Entering the European market for shea butter

To enter the European market for shea butter you must meet the mandatory requirements set by the European Union. At the same time, also consider meeting common additional requirements that European buyers and niche markets have as they will give you an advantage in your journey to enter the European market. The European market for shea butter is divided into two segments, providing different channels you can enter through. When entering the European market, you will face competition from other countries, companies and products. In recent years, prices of shea butter have increased.

1. What requirements and certifications must shea butter for cosmetics comply with to be allowed on the European market?

What are mandatory requirements?  

Your shea butter can only be exported for the European cosmetics market if you comply with the European Union’s (EU) mandatory legal requirements for natural ingredients for cosmetics. Non-compliance will prevent your shea butter from entering the European market for cosmetics.

EU Mandatory Requirements

The most important mandatory EU regulations you have to comply with are:

• Cosmetic Regulation (EC 1223/2009) is the central regulatory framework for cosmetic products for the European market, covering the safety and effectiveness of cosmetic products. Claims concerning sunscreen products have specific requirements. This regulation affects suppliers of cosmetic ingredients such as shea butter, as well as manufacturers and importers of cosmetic products. 
• Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)
• EU Commission Regulation (EU) No 655/2013 requires claims for a cosmetic product (explicit or implicit) to be supported by sufficient and provable evidence.
• The EU has packaging and labelling requirements for chemicals based on the Globally Harmonised System of Classification and Labelling of Chemicals (GHS) outlined in its Classification, Labelling and Packaging (CLP) Regulation (EC) 1272/2008.

The UK has officially left the EU, the EU Single Market and Customs Union with EU law no longer applying to the UK. However, EU REACH regulation was brought forward into UK law on the 1st of January 2021, this is known as UK REACH. To enter the UK, exporters of natural ingredients for cosmetics from developing countries must meet both UK REACH and EU REACH requirements.

Technical Documentation

To comply with the EU’s legal requirements, European buyers of shea butter for cosmetics need you to provide a well prepared technical dossier. The technical dossier should include Technical Data Sheet (TDS), Safety Data Sheet (SDS) and Certificate of Analysis (COA).

Figure 1: Technical Documentation Description

Source: Ecovia Intelligence

Convention on Biological Diversity (CBD)

For shea butter to enter the European market you must comply with the requirements on using plant resources agreed under international treaties and protocols within the Convention on Biological Diversity (CBD). The CBD is a part of EU law, but your own country is likely to be a signatory. This means you need to comply with the CBD in order to meet your national laws. For example, in Burkina Faso the shea tree is of great environmental importance, and is therefore protected under the country’s national forestry code.

The Nagoya Protocol’s Access and Benefit-Sharing (ABS) provides guidelines for accessing and utilising genetic resources and traditional knowledge. As shea butter is already established, it does not fall under the scope of ABS.

In recent years, there is increasing consumer awareness and demand for environmentally-friendly products, and this trend is set to continue. This is leading European buyers to seek ethically sourced ingredients, something which is likely to become more important in the future.

What additional requirements do buyers often have?

Quality requirements

There is currently no official grading system for shea butter for the cosmetics industry. The Global Shea Alliance has developed a standard only for shea kernels, along with providing guidance on best practices for production of quality shea nuts. The African Organisation for Standardisation is currently in the process of developing a standard for shea butter.

The production process is important for shea butter.  The shea butter you export to the cosmetics industry should have a low Free Fatty Acid content (FFA <0.75%), low peroxide value (preferably <1 milliequivalents per kg), low impurities (<0.1%) and low moisture content (<0.1%), for refined butter. You should meet these suggested quality requirements. You should also speak to European buyers and find out their preferences and specifications so your end product meets those as well.

West African and East African shea butter have different qualities. West African shea butter has a higher melting point, higher concentration of vitamin A and sterol, a lower concentration of oleic acid, and is also harder in consistency in comparison with East African shea butter. In comparison with West African shea butter, the East African variety spreads more easily, is more liquid and yellow in colour, has a lower melting point, a higher concentration of oleic acid and has a softer and creamier texture.

A European importer who tried both types of shea butter said in an interview for this report: ‘I prefer, and my customers also prefer the West African (shea butter) because of the consistency; the East African shea butter is too soft and does not work very well in certain formulations’.

