Dabur takes small step into African cosmetics market

13-Sep-2016 - Last updated on 13-Sep-2016 at 21:24 GMT

India-based consumer goods and cosmetics player Dabur has just sealed a deal to buy a small South African cosmetics player, paving the way to huge growth potential across the African continent.

The company announced back in July that it was acquiring South African cosmetics player Discaria Trading, and the acquisition has just been confirmed as completed on the Bombay Stock Exchange, last week.

"The company's wholly-owned subsidiary Dabur International has acquired 100% share capital of Discaria Trading in South Africa. Accordingly, Discaria has become a step down wholly-owned subsidiary company of Dabur India," the maker of Vatika shampoo said in the original BSE filing.

Highly strategic move

The move is seen has being a highly strategic one for the big Indian player, as Discaria has manufacturing in Nigeria, the biggest economy in Africa, as well as Egypt.

Dabur says it wants to set up a greenfield manufacturing facility in South Africa, from which it will target significant opportunities for growth in cosmetics and personal care, both in South Africa and more developed countries in the African continent.

A Dabur spokesperson has previously said that it wants to sell the Namaste range of hair care products that is targeted at African hair care, as well as its Vatika hair care and DermoViva skin care brands

South Africa growth market

Dabur has picked the right time to move in on the South African market, as consumer spend is currently booming off the back of improved wealth distribution, thanks to a burgeoning black middle class.

Currently it is one of the fastest growing markets for beauty and personal care in the world, and with a current market value of $3.4bn, it should grow at a CAGR of 4.5% to reach 4.3% by 2020, according to market research company Mintel.

The best growth opportunities are currently in the body care, colour cosmetics and fragrance categories, while hair care remains by far the biggest category in South Africa, and throughout the African continent.