For years economists have been saying the continent needs to unlock its local manufacturing potential and produce African products for Africans that can compete with foreign players. As true as this may be, it is easier said than done.
For starters, entrepreneurs have to first overcome high manufacturing costs that make it difficult for their products to compete with foreign brands. And then there is the challenge of winning consumer trust, which often requires large marketing budgets. Manufacturing is capital intensive and many African companies struggle to move from small to mass production.
Swaziland-born Ntombenhle Khathwane refused to be one of these entrepreneurs. About five years ago she started manufacturing natural hair-care products, under the name AfroBotanics.
Recently Khathwane signed contracts with two leading South African retailers – hypermarket Game and the country’s second largest grocer, Pick n Pay. These deals allow her products to be sold in 40 Game stores and 100 Pick n Pay outlets – with the opportunity to expand further as the brand gains traction. She is also in talks with a third major retailer about stocking her product.
“It is a good start. By the end of the year we are looking to be in 200 stores,” Khathwane tells How we made it in Africa.
But getting this far required some clever strategies, which Khathwane is happy to share with other aspiring African manufacturers looking to play in the big leagues.
1. Grow your brand – every way, any way!
Khathwane invested a significant portion of her savings into developing her product, and when she was finally armed with a winning hair-care formula, she thought all she had to do was approach key retailers and they would stock it. However, it is not this simple and Khathwane was told she first had to develop brand awareness before big retailers would sell her products.
“It is like a chicken and egg situation,” she highlights. “You need to be in retail in order for people to know and access your brand, but retailers want your brand to first be known before they retail it.”
So what did Khathwane do? She did everything she could to develop her brand. She launched an online store and supplied as many small shops and boutiques as she could.
“I also tried to push as much PR as I could, like getting into True Love magazine, talking on the radio – anything that didn’t require me to spend money because I didn’t have any to spend for marketing.”
2. Be an expert
Another way to create awareness is to educate consumers about the brand’s value proposition.
“Because my products are made from natural [inputs], they are more expensive than what you can buy at stores. So it was difficult to get people to understand what I was trying to sell and, more importantly, to get them to keep their hair natural as most were used to relaxing their hair or wearing extensions.”
She started publishing blog posts through her online store that covered all topics relating to African hair – from its chemical structure to tips for maintaining strength and health. Not only did these articles alert consumers about her products’ value, but it also attracted visitors to her website.
3. Get reviewed
In addition, she sent her products to popular beauty bloggers and journalists to sample and review, which further created brand awareness. These reviews typically mentioned where consumers could find her products, or featured links to her online store.
According to Khathwane, a breakthrough was when she managed to get her product into the hands of Khanyi Dhlomo, a South African TV personality and owner of Destiny Magazine. Two months later Khathwane’s products were endorsed in the publication.
4. Enter competitions for support and advice
Much of the support that has helped Khathwane get to where she is today came through entering competitions.
In 2010, when she was still developing her products, she entered her concept into a business plan competition Pitch & Polish, and won a trip to the US to meet with industry experts who could advise on product development. When she came back she shared this information with a professional formulator. By the end of 2011 Khathwane had developed her formula, tested it and was ready to manufacture.
In 2014 Khathwane was selected to appear on a Standard Bank-sponsored TV show called Think Big to compete for R1m ($70,000) business financing. While she didn’t win the grand prize, the show was watched by a manager working at Game who, after seeing how people reacted to her brand, agreed to stock it on a three-month trial basis.
5. Celebrity endorsements
While Game is a leading hypermarket in South Africa, Khathwane knew it wasn’t the go-to store for hair products. She realised she had to pull-out all the stops to ensure her products sold during their three-month trial.
“I was warned that many make the mistake of thinking that once a product is on the shelf, people are going to buy it.”
She decided to approach a celebrity for an endorsement. She contacted a South African radio and TV personality, Pearl Thusi (who is well-known for her natural hair styles) and together they developed the Black Pearl Collection.
It took off and wasn’t long before Game agreed to sell her products in 40 stores, followed by Pick n Pay in 100 stores.
6. Start small and prove your business case
Today Khathwane has her own factory, and while it currently turns out 2,000 bottles a week, it has the capacity to produce 4,000 bottles a day.
However, she advises other manufacturers starting out to first outsource manufacturing of their product before investing in their own factory and machinery.
“First prove your business case – that is the important thing,” emphasises Khathwane. “Contract a manufacturer, prove your business by showing there’s a market and that people are buying your product, and then you can go look for funding and go into full-scale manufacturing.”
And once products get onto the shelves of key retailers, manufacturers need to ensure they can meet demand by scaling production.
“Because the first thing a Game or a Pick n Pay will ask you is if you have the capital to be able to produce the amount of products to satisfy customers.”