The differences between the two is something you may want to highlight to European buyers, who may have specific requirements depending on their intended use in specific formulations.

Quality consistency is important to European buyers of shea butter.  Buyers therefore prefer a standardised high-quality shea butter product across all orders in suitable packaging according to each order volume. For example, high-quality shea butter in a container that can hold 25 kilograms for an order of that size.

Do not contaminate your shea butter with other foreign substances. European buyers regularly test the products they purchase to ensure they meet their requirements. For example, a European importer of shea butter revealed in an interview: ‘we always test in-house to make sure the product is of a good standard because that is what our clients demand’. Another European importer of shea butter interviewed confirmed it, saying: ‘when the goods arrive, we also do our own analysis in our own lab’.

Quality management standards

European buyers of shea butter are increasingly using quality management standards to assess the credibility of producers of shea butter. Adopting quality management standards gives your business credibility and a positive image because it shows your commitment to delivering high-quality ingredients. Adopting quality management standards can also help to show that you comply with mandatory requirements.

Consider adopting quality management standards to increase the quality of your shea butter.  Examples include ISO 22000 and ISO 9001:2015 from the International Organization for Standardization and Food Safety System Certification (FSSC) 22000. Other common guidelines you should consider following include Good Agricultural and Collection Practices and Hazard Analysis and Critical Control Points.

Labelling and packaging

Packaging requirements often differ from buyer to buyer, but there are some general rules that you should follow. You should consider meeting the additional labelling and packaging requirements that European buyers commonly have. This includes listing the following on your product documentation and labels in English unless asked otherwise:

• International Nomenclature Cosmetic Ingredient (INCI) name and product name
• Name and address of exporter
• Batch code
• Place of origin
• Date of manufacture
• Best before date
• Net weight
• Recommended storage conditions
• Organic certification number along with the name/code of the certifying inspection body if you export organic shea butter.  

European buyers of shea butter require good quality shea butter, so consider preserving the quality of your shea butter by doing the following when it comes to packaging:

In order to preserve the quality of your shea butter, follow these steps:

• Use polythene-lined boxes, aluminium, lined or lacquered steel containers as they do not react with the components in shea butter.
• Ensure packaging materials such as boxes and containers are clean and dry before packing shea butter in them.
• Fill headspace of packaging materials with gases, such as nitrogen or carbon dioxide as they do not react with shea butters constituents.

Shea butter is traded in volumes ranging from 1 kg to 5 kg, but also in large volumes up to tonnes. Package your shea butter in packaging material appropriate to each order volume.

Payment terms

Payment is central to all trade, and presents risks to all parties involved. Before trading with European buyers, do risk assessments of available payment terms. You should try to minimise your risks whilst working to meet the needs of European buyers.

There are several methods of payment. For both importers and exporters, Letters of Credit (LC) are considered to be the safest payment term. LC lets both parties contact a neutral arbitrator, usually a bank to resolve any issues. For the exporter, the chosen bank is a guarantor of full payment as long as goods have been dispatched. In such instances, to avoid further losses, exporters should find new buyers and pay for the return of dispatched goods.

Figure 2: Letters of Credit Process

Source: www.globalior.com

Both importers and exporters can choose from the several LC payment terms. They include standby, revocable, irrevocable, revolving, transferable, un-transferable, back to back, red clause, green clause and export/import. For exporters, standby LC is considered to be the safest, with it being frequently used in international trade. This is because it provides security to both importers and exporters who have little trading experience with each another. Other payment terms include cash in advance, documentary collections and open account.

Delivery terms

Before agreeing on delivery terms with European buyers you must carefully consider the following three important factors:

1. Delivery time – European buyers prefer shorter delivery times. Airfreight is more reliable in terms of on-time delivery, usually faster than sea freight. It is important to note that delivery times could be longer than usual due to restrictions on the movement of goods, forced quarantine measures and lockdowns implemented because of the COVID-19 pandemic.
2. Delivery volume and order quantity – Larger volumes are often cheaper to transport via sea by ship. However, as margins are reduced, airfreight volumes can be less expensive to transport.
3. Cost of delivery method – For larger volumes, airfreight is an estimated 4–6 times more expensive than sea freight. As volumes increase, it is unlikely that freight prices will increase significantly. Be aware that the COVID-19 pandemic has increased the cost of airfreight, which is likely to change when passenger flights are fully operational. Although the situation has improved, air travel is not fully back to pre-pandemic levels.

