Soap & Industry: A Global, Regional and Country Specific Report on the Soap and Cosmetic Industry Canadian Crossroads International AFEME Tara Scanlan Pre-Mandate Report November, 2011

Contents 1 Tara Scanlan

Introduction Part 1: Soap Soap Defined Cleansing soaps History of Soap Soap Production Process Cold Process: Hot Process: Fats and Oils used for Soap Making Vegetable Oils Animal Fats Part 2: Industry Global Regional Western Europe North America Middle East-Africa Country Specific France Population Economics Consumer Lifestyle: Personal Care Products Shopping habits Trends in the beauty sector Communications Leisure Activities Internet Mobile Phones E-Commerce Canada Population Economics Consumer Lifestyle: Personal Care Products Communications and the Internet Internet Mobile E-Commerce Nigeria Population Economy Consumer lifestyle: Personal Care Products Communications and the Internet Communications: Television, Cable and Satellite Printed Media Computers and the Internet Conclusion Appendix Appendix 1: Saponification Chart 2 Tara Scanlan

Introduction Soap is a product that has penetrated markets around the world for decades, and is a necesity for most consumers. In todays global market there are many characteristics and prices of soaps, which range from lower income to super luxury. The more developed markets, such as Europe and North America, give consumers a large amount of product opptions due to intense competition among producers. In comparision, the developing markets of Latin American and Africa have seen a rise in the presence of international cosmetic brands, but they still offer room for growth. This report will define soap, and indicate the soap making process. It will also examine the current market place for soap and cosmetics on a global scale, a regional (North America, Western Europe and Western Africa) scale and a country specific scale, including: Canada, France and Nigeria.

Part 1: Soap Soap Defined Soap is a cleasing and emulsifying agenty produced by the action of alkali on fat 3 Tara Scanlan

or fatty acids and essentially consits of the salt produced by sodium or potassium acids1. In the simplist terms, soap is a salt of a fatty acid2 that is produced by treating vegtable or animal oils/fats with a strong alkaline solution. The process of producing soap is called saponification, which uses a base hyrolysis (a chemical reation of water that usually produces an acid, alkali or sodium hydroxide3) of triglycerides (a chemical compound derived from glycerol and three fatty acids – vegtable or animial oil/fats – attached to a single molecule of glycerol4), which are then ‘chemical compounds’ of fatty acids that form the sodium salt of a carboxylate.5Triglycerides, vegtable oil or animal fats, can be transformed into soap through a one or two step process. The traditional method, which is the industrustrial method for making soap, only requires one step. The triflyceride is treated with a strong base, which simply put realses the fatty acid salt and glycerol. There can be a second step added, as soaps can be precipited through saliting, which removes the saturated sodium chloride.

Cleansing soaps In creating cleansing soaps, the type of alkali metal used determines the type of soap produced. Firm/hard soaps are made from sodium hydroxide or lithium, soft and liquid soaps are produced from potassium hydroxide. The typical vegetable oils used in soap making are palm oil, coconut oil, and olive oil. Seed oils give softer and milder soaps, such as that derived from olive oil6. The ancient Egyptians, around 1550 BC, were reported to have bathed regulary and combined animal and vegetable oils with alkaline salts to create a soap-like substance.

History of Soap The original recipe for soap was a mixture os ash, cypress oil and sesame seed oil 7 dating back to Ancient Bablyon in 2800 BC8. Sapo, the Latin word from soap, was made from tallow and ashed, and was most likely used by Gauls and German men for hair pomade9. Many believe that soap received its name from Mount Sapo, where animal sacrifies 1 Webster-Webster. (2011). Definition of Soap. Retrived from http://www.merriam-webster.com/dictionary/soap 2 IUPAC. (1997). Compendium of Chemical Terminology, 2nd ed. (the "Gold Book"). Online corrected

version: (2006–) "hydrolysis". 3 IUPAC. (1997). Compendium of Chemical Terminology, 2nd ed. (the "Gold Book"). Online corrected version: (2006–) "hydrolysis". 4 Nelson, D. L.; Cox, M. M. (2000). Lehninger, Principles of Biochemistry, 3rd Ed. Worth Publishing: New York. 5 K. Schumann, K. Siekmann. (2005). Soaps.Ullmann’s Encyclopedia of Industrial Chemistry, Wiley-VCH,

Weinheim. 6 Wikipedia. (2011). Soap. Retrived from http://en.wikipedia.org/wiki/Soapmaking#cite_note-0 7 Noted in Martin Levey, "Gypsum, salt and soda in ancient Mesopotamian chemical technology" Isis 49.3

(September 1958:336–342) p. 341 8 Willcox, Michael (2000). "Soap". In Hilda Butler. Poucher's Perfumes, Cosmetics and Soaps (10th edition ed.). Dordrecht: Kluwer Academic Publishers. pp. 453. "The earliest recorded evidence of the production of soap-like materials dates back to around 2800 BCE in ancient Babylon. 9 Pliny the Elder, Natural History, XXVIII.191.

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took place; the tallow from the sacrifices would have mixed with the ashes from the fires associated with these sacrifies and in turn, with water produced soap. Although this theory is widley believed, it has not been proven. During medieval times it has been indicated that there were registered soap makers in Naples during the sixth century,10 and by the 8th century, soap-making was well know in Italy and Spain.11 By the 15th century soap way semi-industrialized and was prevelent in many parts of Europe, specfically Marseilles, France12 and London, England13. As industrially manufactured bar soaps started to become widly available at the end of the 18th century, due to the advertising in Europe and the USA to promote cleanliness.14 The real advancments in soap manufacturing happened from the late 1700’s to the late 1800’s, including in 1886 when Unilever was founded, which still remains as one of the largest soap businesses in the world. Today soap is used for cleaning the body, clothes, dishes and household surfaces15.

