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Japan Set for Recovery

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

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Alongside hair care, color cosmetics is the second largest category after skin care. Sales in 2005 picked up by 3.6% to exceed $6 billion, making it the most dynamic in cosmetics and toiletries. Facial makeup comprises more than half of color cosmetics sales in Japan due to the emphasis placed on daily application of foundation/ concealer. The majority of foundations must now contain added value benefits, such as moisturizing or sun protection, to attract consumers. Indeed, this has seen players that are dominant in skin care, such as P&G’s SKII, leverage their knowledge to make the crossover to color cosmetics, and is likely to be a tactic that is employed more frequently in the future.

In order to expand their consumer base, makers of color cosmetics are attracting young consumers by launching products suitable for their delicate skin. Teens and ’tweens could become a lucrative consumer group—fewer children in each family means that grandparents, as well as parents, are likely to lavish them with gifts and pocket money. A tie-in between toy manufacturer Bandai Co. and children’s clothing firm Narumiya International Co. has seen girls as young as 8 targeted with lip glosses, facial powders and cologne. Color cosmetic companies could tap into this segment with specific ranges that would enable them to cement brand loyalty at an early age.

Smaller Sectors Show Promise

Although it is the largest sectors that are exhibiting the fastest growth rates in the Japanese market, smaller categories such as sun care and deodorants offer future potential, with forecast average annual growth rates of 4% and 2% respectively to 2010. Sun protection is registering heightened demand from women seeking to maintain pale skin to comply with the aforementioned trend for whitening. Therefore, sun protection will continue to be the driver of overall sun care sales. Manufacturers looking to drive growth should continue to educate consumers to use products on a daily basis to inhibit blemishes and freckles. Segmenting to meet the needs of different genders is also likely to be successful, as research has illustrated that each sex has different levels of tolerance to the sun.

Similar tactics have been employed in deodorants. Lion Corp., in particular, stands out for its efforts to better understand its target groups. In January 2005, the company launched Men’s Ban Deodorant Spray, designed to eliminate the odor from men that women find offensive, and it will redevelop its Ban Powder Spray (designed to leave a dry feeling on women’s skin) in 2006. In addition to segmenting by gender and age, manufacturers in more niche sectors could tap into trends that are driving product innovation in the more mature sectors. The need for convenience and consumers’ desires for natural products are among these trends.

Fragrances Sales Waning

In 2005, value sales of fragrances declined by almost 6% in current value terms, following more than a 2% decline in 2004. The primary reason being that many fragrances, especially imported products, were sold at discounted prices through department stores, drugstores and discount stores. However, sales are under threat from other sectors. In 2004 and 2005, hot weather conditions raised the demand for deodorants and purity. Japanese are more concerned about keeping themselves odorless in hot conditions, rather than using many fragrances to mask odor. To revive the sector, manufacturers should target teens and ’tweens, whose demand for fragrances is greater than the current supply of products specifically targeted at them.

Tapping into Wider Trends