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MANUFACTURING SECTOR Laundry Bar Soap-Investment 1

TABLE OF CONTENTS

BODY CARE SECTOR EVALUATION 1.1 Body Care: Background and Overview 1.2 Body Care: Market Information Gathering 1.3 Body Care: Survey Results 1.4 Body Care: Market Size Determination and Results 1.5 Body Care: Route to Market

INVESTMENT OPPORTUNITIES 2.1 Potential Investment Opportunities

2.2 Body Care: High Level Financial Model: Greenfield

2.3 Body Care: High Level Financial Model: Carry-In

APPENDIX Body Care Market: SWOT Analysis Body Care Market: Key Risks & Barriers to Entry Project Cost Quotes

2

Background EQ is in the process of identifying opportunities and new

categories to invest in as part of its growth strategy Accordingly, EQ has identified the Body Care Sector, as a potential

investment opportunity For that reason investment opportunities are being explored in

the Body Care Sector Limited market information is currently available on this market

segment, thus EQ has taken the initiative to fully investigate this sector

Successful development of a new brand/s into this sector will require a comprehensive understanding of this market segment particularly knowledge about the current market participants

3

Case Study: KSI Botswana

4 Marang Soap Manufacturer

BODY CARE OVERVIEW

7 Key Categories

Shower Gel / Body Wash

Facial Cream

Petroleum Jelly

Hand Cream / Wash

Body Cream / Lotion Deodorants & Fragrances

Body Care Sector: Segment of consumer spending focusing on the use of products for cosmetics, cleansing, moisturizing, etc. to care for the body, particularly the face, hands &

body

Soap

5

Regularly Used Body Care Products

6

TABLE OF CONTENTS


INVESTMENT OPPORTUNITIES 2.1 Potential Investment Opportunities 2.2 Body Care: High Level Financial Model: Greenfield 2.3 Body Care: High Level Financial Model: Carry-In


7

Market Information Gathering

In order to achieve a comprehensive understanding of the Body Care Sector, data was collected from a variety of sources, such as:

8

Market survey done in retail and wholesale stores Discrete visits to local manufacturing companies

Discrete visits to local distributors

Internet Research Zimbabwe Statistics

(ZimStats) Buy Zimbabwe Ministry of Industry

and Commerce

Research Objectives To understand consumers’ current habits and attitudes towards Body Care

products

To understand key drivers/triggers in the Body Care sector

To estimate market demand and market size within this category

To identify the barriers and key risks of this industry

To identify which Social Economic Status (SES) segments are well supplied and which are not

To gain an understanding of the key competitors

To understand the Body Care Sector and the key categories that constitutes this sector

To gain relevant data for constructing high level financial models

9

Shops Selected for Market Survey

OUTLET Retail

/Wholesale LOCATION

Retail Arundel Village

Retail Mount Pleasant, Borrowdale,

Avondale

Retail First Street, Mbare, Warton

Park

Retail Charge, Strathaven

Retail Kensington, Borrowdale,

Belvedere

Large Retail Braeside

Mohammed Mussa Wholesale South Ave

Bhadhella Wholesale Ruzende

Tynserve Wholesale Ruzende

Lylys Wholesale Ruzende

Due to the exploratory

nature of the project,

qualitative research was

recommended and the research was conducted by means of an

extensive market survey in

both relevant retail and wholesale

outlets in Harare 10

Local Manufacturing Companies Selected for Survey

Information was also gathered discreetly via interviews with sales reps at the following relevant

local companies

• Meditech • United Refineries • Various Small Scale Manufacturers • Uni-liever • .

11

Methodology of Body Care Survey Survey focused on documenting products from the follow Key Categories

Facial Cream Hand Cream / Wash Shower Gel / Body Wash Petroleum Jelly Body Cream / Lotion Soaps Deodorants and Fragrances* [*work still needs to be completed]

Information that was collected includes: o Product Name, Brand Name, Applicable Category, Manufacturer, SKU,

Country of Origin, and Market Prices Survey conducted identified the following three distinct classifications:

• Brands • Brand Variants • Number of Individual Products Counted

Using Petroleum Jelly as a point of reference for the three distinct classifications • Brands = 3 • Brand Variants = 5 • Number of Individual Products Counted = 6

Refer to the next slide for a graphical demonstration of the three distinct classifications example 12

Important Definitions Explained

# of Individual Product Items Counted

+ + + + + = 6

Brand Variants

+ + + + = 5

Brands

+ + = 3

13

Survey Sample Overview

6 KEY CATEGORIES Brands Brand Variants

Number of Individual Products Counted

Facial Cream 6 11 11

Hand Cream / Wash 9 24 25

Shower Gel / Body Wash 12 59 67

Petroleum Jelly 7 18 28

Body Cream / Lotion 21 63 76

Soaps 18 66 80

Deodorants & Fragrances N/A N/A N/A

TOTAL 73 241 287

14

Social Economic Status Explained • Low, Mid, and High Social Economic Status (SES) ratings is a measurement based on:

price point, packaging, impression and overall product quality. As the following illustration from Body Cream / Lotion category demonstrates:

HIGH SES MID SES LOW SES

Relatively higher price to comparable products

Targets upper class High quality product Consumers tends to be

insensitive to price 250 ml = $5.06

More common in Mid-High End Stores

Relatively mass product Moderately priced

compared to competitors 500 ml = $4.39

More common in Low End Stores

Mass product Consumer tends to be

sensitive to price Lower quality 500 ml = $2.03

15

TABLE OF CONTENTS




16

Summary of the Results at a Glance Local vs Imported Brands

6 Key Categories NUMBER OF LOCAL BRAND

VARIANTS (including Variants)

