Flame Tree shares rise after brands buyout four cosmetics brands

Consumer goods manufacturer Flame Tree Group has expanded its cosmetics business by buying hair and skin brands of a Nairobi-based company.

Flame Tree Group has acquired Miss Africa, Black Angel and Beautyplus hair brands from Beauty Plus Trading East Africa. The listed company also bought the Monalisa skincare brand.

Its share price as a result Tuesday rose by 8 per cent to settle at Sh7 from Monday’s closing price of Sh6.50.

Chief executive of the listed firm Heril Bangera said the acquisition is meant to increase sales from the cosmetics division which has promising prospects due to increased consumer awareness and growing incomes.

“The acquisition of Miss Africa, Black Angel, and Beautyplus will boost our position in the hair-care range, the fastest growing and largest segment in the cosmetics market. We are excited about this acquisition because Miss Africa, is the number two braid spray in the hair-care category in East Africa and it makes us the only company to offer braid sprays for the kids segment.”

The firm’s annual report for 2014 states that cosmetics division fell under the manufacturing arm of the business and accounted for 74 per cent of its portfolio. The trading arm accounted for the remaining 26 per cent.

International cosmetics companies are eyeing the Kenyan market and are actively expanding through buying out local brands and forming joint ventures.

French cosmetics giant L’Oréal bought out Interconsumer Products, the makers of Nice & Lovely brand in 2014.

Six years earlier South African firm Tiger Brands had bought a 51 per cent stake in Haco Brands. Haco has a suit of hair and skin care products.

The acquisition of the three hair brands and one skin-care product will supplement its Zoe brands and Siora hair extensions brands.

The latest acquisition comes hot on the heels of a similar buyout in the first quarter of the year where the firm bought the snacks and spices brands of Chirag Kenya.

Analysts at the time said they expect the investment in Chirag’s brands to bear fruit in the second half of this year.

“The addition of Chirag to its fast moving consumer goods business will help in improving revenues in the second half of the year, as the firm deepens its footprint in the market with well-known brands amongst consumers,” said an analyst report by Genghis Capital.