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Japan Set for Recovery

By: Briony Davies
Posted: August 7, 2006, from the August 2006 issue of GCI Magazine.

The year 2005 marks a reverse in the slowdown of the second largest cosmetics and toiletries market in the world—Japan. Euromonitor International’s latest view forecasts sales growth of 12% to 2010.

Japan’s total cosmetics and toiletries sales eclipsed $31.7 billion in 2005, reflecting almost 3% growth over the previous year in fixed exchange terms. Per capita spending on cosmetics and toiletries in Japan is among the highest in the world, with the average consumer spending in excess of $250 per year. Although this indicates the significance of Japan in the global market, it also hints at its saturated nature, which is a challenge for industry players. In view of this, achievement of the growth witnessed in 2005 should be heralded as a success. In this feature, Euromonitor pinpoints developments in key sectors and comments on who and what to watch for to sustain growth.

Skin Care is the Savior

Skin care, with sales in excess of $13.5 billion, accounts for more than 40% of Japan’s sales in cosmetics and toiletries. With year-on-year growth averaging almost 4% since 2000, it also is among the fastest moving sectors in the market. Although skin care has been entrenched in the beauty regime of Japanese women for many years—especially the three-step routine of cleansing, toning and moisturizing— manufacturers have employed numerous strategies to eke out growth.

In 2005, manufacturers responded to consumers needs by taking antiaging to the next level. Moving away from traditional concerns of fine lines and wrinkle prevention, both Shu Uemura and Kao took notes when respondents of a survey cited pore enlargement as a result of aging as a major worry. Both companies launched moisturizers to minimize this issue, and then expanded the properties to facial cleansers. Perhaps skin care companies could exploit the demand for antiaging products by introducing home peeling kits that promise professional results at a fraction of the time and cost required to undergo specialist treatment at the salon. These took the South Korean market by storm in 2005, and have potential for success in Japan—especially in terms of capturing the attention of the lucrative over-40 segment with its increased disposable income.

All players across cosmetics and toiletries need to take cultural factors into consideration in Japan. A well-known Japanese proverb states that “a fair complexion makes up seven deficits,” and although the growth of whitening products is starting to stabilize since the boom at the end of the 1990s, there is still a strong demand for whitening properties in skin care. Although body care in Japan is tiny relative to skin care, the launch of body care products that have a whitening function, such as Beiersdorf’s Nivea Body Vital Whitening, could be a key to driving growth.

Crying Out for Color Cosmetics