Soap Production Process16 Soap production process is done by saponification, and then the batch is placed into molds, which can be made of plastic or cardboard boxed lined with a plastic film, which then follows a drying process where other elements may be added. There are two ways of making soap, the cold process or the dry process.

Cold Process: During the cold making process there is a need for precise measurements of lye and fat, to ensure that there is not an excess amount of hydroxide or free un-reacted fats. Soap that is not prepared by well calculated measurements can lead to skin irritation or burning, such as a soap that has too much lye. A saponification chart is helpful in determining the amounts of oil vs. lye in a recipe (refer to Appendix 1 for an example saponification chart). Many soap makers produce recipes with a 4-10% lye deficit so that all of the lye is converted and the excess fat will be left for moisturizing the skin. Steps: 1. 2.

Lye is dissolved in water. Oils are heated/melted at room temperature.

10 footnote 48, p. 104, Understanding the Middle Ages: the transformation of ideas and attitudes in the

Medieval world, Harald Kleinschmidt, illustrated, revised, reprint edition, Boydell & Brewer, 2000, ISBN 085115-770-X. 11 p. 632, chapter 11, Anionic and Related Lime Soap Dispersants, Raymond G. Bistline, Jr., in Anionic surfactants: organic chemistry, Helmut Stache, ed., Volume 56 of Surfactant science series, CRC Press, 1996, ISBN 0-8247-9394-3 12 John U. Nef, "A Comparison of Industrial Growth in France and England from 1540 to 1640: III" The Journal of Political Economy 44.5 (October 1936:643–666) p. 660ff. 13 Nef 1936:653, 660 14 McNeil, Ian (1990). An Encyclopaedia of the history of technology. Taylor & Francis. pp. 2003–205.

ISBN 9780415013062. 15 The London School of Hygiene& Tropical Medicine. (2000) The Global Market for Soaps. A Market Research Report for the Public-Private Partnership on Handwashing and Soap. 16 http://en.wikipedia.org/wiki/Soapmaking#cite_note-16

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Lye and oils are combined. Mixed until the mixture starts to thicken – “trace”. Additives may be added as there are signs of light trace, medium trace or heavy trace – oils can be added with the initial soaping oils, but solids (herbs, oatmeal, botanicals, etc…) are best added at a light trace, as the mixture starts to thicken. 6. Batch poured into moulds, kept warm with towels or blankets (milk or soaps with sugars added increase the speed of reaction and the production of heat). 7. Saponification happens for 12-48 hours. 8. Cured and hardened on a drying rack for 2-6 weeks. 3. 4. 5.

Hot Process: The hot processed soaps are created by adding heat, and therefore speeding up the saponification reaction. The main difference between the cold-processed soap is that in the hot process soaping the oils are completely saponified by the end of the handling period. Whereas with the cold process the saponification happens after the oils and lye mixture is poured into moulds. and perfect accuracy of the amount of hydroxide is not needed. Steps of the hot process: 1. Hydroxide and fat are heated and mixed together 80 – 100 degrees, until saponification is complete – which is determined by taste or eye. 2. “Neat soap” is precipitated from the solution by adding common salt and excess liquid drained off. 3. Hot, soft soap is then pumped into a mould. Finishing Process: 1. 2. 3. 4. 5. 6. 7.

Boiling the soap curds in water and precipitating the soap with salt. Dry soap is compacted into small pellets or noodles, and then turned into bars. Fragrance and other materials may be added. Soap is passed through a refiner to further plasticize the soap mass. Soap is passed through a vacuum chamber to remove trapped air Soap is stamped into shape. Soap is packaged.

Fats and Oils used for Soap Making17 Vegetable Oils Coconut Cottonseed Soya Bean

Castor Palm Sunflower Rice Bran Palm kernel Rapeseed

Animal Fats Tallow Fish Oils

Lard

17 Chemical Business, February 2000

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Mowrah

Karanja

Part 2: Industry Global Soap is classified, in general, as a staple product in detergents and personal care. In 2000 12.4% of consumer expenditure is spent on household goods in industrialized countries, and it was between 2.6 % - 5% in the developing world. The developed world market is a highly saturated and competitive industry, while the developing stills offers room for growth,18even with many of the big multinationals having leading presence. “The global market for soaps is dominated by a small number of multinational companies with strong brand identity and enormous advertising budgets”19. The major players are Unilever, Procter and Gamble, Colgate Palmolive and Johnson and Johnson. Paterson Zochoins is the major player in the soap industry in Africa. As the global economy and global companies have seen a number of changes in the past number of years, consumers are starting to change their preferences in a product. Consumers are looking for value, an experience, and to be connected digitally. Consumers are also looking for luxury, which is now associated with exclusive, artisan, and green products. Staying ahead is another important characteristic. For example using holistic and preventative health in products, such as the macro trend of anti-ageing components is an attractive product feature in today’s market.20 As the global economy has been slowly recovering, retailing numbers have also started to see a rise. The biggest growth has been in non-store sales, which indicated strong growth in 2010, as many businesses are now strategizing to sell their products online. Direct sales have also illustrated to be highly effective in gaining growth in the beauty and personal care industry. 21 There was a growth of 5% in 2010, attributed mostly to the mass market industry; premium cosmetics also had a strong increase in growth. It is forecasted that by 2015 there will be an even stronger global presence of mass cosmetics, specifically in Latin America; North America and Western Europe is forecasted to be largely unchanged. This is due to the fact that many consumers perceive that mass or upper end products

