Great Business Keeping Households Clean

The liquid soap boom shows that there is room in the market for cottage industries

Making liquid soap was a tiny affair involving a bucketful of chemicals and an investment of 500 Br, when Dereje Asmamaw started out from the comfort of his home three years ago.

“We bought a small amount of different chemicals from a local market, put them in a 20lt bucket, and stirred them up with a stick, manually,” he remembers.

Today Frehiwot Detergent Shop, the company licensed by his wife and managed by him, sells 10,000lt a day, on average, to the large number of people standing in line in front of their outlet at Jemo. The business currently has annual sales of around 26 million Br. They make the soap at a different facility in the same area.

In Addis Abeba, there are now several small scale liquid soap makers, whose products are competing with larger factories. Users say the soap they buy is cheaper, and just as effective, as that obtained from large manufacturers. The producers disclosed to Fortune, that they import the chemical ingredients from abroad but they were not willing to name the countries.

Fortune visited three of these small scale manufacturers and their shops. Frehiwot, the largest, has its production site in Jemo Condominium at German Square. Yonas Liquid Detergent Shop, established with capital of 40,000 Br four months ago, is also found there, while the third, Yonas Liquid Detergent Shop, is located around Lafto in Nefas Silk Lafto District. Their prices for a litre of soap are 10 Br at Frehiwot and Addis and 11Br at Yonas.

A chemistry graduate, Dereje decided to put his knowledge to use when the prices of all kinds of soaps started soaring. Buyers often come with their own containers, but at Addis there are jerry cans ranging from five litres to 25lt, the largest selling for 40 Br.

The scene at Frehiwot’s manufacturing facility is one of men in boiler suits wearing gloves and rubber boots. There are many white, 1,000 litre Roto water tanks in which the soap is made and blue barrels in which the end product is transported to the sales outlet. It was difficult to walk across the floor as spills of liquid soap were seen everywhere.

Dereje said he designed the stirring machine, which has two blades to stir the chemicals in the Roto tank, and got it crafted in a local metalwork shop. The machine, which operates with electricity, looks like two spades stuck together, back-to-back. It does not look sophisticated enough for a machine that produces, on average, 10,000 litres of detergent on a daily basis.

Firehiwet’s Soap & Liquid Detergent Shop started producing bars of soap for laundry as well as dishwashing on July 23, 2015 and on July 30, respectively. Currently, around 20 packs are sold per day: a pack contains 50 pieces, and the soaps are produced in blue, purple, and white colours.

It was nearly a year ago that the demand for liquid soaps increased dramatically, says Dereje.

“At first, we used to sell only five to 10lt per day, but the business has grown to the point when we have sold 26 million Br this year.”

That kind of boom is yet to come for Yonas Liquid Detergent Shop. The owner, Tagel Biruhyesfa, a chemical engineer, does most of the manual jobs, assisted by three family members. In business for the last two months, he now produces 100lt a day.  The other shop, Addis, was formed after Addis Baheru, a management graduate, took a 10-day course in India where he learned how to make powdered soap at a micro detergent factory.

Tamenech Wube, a regular customer at Addis Soap & Detergent Shop, comes all the way from Kazanchis to buy four litres every month. She has been purchasing soap from the shop ever since a friend told her about it.

Gidey Lemma, a customer at Frehiwot, buys 40lt of liquid soap every week. Since the company started bar soap production, she has also bought two packs in just one week.

“I started buying from this shop about four months ago, not only for household consumption but also to sell it to people in my neighbourhood. The fact that it is so cheap while as good as factory produced detergents makes everyone very happy, especially those who cannot afford to buy the packed ones,” she said, adding that there were also people who bought from her to resell.

Addis Soap & Detergent has been producing bars of soap from the beginning. The company employs 25 workers, including two senior and two junior chemists. He has a plan for expanding the manufacturing capacity to a point where he can produce 10,000lt of liquid soap per day.

One of the most popular liquid soap brands Largo, produced by the large manufacturer, Repi Soap & Detergent S.C., sells in the market for 55 Br to 60 Br in a two-litre package; that is a big difference in price to the 10Br to 11Br a litre from the small producers.

A customer at Firehiwet Detergent Shop, Wondwosen Tsegaye, said “I have been buying liquid detergent from this shop for three years. I buy five litres every month, and it can be used to clean clothes, dishes and my house. What keeps me coming here is that the price is reasonable; the liquid detergent is very thick, and it is every bit as good as the factory products, except that it slightly burns my hands.”

Their competition is being felt by the large factories.

“These cottage industries do not have a document that certifies the quality of their products, and again they have been affecting our business by selling uncertified products for a lower price,” argued Bekele Tsegaye, President of the Ethiopian Chemical Products Producers Association and manager of Bekas Chemicals Plc.

“The Association has sent a letter of complaint to the Ministry of Trade and we are waiting for a reply.” he added.

Both Dereje and Addis were not willing to tell the name of the chemicals they use as ingredients to produce the detergent.

“There are about 21 ingredients including colouring and perfume to make any kind of soap,” Addis explained, “but mostly here in Ethiopia, we use from six up to 13 ingredients only.”

He uses only eight ingredients to make the soap, but he did not want to say which.

Though Dereje said that someone comes randomly to check his operations, the absence of standards is an issue.

According to Addis Abeba City Trade & Industry Bureau, there are 128 manufacturers currently engaged in the production of soap, liquid detergent, beauty products, and chemical products, with capital investment ranging from 360Br to six million Birr. The small scale manufacturers have a business license to manufacture but not one that certifies the quality and standard of their products. Nonetheless, customers say the detergents are filling a gap in the market, and the business is booming now.


Published on Aug 17,2015 [ Vol 16 ,No 798]



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