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Growing Demand for palm oil products in South Africa's soap sector
Some 50 per cent of South Africa's 44 million population lives below the poverty line. In general, the poor and the richer South Africans have distinctly different habits of using soap. The better-off people use toilet soap for personal cleansing and laundry soap for washing soiled clothes and other fabrics.
The poorer section of the population uses laundry soap for both purposes. The very rich South Africans use liquid foam toiletries, but soap bars are most widely used, accounting for 97 per cent of the country's soap market.
The oil-based raw materials that is commonly used in the production of laundry soap are PFAD and acid oil. Blends of palm stearin/ PKO and tallow/coconut oil are widely used to manufacture bath soap. As ingredients, coconut oil and PKO are used mainly to soften the soaps. Palm-based oils at present constitute less than 20 per cent of the fatty acid composition in most toilet soaps produced.
The palm stearin and PFAD requirements of the South African soap sector are mostly imported from Malaysia. Local dairy farms supply about two-thirds the tallow needs and the balance is imported, mostly from the United States and Australia.
Five large firms in the business
Annually, South Africa uses some 200,000 metric tonnes (MT) of bath and laundry soaps, and exports about 20,000 MT to neighbouring countries such as Angola, Mozambique, Zambia and Zimbabwe.
South Africa's laundry and bath soap production is in the ratio of 60:40, with five of the largest manufacturers in the country producing 70 per cent of the soaps. Unilever is the biggest producer, commanding approximately 23 per cent of the market share, followed by local enterprises Golden Glo, Willowton and Elangeni. Colgate-Palmolive does not produce laundry soap and therefore holds only nine per cent of the market share. Unilever's performance is attributable to brand popularity and a wide assortment of products, which give the company the lead for prime spots in retail outlets in South Africa.
The bath soap market alone is estimated at about 80,000 MT per annum, with the top selling brands owned by Unilever and Colgate-Palmolive, which produce 2,500 MT and 1,500 MT a month respectively. The others have production capacities below 600 MT per month. Local producer Elangeni is a leader in the laundry soap sector, ahead of Unilever, Sealake, Golden Glo, Willowton and Capital Oils.
In addition to the popular brands of bath and laundry soaps available in the market as shown in the table below, the green bar laundry soap produced by Golden Glo sold under various brand names and retailers' brands (such as “Pick and Pay”), is also popular with the South Africans.
Market outlook
It is expected the quantity of soap use will not change much from 2007-2011 as it is anticipated that population during this period will register close to zero growth. However, bath and laundry soap usage is expected to grow as a result of rising disposable incomes among consumers in rural areas. According to a survey conducted by Euromonitor International, the replacment of laundry soap with bath soap among the poorer sections of society will be at a rate of 3.9 per cent a year over this period.
This situation will result in changes to raw material demands of the industry, with more palm stearin/PKO and/or tallow/coconut oil used in place of PFAD and acid oil, the main oil-based raw materials for making laundry soap. The average fatty acid composition of 80 per cent in bath soap and 60 per cent in laundry soap will lead to a compound average growth in total fatty acid usage in bath soap by 3.9 per cent and a decrease of three per cent fatty acid usage in the laundry soap sector. Higher composition of palm stearin and tallow for bath soap production will lead to higher demand for these oils and fats.
Malaysia's export of PFAD grew despite reduced local demand for laundry soap. Possibly, the higher PFAD usage could be is due to increased exports of laundry soap to neighbouring countries.
In general, palm oil-based raw materials are superior to tallow-based materials for the production of bath soap. Palm oil-based soaps have the advantage over tallow-based soaps as the oil is acceptable to users of all religious backgrounds. Furthermore, as a raw material, palm stearin is easier to obtain as it is available ex-tank. Tallow in South Africa is normally sold in 190kg drums, making handling consignments more difficult as well. |