18 Euromoniter 2000 19 The London School of Hygiene& Tropical Medicine. (2000) The Global Market for Soaps. A Market Research

Report for the Public-Private Partnership on Handwashing and Soap. 20 Euromonitor. (2011). Beauty Beyond the Crisis, May 2011. Retrieved November.15, 2011, from Euromonitor Global Market Information Database. 21

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offer the same quality and status to premium offerings.22 Deodorants, baby care and men’s grooming are the smaller categories what have since a consistent growth over the years. Men’s grooming is now a US$30 billion industry and it is expected to continue to grow.23 Retailers have been increasing the sophistication and have specialised in bath and body lines, and are positioning the products on more than just scent, and on scientific efficacy. Natural and organic products are also popular, as retailers are creating their own label and certification systems. 24

Consumers are going online more and more to get information about a product or to make a purchase. ``On a global scale the internet provides the same benefit to the consumer regardless of geographic location. The internet is becoming intertwined in our daily lives and is the most widely used resource for gathering information`` With that, the beauty industry continues to adapt new strategies to build a more interactive relationship with consumers. Many brands are doing this through social media interaction, mobile marketing and Smartphone applications, but also through new ways of creating positive in-store experience. Social media is a key factor in marketing strategy as Facebook has over 500 million users, with each having an average of 130 friends and with 50% of overall usage done by females. Unilever, the second largest global advertiser, doubled its allocated marketing budget to the web in 2010, and plans on 10% of US marketing to come from social media. 25 There has been a steady growth in the global bath and shower products over the past 5 years. Bar soap has seen the same rise in value.

Regional Western Europe Figure 1 Western Europe Market Size Bath and Shower - Retail Value Figure 2 Western Europe Market Size Bar Soap - Retail Value 22

ibid ibid 24 ibid 23

25 Euromonitor. (2011). Beauty Beyond the Crisis, May 2011. Retrieved November.15, 2011,

from Euromonitor Global Market Information Database.

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Relative to the rest of the world, Western Europe has had a slower recovery in terms of economy. Many countries are feeling high unemployment and low consumer speeding, which is forecasted to remain for the medium term.26 This has resulted in negative growth in both the bath and shower industry and the bar soap values.

North America Figure 3 North America Market Share Bar and Shower - Retail Value Figure 4 North America Market Share Bar Soap - Retail Value

Overall in North America there has been a small constant growth in the bath and shower industry, but the continent has seen a decrease in 2010 in the retail value of bar soap.

Figure 5 Middle East- Africa Retail Value Bar and Shower - Current Prices

Figure 6 Market Share Middle East-Africa Bar Soap - Retail Value

Middle East-Africa The main issue in the Middle East and Africa is the persistent political unstability. In turn, making multinationals weary of entering the market. Regardless of the economic and political turmoil though, the Middle East-Africa has seen a steady rise in the retail value of bar soap over the past 5 years.

Country Specific France Population Figure 7 Population by Age: 2010-2027

'000/as stated 0-14 yrs

2010 2015

2020

% Growth

11,561 11,795 11,819 2.2

26 Euromonitor. (2011). Beauty Beyond the Crisis, May 2011. Retrieved November.15, 2011,

from Euromonitor Global Market Information Database. 27 National statistics, UN, Euromonitor International

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15-64 yrs 65+ yrs TOTAL Median age of population (years)

40,701 40,489 40,336 -0.9 10,510 11,869 13,224 25.8 62,772 64,153 65,379 4.2 39.8

40.9

41.3

1.5 years

France is currently facing an aging population, with a 25% growth forecasted for the 65+ population in the next 10 years. There will also be a growth in urban living, as all the population in major cities in France is expected to rise. Figure 8 Population by Major Cities: 2010-202028

'000 Paris Marseilles Lyon Lille Nice

2010 2,197 859 487 236 353

2015 2,250 891 506 246 361

2020 2,311 925 525 256 371

% Growth 5.2 7.6 7.9 8.7 5.0

Economics France has one of the most equal household income distributions in Western Europe. “In 2009, nearly 72% of households (19.3 million) had annual disposable incomes of more than US$45,000. In the same year, just over 37% (10 million) had annual disposable incomes of more than US$75,000 and only 5.4% (1.5 million) had annual disposable incomes of more than US$150,000. The global economic downturn had a significant impact on household income in France. In 2009, the number of households earning with annual disposable incomes of more than US$45,000 declined by 26% while the number with more than US$75,000 declined by 8.6% and the number with more than US$150,000 declined by 13%.”29 40-60 is the age group who is making the most money in France, and disposable income has remained constant over the past 5 years. Figure 9 Annual Disposable Income per Household (Current Value):2005-2009 30

'000 above US$500 above US$1,000 above US$5,000 above US$10,000 above US$25,000 above US$45,000

2005 25,689 25,687 25,609 25,281 22,411 15,331

2006 25,991 25,990 25,917 25,613 22,955 16,249

2007 26,296 26,295 26,240 26,011 23,964 18,423

2008 26,593 26,592 26,545 26,353 24,631 19,814

2009 26,883 26,882 26,829 26,609 24,652 19,303

28 National statistics, UN, Euromonitor International 29Euromonitor. (2010). Culture & Lifestyle France, Nov 2010. Retrieved November.15, 2011,

from Euromonitor Global Market Information Database. 30 National statistical offices, Euromonitor International

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above US$75,000 above US$150,000