NUMBER OF IMPORTED

BRAND VARIANTS (including Variants)

Facial Wash 0 (0%) 11 (100%)

Hand Cream / Wash 1 (4%) 24 (96%)

Shower Gel / Body Wash 0 (0%) 59 (100%)

Petroleum Jelly 9 (50%) 9 (50%)

Body Cream / Lotion 12 (19%) 51 (81%)

Soap 7 (11%) 59 (89%)

Laundry Soap 8 (80%) 2 (10%)

TOTAL 37 (15%) 213 (85%) 17

1. Facial Cream Category Facial Cream

A cream used to keep the skin on your face soft, smooth and clean. Acne Cream is an important and prevalent sub-category of Facial Cream. Example: Johnson & Johnson’s Clean & Clear

Manufactures and their respected Brands

Johnson & Johnson • Clean & Clear • Deep Clean • Visible Clear Reckitt Benckiser PLC • Clearasil The Himalaya Drug Company • Himalaya Unilever • Nivea

Survey Results Split into Different Categories

18

0

1

2

3

4

Reckitt BenckiserFrance

Johnson & JohnsonSouth Africa

Johnson & JohnsonItaly

Johnson & JohnsonUnited Status

The Himalaya Drug CompanyIndia

UnileverGermany

# o

f D

iffe

ren

t B

ran

d V

aria

nts

Manufacture’s Production Site

Number of Manufacture's Brand Variants Produced per Country of Origin

Facial Cream cont.

100%

0% 0%

Social Economic Status (SES) of Products within Sample

High SES

Mid SES

Low SES

2

1

2

5

1

0

1

2

3

4

5

6

75 ml 100 ml 125 ml 150 ml 200 mlAct

ual

# o

f P

rod

uct

s Su

rve

yed

SKU

Stock Keeping Unit (SKU) within Sample

6 Brands

11 Brand Variants

11 # of Individual Product Counted

19

Facial Cream cont.

18%

64%

9%

9%

Manufacturer’s Products Actually Seen within Category

Reckitt Benckiser

Johnson & Johnson

The Himalaya Drug Company

Unilever

6 Brands

11 Brand Variants


20

2. Hand Cream Category Hand Cream / Wash

Hand Cream is a moisturizing substance used to help make hands soft. Hand Wash is a substance that aims to eliminate germs and bacteria. Example: Reckitt Benckiser’s Dettol Hygiene Original Hand Wash


A&F Pears Limited • Pears Amka Products (Pvt) Ltd • Satiskin Codaa • Asepso Colgate • Palmolive Johnson & Johnson • Savlon PZ Cussons (UK) Ltd • Cussons Reckitt Benckiser • Dettol Unilever • Nivea • Radox

21

Hand Cream / Wash cont.

52%

48%

0%


High SES

Mid SES

Low SES2

1

3

11

4

1

4

0

2

4

6

8

10

12

75 ml 200 ml 237 ml 250 ml 300 ml 400 ml 600 ml

Act

ual

# o

f P

rod

uct

s Su

rve

yed

SKU


0

1

2

3

4

5

6

7

A&F Pears LimitedIndia

Amka Products(PVT) Ltd

South Africa

CodaaUnited Kingdom

ColgateSouth Africa

Johnson &Johnson

South Africa

PZ Cussons (UK)Ltd

United Kingdom

Reckitt BenckiserSouth Africa

UnileverGermany

UnileverSouth Africa

# o

f D

iffe

ren

t B

ran

d V

aria

nts



9 Brands

24 Brand Variants


22

Hand Cream / Wash cont.

12%

4%

4%

4%

13%

17%

25%

21%


A&F Pears Limited

Amka Products (PVT) Ltd

Codaa

Colgate

Johnson & Johnson

PZ Cussons (UK) Ltd

Reckitt Benckiser

Unilever

9 Brands

24 Brand Variants


23

3. Body Cream Category Body Cream / Lotion

Body Cream and Body Lotion is a moisturizing substance used to help

make the body smooth and soft. Body Cream tends to have a colour

that disappears once rubbed in while Body Lotion tends to be more

transparent and more liquid like. Example: Unilever’s Vaseline Aloe

Fresh

Prochem (Pvt) Ltd • Elegance • MaxiSmooth Softsheen Carson • Dark & Lovely The Himalaya Drug Company • Himalaya The House of Kubi • Ex-Cell Tiger Consumer Brands • Ingram’s

Camphor Cream Unilever • Dawn • Lux • Nivea • Vaseline Union Swiss (Pty) Ltd • Bio-Oil


Amka Products (PVT) Ltd • Clere • Top Society Codaa • Asepso Colgate • Palmolive Comafrica Consumer Goods • Crez Datlabs • Lanolene • CamphaCare Palmer’s • Cocoa Butter

Formula • Skin Success Plus Five Pharmaceuticals • Evolve

24

Body Cream / Lotion cont.

38%

54%

8%


High SES

Mid SES

Low SES

2 2

15

11 10

0

5

10

15

20

103.507 ml 150 ml 200 ml 250 ml 300 ml

Act

ual

# o

f P

rod

uct

s Su

rve

yed

SKU


0

2

4

6

8

10

12

14

16

18


South Africa

CodaaSwitzerland

ColegateBelgium

ComafricaConsumer Goods

South Africa

DatlabsZimbabwe

NiveaSwitzerland

Palmer'sUnited Kingdom

Plus FivePharmaceuticals

(PVT) LTDZimbabwe

Prochem (PVt)Ltd

Zimbabwe

SoftsheenCarson

South Africa

The HimalayaDrug Company

India

The House ofKubi

Zimbabwe

Tiger ConsumerBrands

South Africa

UnileverGermany


UnileverSpain

UnileverThailand

Union Swiss (Pty)Ltd

South Africa

# o

f D

iffe

ren

t B

ran

d V

aria

nts



21 Brands

63 Brand Variants


25

Body Cream / Lotion cont.

