Clacour International

Doing Business in AfricaConsulting, Marketing and Sales

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Company Profile

Clacour International is headquartered in Johannesburg, South Africa

The company is headed by R. Courtney and Clara Priester who are building a team of experts in the hair care and beauty industries

Combined the Priesters have more than 50 years experience in marketing, sales and customer service in the U.S. and South Africa

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Clacour Strategy

VisionTo become the premier, sought after agent for distribution, marketing and sales of ethnic hair care and beauty products in South Africa and Sub-Saharan Africa

MissionTo meet the increasing demand for a wider selection of quality ethnic hair care and beauty products

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Keys to Success

Partnering with top quality U.S. manufacturers

Building strong business relationships with retailers and wholesalers

Providing a professional approach to creating, developing, and implementing sales and marketing programs

Producing measurable growth for our clients

Maintaining consumer intelligence

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Cosmetics World TrendsOver 1000 companies manufacture and market more than 20,000 cosmetics and toiletry brands in the worldMost of the markets, notably the U.S. have matured

Dropping from 31% of global sales in 2002 to 27% in 2004*

Many U.S. companies are looking for opportunities to enhance their growth

Africa provides such an opportunity

*Based on data from Euromonitor.

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World Top Ten Cosmetics Brands

other49%

Avon3%

Colgate & Pamolive

4%

Shiseido3%

Henkel2%

Johnson & Johnson2%

Beirsdorf3%

Unilever8%

Procter & Gamble13%

Loreal10%

Estee Lauder4%

Ten leaders account for more than 50% of total industry salesEstee Lauder, Limited Brands, and Johnson & Johnson are the major marketers in the skin careL'Oreal, Estee Lauder, and Revlon are dominant in make upProcter & Gamble, L'Oreal, and Unilever are the leaders in hair care.Coty leads in the fragrances segment

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Cosmetics Segments

0 5 10 15 20 25

Hair Care

Skin Care

Colour

Fragrances

Bath & Shower

Oral Hygeine

Men's Grooming

Deodorant

South Afr icaWor ld

SIZE (%)

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Market Presence

World65%

Africa35%

South Africa, the foundation of Clacour dominates the African region

In the global markets Africa remains the biggest market

South Africa55%

Africa45%

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Why South Africa at a glance . . .The South African cosmetics industry is competitive and sophisticated. The sector has recently recorded its fastest growth since the country’s first democratic election in 1994, which marked the end of Apartheid. Industry sources claim that the South African cosmetic and toiletries industry grew by approximately 45 percent during the last two years.Currently it has an estimated value of over $ 3.4 billion (R24 billion) and it is predicted that it will grow by 15 to 20 percent in the coming year.

Source: Research Wikis

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Why South Africa at a glance . . .

On the high-end of the consumer market, there is a trend towards premium products, especially those with anti-aging properties.

With the growth of the middle class and increased spending power across many socioeconomic groups, there is now demand for affordable but reliable quality ethnic skin care and hair products.

Source: Research Wikis

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Why South Africa at a glance . . .Consumer demand for cosmetics and toiletry products has created a demand emphasizing more and more products specifically geared for local skin and hair types. The industry is set to grow continuously for the next five years particularly in the following market segments: cosmetics, sun care products, hair care and treatment products and specialized facial creams for the ethnic skin/hair market. According to industry sources, there are over 15 million potential consumers in the ethnic hair (maintenance) market alone.

Source: Research Wikis

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Why South Africa at a glance . . .Consumer demand for cosmetics and toiletry products has created a demand emphasizing products specifically geared for local skin and hair types. The industry is set to grow continuously for the next five years particularly in the following market segments: cosmetics, sun care products, hair care and treatment products and specialized facial creams for the ethnic skin/hair market. According to industry sources, there are over 15 million potential consumers in the ethnic hair (maintenance) market alone.

Source: Research Wikis

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South African Market - MacroPopulation: 45 MillionAdult population: over 29 million

14.7 million females14.04 million males

Literacy: 86%Total Area: 1.22 million km sq. (slightly less than twice the size of Texas)Nominal GDP: US$ 135 billion (approx same as S. Carolina)

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South African Market - Macro

South Africa's regional importance

6% of the continent population

50% of purchasing power

18% of continent-wide GDP

45% of mineral production

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Retail Size: SA

Mass Market Buying and Distribution Groups (Cash and Carry)

Jumbo + 50

Score +100 stores

Shield +600 stores

Drug Stores

Clicks +34 stores

Diskom +100 stores

Dischem +100 stores

Others +100 stores

Hyper/Supermarket

Shoprite +1000 stores

Pick n’ Pay +1000 stores

SPAR +800 stores

Other

+1000 outlets

There are more than 33000 outlets in South Africa, Clacour will focus on only key accounts.

