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Shiseido Establishes India Subsidiary, Targets Middle Income Consumers
Posted: July 19, 2013
Shiseido Co., Ltd. announced it has established a wholly owned subsidiary—Shiseido India Private Limited—in Mumbai, India, as part of its strategy to target the bourgeoning middle-class masstige market, which is forecast to grow significantly in the coming years.
Shiseido’s initial entry into the segment will target the upper masstige bracket with the skin care and makeup brand Za, which is currently offered in 12 markets in the Asia/Oceania region. With optimistic forecasts for long-term growth, the line is expected to bow in April 2014 with plans to be offered in 250 doors by the end of 2014, 650 doors in 2015, and expansion plans in place to reach over 1,700 doors by 2018. The global brand Shiseido has been present in the market since 2001 through a local distributor focusing on the prestige segment and will remain under the stewardship of the company.
With a population of 1.2 billion, India can look forward to further population growth and economic development over the mid- to long-term. According to a study carried out by Shiseido in 2011, it is estimated that the masstige market is eight times larger than the prestige market in which Shiseido currently operates. Therefore, to strategically expand its presence and better serve the profile of the local market, Shiseido established a representative office in Mumbai in 2011, carrying out marketing surveys and research into consumer habits and preferences.
As a result of these insights, Shiseido has decided to continue the current operational structure with Baccarose acting as distributor and operator of the global brand Shiseido and Beauté Prestige International as distributor for fragrances in the prestige segment, while the newly established subsidiary will commence operations toward the masstige segment, which is expected to deliver greater growth.
Designated as one of Shiseido’s global mega-brands, Za is marketed as a comprehensive self-selection skin care and makeup brand. Present in Asian markets since 1997, it launched in Japan in September 2012 and expanded into the Philippines in June 2013 where is it posting positive sales. As stated above, the company will position Za toward the relatively high-priced segment within the masstige market in India.
Products will be imported into the market after being manufactured primarily at Shiseido’s Vietnam factory (in Dong Nai Province) to maximize production and transportation cost efficiency. The Vietnam factory, operational since 2010, produces products mainly for ASEAN and Japanese markets and is slated to undergo expansion this year to raise production levels.
Shiseido aims to become “a global player representing Asia, with its origins in Japan.” The ratio of its overseas sales has reached 44.9% (as of FY2013), bringing the near-term goal of 50% within reach. With the establishment of the Indian subsidiary, Shiseido has commenced direct investment in each of the BRIC (Brazil, Russia, India and China) markets. To pursue its steady growth strategy, the company intends to maintain its active investment not only in established markets but also in emerging markets as well.