3%

13%

5%

1% 1%

5%

6%

1%

8%

2% 2% 2% 5%

44%

2%


Datlabs/Adcock Ingram


Codaa

Colegate

Comafrica Consumer Goods

Datlabs

Palmer's

Plus Five Pharmaceuticals (PVT) LTD

Prochem (PVt) Ltd

Softsheen Carson

The Himalaya Drug Company

The House of Kubi

Tiger Consumer Brands

Unilever

Union Swiss (Pty) Ltd

21 Brands

63 Brand Variants


26

4. Petroleum Jelly Category Petroleum Jelly

A translucent jelly consisting of a mixture of

hydrocarbons, used as a lubricant or ointment. Example: Prochem’s

Elegance Perfumed PJ


Amka Products (Pvt) Ltd • Baby Line • Clere Comafrica Consumer Goods • Crez Prochem (Pvt) Ltd • Elegance Punch Bowl Quality Products • Bint El Sudan TSATSA (Pvt) Ltd • Jet Seal Unilever • Vaseline

27

Petroleum Jelly cont.

0%

83%

17%


High SES

Mid SES

Low SES

3

10

1

5 6

3

0

2

4

6

8

10

12

50 ml 100 ml 125 ml 250 ml 300 ml 500 ml

Act

ual

# o

f P

rod

uct

s Su

rve

yed

SKU


0

1

2

3

4

5

6

7

8

Amka Products (PVT) LtdSouth Africa

Comafrica ConsumerGoods

South Africa

Prochem (Pvt) LtdZimbabwe

Punch Bowl QualityProducts

Zimbabwe

TSATSA (Pvt) LtdZimbabwe


UnileverGhana

# o

f D

iffe

ren

t B

ran

d V

aria

nts



7 Brands

18 Brand Variants


28

Petroleum Jelly cont.

11%

5%

39%

6%

6%

33%



Comafrica Consumer Goods

Prochem (Pvt) Ltd

Punch Bowl Quality Products

TSATSA (Pvt) Ltd

Unilever

7 Brands

18 Brand Variants


29

5. Shower Wash Category Shower Gel / Body

Wash A thick liquid product used for bathing, an

alternative to conventional soap. Example: Colgate’s

Protex for Men Energy


Amka Products (Pvt) Ltd • Satiskin Colgate • Palmolive • Protex Imperial Leather UK • Imperial McBride • Gentelle Reckitt Benckiser • Dettol Schwarzkopf & Henkel • Fa Fresh Tiger Brands • Gill Unilever • Dove • Lux • Nivea • Radox 30

Shower Gel / Body Wash cont.

63%

37%

0%


High SES

Mid SES

Low SES

5

34

5

17

4 2

0

5

10

15

20

25

30

35

40

200 ml 250 ml 300 ml 400 ml 500 ml 600 ml

Act

ual

# o

f P

rod

uct

s Su

rve

yed

SKU


0

5

10

15

20

25

30


South Africa

ColgateBelgium

ColgateTurkey

Imperial LeatherUnited Kingdom

McBrideUnited Kingdom

ReckittBenckiser

South Africa

Schwarzkopf &HenkelEgypt

Tiger ConsumerBrands

South Africa

UnileverGermany


# o

f D

iffe

ren

t B

ran

d V

aria

nts



12 Brands

59 Brand Variants


31

7%

10%

9%

8%

5%

8% 2%

51%



Colgate

Imperial Leather UK

McBride

Reckitt Benckiser

Schwarzkopf & Henkel

Tiger Consumer Brands

Unilever

Shower Gel / Body Wash cont.

12 Brands

59 Brand Variants


32

6. Soap Category Soap

A substance used with water for washing and

cleaning, made of a compound of natural oils

or fats with sodium hydroxide or another

strong alkali, and typically having perfume and

colouring added. Example: Unilever’s Geisha

Snoothing Aloe Vera


Colegate • Palmolive • Protex East Africa Ltd • Imperial Elangeni Oil and Soaps (PTY) LTD • Elangeni* • Pearls Beauty Soap Johnson & Johnson • Savlon Olivine Industries (Pvt) Limited • Romance

Reckitt Benckiser • Dettol SPAR South Africa (Pty) Ltd • Germex Unilever • Dove • Geisha • Lifebuoy • Lux • Nivea • Sunlight* • Vaseline United Refineries Limited • Impala* WilloSonaton Group • Sona * Denotes Laundry Soap Bar

33

Soap Cont. 18 Brands

66 Brand Variants


02468

101214161820

ColgateSouth Africa

East AfricaLtd

Kenya

Elangeni Oiland Soaps(PTY) LTD

South Africa

Johnson &Johnson

South Africa

OlivineIndustries

(Pvt) LimitedZimbabwe

ReckittBenckiser

South Africa

SPAR SouthAfrica (Pty)

LtdSouth Africa

UnileverKenya


UnileverGermany

UnileverZimbabwe

UnitedRefineries

LimitedZimbabwe

WillowtonGroup

South Africa

# o

f D

iffe

ren

t B

ran

d V

aria

nts



12%

61%

27%


High SES

Mid SES

Low SES

3

8

2

22 20

8

5 3 3 2 3

1

0

5

10

15

20

25

90 g 100 g 125 g 175 g 200 g 250 g 300 g 350 g 400 g 500 g 700 g 1000g

Act

ual

# o

f P

rod

uct

s Su

rve

yed

SKU


34

Soap cont.