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Hierarchy of Needs - SAConsumers’ habits are driven largely by needs and the ability to meet those needs.Maslow’s pyramid suggests that human beings have some basic requirements which they need to meet.A growing economy and increasing distribution of wealth more so to previously disadvantaged groups, enables more people to meet their needs.Living Standard Measure (LSM) levels 6-10 have enjoyed a significant growth due to the emerging black middle class.

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Hierarchy of Needs - SAMany “aspirational” brands are now within reach

Not every brand will deliver the benefits, but only those specifically made for ethnic markets

Clacour will use every appropriate channel to reach this emerging market

Our brands are there to serve the target market since they are created for the consumers and not the consumers for the brands

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Hierarchy Of Needs – SA

Laundry bars, Vaseline, Lifebuoy

Vaseline, Dawn, Ingram's,

Almay, Charlie, Rimmel, Sleek , Sof n’ Free

Kalos, Dark n’ LovelyPantene, Camelle, Revlon

MAC, Fashion Fair

VinintoEstee Lauder

Chanel, Redken, Paul Mitchell

Products Disposable Income

Prestige Brands

R13 406.00

Branded Skincare,

color cosmetics, fragrances

R7 470.00

Hair care, Deodorant,

cheap color

cosmetics

R3 731.00

Toiletries, oral

hygiene

R1 595.00

Oral Hygiene

R895.00

LSM Pop. %

+10 10%

7-10 20%

5-6 24%

3-4 20%

1-2 26%

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People of Colour: South AfricaBlack South Africans account for almost 56% of the spending power.The brands status in the store has not really changed. It is still 90% dominated by these global players especially in the department stores.This new market however seeks identity and image hence desire to use prestige brands or rather global brands like Estee Lauder, MAC, Clarins, Elizabeth Arden, Lancôme, Bobbi Brown, etcMany of these consumers experience “postpurchase dissonance”

Brands fail to reach their expectationsMajority of brands though they are global, were not made specifically for Black consumers

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Cosmetics Market Trends: SAA Black Person’s Needs:

Target Young emerging markets Products

Lifestyle Fairly successfulSeemingly affluentMaterialisticVery image consciousDiet conscious and body ware

Quality PackageQuality ingredientsValue for moneyHighly esteemed brandsEndurance

Positives Pride in successHealth focusedEnjoyment of admiration/attention

Negatives Credit-based, little capital-lifestyle funded by salaryStressful – fear of losing everything

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Hair Care - GlobalGlobal Hair care

Conditioners20%

2-in-1 products

1%

Shampoo

31%

Saloon Hair Care10%

Hair Colourants

20%Perm & Relaxant

s1%

Styling Agents

17%

Hair care products contribute the biggest in the cosmetics sector Most of the giants have hair care contributing more in both turnover and profit

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Hair Care – SA Key Players

Henkel2%Kao Corp

2%

Rapidol2%

Unilever8%

P & G27%

Amka16%

Designer Group

6%

Alberto Culver

2% Colgate Pamolive

1%

Loreal34%

Ethnic hair care products make up approximately 43% of sales, which makes SA one of the world’s largest ethnic hair care marketsTop hair care players are gaining market share at the expense of smaller manufacturers.

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SA Market Entry

For international companies to enter the South African cosmetics and toiletry market it is imperative to find a local representative, distributor or agent.

South African industry is extremely brand and supplier loyal, and the quickest road to success in the market is teaming up with a widely networked local partner.

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Market Issues and ObstaclesThere are no major issues or obstacles regarding importation of toiletries, cosmetics or fragrances into South Africa.

However, if cosmetics, hair care or skin care products claim medicinal ingredients, they will need to be registered with the Medicines Control Council of South Africa (MCC) – a tedious, long and complicated process.

The South African cosmetics and toiletry industry is largely self-regulatory. Regulatory requirements developed by the CTFA, the South African Government, the South African Bureau of Standards (SABS) and the local cosmetics industry, are based on E.U. cosmetic directives. The advertising of cosmetic products is closely regulated by the Advertising Standards Authority (ASA). South African Governmental regulations relating to the ingredients of cosmetic products are included in the Foodstuffs, Cosmetics and Disinfectants Act 54 of 1972

For the complete Act browse to hhtp://www.doh.gov.za/docs/legislation/acts/1972/act54.htmp

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SA Prospective Buyers

Prospective buyers for large volumes of cosmetics, toiletries, and fragrances include major retail chain stores, department stores, pharmacy chain stores and wholesalers - who in turn sell to smaller retail stores.