The COVID-19 pandemic has created logistical challenges for exporters in developing countries. These challenges are expected to continue for the foreseeable future, as governments attempt to tackle the pandemic by implementing different measures. European importers of shea butter interviewed for this report commented that: ‘logistically it’s been very difficult’ during the coronavirus pandemic. Higher transport costs and delays are two of the main difficulties European importers reported. The situation has gotten better in terms of logistics, but some channels were still not operating at full capacity at the end of 2021.

Any goods imported to the EU must be insured and the buyer is usually in charge of insurance. European buyers of shea butter prefer to ship according to FOB terms. However, this varies depending on the buyer.

Figure 3: Delivery Terms in International Trade

Source: velotrade.com

What are requirements for niche markets?

Organic and fair trade

There is a growing demand for certified raw materials on the European cosmetics market. At the same time a growing number of cosmetic products and raw materials are being certified according to natural and organic standards. Two of the leading organic standards are:

• NaTrue
• COSMOS

There are over 10 other natural and organic cosmetic standards in Europe; they include Demeter and Organic Farmers and Growers.

Fair trade is also becoming popular among European cosmetics manufacturers. This is because it pertains to various environmental and social attributes of sustainability. Examples of various fair trade standards include:

• Fairtrade International
• Ecocert Fair Trade and Fair for Life
• FairWild, which attests the use of sustainable collection, social responsibility, and fair trade principles.

Figure 4: Savanah Fruits Company Shea Butter Certifications

Source: savannahfruits.com

2. Through what channels can you get shea butter on the European market?

The commercial production of shea butter is concentrated in African countries: Nigeria, Mali, Burkina Faso, Ghana, Ivory Coast, and Uganda.  In the European market, shea butter is mainly used in the food industry, with the cosmetics industry only having a small share.

How is the end-market segmented?

The European market for shea butter can be segmented by end-user industries: the food and cosmetics sector. See Figure 1 examples of shea butter products on the European market as it shows the end-market segmentation of shea butter on the European market.

About 85 percent of shea butter goes to the food industry, according to the Global Shea Alliance. This study focuses on the use of shea butter in the cosmetics industry. The share of the cosmetics market increased from 10 percent to 15 percent in recent years. This trend is expected to continue.

Figure 5: Examples of shea butter products on the European market

Source: Pexels / Anete Lusina/ Leef Parks

Food industry

The food industry is the largest consumer of shea butter. It is mainly used in confectionary products because it is used as a cocoa butter equivalent (CBE). Shea is used as an alternative to cocoa butter because of its nutritional content, and it has a lower price. Producers of confectionery products can actually make their products cheaper by substituting cocoa butter with shea butter. Even though the demand for shea from the food sector is growing the share is slowly decreasing, as there is higher demand coming from other sectors.

Cosmetic industry

About 15 percent of shea butter goes to the cosmetics sector. Cosmetic companies in Europe use shea butter as a moisturising body butter in their products. The concentration of shea butter in cosmetic products can range between 5 and 50 percent. Shea butter has a number of beneficial properties for the skin. Many companies use shea butter because of its outstanding emollient properties, particularly its ability to soften the skin along with treating dry skin areas.

Shea butter is also used in the cosmetics sector in the form of derivatives, such as olein and stearin. They are produced through the process of chemical derivatisation. The Swedish company AAK offers a wide range of functional ingredients derived from shea butter. The main driver of innovation in the shea-derived ingredients sector is increasing demand for personal care products with clean formulations.

Personal care companies are replacing synthetic ingredients with natural alternatives with similar efficacy. The traceability of shea-derived ingredients makes them an attractive choice for personal care formulators. It is expected that the demand for shea butter and shea-derived ingredients in the cosmetic sector will continue to increase in the future. Shea derivatives are also used as palm oil alternatives in the personal care sector. This is a good selling point for shea because of the high environmental footprint of palm oil.