18 Brands

66 Brand Variants


18%

3%

3%

3%

1%

12%

5%

52%

1% 2%


Colgate

East Africa Ltd

Elangeni Oil and Soaps (PTY) LTD

Johnson & Johnson

Olivine Industries (Pvt) Limited

Reckitt Benckiser

SPAR South Africa (Pty) Ltd

Unilever

United Refineries Limited

Willowton Group

35

TABLE OF CONTENTS



APPENDIX Body Care Market: SWOT Analysis Body Care Market: Key Risks & Barriers to Entry

Project Cost Quotes

36

Method

Approach Market Size for Petroleum Jelly, Soaps, and respected Skin Cream categories is derived from

Private Consumption Expenditure PICES 2011 In 2011, Petroleum Jelly accounted for $23,486,325.24, Skin Cream accounted for

$20,730,244.32, and Soaps accounted for $29,686,912.00 2013 estimates were derived from taking into account 2012 and 2013 nominal GDP growth

figures from the World Bank 2012 Nominal GDP Growth = 13.84% ; 2013 Nominal GDP Growth = 2.64%

Product Visibility In order to estimate Market Share of respected manufacturers, the calculations are based

upon the visibility of products in the survey The survey is the best unbiased source in order to calculate Market Share Annual sales volumes for the respected manufactures are not available given the private

nature of the data

37

Facial Cream, & Hand Cream, Body Cream Market Size & Market Share (2013)

Manufacture % Visibility within Survey Estimated $ Market Share

Unilever 32.32% $3,914,386

Johnson & Johnson 10.10% $1,223,246

Amka Products (PVT) Ltd 9.09% $1,100,921

Reckitt Benckiser 8.08% $978,597

Prochem (PVt) Ltd 5.05% $611,623

Codaa 4.04% $489,298

Palmer's 4.04% $489,298

PZ Cussons (UK) Ltd 4.04% $489,298

Tiger Consumer Brands 3.03% $366,974 Datlabs 1.59% $192,570

Others 18.61% $2,253,921

TOTAL (including VAT) 100.00% $12,111,343

TOTAL MARKET SIZE (LESS VAT) - $10,294,642

• Based on information from Private Consumption Expenditure PICES 2011 • 2013 figures estimated via World Bank nominal GDP growth figures for years 2012 and 2013 • 2012 Nominal GDP Growth = 13.84% ; 2013 Nominal GDP Growth = 2.64% • For purposes of this presentation, given input from PICES 2011, the 2013 annual Market Size for

Skin Cream is estimated at $12,111,343. • Market Share based on visibility of products within Survey Split between visibility and estimated Dollar Market Share can be seen below

38

Facial Cream

Reckitt Benckiser Plc • Founded in 1823, headquartered in

Slough, Berkshire, England • Operations in around 60 countries • After 2013 year, local operations

discounted in Zimbabwe due to economic challenges

• 18% visibility in market survey within this category

• Products sold in almost 200 countries

• Employs over 37,000 people globally

• In 2013, revenues totaled £10bn • The company’s acne treatment

brand is Clearasil which is manufactured in France

Johnson & Johnson • Founded in 1886, headquartered in

New Brunswick, New Jersey • The world’s sixth-largest consumer

health company and sixth-largest pharmaceuticals company.

• 250 subsidiary companies • Operations in over 60 countries • No operations in Zimbabwe • 64% visibility in market survey

within this category • 128,700 global employees • Products sold in over 175 countries • In 2013, revenues totaled $71.3bn • Portfolio of several acne treatment

brands such as Clean & Clear, and Neutrogena

39

Hand Cream / Wash

Reckitt Benckiser Plc • Previously discussed • 24% visibility in market survey

within this category • The company’s best known hand

cream brand is Dettol

Unilever • Founded in 1929 • Co-headquartered in London,

England and Rotterdam, the Netherlands

• World’s third-largest consumer goods company by revenue in 2012, after Procter & Gamble and Nestle

• Products sold in around 190 countries


• Significant local operations exists in Zimbabwe

• Portfolio of several Hand Cream/ Wash brands such as Nivea and Radox. 40

Body Cream / Lotion

Amka Products (PVT) Ltd • Founded in 1955, headquartered in

Pretoria • Products sold in 35 African

countries • 13% visibility in market survey

within this category • No operations in Zimbabwe • Within Southern Africa, the largest

independent manufacturer and marketer of well established brands in the Haircare, Facial Care, Personal Hygiene, toothpaste, and body lotions sectors

• Portfolio of several Body Cream/ Lotion brands such as Clere, CamphaCare, and Top Society

Unilever • Previously discussed • 41% visibility in market survey

within this category • Portfolio of several Body Cream/

Lotion brands such as Nivea, Lux and Dawn

41

Petroleum Jelly Market Size & Market Share (2013)

• Based on information from Private Consumption Expenditure PICES 2011 • For purposes of this presentation, given input from PICES 2011, the 2013 annual Market Size

for Skin Cream is estimated at $19,210,160. • 2013 figures estimated via World Bank nominal GDP growth figures for years 2012 and 2013 • 2012 Nominal GDP Growth = 13.84% ; 2013 Nominal GDP Growth = 2.64% • Market Share based on visibility of products within Survey Split between visibility and estimated Dollar Market Share can be seen below


Prochem (Pvt) Ltd 38.89% $7,470,831

Unilever 33.33% $6,402,746

Amka Products (PVT) Ltd 11.11% $2,134,249

Comafrica Consumer Goods 5.56% $1,068,085

Punch Bowl Quality Products 5.56% $1,068,085

TSATSA (Pvt) Ltd 5.56% $1,068,085

TOTAL (including VAT) 100% $19,210,160

TOTAL MARKET SIZE (LESS VAT) - $ 16,328,636 42

Petroleum Jelly


within this category • The company’s main Petroleum

Jelly brand is Vaseline

Prochem (Pvt) Ltd • Founded in 1986, in Harare • Wholly Zimbabwean owned private

company part of the Varichem Group


• Prochem imports all the necessary materials from South Africa, only the packaging of the final products are done locally.