5,946 981

6,772 1,077

9,143 1,346

10,947 1,674

10,006 1,456

Figure 10 Annual Gross and Disposable Income (Constant 2009 Value): 2005-2009 31

EUR per capita

2005

Annual Gross Income Disposable Income

29,404 19,664

2006 30,053 20,140

2007 30,745 20,746

2008 30,606 20,638

2009 30,592 20,718

Figure 11 Average Annual Gross Income by Age (Constant 2009 Value): 2005-2009 32

EUR 15-19 yrs 20-24 yrs 25-29 yrs 30-34 yrs 35-39 yrs 40-44 yrs 45-49 yrs 50-54 yrs 55-59 yrs 60-64 yrs 65+

2005 28,250 32,873 35,571 37,581 39,328 41,062 42,290 42,464 42,080 40,363 38,907

2006 28,825 33,510 36,312 38,337 40,217 42,053 43,357 43,449 43,163 41,349 39,658

2007 29,344 34,057 37,034 39,007 41,132 43,102 44,507 44,586 44,315 42,808 40,599

2008 29,626 34,257 37,154 38,844 41,061 42,981 44,348 44,320 43,905 42,703 40,083

2009

% Growth

29,633 34,321 37,209 38,763 41,134 43,078 44,534 44,466 43,905 42,991 40,081

4.9 4.4 4.6 3.1 4.6 4.9 5.3 4.7 4.3 6.5 3.0

Consumer Lifestyle: Personal Care Products33 Shopping habits As in most places in the world, the French have been ever stringent in what they are spending their money on, and even changing their shopping habits. Many consumers have switched from the premium brands to the most affordable brands, which are found in pharmacies and drugstores. Premium products are sold by beauty specialists, department stores and pharmacies, the mass market products are on the shelves of hypermarkets and supermarkets sold mass-market brands and a few private label products. There has been a conjunction of mass market and premium products in recent years. This is particularly true with organic products, which were once limited to pharmacies and drugstores, but are now offering strong sales opportunities in the mass market retail venues. It has shown that the economy and the degree of consumer confidence are directly 31 National statistical offices, Euromonitor International 32 National statistical offices, Euromonitor International 33 Euromonitor. (2010). Culture & Lifestyle France, Nov 2010. Retrieved November.15, 2011,

from Euromonitor Global Market Information Database

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related to the state of the beauty and personal care industry. This is indicated by the slow sales growth in 2008, 2009 and the huge drops in skin care and fragrances sales. The premium and mass market sectors have both seen a slow down, even with declining prices. More and more French consumers are going online to purchase their cosmetics, as there was a sales increase of 32% of internet sales in 2009. This is due to the fact that many brands are opting to offer a personalized, interactive website for their products and brand. In turn, with the environment of the economy, French consumers are opting to ditch their brand loyalty and continue to compare prices in order to obtain the best deals and explore new retailing opportunities – such as online. It is forecasted that consumers will start to purchase more mid-priced and premium private label products into the short and medium future. Competition will also be up amongst retailers, yet premium brands will still be preferred amongst upper and middle income consumers, and will be the inspiration to many popular mass market brands. It is also forecasted that many smaller manufactures and brands will suffer in the short term, due to relatively limited resources in product development and marketing.

Trends in the beauty sector French woman are very concerned about their appearance and place great importance in taking care of their skin, as France has the fourth-largest skin care market in the world with sales in 2009 at US$4.1 billion. In 2008, when the recession began, French woman looked for skin products that would boost their spirits and were willing to indulge themselves. In 2008, French consumers also saw a rise in the demand for natural and organic products, resulting in more product development in all categories. Although there has been a trend in organic and environmentally friendly ideologies, it has taken French consumers longer to jump on the idea. This trend is expected to continue to grow over the forecasted period. It is important to note that although French consumers are willing to purchase the more ‘ethical’ products, they are not willing to compromise price or quality. Manufacturers are now faced with the demand to present products that are more natural, made from cleaner manufacturing processes and whose packaging is recyclable or biodegradable while avoiding significantly higher prices. Fair Trade in France has also seen growth, as turnover increased by 37% between 2004 and 2007, with sales at EURO 41 million in 2007. The textile sector has seen the biggest growth with an increase of 745% in 2007 from 2004. Men’s grooming has also been a steady increasing trend, with a high demand for mens skin care products. Figure 12 Expenditure on Cosmetics and Toiletries (Constant 2009 Value):2005-2009 34

EUR million Colour Cosmetics 34

2005 1,197

2006 1,205

2007 1,231

2008 1,243

2009 1,252

% Growth 4.6

National statistical offices, Euromonitor International

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Fragrances Hair Care Men's Grooming Skin Care

1,838 2,007 1,002 3,063

1,876 1,932 992 3,121

1,926 1,891 1,005 3,148

1,883 1,816 998 3,090

1,824 1,731 994 3,020

-0.8 -13.7 -0.8 -1.4

Communications35 Leisure Activities Leisure activities in France tend to depend on age groups. An IPSOS survey indicated that older people (aged 50-64) preferred home-based leisure activities, such as listening to music (67%) or watching films on TV or on a DVD (65%) whereas younger people (aged 15-25) liked using the internet (70% of young people declared it a favourite activity compared to 43% of the overall population

Internet The French are significant users of internet, and this is forecasted to continue. This is expected to increases as the French households continue to run to ‘cocooning’, spending more time relaxing at home instead of out of the home.

Mobile Phones French consumers are significant users of mobile phones, and this is expected not to change in future. New technologies and smart phones are expected to increase the demand, and the connectivity will increase.