Europe has one of the largest markets for natural and organic cosmetics in the world. Consumers in Europe actively look for natural and organic products. The European natural and organic market is expected to grow at a healthy rate in the coming years, offering many opportunities for shea butter.  

 As pointed out earlier, this study looks at the use of shea butter by the cosmetics industry.

Through what channels does shea butter end up on the end-market?

Figure 6 shows the export value chain for shea butter on its journey to reach the European market. The processing and exporting of shea butter is frequently combined and done by the same company in shea-producing countries. However, food companies tend to source shea kernels and process them themselves. The process of shea butter production includes collection of kernels, drying and milling. The extraction of butter is traditionally done by hand kneading. The butter is eventually boiled, filtered and packed in airtight containers.

Processor

European processors can directly source shea butter from developing countries as it provides them with greater transparency and control over product quality. Swedish-Danish processor AAK directly sources shea butter from West African countries such as Ghana and Burkina Faso through its responsible sourcing of shea grower project.

European processors often travel to developing countries in person to meet their suppliers when assessing their credibility as a potential trading partner. Import volumes in this channel are larger, usually in tonnes. Despite the increasing rate of processing of shea in Africa, European processor still prefer processing shea kernels in Europe.  

Agent

An export agent is a firm or an individual that undertakes most of the exporting activities on behalf of an exporter as well as introducing their client’s product or services to prospective customers, usually for a commission. Agents can be found in the local market in your country or in Europe, however, it is uncommon for companies to use agents in the European market. As an exporter in a developing country, you can work with agents who represent you and act on your behalf in the European market.

Importer/Distributor

Dutch company IMCD is a leading importer/distributor of shea butter in Europe. The company offers different types of shea butter such as refined and organic. Shea butter enters the European market in a dried form. Other importer/distributors of shea butter include Ceratec Sarl, EICO Novachem and Gustav Heess. Import volumes range between kilograms and tonnes.

Finished cosmetic product

Shea butter also ends up in the European market as a finished cosmetic product. Guru Nanak Oil Mills is a well-established Ugandan company exporting a range of high-quality Ecocert-certified organic finished shea butter products to the European market.

Figure 6: Export Value Chain of Shea Butter

Source: Ecovia Intelligence

What is the most interesting channel for you?

As an exporter of shea butter in a developing country, importer/distributors are the most interesting channel for you. Unrefined shea butter is usually processed in Europe. European importers supply shea butter further to processors or to personal care manufacturers. However, there has been a trend towards local processing in recent years.

The European finished cosmetics product market is another interesting channel for exporters in developing countries. Guru Nanak Oil Mills is a well-established Ugandan company exporting a range of high-quality Ecocert-certified organic finished shea butter products to the European market. However, this is only a small part of shea butter exports to Europe.

3. What competition do you face on the European shea butter market?

What countries are you competing with?

Nigeria is the leading producer and exporter of shea nuts in the world. Mali, Burkina Faso, Ghana, Ivory Coast and Uganda are other significant producers and exporters of shea products. Developing countries that successfully export shea butter to the European market often share several key strengths fundamental to their success. These include good production and processing facilities, improving infrastructure, investment and favourable climatic conditions. The COVID-19 pandemic is a challenge for successful countries, and is likely to remain so for the foreseeable future.

Nigeria

As shown in Figure 7, Nigeria is the biggest producer of shea nuts in 2019. Most of the shea butter produced in Nigeria is for domestic consumption. The processing sector in Nigeria is still underdeveloped. Nigeria faces several challenges, including political instability, insufficient infrastructure, unpredictable power supply, high inflation, currency volatility, corruption, high capital costs, and excessive and unpredictable regulations.

Among the challenges facing Nigeria, a European buyer of shea butter interviewed for this report also cited the difficulty of obtaining organic certification, the lack of modern machinery and education concerning the processing of shea. Some traders stated that logistics and border closures with countries such as Benin cause problems for traders in Europe. Large numbers of shea nuts are exported or smuggled from Nigeria for processing in neighbouring countries, such as Ghana, Benin and Burkina Faso, which have better infrastructure and processing facilities. The COVID-19 pandemic is a new challenge for Nigerian exporters, particularly lockdown and quarantine measures which make exporting difficult. 

