In 2013, L’Oreal established its first factory in Egypt’s 10th of Ramadan industrial city, with investments amounting to €50 million.
L’Oreal offers a variety of its international products in Egypt, reaching 12 brands – many of which are locally manufactured at its Egypt factory, while others, produced by L’Oreal Group, are imported from other facilities.
Now the cosmetics giant plans on expanding its production in Egypt. In 2018 it targets to produce more than 80 million units – from its 75m units produced last year. The products are expected to be sold not only to Egypt’s strong consumer base of 100 million but also in the Middle East and Africa region.
L’Oreal faced an increase in production costs due to the liberalisation of the exchange rate which finally led the company to increase its product prices. The increase ranged around 40% based on the type of product.
However, L’Oreal is now addressing the rising costs through local sourcing of raw materials and incorporating more locally manufactured packaging materials in Egypt. Locally manufactured packaging last year represented 85% of production versus 50% in 2015 while local component of raw materials in production further increased to 25% instead of 15% in the same year.
The production capacity at its Egypt factory is 120m units while it has the potential to expand its productivity to 300m units – which will be determined by the demand in both local and regional markets. Around 85% of its production from the Egypt facility is export-oriented, while the local market consumes the remaining 15%. Saudi Arabia, the rest of the GCC, Lebanon, and Morocco are the company’s main exporting markets.
Find out more at CMT’s Africa Home and Personal Care Markets Summit on 26-27 September, 2018 in Johannesburg, South Africa.