E-Commerce Online retailing will continue to see continual growth into the future, and the beauty and personal care is expected to continue to be the fastest-growing category. This category should benefit from the development of websites offering low-cost products, as new players launch online stores over the forecast period.

Canada Population The Canadian population is expected to increase to just over 36 million people in 2020, with a trend of growth in the major urban centres, particularly Calgary and Toronto. There is also an anticipated growth rate in the senior population, with a 37% 35

Euromonitor. (2010). Culture & Lifestyle France, Nov 2010. Retrieved November.15, 2011, from Euromonitor Global Market Information Database

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increase by 2020.

Figure 13 Population by Major Cities 2010-202036

'000 Toronto Montreal Vancouver Calgary Ottawa - Gatineau

2010 5,044 3,452 2,029 1,072 882

2015 5,354 3,599 2,112 1,160 906

2020 5,659 3,757 2,201 1,243 936

% Growth 12.2 8.8 8.5 15.9 6.1

Figure 14 Population by Age 2010-202037

'000/as stated 0-14 yrs 15-64 yrs 65+ yrs

2010 5,560 23,635 4,772

2015 5,572 24,114 5,601

2020 % growth 5,814 4.6 24,230 2.5 6,544 37.1

TOTAL

33,968

35,287

36,589

7.7

39.7

40.6

41.4

1.7 years

Median age of population (years)

Figure 15 Female Population by Age: 2010-202038

'000/as stated 0-14 15-64 65+ TOTAL Median age of female population (years)

2010

2015

2,712 2,706 11,767 11,951 2,659 3,071

2020 % Growth 2,817 3.9 11,943 1.5 3,554 33.6

17,138 17,729 18,314 6.9 40.6 41.6 42.4 1.8 years

Economics Average annual gross income in Canada increased by 5% during the review period, and is expected to grown into the future. Not surprisingly, it was people in their forties and fifties—for most workers, their peak earning years—who benefited most from this growth. Indeed, the average annual gross income of people in their forties increased by 7% during the review period, while people in their fifties saw their average annual gross income rise by 7.6%. In contrast, people in their thirties saw their gross income grow at a slower rate of 5.5%, while people in their sixties saw

36 National statistics, UN, Euromonitor International 37 Ibid. 38 Ibid.

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their gross income grow at a relatively sluggish rate of nearly 4%. 39 Figure 16 Annual Gross and Disposable Income (Constant 2009 Value) 40

C$ per capita

2010

Annual Gross Income Disposable Income

2015

35,688 27,960

2020

38,677 30,283

40,849 31,975

Figure 17 Average Annual Gross Income by Age (Current Value): 2005-2009 41

C$

2005

15-19 yrs 20-24 yrs 25-29 yrs 30-34 yrs 35-39 yrs 40-44 yrs 45-49 yrs 50-54 yrs 55-59 yrs 60-64 yrs 65+

23,182 29,726 36,080 41,536 45,489 47,875 48,692 47,797 44,582 38,805 33,435

2006 23,804 30,352 37,118 43,118 47,440 50,008 50,866 49,999 46,598 40,314 34,426

2007

2008

24,200 31,145 38,717 45,552 50,425 53,219 54,113 53,204 49,498 42,369 35,588

2009

24,736 31,706 39,727 47,103 52,347 55,276 56,209 55,300 51,459 43,785 36,499

24,075 30,707 38,816 46,404 51,809 54,778 55,768 54,975 51,351 43,751 36,599

Consumer Lifestyle: Personal Care Products Non-grocery retailers dominated the distribution landscape, led in particular by health and beauty specialists, drugstores and mixed retailers. Direct selling is an important distribution channel in the colour cosmetics and toiletries markets. In particular, Avon Canada has always played a significant role in the distribution of these products. Indeed, Avon is the leading direct seller of cosmetics and toiletries in Canada. It is expected that the success of direct selling in Canada will decrease in the future, and internet retailing will be preferred. Beauty and personal care products are project to grow by 15% between 2010 and 2015, reaching C$121.7 million in sales in 2015. Figure 18 Expenditure on Cosmetics and Toiletries (Current Value): 2005-2009 42

C$ million Colour Cosmetics

2005 1,062

2006 1,117

2007 1,189

2008 1,248

2009 1,275

39 Euromonitor. (2010). Culture & Lifestyle Canada, Nov 2010. Retrieved November.15, 2011,

from Euromonitor Global Market Information Database 40 National statistical offices, Euromonitor International 41 National statistical offices, Euromonitor International 42 National statistical offices, Euromonitor International

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Fragrances Hair Care Men's Grooming Skin Care

612 1,430 526 1,099

630 1,473 566 1,191

646 1,504 594 1,288

659 1,516 610 1,346

660 1,514 616 1,376

Figure 19Expenditure on Cosmetics and Toiletries (Constant 2009 Value): 2005-2009 43

