2. Executive Summary
• Analysis of the South African surfactants market
• Key areas of household detergents and cleaning surfactants are analysed
• Opportunities in the market exist
• Research & development is moderate to low – mostly a case of companies
using tried and tested methods from external markets
• Competition in the market it low – room for improvement exists
• Key players in the market are addressed
• End user usage analysis with environmental regulations and general
legislation addressed
• Current surfactants market in SA growing slowly – Loadshedding has
affected manufacturing industry with a knock-on effect
• Most surfactants are imported, with downstream products being
manufactured locally
Introduction Market Overview Market Structure Key Findings
3. Executive Summary
• Slowdown in manufacturing sector across the board
• Economic growth which is slowing as a result of frequent power outages is
affecting industry growth
• Growth will remain steady in the medium term (2015-2019) until energy crisis
is effectively remediated
• Specialty end user sector (mining) is decreasing as a result of lower global
commodity prices
• Construction industry is experiencing moderate growth (~2% p.a)
• Household detergent and cleaning market will experience highest growth as a
result of increasing urbanization and demand for improved hygiene (~4% p.a)
Introduction Market Overview Market Structure Key Findings
2015 2016* 2017* 2018* 2019*
4% 4.1% 4.1% 4.5% 4.8%
4. Executive Summary
Introduction Market Overview Market Structure Key Findings
Anionic
Cationic
Nonionic
Amphoteric
Market
Segment and
Area of
Application
Household
Detergents
Industrial and
Institutional
Personal Care
Specialty
Product
Type
Application
5. Executive Summary
• SA surfactants market generated revenues of $188.2 million in 2014
• Anionic account for majority of the market share of which household detergents
and cleaning accounted for 60% of the total market
• In 2014 personal care products and I&I accounted for 19 and 15%, respectively
Introduction Market Overview Market Structure Key Findings
66%
18%
13%
3%
SA Surfactants Market
Share (2014)
Household detergents
and cleaning products
Personal care
Industrial &
Institutional
Other (mining, paints,
construction etc) 0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2015 2016 2017 2018 2019
%growthperyear
Year
Household detergents
and cleaning products
Personal care
Industrial &
Institutional
Other (mining, paints,
construction etc)
Annual Surfactants Growth Rate (Predicted)
6. Aim & Objectives
The aims and objectives of this report are as
follows:
• To provide a brief overview of the South African
surfactants market with a focus on household
detergents and cleaning (key trends, market
segmentation, drivers and restraints)
• To estimate the market size (demand) in US dollars for
2014
• To project market growth (%) up to 2019
• To provide a competitive overview (current participants,
structure, trends and other relevant information)
7. Scope & Definitions
• Real GDP growth rate in SA
• Rapid urbanization will lead to
increased demand in FMCG
sector
• Home and personal care
manufacturing sectors
expected to increase by 4% p.a
• Significant opportunity in
Southern African region
Geographic
Scope
Product Scope
Application
Scope
Definitions
2015 2016* 2017* 2018* 2019*
2% 2.1% 2.2% 2.5% 2.9%
8. Scope & Definitions
Anionic Surfactants
• Commercially most significant
• Household cleaning
• Institutional cleaners
• Cationic, amphoteric and non-ionic are less prevalent in
the market
• SABS compliant
• Mature FMCG industry able to absorb supply
• Location of manufacturing facility
Geographic
Scope
Product Scope
Application
Scope
Definitions
9. Scope & Definitions
Geographic
Scope
Product Scope
Application
Scope
Definitions
National Programme
Steering Committee
National
Implementing Agency
Coordination Team
Implementing Partner – Frost &
Sullivan
Surfactants Producer
Customers – FMCG Manufacturers
Credit
Providers
Programme
Advisory
Committee
Business
Development
Research &
Development
After Sales
Service
10. Scope & Definitions
• BBBEE – Broad Based Black Economic Empowerment – An initiative by
the South African government in response to criticism against Narrow
Based Empowerment instituted in the country during 2003/2004 with the
aim of uplifting ethnic groups marginalised by the apartheid regime
• LCA – Life Cycle Assessment – This is an environmental model to
evaluate the effect a product has on the environment from cradle to crave
