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Enterprise

Flat packaging nightmare for Kenya start-up cosmetics firms

Ms Wacu Mureithi, founder of Mosara. PHOTO | COURTESY
Ms Wacu Mureithi, founder of Mosara. PHOTO | COURTESY 

For Kenya’s growing array of cosmetics producers, packaging can account for up to a quarter of production costs, but plays a key role in capturing sales, making cost savings a potential sales killer.

As a result, sourcing the right pots and bottles for small runs of creams and lotions is often pushing producers to import from as far afield as China, or to design their own packaging from scratch.

The first challenge for start-ups is that the lowest cost packaging is ready-made, but comes in very few shapes and sizes in Kenya, meaning all new products can end up looking the same.

“Locally available materials are mostly uniform, this means that it is only the colours used and the branding style that distinguishes them,” said Lulu Mbugua, CEO of cosmetics company Luguah Naturals, which she founded in 2016.

Ms Lulu initially sourced ready-made packaging locally. However, with the packaging options so limited, products such as lotions were nearly all being packaged in the same rectangular pots.

“I preferred 250ml round jars or tubs with a gold-purple colour,” said Ms Lulu.

So, in November 2016, Ms Lulu started searching online for packaging from China and the US that would make her product stand out. She found what she was looking for, almost instantly.

Wacu Mureithi, founder and CEO of Mosara hair brands, reports a similar journey, for her haircare products company, launched in November 2015.

“There is a big dilemma, especially when one wants to source locally. To have good quality, unique packaging that goes along with your branding colours and concepts come at a very high cost. You basically have to create it from scratch, developing the designs and ordering quantities in the tens of thousands for it to makes sense,” said Wacu.

“Initially, we used to source at least 3,000 units of materials from local companies, but after I researched online I found alternative materials online, which I ordered, and received samples I preferred to use.”

“We looked at hundreds of other brands online over a period of two years, before we settled on our current style,” said Ms Wacu.

However, moving to foreign sourcing has delivered such producers from the difficulties of ordering vast quantities.

“The advantage with the online order is that I can order any quantity I need and I have an array of options to choose from: this can be glass, distinctive plastic tubs or even products made from bamboo,” said Ms Lulu.

But the costs are far higher. Said Ms Wacu. “Importing from China costs Sh50 per unit regardless of the quantity ordered. In Kenya, it costs Sh5 per piece if you order between 5,000 and 10,000 pieces and Sh10 per piece for orders below 1,000 pieces.”

Producers who source overseas must also pay freight charges, although with empty packaging being relatively light in weight, these are relatively low.

Ms Lulu has used a mix of logistic companies to deliver her online packaging orders to Kenya by air, with her orders taking around 12 days to arrive. But the freight cost is typically around Sh860 per kilogramme from China and Sh1,500 per kilogramme from the US.

Ms Wacu also now sources her packaging from China, but has it shipped into the country by sea, which usually takes about six weeks.

By contrast, Paul Ng’ang’a, the founder and CEO of Alkemy Brands Limited (ABL), which began producing cosmetics in Kenya in 2015, sources his packaging materials locally.

This has meant designing his own, which he then sources from local suppliers such as General Plastics and Super Plastics.

“The cost of designing the packages depends on the size: 500ml designs cost Sh10, while 200ml costs Sh7,” said Mr Ng’ang’a.

“We also use an extra Sh2 per unit to achieve a pearl white finish on all our products. In this, we are able to attain a smooth texture that distinguishes our goods from the rest in the market.”

However, the higher cost of the customised packaging sees ABL spending 20 per cent to 25 per cent of its total production costs on packaging.

The necessary quantities can also be a real barrier for new producers, said Mr Ng’ang’a.

“The major concern with local suppliers is they will sometimes require unreasonable minimum quantities orders which is not feasible for start-ups, new entrants or growing businesses.”

However, nearly all of Kenya’s budding SME manufacturers are sourcing their labelling locally, buying labels that get glued to the packaging and carry their brand logo, the product name, ingredients, and usage instructions.

In this, ordering labelling requires more details to be shared, and needs checking for errors before printing, making local production more practical.

For Ms Lulu, who sources labels from the Colour Labels Company, the cost is around Sh6 for plastic tubs and Sh11 for bottles.

But the designs need checking before printing, said Ms Wacu, who found herself removing and replacing labels in November 2016, on a batch that had arrived with a printing error.

- African Laughter

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