C$ million Colour Cosmetics Fragrances Hair Care Men's Grooming Skin Care

2005 2006 2007 2008 2009 1,149 662 1,546 569 1,188

1,184 668 1,561 600 1,263

1,234 671 1,561 617 1,336

1,274 673 1,549 623 1,375

% growth

1,275 660 1,514 616 1,376

11.0 -0.2 -2.1 8.3 15.8

Communications and the Internet44 Internet Canadian consumers are opting to use internet rather than the traditional consumer products to satisfy a greater portion of in home entertainment, news and communications needs. Social networks, particularly Facebook, are very popular amongst Canadians with over 60% visiting social media sites every month. The Canadian Internet Project reports that Canadians under the age of 30 have adopted social networking as part of their typical communication routines and have shifted some face-to-face communication to virtual communication. This shift is based largely on the comfort that this group has in using technology. As an aside, the report noted that Anglophones are far more likely than Francophones to use social networking sites. According to a recent Statistics Canada report on the online activities of Canadian Baby Boomers and seniors, in 2007, seniors were found to be online significantly less than Boomers. Regardless, data revealed that the relative gap in internet use rates has been closing. “The gap between boomers and seniors is not just in internet use rates,” the report noted. “Seniors also perform a smaller variety of online activities than boomers. Choices of activities reveal different preferences, as well as the different functional role the internet plays in their personal lives.” Email was the most common use of the internet by seniors, with nine in 10 senior internet users taking advantage of it, often to keep in touch with dispersed extended family members. Playing games on the internet was the second-most popular leisure activity among seniors who used the internet from home in 2007. In fact, seniors were more likely than boomers to play online games (36% versus 27%), most likely because 43 National statistical offices, Euromonitor International 44 Euromonitor. (2010). Culture & Lifestyle Canada, Nov 2010. Retrieved November.15, 2011,

from Euromonitor Global Market Information Database

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they have more leisure time. More than half the seniors used the internet to find information on travel, health, news and sports, or the weather and driving conditions. It is anticipated that heavy internet use by Canadians will continue, as by 2020 it is forecasted that 91.5% of Canadian households are expected to own broadband internet-enabled computers.

Mobile Canada holds a relatively low household mobile phone penetration rate, in comparison to other countries. In 2009 79% of the population possessed mobile phones, and the relatively low rate can be attributed to the restrictive rules in the telecoms market. Canada also has great fixed-line infrastructure through the country, and local calls from and to fixed likes are free, this has resulted in Canadian consumers to believe that mobile phones are not critical purchases. As more technology becomes available to Canadians in terms of smart phones, consumers are seeing the advantages of entertainment, information and communication “on the go”, and it is expected that demand will continue to increase.

E-Commerce E commerce in Canada continues to experience growth, but not at the same rate or degree as consumers in the US. This has largely to do with Canadian retailers not investing enough to make their online sites attractive and easy-to-use, resulting in many of them becoming simply uncompetitive when compared to US online sites. The Economist Intelligence Unit did a study on e-commerce readiness in 2008, and revealed that many retailers were weary to conduct business online. Many Canadian retailers did not believe that their businesses were suited for e-commerce. Canadians tend to browse online shopping sites for product information, but then purchase in store. Current e-commerce usage by Canadian consumers is tallied and reported in the annual Canadian Internet Use Survey, sponsored by Industry Canada. In the 2009 survey, it was reported that about 39% of Canadians aged 16 and over used the internet in 2008 to place more than 95 million orders, up from 32% and 70 million orders in 2007. Growth has been attributed, in part, to the economic downturn and Canadian consumers’ hunting for lower prices. Further, the report revealed that 51% of Canadians aged 16 to 34 purchased a product online in 2009. Men (42%) were more likely than women (37%) to have made an online purchase. By province, purchases were more likely to be made by residents of British Columbia (47%) and Alberta (45%) in 2009. Statistics Canada reports that Canadian seniors are not yet sold on e-commerce. In part, this is due to seniors’ tending to have less online experience than younger users and concerns about security. Since seniors generally have lower levels of expenditure when compared to other consumer segments, it is not surprising that they spend less via internet retailers. Growth of e-commerce is expected to continue over the forecast period as more Canadian households connect to the internet and as Canadian internet retailers develop and provide even more sophisticated services to their online customers. 17 Tara Scanlan

Nigeria Due to the fact that there is limited data surrounding Senegal and Western Africa countries, this report will focus on Nigeria as a market indicator.

Population Nigerians has a population of just over 150,000 and is dominated by youth. The ratio of women to men is almost equal amongst the country, with the country having a slightly higher male population in 2008, and is anticipated to remain unchanged. The majority of the population is under 25, and the trend is expected to be consistent into the future. 45

Figure 20: Population by Age and Gender

'000 0-4 yrs 5-9 yrs 10-14 yrs 15-19 yrs 20-24 yrs 25-29 yrs 30-34 yrs 35-39 yrs 40-44 yrs 45-49 yrs 50-54 yrs 55-59 yrs 60-64 yrs 65-69 yrs 70-74 yrs 75-79 yrs 80+ yrs Female Male TOTAL

1995 19,460 16,134 14,070 11,935 9,641 7,791 6,541 5,544 4,641 3,748 3,161 2,556 1,980 1,455 964 537 291 55,430 55,020 110,449

2000 21,398 17,798 15,609 13,722 11,560 9,243 7,409 6,189 5,226 4,355 3,483 2,881 2,251 1,641 1,092 620 364 62,516 62,326 124,842

2005 23,668 19,791 17,281 15,252 13,318 11,093 8,752 6,953 5,792 4,886 4,049 3,187 2,554 1,886 1,252 720 446 70,381 70,498 140,879

2008 25,048 21,117 18,420 16,203 14,220 12,158 9,804 7,638 6,170 5,189 4,353 3,490 2,706 2,051 1,365 785 495 75,454 75,758 151,212

2015 26,719 24,147 21,466 18,817 16,420 14,271 12,213 9,947 7,703 6,066 5,022 4,163 3,311 2,399 1,663 974 626 87,599 88,329 175,928

2020 26,781 25,227 23,584 21,031 18,329 15,868 13,662 11,582 9,368 7,225 5,656 4,625 3,734 2,822 1,876 1,133 749 96,115 97,137 193,252