(acquisition of raw materials to end of product life)
• SABS – South African Bureau of Standards - leading global provider of
standards, management systems, business improvement and regulatory
approval information and is responsible for regulating the quality of South
African goods and services
Geographic
Scope
Product Scope
Application
Scope
Definitions
11. Industry Best Practices
• Manufacturing processes are clearly defined and controlled
• Manufacturing processes are controlled, and any changes to the process are
evaluated
• Instructions and procedures are written in clear and unambiguous language
• Training – Ongoing and targeted training on issues ranging from allergen control,
cleaning and sanitation procedures, incoming ingredient receipt protocol, and
monitoring for employees, management, as well as suppliers
• Audits – Periodic audits and inspections of facility and raw material suppliers either
in-house or by third-party firms
• Documentation – Documentation of training activities, raw material handling policies
and activities, cleaning and sanitation, receiving records, and use of sign-off logs
• Validation/Evaluation – Evaluation of training effectiveness and establishment of
accountability, validation of cleaning through testing
• Processes are compliant with the necessary environmental (LCAs) and labour
legislation
12. Market Analysis
Manufacturing Production
Introduction &
Overview
Industry
Challenges
Supply &
Demand
Drivers &
Restraints
Strengths
-moderate growth
rate
-barriers to entry
-high profitability and
revenue
-existing distribution
and sales networks
Weaknesses
-high loan rates
-investments in
research and
development
-small business units
-competitive market
Opportunities
-growing demand
-income level is at a
constant increase
-new markets
-new products
-new acquisitions
-growth rates and
profitability
Threats
-government
regulations
-increasing costs
-increase in labour
costs
-financial capacity
2014 2015 2016* 2017* 2018* 2019*
2.4% -2.4% -0.8% 2.1% 3.0% 3.2%
Manufacturing Sales Growth
2014 2015 2016* 2017* 2018* 2019*
0.8% -3.1% -1.1% 0.5% 2.0% 2.9%
Producer Price Inflation (PPI)
2014 2015 2016* 2017* 2018* 2019*
9.3% 3.4% 3.5% 3.9% 4.8% 4.8%
13. Market Analysis
• Perennial constraints regarding the
security of electricity supply and
increased costs incl. water
• Influx of incentivised and cheap
imports
• Labour unrest
• Fluctuating exchange rates and
weakening Rand
• Slowdown in manufacturing sector
• Disjointed trade policy and
administration
Introduction &
Overview
Industry
Challenges
Supply &
Demand
Drivers &
Restraints
15. Market Analysis
Introduction &
Overview
Industry
Challenges
Supply &
Demand
Drivers &
Restraints
Driver/
Restraint
Micro Trends Short term
(1-2 years)
Medium term
(3-5 years)
Long term
(6-10 years)
Driver Consumer market growth is being spurred on by:
- Economic growth
- Retail expansion
- Middle class growth & income
- Population growth
Driver Limited availability of ingredients (Raw materials are mostly
imported)
Driver Mature end user product manufacturing industry
Restraint Increased contract manufacturing as a result of increasing
manufacturing costs
Restraint Environmental and health concerns
Restraint Multifunctional product base (Large divide between rich and
poor in society)
ModerateHigh Low
17. Financial Analysis
• Revenues for 2014 totaled
$188.2 million in the household
detergents and cleaning market
• Household detergents and
cleaning revenues expected to
grow at a steady 3-4% over the
next 5 years (2015-2019)
• Revenues in the specialties
sector surfactants market are
expected to decline in 2016 as
a result of a global slow down
in mining output based on
lower commodity prices
Revenue
Forecast
Market Forecast
Supply Chain
Analysis
Competitor
Activity
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2015 2016 2017 2018 2019
%growthperyear
Year
Household detergents
and cleaning products
Personal care
Industrial &
Institutional
Other (mining, paints,
construction etc)
Projected Annual Surfactants Growth Rate
18. Financial Analysis
Raw
materials
acquisition
Revenue
Forecast
Market Forecast
Supply Chain
Analysis
Competitor
Activity
Supplier
Manufacturer
Distributor
Customer
Consumer
Note
The inputs into detergents,
cosmetic and pharmaceutical
products include a variety of
speciality raw materials,
including chemicals,
fragrances, essential oils,
thickeners, surfactants,
preservatives, colourants and
active ingredients. Many of
these ingredients are imported,
which puts South African
manufacturers at a
disadvantage.
