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Japan Set for Recovery

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

page 4 of 4

With forecast sales growth of 12% to 2010, the future is brighter for Japanese cosmetics and toiletries due to the recovering economic climate. However, the market remains mature and highly competitive. Euromonitor International believes that innovation is key to sustaining expansion of the market. As consumer confidence increases, premium products with multiple benefits will fare well, and could take share from mass brands. The aging population will be a boon for manufacturers, as many Japanese are due to reach retirement in the next five years. These consumers will be increasingly keen to pay for products that cater specifically for their needs. Cosmetics and toiletries players cannot rely on this group, however, and must continue strategies of widening their consumer base to include ’tweens, teens and men.

Observation of developments in other mature markets, such as the increased demand for natural products, will enable companies to secure sales. Noevir Co. Ltd.’s research department has found that brown sugar has an antiaging effect and increases cell renewal activity. Following this finding, brown sugar could be the new hit ingredient in cosmetics and toiletries in Japan. Market entry for new players will prove a struggle, as cosmetics and toiletries will continue to be dominated by domestic manufacturers over the forecast period. With deep understanding of local consumer behaviors and long-term experiences in Japan, the current leading manufacturers will keep on performing well. Their strong distribution networks and marketing strategies also are advantages with which foreign manufacturers will find it hard to compete.