45 National statistics, UN, Euromonitor International

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Economy The Nigerian economany has seen a subsantal amount of growth in the past 15 years. This can be attributed to the strong oil sector in the country. This is indicated by the large growth of disposible income within the country. Over all education groups there was a substantial increase in the mean annual disposbale income in the country. There was growth from NGN$ 44,319.60 in 1995 to NGR$ 266,365.0 in 2008, although it should be noted that Nigeria has faced high inflation rates, with a rate of 13.9% in 2010 alone46. Men are also making significantly more money, on average, than females. Figure 21 : Mean Annual Disposable Income by Education and Gender 47

NGN

1995

2000

2005

2006

2007

2008

Disposable income by education Primary Secondary Tertiary

33,039. 101,782.5 120,137.3 119,155.0 142,354.7 8 32,078. 44,366. 160,681.3 189,657.6 188,106.9 224,731.6 2 3 60,462. 229,380. 266,365. 44,319.6 198,301.6 227,505.3 0 8 0 24,774.4

Disposable income by gender Female 11,256.3 15,843.4 60,451.3 59,444.9 60,224.2 68,420.1 26,300. Male 18,628.3 98,070.3 98,385.9 99,675.7 114,396.1 0

Consumer lifestyle: Personal Care Products48 The consumer expenditure on personal care products has declined in Nigeria in the past number of years. With spending of NGN 53.8 billion in 2000 to 48.2 billion in 2008, which was due to the financial crisis and consumers consequentially spending less. It is forecasted that there will be future growth in personal grooming products, including toiletries. Although, if the consumer environment stays the same it will have an effect on growth and consumers will be more apt to purchases less expensive brands. Open markets and speciality cosmetic retailers are the primary distribution channels for cosmetics and toiletries; convenience stores and pharmacies also have a selection 46 CIA World Factbook. (2011). Nigeria Economy. http://www.theodora.com/wfbcurrent/nigeria/nigeria_economy.html 47 National statistical offices, Euromonitor International 48 GMID Consumer Lifestyles in Nigeria

19 Tara Scanlan

of the noted products. This is forecasted to remain constant, although there has been growth in formal retail operations, which in turn would change the share of distributaries from the open markets. The consumers of Nigeria, specifically young consumers, have an increasing interest in personal grooming. Personal hygiene is very important for all social and economic groups of society, with the demand for products regarding beauty, cleanliness and health is increasing. Many Nigerian women are wearing makeup, due to a desire to look more attractive, regardless of the past ideas that women who wore makeup were thought to have low moral standards. Men are also increasing their consumption of personal hygiene products, expanding the traditional shaving and aftershave products, and moving to deodorants, fragrancces and hair and skin products. One can attribute the increase in demand and interest in appearance and personal cosmetic products in the media and the increase of exposure from the West. Figure 22 : Consumer Expenditure on Personal Care49

NGN billion

2000

TOTAL

53.8

2005 49.2

2006 50.9

2007 50.6

2008 48.2

Figure 23 Consumer Expenditure on Personal Care (% Growth): 2000-2008 50

% Growth

2000-2008

TOTAL

-10.4

Figure 24 Per Capita Expenditure on Personal Care51

US$ per capita Personal care Average of CLIFE countries

1995 2.38 123.74

2000 3.83 123.23

2005 11.69 191.67

2006

2007

11.77 205.02

16.77 235.90

2008 20.44 261.85

Figure 25 Per Capita Expenditure on Personal Care52

% growth Personal care Average of CLIFE countries

1995-2008 757.32 111.61

2000-2008 433.96 112.49

Communications and the Internet Communications: Telecommunications in Nigera has seen huge growth in the last 15 years, with serge from NGN 109.3 billion in 1995 to NGN 271.6 billion in 2008. This was a 49 National statistical offices, OECD, Eurostat, Euromonitor International 50 National statistical offices, OECD, Eurostat, Euromonitor International 51 National statistical offices, OECD, Eurostat, Euromonitor International 52 National statistical offices, OECD, Eurostat, Euromonitor International

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result of deregulation in the industry and the increase of Global Systems for Mobile communications (GSM) in the market. Prices for phones and services has decreased,

Television, Cable and Satellite Nigerians enjoy watching television, and many people indicate that it is the most common form of relaxation and entertainment. With an increase of telephone channels offered to consumers increasing, and many families opting for coloured TV’s, the demand for satellite services and LCD TV’s are forecasted to grow.

Printed Media Nigeria has a number of newspapers and magazines available, from a broad coverage to some publication having a specific focus. The country has a relatively well developed print media, and has seen many new magazines and newspapers sprout up recently. Print media is accessible to typical Nigerians, but they may not be able to afford the purchase of magazines and newspapers as often as they would like. Due to this, many Nigerians read newspapers at work or pay to read at newspaper stalls. It is forecasted that interest in print media will continue to increase, with new free newspapers that depend on advertising revenue alone will be launched.

