Since 2009, US cosmetics giant Estée Lauder Companies has widened its presence in sub-Saharan Africa, entering new markets and expanding its product portfolio. In the last five years the company has made forays into Nigeria, Kenya, Ghana, and Côte d’Ivoire.
After decades of doing business in South Africa and its neighbouring countries, the company now operates in a total of 14 markets on the continent.
“For many years our Southern African footprint has been strong. We have a very broad portfolio of our products in South Africa, for instance, and all of them are performing extremely well. We have slowly been building our presence in the rest of sub-Saharan Africa because we see it as a growth opportunity,” says Sue Fox, managing director for Estée Lauder in the sub-Saharan region.
Changing dynamics in Africa
Fox points to the “changing dynamics of Africa” such as economic growth in many countries, a rising middle class with an appetite for branded products, and a large population of young people.
“There has been a big shift in the last few years. There is more consumer awareness. More people travel outside of Africa and see brands abroad they want to buy in their own markets. We are entering these markets because we see the region as having sustainable, long-term growth. The future is really positive,” she explains.
Fox says she is “very pleased” with the outcome the company has seen in new markets. In Kenya for instance, Estée Lauder first launched a range of products three years ago. Two months ago it partnered with a local entrepreneur to open in Nairobi the first MAC Cosmetics outlet in East Africa. She notes that consumers are “absolutely” brand conscious and are keen to learn and to try new things.
“It is a fantastic opportunity to be able to launch new brands in new markets, to build those brands and to bring new consumers into those brands. Across the globe there aren’t that many markets that are left to launch,” says Fox.
“As the consumer has more disposable income, as more people enter into the middle class, as they become more aspirational, the market is going to grow. We have seen that in South Africa, how the market has shifted and grown over the years,” she explains.
An important element in Estée Lauder’s expansion is working with the right partners who understand the “importance of protecting brand equity”. Estée Lauder also needs to bring in the right range and assortment of products, train staff and educate clients. And finding the right location at the right mall and at the right time “is critical”. She adds she is excited to see a good number of shopping malls coming up in several countries.
“The retail industry has been very informal but now we are seeing a fundamental shift away from that. Although informal trading will always be an integral part of African culture, the mall shopping experience is becoming more enticing to the consumer,” explains Fox.
Although there are various risks and challenges to doing business in sub-Saharan Africa, Fox adds she has “not come across anything insurmountable”.