Why Kenya’s beauty market is attracting mega takeover deals

World-class personal care and beauty product makers smell money in the growing population of liquid women. PHOTO | FILE 

By DOREEN WAINAINAH, dwainainah@ke.nationmedia.com

In Summary

• Kenya’s colour cosmetics market is estimated to be worth Sh5.4 billion and is expected to grow to Sh6.6 billion by 2018.
• The Flame Tree Group says the cosmetics division, under the manufacturing arm, accounted for 74 per cent of the company’s portfolio with the rest going to the trading arm.

The beauty and cosmetics industry has become Kenya’s new hub of investment that is pulling in big money to establish new lines of business and to snap up successful enterprises through multi-million shilling acquisition deals. 

That statement was firmly made last month when Flame Tree Group acquired a local start-up Suzie Beauty in a deal estimated to be worth millions of shillings.

The Flame Tree Group said it made the acquisition as part of a larger plan to expand its fast moving consumer goods business, especially in cosmetics where it is already a big player.

“Suzie Beauty is a strong brand in Kenya with a niche target. Of the beauty products in our portfolio, all are mass market goods. Suzie Beauty is a niche product that gives us reach to the high-end market,” said Heril Bangera, chief executive officer of Flame Tree Group.

Suzie is the fourth acquisition that the Flame Tree Group has made since its 2014 listing on the Nairobi Securities Exchange.

The beauty products maker bought Miss Africa, Black Angel and Beauty plus hair brands from Beauty Plus Trading East Africa before taking in Monalisa skincare brand shortly thereafter.

Kenya’s colour cosmetics market is estimated to be worth Sh5.4 billion and is expected to grow to Sh6.6 billion by 2018.

The Flame Tree Group’s annual report for 2014 says the cosmetics division, under the manufacturing arm, accounted for 74 per cent of the company’s portfolio with the rest going to the trading arm.

The Suzie Beauty takeover comes barely two years after French beauty and cosmetics giant L’Oreal acquired Nice & Lovely range of products from Paul Kinuthia startup InterConsumer in a deal worth more than Sh1.5 billion.

L’Oreal, one of the largest cosmetic groups in the world, purchased InterConsumer Products, targeting Kenya’s fast-growing lower end of the market, where it had no presence.

That gamble paid off when the company clocked 40 million units in sales after the acquisition, up from just 2 million the year before.

READ: L’Oreal reaps from Nice & Lovely buy

ALSO READ: Nigerian entrepreneur enters Kenya’s cosmetics market

Mr Kinuthia, the brain behind InterConsumer, had grown the company from its humble roots as a backstreet cosmetics maker to an industrial giant that produced lotions, jelly, baby powder, soap, shampoo and hair dyes.

InterConsumer sold cosmetics worth Sh1.7 billion, earning Mr Kinuthia more than Sh200 million in net profits prior to the sale of Nice & Lovely range of products