Computers and the Internet In 2008 Nigeria had 11 million internet users, mostly from cyber cafes as many people rely on the cafes for browsing. As a result there is a low rate of e-commerce, but it is expected to grow as the use of ATM cards or online cash payments are rising and expected to boost online shopping. As internet usage increases, it will eventually lead to the development of e-commerce in Nigeria. This is a low rate or personal computers in households in Nigeria it is expected to rise, and laptop computers will grow in demand as the products becomes less expensive. Figure 26 Per Capita Expenditure on Communications53

US$ per capita 1995 2000 2005 2006 2007 2008 Communication 3.13 3.65 11.77 12.02 16.81 20.19 s Average of 108.6 146.0 245.3 265.5 312.3 357.6 CLIFE 9 4 7 1 5 3 countries Figure 27Consumer Expenditure on Communications54

NGN billion

1995

200 200 200 200 200

53 National statistical offices, OECD, Eurostat, Euromonitor International 54 National statistical offices, OECD, Eurostat, Euromonitor International

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0

5

6

7

8

Postal services 31.7 31.4 67.0 65.3 67.2 66.9 Telecommunications 5.8 7.1 10.5 10.2 10.3 10.1 equipment Telecommunications

71.8 83.8 199.5 187.0 194.5 194.6

services TOTAL

109.3122.2

276. 262. 272. 271.6 9 4 0

Figure 28 Penetration of Cable and Satellite Television 55

% of households Cable TV Satellite TV system

1995 0.01 0.00

2000 2005 2006 2007 2008 0.17 0.02

0.51 0.37

0.57 0.49

0.62 0.63

0.67 0.76

Figure 29 Household PC Penetration and Internet Usage 56

As stated Internet users ('000) ISDN subscribers ('000) PC penetration (% of households)

1995

200 0

0.0 0.0 0.0

80.0 5,000.0 8,000.0 10,000.0 11,000.0 0.0 0.4 0.5 0.5 0.6 0.2 1.2 1.3 1.5 1.9

2005

2006

2007

2008

Conclusion The soap and cosmetic industry is an extremely dynamic market, and has seen a consistent growth in the global market over the past decade. Soap is a product that has been used for centuries and what was once considered an upper class and luxury good, is now widely seen as a household necessity. Even in light of the current economic difficultly, the demand for soap as has been, for the most part, consistent. The major change in the market has been the shift from premium brands, to the more economical mass market brands, but women are still willing to indulge when it comes to specific beauty products. The organic and green trend is expected to continue to grow, even in the saturated markets of the Western world. While in the developing world, the industry will see new market entrants and a larger degree of products offered. This report will play a fundamental role in the next steps for the Soap Workers at AFEME, in Dakar, Senegal.

55 Euromonitor International from trade sources and national statistics 56 National Statistical Office, International Telecommunications Union, World Bank, Trade Sources, Jupiter

Research, Euromonitor International

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Appendix Appendix 1: Saponification Chart Oil

Sodium Hydroxide (NaOH)

Potassium Hydroxide (KOH)

Oil

Sodium Hydroxide (NaOH)

Potassium Hydroxide (KOH)

Almond, Sweet .1360

.1904

Apricot Kernel Arachis Avocado Babassu, brazil nut Beef Hoof Beeswax, White Brazil Nut Butterfat, Cow Butterfat, Goat Canola Castor Chicken Fat Chinese Bean Cocoa Butter Coconut Cod-liver Coffee-seed Colza Corn Cottonseed Earthnut Flaxseed Florence, aka Olive Gigely Tree Goose Fat Grapeseed Hazelnut Hemp Seed Java Cotton Jojoba

.1350 .1360 .1330

.1890 .1904 .1862

Maize Mink Mustard

.1360 .1400 .1241

.1904 .1960 .1737

.1750

.2450

Neat's foot

.1359

.1902

.1410 .0690 .1750 .1619 .1672 .1240 .1286 .1389 .1350 .1370 .1900 .1326 .1300 .1240 .1360 .1386 .1360 .1357

.1974 .0966 .2450 .2266 .2340 .1736 .1800 .1944 .1890 .1918 .2660 .1856 .1820 .1736 .1904 .1940 .1904 .1899

Neem Niger-seed Nutmeg Butter Olium Olivate Olive Palm Butter Palm Kernel Palm Peanut Perilla Poppyseed Pumpkinseed Ramic Rape Rapeseed Rice Bran Ricinus Safflower

.1387 .1355 .1160 .1340 .1340 .1560 .1560 .1410 .1360 .1369 .1383 .1331 .1240 .1240 .1240 .1280 .1286 .1360

.1941 .1897 .1624 .1876 .1876 .2184 .2184 .1974 .1904 .1916 .1936 .1863 .1736 .1736 .1736 .1792 .1800 .1904

.1340

.1876

Sesame Seed

.1330

.1862

.1330 .1369 .1265 .1356 .1345 .1370 .0690

.1862 .1916 .1771 .1898 .1883 .1918 .0966

.1280 .1360 .1350 .1340 .1340 .1390 .1405

.1792 .1904 .1890 .1876 .1876 .1946 .1967

Kapok

.1370

.1918

Shea Butter Shortening (veg.) Soybean Sunflower Seed Sweet Oil Tallow, bear Tallow, beef Tallow, chinese vegetable

.1345

.1883

.1280

.1792

Tallow, deer

.1379

.1930

.1360

.1904

Tallow, goat

.1383

.1936

Karite Butter (Shea) Katchung

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Kukui Nut .1350 .1890 Tallow, sheep .1383 .1936 Lanolin .0741 .1037 Teal/Teel/Til .1330 .1862 Lard .1380 .1932 Theobroma .1370 .1918 Linseed .1357 .1899 Tung .1377 .1927 Loccu .1340 .1876 Walnut .1353 .1894 Macadamia .1390 .1946 Wheatgerm .1310 .1834 Oil (in ounces or grams by weight) x SAP value* (from chart below) = Amount of lye needed If you are using more than one type of oil in a single recipe, do the above step for each oil and total your results together to get the total amount of lye needed. *Use Sodium Hydroxide listing for bar soaps and potassium hydroxide for liquid soaps. 57

57

http://standeyo.com/News_Files/Soap/Saponification_Chart.html

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