• Strong distribution network in Zimbabwe, where Prochem offers delivery of their products throughout major cities and towns.

• The company’s primary Petroleum Jelly brand is Elegance

43

Shower Gel / Body Wash Market Size & Market Share

44

Data was collected from retail and local manufactures in order to compile the 2011 Private Consumption Expenditure (PICES). Market Size for Bath Soap is derived from PICES 2011 where 2013 estimates stem from 2012 and 2013 Nominal GDP growth statistics. Shower Gel market size estimated at 20% of Bath Soap.

2013 annual Market Size for shower gel is estimated at $6,937,667. 2013 figures estimated via World Bank nominal GDP growth figures for years 2012 and 2013 2012 Nominal GDP Growth = 13.84% ; 2013 Nominal GDP Growth = 2.64% Market Share based on visibility of products within Survey Split between visibility and estimated Dollar Market Share can be seen below


Unilever 51% $3,527,627

Colgate 10% $705,525

Imperial Leather UK 8% $587,938

McBride 8% $587,938

Schwarzkopf & Henkel 8% $587,938

Others 14% $940,701

TOTAL (including VAT) 100% $6,937,667

TOTAL MARKET SIZE (LESS VAT) - $5,897,017

Shower Gel / Body Wash


within this category • Portfolio of several Shower Gel

brands such as Nivea, Lux and Radox

Colgate • Founded in 1806, headquartered in

New York City • Colgate enjoys numerous

subsidiary organizations spanning 200 countries

• In 2012, over 37,700 employees worldwide

• In 2013, revenues totaled just over $17bn

• Approximately 80% of sales from International operations outside the US.


• The company’s main Petroleum Jelly brand is Elegance

45

Soap (Bath Soap) Market Size & Market Share (2013)


Colgate 20.34% $7,055,254

East Africa Ltd 3.39% $1,175,876

Johnson & Johnson 3.39% $1,175,876

Olivine Industries (Pvt) Limited 1.69% $587,938

Reckitt Benckiser 13.56% $4,703,503

SPAR South Africa (Pty) Ltd 5.08% $1,763,814

Unilever 50.85% $17,638,136

Willowton Group 1.69% $587,938

TOTAL (including VAT) 100.00% $34,688,335.00

TOTAL MARKET SIZE (LESS VAT) - $29,485,084.75

• Based on information from Private Consumption Expenditure PICES 2011 • Bath Soap accounted for $29,686,912.00 in 2011 • 2013 figures estimated via World Bank nominal GDP growth figures for years 2012 and 2013 • 2012 Nominal GDP Growth = 13.84% ; 2013 Nominal GDP Growth = 2.64% • Market Share based on visibility of products within Survey Split between visibility and estimated Dollar Market Share can be seen below

46

Soap (Laundry Soap) Market Size & Market Share (2013)


Elangeni Oil and Soaps (PTY) LTD 22% $14,296,740.00

Unilever 18% $11,593,480.00

United Refineries Limited 14% $9,151,572.00

Others (e.g Rockshell, Nemo Metta) 45% $29,000,001.00

TOTAL (including VAT) 100.00% $64,041,793.00

TOTAL MARKET SIZE (LESS VAT) - $54,435,524.00

• Based on information from Private Consumption Expenditure PICES 2011 • 2013 annual Market Size for Laundry Soap, for purposes of this presentation, is assessed at

$64,041,793 given input from PICES 2011. • 2013 figures estimated via World Bank nominal GDP growth figures for years 2012 and 2013 • 2012 Nominal GDP Growth = 13.84% ; 2013 Nominal GDP Growth = 2.64% • Market Share based on visibility of products within Survey Split between visibility and estimated Dollar Market Share can be seen below

47

Soap


within this category • Portfolio of several Shower Gel

brands such as Dove, Nivea, Geisha, Lifebuoy, Lux an Sunlight

• Manufacture of both Bath Soap and Laundry Soap

• Unilever is the only market player with a variety of Laundry Soap brand variants including Sunlight Original/Sunlight Germiguard, Sunlight Tropial and Sunlight Mild & Gentle.

Colgate • Previously discussed • 18% visibility in market survey

within this category • Portfolio of several soap brands

such as Palmolive and Protex

48

Market Size Summary

Category 2013 Estimated Size

Petroleum Jelly $19,210,160

Hand Cream, Body Cream & Facial Cream $12,111,343

Soap (Bath Soap) $34,688,335

Soap (Laundry Bar Soap) $64,041,793

Shower Gel / Body Wash $6,937,667

TOTAL (including VAT) $136,989,298

TOTAL Body Care Market Size (LESS VAT) $116,440,903

49

Applicable Taxes & Duties

Customs Duty VAT Surtax

General COMESA RSA SADC(ZA) SADC (Other)

VAT GENERAL COMESA SADC

40 8% 0% 0% 0% 15% 15% 2% 0%

Code # 340130

Organic surface active pds and preps for washing skin in liquid/cream for retail sale




40 8% 0% 0% 0% 15% 15% 2% 0%

Code #271210

Petroleum jelly in immediate packings >=5kg

50

Code # 340119

Soap and organic surface-active products in bars, etc, nes

Applicable Taxes & Duties cont.