DistributionClacour Plan

Department Stores

30%

Pharmacies

15%

Direct Sales10%

Supermarkets25%

Specialty Stores10%

Salons10%

Global Trends

Supermkts25%

Outdoor Mkt2%

Direct Sales12%

Specialist12%

Others4%

Dpt Stores13%

Discounters8%

Pharmacies18%

Convenient stores

3%Food stores

3%

Clacour operates on a “Key accounts management” principle, where we seek to trade with existing and potential key customers in different channels. The brands will be present in all esteemed channels relevant to our defined target market.Global Trends reflect that cosmetics are accessed more through supermarkets, Pharmacies, Department stores, and others

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Further Africa PotentialCosmetic, toiletries and fragrances imported into South Africa cater primarily for the local market, butIncreasingly, cosmetic companies are expanding their business to the greater SADC (Southern African Development Community) region. The SADC is comprised of Angola, Botswana, Lesotho, Namibia, Mozambique, Malawi, Mauritius, Democratic Republic of Congo, Tanzania, Swaziland, Seychelles and Zimbabwe.The SADC has a population of over 180 million people and countries such as Zambia (5.3 percent) and Angola (16.3 percent) are showing rapid GDP growth.

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Distribution FeesClacour functions as a distributor in two ways:1. Appointment by the principal on a given territory

Undertake full responsibility to nurture and grow both the market share and the sales volume

1. As an agent on a commission to prospect and identify the customer and obtain orders on behalf of the principal.

In this case the marketing functions remains fully the principal’s responsibility.

Commission will be determined per contract

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Human Resources Plan

Clacour seeks not only to create more jobs but to work and develop local nationals in respective countries to be international professionalsEmphasis is on the importance of attracting, developing and retaining outstanding professionalsEnhancing management succession primarily within the organizationOur ultimate goal is to become and remain a preferred employer

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SWOT Analysis

StrengthsHigh quality range of productsInnovation of productsKnowledgeable of African marketsLower overhead costsSupport from local community

Weaknesses

New player, new brands

Turnover based on prediction

Limited financial resources

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SWOT AnalysisOpportunities

Untapped market of South Africa and Sub-Saharan

Increases in middle class spending power

Appeal of U.S. products

ThreatsAggressive competitor's marketingGlobal economic recessionNew regulation in cosmetics industryDifferent regulations in countries on which markets will be involved

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Clara PriesterClara Priester has significant advertising and marketing experience. Her expertise is strategic marketing, branding and planning; assessment and training of marketing staff.

In 1978, Clara’s advertising and marketing career started at Leo Burnett Advertising Company located in Chicago, Illinois. Clara then joined McDonald’s Corporate Headquarters in 1987 where she was responsible for strategic marketing and planning, ethnic marketing and the breakfast business until 1998 when she undertook the responsibilities of Marketing and Communications Director for McDonald’s South Africa.

From 2003 to 2006, Clara was the Director: Marketing and Communications for Wits Business School where she is currently a lecturer; and Programme Director for Women Entrepreneurs New Venture Creation Certificate Programme, Women’s Management Development Programme (WOMAP) and isiZulu, French and Mandarin Language Courses. She is a director of Brandworx, (Pty) Ltd which specialises in strategic branding consultation and marketing training. She is a member of the Institute of Directors; and since 2002 has been Chair of the Businesswoman’s Association (BWA) Johannesburg branch.

She is currently a Women’s Private Equity Fund Trustee and a CAF Southern Africa Board Member. She is also a member of the Democrats Abroad South Africa Steering Committee.

Clara has a Bachelors Degree in Psychology and Secondary Education from Kansas Wesleyan University, a Masters in Business Administration (MBA) from University of Chicago, and is a Chartered Marketer, CM (SA).

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R. Courtney PriesterR. Courtney Priester has significant customer service and hospitality management experience within the telecommunications and hospitality industries. His expertise is in organizational and personnel management. Courtney also has experience in Project Management, Help Desk Management and Call Centre management.

In 1979, Courtney began his career in the hospitality industry where he managed and worked at various private clubs, bars and restaurants until in 1994 when he became a partner in “Upon Your Request”, a successful Jazz Venue located in downtown Chicago.

In 1995, Courtney joined SBC and was quickly promoted to manage the regional Help Desk, supervising a core of assistant managers and service representatives to resolve escalated customer service issues. In 2000, Courtney was again promoted to the position of a Network Provisioning Manager where he remained until relocating to Johannesburg South Africa in 2003. In 2005 Courtney joined a partnership and opened Mzansi Orleans, a New Orleans styled restaurant and jazz club in Norwood, SA.

Courtney has had success in selling items from Italian Jewellery to Insurance. He has accumulated many top sales awards in those various industries.

Courtney has a Bachelors Degree in Hospitality Management from Roosevelt University in Chicago, Illinois. He also has various certificates in security, community service, and customer service. .