Beauty at a Price



Fri, 30 Jun 2017 - 08:00 GMT


Fri, 30 Jun 2017 - 08:00 GMT

L’Oreal Nail Polish -  Creative Commons

L’Oreal Nail Polish - Creative Commons

 CAIRO - 30 June 2017: "This is a disaster!” grumbled a manager at Mazaya, one of Cairo’s most renowned cosmetic shops, when an affluent customer refused to buy her usual foundation and left the store after finding out the price had increased by 200 percent.

In a market where necessities like food are facing drastic buying cuts, it is inevitable that a luxury segment of the market will face far larger cuts, especially given increasing customs and cost hikes. Cosmetics is one such luxury segment that dealt a harsh blow by the flotation, especially since most products are either imported or largely dependent on imported raw materials.

With prices of imported goods increasing by 100 percent to 300 percent, customers are struggling to buy their usual products, and international brands like Givenchy, Dior, L’Oreal, Makeup Forever, Chanel and Lancôme are facing dramatic price increases. A typical Mac foundation has doubled after the flotation to reach LE 1,200, to name one.

Head of Hairdressers Division at Cairo Chamber of Commerce Mahmoud el-Degwy explained that the currency flotation had a severe effect on the cosmetics market. “Egyptian pound flotation and the 60 percent increase in customs on cosmetics, which are considered luxury goods, led to prices of all cosmetic products and beauty services doubling,” Degwy told Egypt Today. “The percentage of customers who purchase beauty products decreased this year by 40 percent. Last year, Egypt imported cosmetics worth LE 5 billion ($275 million), this year the percentage has decreased to LE 3 billion due to the difficulties and challenges importers face, so the profits decreased by more than 50 percent.”

An additional factor contributing to the stagnant cosmetics market is a decision announced by the Ministry of Health on March 22 requiring all companies producing cosmetics and importing raw materials and packaging to pay an annual LE 50,000 for each raw material imported. The decision came in addition to an already-existing 60 percent custom duty on cosmetics.

Local is the answer

“Financially speaking, makeup can be a burden. The combined cost of everything you might find in my makeup kit like foundation, primer, mascara, eyeliner, blush, contour palette kit and so on quickly adds up,” beauty adviser Haya el-Morshedy says. “I used to fill up my makeup kit with Makeup Forever products but now I can’t afford buying much, so I buy only basics like powder and primer and buy cheaper brands for other makeup products.”

A public relations team representative from Fortune cosmetics stores agrees the market has been affected by the economic conditions and some customers who used to buy expensive products like Givenchy can’t afford to do that anymore. “Brands like Cybelle and Pupa are much cheaper [than other more premium brands] so customers favor them now because the cost is more affordable and they offer good quality,” she adds, pointing out the importance of local brands like Cybelle these days.

Egyptian products like Luna and Amanda are finding a bigger window to compete against international ones. “We are definitely welcoming new customers every day as people decide to buy cheaper products instead of expensive ones,” Luna brand manager Noha Lewis told Egypt Today. “Surprisingly, A and B classes who don’t suffer from a financial crisis tend to purchase our products these days. This explains people wanting to save more money as the crisis has also led to price increases on other goods, including food and transport.”

She added that they use every possible means to promote their products, depending on trade show booths in clubs and malls to drive more traffic and targeting A-class customers in particular. They also participate in all “made in Egypt” campaigns promoting Egyptian products and the marketing team is also planning to produce television commercials in 2018.

“Concerning quality, we are definitely working on improving product quality. We even try it on ourselves to be 100 percent sure it is perfect,” added Lewis.

Local brands may be drawing in more a-class customers, but they are losing the business of B-class clients who can no longer afford to buy luxury items such as makeup.

Amanda brand manager Reem Adel explains that the ratio of people who started using their products because they are “cheaper” is the same as the ratio of people who quit using Amanda products to go for cheaper ones. “It is a stable status...We are forced to reduce the profits to cope with the market conditions as we can’t afford to bring down product quality.”

International brands manufactured in Egypt are attracting a wider client base because they are maintaining global standards. L’Oreal has four production divisions; one of them is manufactured here in Egypt, says communications manager Nahla Mokhtar, adding that Egypt does not only manufacture these products, but also exports them to South Africa and the Middle East “because our quality is the same as products manufactured internationally.”

L’Oreal has an edge because it has a locally-based factory. “We don’t face import challenges because our factory is in Egypt so things are more flexible,” says Mokhtar, who adds that L’Oreal’s mission is to have 1 billion new customers globally by 2020.
“We are brand number one so our customers are loyal to us, I think we are doing well so far. Moreover, we now have now new customers,” Mokhtar said.

Cosmetics specialists like Sarah Ghaleb said she prefers international brands manufactured in Egypt like L’Oreal as they give her both “quality and affordable cost,” pointing out that quality is not necessarily measured by price. “I can’t use low-quality products on my clients. That’s why I feel that international brands manufactured in Egypt have solved a big part of the problem and we do need more factories here.”

Degwy calls on the government to help the cosmetics industry by easing regulations and hikes. “We want the government to facilitate all possible procedures for Egyptian companies so we can overcome this crisis—they should not place more obstacles in front of investors looking to build more cosmetics companies in Egypt.”



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