40 8% 0% 0% 0% 15% 15% 2% 0%

51

TABLE OF CONTENTS



APPENDIX Body Care Market: SWOT Analysis Body Care Market: Key Risks & Barriers to Entry

Project Cost Quotes

52

Route to Market

Manufacturer FACIAL CREAM

HAND CREAM / WASH SHOWER GEL / BODY WASH

BODY CREAM / LOTION

25% Wholesale

75% Retail

Manufacturer PETROLEUM JELLY

SOAP

60% Wholesale

40% Retail

NF Depot is estimated to account for 50% of Wholesale 53

TABLE OF CONTENTS




54

Potential Investment Opportunities

Investment opportunities identified using the following criteria:

Growth Potential

Scale of opportunity

Barriers to entry

55

Greenfield Investment The production of Laundry Bar Soap has considerable opportunity in the local market. The market for Laundry Bar Soap is large enough to accommodated a number of investments, and offers a huge opportunity for a dedicated company to consolidated the market share for small scale players. The Laundry Bar Soap will have two options the Basic Green Bar (Made from Vegetable Oil) and Premium Blue Bar (Made from Tallow). Other additionally, Greenfield Investment prospects will be investigated for Bath Soap and Petroleum Jelly. The initial capital injection being $36 941.28 before negotiating on prices for Equipment and Machinery- if successful which we hope to negotiate and cut costs by about $6 000.00 on E&M. Return on capital is lucrative at with IRR of 54.97%

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Carry-In Carry-In High Level Financial Models was done Laundry Soap, however manufacturing has higher IRR. The Republic of Zimbabwe’s policies towards BUY Zimbabwe also support a greenfield investment operation. Preferred model is Greenfield Investment.

Acquisitions Acquisition is an option that can be considered, however Laundry Soap manufacturing is less capital intensive that an option for greenfield is highly recommendable. Local companies tend to over-value their net assets values. Preferred model is Greenfield Investment.

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58

Soap Making Machine Process Diagram

59

500g & 1kg Laundry Soap Bar – Manufacturing

60

EQUIPMENT QUANTITY PRICE IN USD PRICE IN USD

Mixing Tank 2t/Cycle 1 $ 4,500.00 $ 4,500.00

Dryer 4t/Cycle 1 $ 8,000.00 $ 8,000.00

Extruder/Noodler - 1500bars/hr 1 $ 7,500.00 $ 7,500.00

Stamper 1 $ 700.00 $ 700.00

Soap Cutter 1 $ 3,000.00 $ 3,000.00

Shrink Wrapper 1 $ 2,800.00 $ 2,800.00

Others (Pipes, Water Tanks, Ladders etc) 1 $ 1,500.00 $ 1,500.00

TOTAL PLANT AND MACHINERY $ 28,000.00

Transportation Allowance 10.0% $ 100.00

TOTAL PLANT AND MACHINERY (Including Duty and V.A.T) $ 28,100.00

CIVILS: TOTAL Adjustements $ -

TOTAL: PLANT AND MACHINERY $ 28,100.00

PRODUCT RESEARCH $ 1,000.00

Contigency Allowance 2.5% $ 702.50

GRANT TOTAL: PLANT AND MACHINERY $ 28,802.50

Working Capital Required @2 Days Cover $ 8,138.78

TOTAL INVESTMENT REQUIRED $ 36,941.28

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500g & 1kg Laundry Soap Bar – Manufacturing LAUNDRY SOAP YEAR 1/2016 YEAR 2/2017 YEAR 3/2018 YEAR 4/2019 YEAR 5/2020

Market Size (Kgs) 67,571,811 68,585,389 69,614,169 70,658,382 71,718,258

Market Share 3.00% 4.89% 6.78% 8.67% 10.56%

Volumes (Kgs) 2,027,154.34 3,353,063.44 4,718,293.70 6,123,726.43 7,570,260.53

Sales (WASP) $ 1,712,378.82 $ 2,832,401.42 $ 3,985,639.40 $ 5,172,837.24 $ 6,394,754.24

Raw materials $ 1,387,185.15 $ 2,294,506.99 $ 3,228,736.37 $ 4,190,476.37 $ 5,180,342.10

Naked margin $ 325,193.68 $ 537,894.43 $ 756,903.03 $ 982,360.87 $ 1,214,412.14

As a % of Net Sales 18.99% 18.99% 18.99% 18.99% 18.99%

Conversion cost $ 113,694.62 $ 156,388.89 $ 200,349.31 $ 245,604.24 $ 292,182.64

Gross Margin $ 211,499.06 $ 381,505.53 $ 556,553.73 $ 736,756.63 $ 922,229.50

Variable selling & distribution $ 81,086.17 $ 134,122.54 $ 188,731.75 $ 244,949.06 $ 302,810.42

Product Research $ 8,561.89 $ 14,162.01 $ 19,928.20 $ 25,864.19 $ 31,973.77

Marketing investment $ 34,247.58 $ 56,648.03 $ 79,712.79 $ 103,456.74 $ 127,895.08

Contribution $ 87,603.41 $ 176,572.96 $ 268,180.99 $ 362,486.64 $ 459,550.22

Bus Management Team $ 21,600.00 $ 21,600.00 $ 21,600.00 $ 21,600.00 $ 21,600.00

Contribution to Group PBIT $ 66,003.41 $ 154,972.96 $ 246,580.99 $ 340,886.64 $ 437,950.22

As a % of Net Sales 3.85% 5.47% 6.19% 6.59% 6.85%

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500g & 1kg Laundry Soap Bar – Manufacturing

LAUNDRY SOAP Sensitivity Summary:

