How Covid-19 washed soap into the most profitable retail item

Manufacturers see welcome surge in demand, with value of industry expected to hit Sh6 trillion by 2027

Just recently, Pwani Oil finalised the acquisition of the Ushindi soap brand from multinational PZ Cussons. But there was a time when Kenyans were not as keen on fighting virulent pathogens like Covid-19, or so the data seems to suggest.

Kenya National Bureau of Statistics (KNBS) numbers show that soap usage in the country dropped from 198,293 tonnes in 2010 to 180,777 in 2018, the last time this data was made available.

This translates to each Kenyan consuming, on average, 3.9 kilogrammes of soaps and detergents, a drop from 6.8 kilogrammes in 2010.

But with the emergence of Covid-19, things are projected to change. Globally, the soap market is expected to be worth Sh6 trillion ($55.3 billion) within the next seven years on the back of the viral disease, according to market research firm Fortune Business Insights. 

In explaining the decision to buy Ushindi, Pwani Oil Commercial Director Rajul Malde said they had noticed a sudden surge in the demand for multi-purpose soap products that fit spending patterns.

"Our decision to buy Ushindi is informed by our desire to give our customers meaningful choices, especially now when they need to keep their families safe by maintaining high hygiene standards,” he said.

“Consumers are increasingly limited by what is in their pocket, hence the need to give them ... products that meet multiple needs. Prior to the onset of Covid-19, consumers were already headed in the direction of healthy and value-added products, and this will continue.” 

Significant share

Pwani Oil, which also produces White Wash and Ndume soaps, anticipates it will gain a significant share of the homecare product market with the Ushindi buyout. Yet, this industry was not always a profitable one.

If anything, the business of manufacturing and selling soap and detergents was on a decline, with businesses producing more of the product than was being used.

A source at one soap manufacturer, who did not want to go on record as they are not authorised to speak to the press, said mass market soaps took a beating when people decided to use bar soaps for all kinds of washing to save money.

"This saw manufacturers going back to the drawing board, and they started manufacturing multi-purpose soaps,” said the source.

But now, the industry is rebounding as the novel coronavirus forces every home, office, factory, restaurant and market to put the cleaning agent at their entry points.

“Give soap 20 seconds at least of thorough scrubbing, and the pin-shaped molecules will penetrate the types of bacteria and viruses, including Covid-19, that protect themselves with an oily lipid membrane,” a Unesco guide on fighting the virus directs. 

Yet, despite the need for additional hygiene standards, Kenyans’ pockets have largely contracted during this season.

As a result, Malde notes that while the consumption of soaps and detergents has increased, consumers want products that serve multiple functions.

Before Covid-19, manufacturers were battling a decline in demand both locally and internally, with the value of exported soaps declining from Sh8.2 billion in 2011 to Sh5.7 billion in 2018. 

Stiff competition

Close to half of these 2018 exports – 47 per cent – went to Tanzania, while Uganda accounted for 11 per cent, Somalia 10.9 per cent and Rwanda 6.9 per cent. Other importers of Kenyan soap included Zimbabwe, South Sudan, Mozambique and Zambia.

In line with this drop, local production of soaps contracted by 16 per cent from 282,730 tonnes in 2011 to 235,227 tonnes in 2018, KNBS data shows.

This came on the back of a three-fold rise in imports from 12,304 tonnes in 2009 to 42,929 tonnes by the end of 2018, as well as stiff competition from cheap imports from countries like Egypt and China. Additionally, some major regional importers, such as Tanzania and Uganda, developed their own industries or sourced for cheaper options.

The data further shows that there were 5,270 employees involved in the manufacturing of soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations in the country at the end of 2018, which was a slight decline from 5,314 in 2013.