L’Oreal subsidiary signals turf war in personal care market

Paris listed L’Oreal has opened a subsidiary in Kenya, targeting the East African common market and part of plans to grow its marketshare in emerging countries.

The Nairobi office will oversee Uganda, Tanzania, Rwanda, Burundi and Ethiopia where it will push its Softsheen Carsons, L’Oreal Paris and Garnier brands among the 23 international brands in its portfolio.

The firm has been feeding its Kenyan market through traders, but it’s now eager to establish a distributorship network that will be backed by a marketing team — signalling its intention to get a larger share of the East African personal care market.

L’Oreal, whose annual revenues are in excess of €20 billion (Sh2.4 trillion) will open a new battle front in a market that is dominated by firms such Interconsumer Products Limited, Haco Tiger Brands, Unilever Kenya, Beiersdorf and PZ Cussons.

“A big opportunity presented itself and we cannot ignore it,” said Patricia Ithau, L’Oreal East Africa’s managing director. “There is a developed personal care market here that we are looking to further tap into. We have been in the market mainly through traders and a structured distribution network had been lacking.”

L’Oreal, one of the largest cosmetic and beauty company in the world, is known to acquire local brands in new markets. It is not clear whether the company will pursue this model for a larger foothold of the East African market in spite of talks that the firm has been pursuing one of the local home care manufacturers.

“I cannot comment on that,” Ms Ithau told Business Daily in reference to the acquisition talk. “In the short term the company will continue importing products into this market and will look if they will set up a factory locally in the future.” L’Oreal has a strategy to reach one billion new customers in the next 10 years. This has seen it roll out an expansion plan in emerging markets, especially Africa where it is looking to tap into the large number of potential new consumers.

Nestle owns 29.7 per cent of the firm, Bettencourt family (30.9 per cent) and 36.8 per cent is held by the public.

In September it opened a subsidiary in Nigeria. It already has a presence in Ghana, South Africa, Morocco and Egypt.

A beauty and personal care report on Kenya by Euromonitor International says the international companies Unilever Kenya Ltd, Beiersdorf East Africa Ltd and PZ Cussons East Africa Ltd are the market leaders due to their network in distribution and the product brands.

These companies have been strengthening their distributorship and re-launching some of their flagship brands with new packaging and updated colours to increase visibility, according to the report, which was launched in 2011.