19. Financial Analysis
Revenue
Forecast
Market Forecast
Supply Chain
Analysis
Competitor
Activity
Threats of Substitutes
Low
Bargaining Power of
Suppliers
Low
Threat of New Entrants
Low
Bargaining Power of
Customers
Medium-High
Competition
Intensity
MediumIn South Africa, demand
meets supply, therefore
bargaining power would be
low.
Unlikely to occur in the forecasted
period. Anionic surfactants are the
backbone of many home and
personal care products. They are
essential to formulations.
Customers are very cost-
oriented and negotiate with
suppliers for lower prices. In
some cases, losing one big
FMCG customer could deal a
severe blow for a supplier’s
livelihood
As South Africa is mostly
selfsufficient, the threat would
be low
21. Areas of Concern
• Home care in South Africa is expected to
achieve slow but steady value growth
during the forecast period (2015-2019)
• Constrained consumer spending impacts
consumer spending patterns
• Rising popularity of increasing range of
private label products
• Highly competitive retailing industry
influences sales of home care
• Supermarkets remain the most popular
retail distribution channel for home care
• Steady growth expected to continue in
home care over the forecast period
Household &
Cleaning Focus
End-User
Applications
Environmental
Concerns
Why South
Africa
0
0.5
1
1.5
2
2.5
3
3.5
2015 2016 2017 2018 2019
PercentGrowth
Year
22. Areas of Concern
• The inputs into fragrance, cosmetic and pharmaceutical products include a variety of
speciality raw materials, including chemicals, fragrances, essential oils, thickeners,
surfactants, preservatives, colourants and active ingredients. Many of these ingredients
are imported, which puts South African manufacturers at a disadvantage
• A concern expressed by industry participants is the fact that imported ingredients are still
subject to an ad valorem ‘luxury’ tax of between 5% and 7% in addition to excise duties
• The South African government spent heavily to improve residents' health care system
which has boost demand for surfactants, with hospital infrastructure and health care
facilities comprising 20% of the surfactant market share
• End user is not very sensitive to the price of the product, demand will remain stable
despite price fluctuations as users are loyal to brands, formulas or surfactant type
• There is growing awareness and interest in renewable-based products by consumers
and industrial end users for “Green Products”
• The largest end use market for surfactants is household cleaning detergents
Household &
Cleaning Focus
End-User
Applications
Environmental
Concerns
Why South
Africa
23. Areas of Concern
• Detergent companies are seeking bio-based surfactant feedstock
• P&G's sustainability goal of using renewable-based surfactant materials for
its detergent products as soon as possible
• One-hundred percent bio-based chemicals are not cheap
• VOC legislation is in place in many parts of the world in order to get
industries to change from solvent-based formulations to water-based
formulations
• Chemical Oxygen Demand (COD) levels are governed by legislation
• The surfactant industry is facing challenging environmental, regulatory and
consumer pressure on the production, exposure, packaging, handling,
transporting, use and disposal of its products.
Household &
Cleaning Focus
End-User
Applications
Environmental
Concerns
Why South
Africa
24. Areas of Concern
• Africa’s most developed economy with significant manufacturing
capacity able to absorb required demand of surfactants in end-user
products
• Strategic point of entry for further expansion on the continent
• Three significant port cities as well as sufficient transportation
infrastructure (air, rail and road network), however the rail infrastructure
is lacking somewhat
• Steady economic growth
• Need to be aware of the energy crisis SA is currently facing
Household &
Cleaning Focus
End-User
Applications
Environmental
Concerns
Why South
Africa
2014 2015 2016* 2017* 2018* 2019*
2.7% 1.3% 2.5% 3.1% 3.6% 4.0%
25. Conclusions
1. Consumer spending remains under pressure
2. South African consumers increasingly open to private
label products as they become less brand loyal in
general
3. Intense competition between major players remains a
hallmark of the competitive landscape in home care as
South Africans look for value
4. A steady growth market in South Africa exists
5. South Africa remains a strategic gateway to the rest of
the continent
6. Most successful companies in South Africa have
developed their business models to compete and be
successful in the tough African market
7. Given local constraints and despite the considerable
challenges, there is a mood of cautious optimism as
companies continue to seek growth opportunities in new
areas, both in South Africa and across Africa.