Description First Year Average

NPV @ WACC $ (176,827.74) $ 992,565.83

NPV @ RRR $ (180,210.77) $ 2,660,881.99

IRR 54.97%

Payback in years "Inclusive of WC" 3.17

Cash flow $ (180,210.77) $ 266,088.20

PBIT $ 66,003.41 $ 499,300.24

RONA % 28.66% 92%

EVA $ 51,851.66 $ 1,216,535.03

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63

Key Assumptions Total Annual Imports

9,363,813 kg SKU Split

500g: 60% 1kg: 40%

Product Details Basic Cost per unit

$0.85 Cost per unit (after shipping,

customs, and VAT) $0.98

Place of Origin Botswana and SA

EQ Discount (500g ; 1kg) 7.5% ; 7.5%

EQ Price (500g ; 1kg) $0.60; $1.05

500g & 1KG Laundry Soap: Carry-In

64

Route to Market

Retail Wholesale

40% 60%

Market (kg) 58,523,832

Market Share 3%

Volume (kg) 1,755,715

Sales (WASP) 2,588,879

Cost Of Carrying

2,181,688

Naked Margin 407,191

As a % of Net Sales 16%

Handling Costs 32,400

Gross Margin 374,791

Variable Selling & Distribution 122,900

Marketing Investment 129,444

Contribution 122,447

Bus Management Team 27,600

Contribution to Group PBIT 94,847


Direct Recoveries 5,178

Direct Admin Costs 5,178

PBIT 84,491


IRR (Average) 58%

PBIT 5 Year Avg $392,000

Capital 5 Year Avg $1,107,000

ROCE 38% 500g & 1KG Laundry Soap

2016 2017 2018 2019 2020 2016-2020

National Market (kg) 58,523,832 60,279,547 62,087,933 63,950,571 65,869,088 62,142,194

Market Share 3% 8% 9% 9% 10% 8%

Volume (kg) 1,755,715 4,822,364 5,587,914 5,755,551 6,586,909 4,901,691

US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

Sales (WASP) 2,589 7,111 8,240 8,487 9,713 7,228

Cost Of Carrying 2,182 5,992 6,944 7,152 8,185 6,091

Naked Margin 407 1,118 1,296 1,335 1,528 1,137

As a % of Net Sales 16% 16% 16% 16% 16% 16%

Handling Costs 32 32 32 32 32 32

Gross Margin 375 1,086 1,264 1,302 1,495 1,104

Variable Selling & Distribution 123 338 391 403 461 343

Marketing Investment 129 356 412 424 486 361

Contribution 122 393 460 475 549 400

Bus Management Team 28 28 28 28 28 28

Contribution to Group PBIT 95 365 433 448 521 372

Direct Recoveries 5 14 16 17 19 14

Direct Admin Costs 5 14 16 17 19 14

PBIT 84 337 400 414 482 401

PBIT 3% 5% 5% 5% 5% 6%

TABLE OF CONTENTS



APPENDIX

Body Care Market: SWOT Analysis Body Care Market: Key Risks & Barriers to Entry Project Cost Quotes

66

ZIM BODY CARE SWOT ANALYSIS Strengths

• Retail distribution network for Body Care products is extensive, all retail outlets have a wide range of imported products for sale.

• Constant demand for Body Care products; significant repeat business capacity.

• Products tend to have a long shelf life.

• Mid & High Social Economic divisions are effectively served in 4 out of the 5 key categories.

• In terms of inventory, extensive variety of Stock Keeping Units (SKU) available on the local market.

• Zimbabwean firms have a strong respectable market share of the Petroleum Jelly category.

Weaknesses • Wholesale distribution network for Body

Care Products exists with only a very limited range or products.

• Lack of appropriate top-of-the-range infrastructure locally with the capabilities to produce most of the Body Care products that is found and that is needed for the local market.

• Low Social Economic division only effectively served in 1 of the 5 categories, research has found that in most cases (except for Petroleum Jelly), the majority of the Body Care products imported are of premium brands, which tends to be out of the price range of the average Zimbabwean.

• Zimbabwean firms have a small to a non-existent market share of the 4 out of the 5 key categories.

67

ZIM BODY CARE SWOT ANALYSIS

• In the case that import duties are increased, the local market will have the opportunity to preform more competitively against imports and thus may be able to produce similar products to serve the market.

• Price sensitive market, if a product can be locally manufactured and sold at a cheaper price than an imported product, preference will favor the cheaper product

• Import or locally manufacture products targeted to Social Economic divisions which are currently underserved.

• Ready export markets such as Botswana, Mozambique, and Zambia for products targeted towards underserved Social Economic divisions.

• International companies may be willing to establish partnerships with local businesses in the case of feasible local opportunity.

• Body Care survey found that 87.5% of products were imported. An increase of import duties will result with higher customer prices which will decrease overall demand.

• An unlikely decrease of import duties for this sector will make it considerably more difficult for local manufactures to compete.

• Cheaper Body Care products imported directly from China, which currently does not exist on the Zimbabwean market, will severally affect local business to compete in this environment.

• This is a mature market with many established players

• Macroeconomic risks, such as liquidity challenges and questionable policies continues to further deteriorate the local economy, as a direct consequence decreasing disposable incomes which will negatively affect this sector.

Opportunities Threats

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TABLE OF CONTENTS



APPENDIX Body Care Market: SWOT Analysis Body Care Market: Key Risks & Barriers To Entry

Project Cost Quotes

69

KEY RISKS • COMPETITION: Importers buy in bulk

and receive significant discounts which is a significant threat for local manufacturers.

• SHELF SPACE: Importers have consolidated strong relationships with retailers to display their products on shelves which tend to be eye-level with a customer. As a result, products on the bottom shelves may be skipped over, in most cases local products are found on the bottom shelves.