In recent years Nigeria has seen infrastructural development and investment going into processing facilities, which is likely to continue. This could potentially shift the market dynamics of shea. The Nigeria Agribusiness Register reports that Nigerian shea dealers will build processing factories estimated at US$30 million in the coming years. As English is the official language spoken in Nigeria, language is not a significant challenge for European buyers dealing with Nigerian businesses.   

Mali

Although it is a fragile and conflict-affected country without a modern shea processing industry, Mali is the world’s second-largest shea supplier, accounting for almost 20 percent of the global shea supply. The World Bank will provide investments to develop Mali’s shea processing industry into being capable of producing and exporting shea meeting the high standards of international cosmetic industries. The investment will be used to improve shea collectors’ access to markets and the quality of shea nuts through technical training.

Malian authorities and international partners launched a national campaign to regenerate Mali’s shea industry in November 2020, including the planting of approximately 8,400 shea plants. However, conflict and political instability pose serious challenges for Mali and are likely to affect the perception of European buyers who may see Mali as a risky place to do business.

Burkina Faso

A report by LMC International for the Global Shea Alliance stated that Burkina Faso is one of the leading exporters of shea in the region. It exported approximately 47,000 tonnes of shea butter in 2015. As shown in Figure 7, it accounted for about 18 percent of total shea nuts production in 2019.  Burkina Faso has comparatively better infrastructure than countries such as Nigeria. Other advantages include its government developing strategies for the shea sector, for example, strategies helping shea growers export.

However, the supply chain from shea grower to exporter can often be long in Burkina Faso, which can potentially lead to lower profit margins for prospective exporters. Also, the majority of shea growers are part of a collective of growers making it more difficult for independent growers to export their shea butter. Burkina Faso’s vulnerability to climate change is a serious challenge for the country’s shea industry, as it leads to lower quality and more expensive shea nuts and butter.

In response to the COVID-19 pandemic, Burkina Faso has put in place strict measures which have disrupted shea production. This is a new challenge for Burkina Faso’s shea industry. Conflict and political instability are also serious issues affecting Burkina Faso. This affects the perception of European buyers who may view Burkina Faso as a risky place to do business.

Ghana

Exports of shea butter from Ghana are currently valued at US$66 million. A key reason for Ghana’s position and one of the country’s key strengths is that it has comparatively better infrastructure than other countries, such as Nigeria. Ghana hasthe ability to process shea butter, as well as shea derivatives.

International organisations have invested in developing Ghana’s shea industry in recent years, for example, the planting of 20,000 trees in 2020. Among other positive factors, the Ghana Export Promotion Authority plans to double the country’s shea butter exports by 2023. However, according to industry sources, Ghana has a restricted capacity to process large volumes of shea butter. There is also a lot of investment going into the shea sector in Ghana, ranging from shea parklands to processing facilities.

Interviews with European buyers of shea butter have shown that buyers generally perceive Ghana favourably, thanks to excellent customer service, good business skills for good business relationships, good reliability and the ability to provide a good product. The COVID-19 pandemic is a challenge also for the Ghanaian shea butter industry. One European buyer of Ghanaian shea butter interviewed for this report said ‘we have had problems. There are shortages, delays in terms of the delivery. Transportation costs have increased’. The situation has improved, but some logistics channels were still not operating at full capacity at the end of 2021.

Ivory Coast

Ivory Coast is not a significant shea nuts producer, but it accounts for around 10 percent of shea exports according to Figures 7 and 8. There has been some investment going into the development of shea sector in Ivory Coast. The country has also been investing in infrastructure modernisation, improving business climate and governance, as well as strengthening political stability.

When working with producers and exporters of shea butter from Ivory Coast, European buyers have reported language and socio-cultural barriers as challenges. The lack of infrastructure and availability of banks along with vulnerability to climate change are other challenges shea butter producers and exporters in Ivory Coast face.

