher price HQ ranked second in the health cushion Market, second only to Always.

The trick that these new players can quickly gain market share is that they can flexibly adapt quickly to new market insights or market dynamics and make quick decisions. They provide the market with the choice of standard products and advanced products, which enables them to attract a wider customer base.

Brand power

As a background of other fast moving consumer goods industry, I have always wanted to compare the industry. Pampers in the diaper Market and curiosity are like Coca-Cola and Pepsi Cola in the beverage market. Their market share is very high.

Coca-Cola is dominant in some areas, Pepsi Cola follows closely, but in some areas it is reversed. In Africa, Coca-Cola is the leader of beverage brands in most regions. To my surprise, Pepsi Cola is not only a market leader in the Middle East, especially in Saudi Arabia, but also has a market share of two to three times higher than Coca-Cola's.

Back in the diaper area, as mentioned earlier, Pampers is very strong in Africa, so that in many markets, Pampers becomes the spokesperson of this category. Of course, this is the result of large-scale marketing over the years. Curiosity is also playing its role on the African continent in the same way, but possibly to varying degrees. In South Africa, curiosity is in a leading position in some areas.

New weather in sub Saharan Africa

In sub Saharan Africa, you can see that market leaders in other health categories are neither Procter & Gamble nor Kimberly. For example, in Kenya, the market leader of toilet paper is Chandaria Industries, which is also an important manufacturer in Tanzania. Chandaria Industries is also involved in other fields, but its leading position and influence in hygiene products can not be ignored. Chandaria Industries is the largest business of Chandaria group. They also produce sanitary pads.

Chandaria Industries is the largest sanitary paper manufacturer in East Africa and Central Africa. They celebrated the establishment of 50th anniversary in 2014, and built a new $50 million factory in the Tatu Industrial Park in 2015, covering an area of 29 acres. This has doubled the capacity of the company's 1200 tonnes of paper products per month.

In 2016, Chandaria added health products to its product portfolio. This is a logical move for market leaders in the two markets of the East African community (Kenya and Tanzania). As the environment becomes the focus of attention of enterprises and the public, Chandaria Industries acts as the recycler of toilet paper, making it a key player in the field of sustainable development.

In South Africa, the market leader of sanitary pads is NSP Unsgaard, a subsidiary of Lion Match, which is headquartered in Cape Town. According to a report by Engineering News in 2018, the South African cushion market is estimated to grow by 9-10% annually. Basie Van Wyk, the chief executive of the company, describes NSP as a small business (compared with other multinational companies of the same category), but they still beat large multinational companies.

The price of Comfitex brand of NSP Unsgaard is competitive and of high value. They occupy a leading position in cushions, and hope to reproduce this success in the field of sanitary napkins.

Van Wyk told Engineering News: "we believe that we can make use of the success in the field of pads, and also reproduce in the sanitary napkin Market. Here, we are still a small participant with only one digit market share, so there is tremendous growth opportunity. For us, the personal care market is our growth area, and we are looking for alternatives in this field. "

Comfitex has been growing steadily. Over the past few years, it has been competing for the market share of P & G, Kimberly and Twinsaver. In 2018, the company invested in a new pad production line, which increased its local production capacity by 55% and reduced its waste by 4%.

Summary

Africa will be a noteworthy market. In the coming years, with the increase of sanitary products production line, the incumbent and new leading brands will change and investment participants will exert influence on the government and lobbying groups to prohibit imports or increase import tariffs to protect their investments. We have seen this in Nigeria. In the medium to long term, industry consolidation is expected to happen as other markets have experienced rapid growth.