• THIRD PARTIES: The industry is highly depended on third parties distributing the Body Care products.

• RAW MATERIALS: Ability to source necessary ingredients depends on third parties.

• STRONG MARKETING: Imported Body Care products are well advertised on billboards and in retail outlets throughout Harare.

• BRAND AWARENESS: High brand awareness for imported products, will take time for local products to enjoy the same brand awareness on the market.

• BRAND LOYALTY: Loyalty for imported brands among High Social Economic division.

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BARRIERS TO ENTRY

• REQUIRED CAPITAL: The required capital for equipment, building and raw materials may be extensive especially given the fact that most likely all the equipment will need to be imported

• CUSTOMER LOYALTY: The presence of established strong imported brands within Zimbabwe may be problematic

• SWITCHING BARRIERS: Transforming routines, such as substituting Shower Gel in exchange for conventional soap, may take a significant amount of time and may in fact be undesired within certain markets.

• COST ADVANTAGES INDEPENDENT OF SCALE: Patented technology, know-how, favorable access to raw materials, and learning curve cost advantages may result as a significant and sizeable obstacle

• ECONOMY OF SCALE: The increase in efficiency of production as the number of goods being produces increase is enjoyed by the major imported brands where a local manufacture may find themselves unable to compete in this kind of environment.

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TABLE OF CONTENTS



APPENDIX

Body Care Market: SWOT Analysis Body Care Market: Key Risks & Barriers To Entry Project Cost Quotes

72

Laundry Bar Soap– Project Costs Water Purification System

CL Model 132-50-75 Siata Semi-Automatic Top Mount Demineralization Plant ZAR 62,800.00

In-Line Fiolter ZAR 550.00

Water Meter ZAR 785.00

Pressure Reducing Valve ZAR 1,280.00

Poor Water Quality Shut-Off Control System ZAR 7,200.00

Shipping 20 Ton Truck (Durban to Harare) $2,400.00

TOTAL PRICE (ZAR) ZAR 99,312.60

TOTAL PRICE (USD) $8,927.78

$1USD = ZAR 11.124

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Soap Making Machine - Project Cost (Quote 1)

74

SAS Mariani Tommaso www.sasoap.com

Machine Price

Mixer € 25,500.00

Pelletizer € 23,500.00

Elevating Conveyor € 7,400.00

Special Duplex Vacuum Plodder € 128,000.00

Close Cycle Water Chiller € 11,100.00

Soap Cutter € 25,500.00

Engraving Rolls € 4,400.00

Shipping 40 ft Container from Italy to Harare $ 6,900.00

Building Civils $ 200,000.00

TOTAL $771,526

1000kg/h Soap Production Line

Item Name Model Qty Price(FOB $)

1 Mixer 1000GA-450Z 1 set $17,500 2 Simplex Refiner 1000GA-DXJ-250 1 set $20,200

3 Belt Conveyor 1000GA-SSJ-D 1 set $3,600

4 Three Roll Mill SM405-800 1 set $13,000

5 Belt Conveyor 1000GA-SSJ-C 1 set $4,600

6 Duplex Plodder 1000GA-DRVP-250 1 set $42,250

7 Electronic Single blade

cutter 2000SA—QKI

1 set $18,000

8 Soap Cake Pick-up Belt JZD-3M 1 set $2,100

10 Water Chiller ZF-20ACH 1 unit $8,800

Shipping 40 ft Container from Shanghai to Harare $6,900

Building Civils $200,000

Total $330,950

Soap Making Machine - Project Cost (Quote 2) Lanzhou Light Industrial Machinary Co

www.soap-china.com

1000kg/h Soap Production Line

Item Name Qty Price(FOB $)

1 RZHJ Series Soap Finishing Line 1 $73,900.00

2 RM-AC-8L Chiller 1 $7,550.00

Building Civils $200,000.00

Shipping 40 ft Container from Shanghai to Harare $6,900.00

Total $288,350.00

Soap Making Machine - Project Cost (Quote 3) Changzhou RuiMa Soup Machinery Co.,Ltd

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Soap Making Machine “India” - Project Cost (Quote 4)

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Description of goods/items 3 TPD

(125 KG./HOUR)

6 TPD

(250 KG./HOUR)

12 TPD

(500 KG./HOUR)

"Jagdish" toilet soap plant complete with :

Caustic lay tank.

Specially designed heavy duty soap saponification pan complete with reduction

gear box system, electric motor, electric panel board, all standard accessories

etc.

Raw oil pump with electric motor.

Heavy duty steam boiler complete with all standard accessories.

Boiler water feed pump complete with electric motor.

Soap cooling moulds.

First soap lifting trolley.

Soap chips making machine complete with electric motor.

Soap mixer (sigma type) with heavy duty "zs", reduction gear box system, electric

motor, electric panel board, all standard accessories etc.

Soap three roller machine with reduction gear box system, water circulating

device, electric motor, electric panel board, all standard accessories etc.

Extra heavy-duty duplex vacuum plodder (first plodder for noodles and second for

finished bar) (this plodder is used for highest finishing of final soap) with reduction

gear box system, temperature controller, water cooling device, electric motor,

soap bar dies, electric panel board, all standard accessories etc.

Vacuum pump complete with electric motor.

Centrifugal water cooling pump with electric motor.

Automatic rotary bar cutting machine complete with all standard accessories.

Final soap cutting machine complete with gear box, automatic sliding ram, all

standard accessories etc.

Soap stamping machine complete with balance weight, one set brass dies.

Replaceable parts.

Full Installation accessories kit etc..................... U.S.$ 34950 U.S.$ 45700 U.S.$ 67100

THANK YOU

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