Benin

Even though Benin is the fourth-largest exporter of shea products according to Figure 8, the shea processing sector is still underdeveloped. A substantial part of shea nuts from Nigeria are re-exported and smuggled through Benin. This is due to relatively higher prices offered in Benin than in Nigeria. Benin shea butter is considered to have a reliable quality standard. Shea nuts from Nigeria and neighbouring countries are further processed in Benin.

The feedback from European traders is positive towards shea products from Benin. The country has good storage and logistics facilities and Beninese ports are capable of transporting large quantities of shea products.

What companies are you competing with?

Many companies are successful in exporting shea butter to the European market. These companies position themselves as being able to deliver high-quality shea butter on the European market in accordance with common European buyer requirements as well as the requirements for niche markets.

A professional website with well-prepared content gives credibility to successful exporters. The company website usually has sections informing prospective buyers about the company itself, how it sources and processes its shea butter, and it offers technical details and certifications it holds, accompanied by professionally taken photographs.

Ghanaian companies

Several well-established companies export shea butter to the European market. Shea Tree Ghana Ltd is one such Ghanaian company. One of Shea Tree Ghana Ltd.’s strengths is that it upholds social responsibility standards, specifically a commitment to protecting the environment and giving back to communities it operates in beyond what may be required by government, association regulators and protection groups.

Nigerian companies

Agriable Limited is a well-established Nigerian company which exports processed shea kernels and shea butter to Europe. A key strength is its commitment to maintaining the highest standards of safety and quality in all it does, with this including the quality and safety of its shea kernels and its collectors. Another key strength of Agriable Limited is that it is expanding its processing capabilities to six Nigerian states to increase its production of shea kernels for global export.

Beninese companies

Karethic Benin is a supplier of shea butter products on the European market. The company has a range of personal care products made of shea butter. The company also sells un-refined shea butter in 1kg, 5 kg and 10 kg sizes. Its shea is ethically produced, organic and fair trade certified which is a sign of quality. 

What products are you competing with?

Shea is frequently used as an emollient in moisturising treatments applied directly to the skin to soothe and hydrate it. Emollients are frequently used to manage dry, itchy or scaly skin conditions such as eczema, psoriasis and ichthyosis along with helping to prevent patches of inflammation and flare-ups of these conditions.

Baobab oil

According to industry sources, baobab oil is a product competing with shea butter because it is also an emollient. However, industry sources suggest baobab oil is not a threat to shea butter because of the greater availability of shea butters. Formulators are also more familiar with shea butter because it has a well-established supply chain and is widely used.

Figure 9: Baobab oil

Source: Marcus Z-pics/ Adobe Stock

Mango butter

According to industry sources, mango butter is another product competing with shea butter because it is also an emollient. However, compared to mango butter, unrefined shea butter has more nutrients, giving it an advantage over mango butter. Mango butter has a slightly lighter feel; however it is harder than shea butter at room temperature thus making it more difficult to use.

Figure 10: Mango butter

Source: svf74/ Adobe Stock

Cocoa butter

Cocoa butter is another product competing with shea butter because it has similar properties in cosmetic products and is solid at room temperature. Shea butter’s advantages over cocoa butter include its lower price and greater marketing potential. Compared to shea butter, there is greater availability of cocoa butter; however a larger share of it is used by the food industry.

Figure 11: Cocoa butter

Source: Africa Studio/ Adobe Stock

4. What are the prices for shea butter on the European market?

The price of shea butter used to be influenced primarily by cocoa butter prices. The volatility in cocoa butter prices has forced confectionary producers to find alternatives. In recent years, the price of shea butter started to follow its own trajectory  as the number of applications of shea butter has increased.

Due to global lockdowns in response to the COVID-19 pandemic, the price of cocoa has dropped by a double-digit rate. Increasing demand for shea butter also influences prices. The market price of shea butter is around USD 2000 (FOB) per metric tonne.

Interviews with European buyers and importers of shea butter suggest that the market price of shea butter has increased since the COVID-19 pandemic because of the disruption caused to supply chains, in particular, increasing transportation costs and delays in receiving orders. Disruptions to supply are expected to continue because of lockdown and quarantine measures introduced during the COVID-19 pandemic.

This study has been carried out on behalf of CBI by Ecovia Intelligence.

Please review our market information disclaimer.