Corporate Sales: $10 billion

Beauty Sales: $4.5 billion

Major Products/Brands: Prestige and Mass Skincare, Hair Care, Salon Care, and Cosmetics from brands including Bioré, Jergens, MyKirei, Success, Kao Sekken White, Blauné, Cape, Essential, Guhl, John Frieda, Liese, Melt, Merit, Rerise, Segreta, Success, Goldwell, KMS, Oribe, Curél, Est, Freeplus, Kanebo, Kate, Molton Brown, RMK, Sensai, Sofina iP, Suqqu, Unlics.

New Products:

• Ban Body
• Bioré Guard Mos Block serum
• Biore UV Aqua Rich moisturizer
• Bondi Sands
• Designing Eyebrow 3D
• John Frieda Ultra Filler+ Thickening Spray
• KMS Consciousstyle Beach Style Cream
• Molton Brown Wild Mint & Lavadin
• Re/Cover Eczema Relief System

Comments: Kao experienced a total, company-wide corporate sales dip of just 1.2% in 2023. The company’s Health & Beauty business unit posted sales of $2.7 billion (+6.3%) though sales in its Cosmetics unit dipped 5% to $1.7 billion. Regionally, Japan represented 64.6% of 2023 sales; followed by Asia (excluding Japan), 18.4%; the Americas, 10.4% and EMEA, 6.6%.

In the Health & Beauty Care business, sales of skincare products increased, as mobility (specifically in Japan) helped boost the sales or UV care products, seasonal products, and a new makeup remover from Biore. Sales in the Americas also increased.

Hair care product sales also increased thanks to the performance of the products under the new and improved Essential brand, as well as the new Cape hair spray brand. Sales of Oribe brand products in high-end hair salons in the U.S. were strong, particularly through e-commerce.

Cosmetics sales decreased in Japan, although core net sales increased thanks to sales of brands like Kanebo prestige skincare and makeup and Kate makeup brands, which remained strong. Cosmetic sales also decreased in China. Despite a weak market in Europe, sales there increased due to steady performance by new products from Molton Brown and the successful renewal of promotions for new and existing products from the Sensai brand.

2023-2024 Highlights:

In November 2023, Kao completed its acquisition of Bondi Sands Australia Pty Ltd. and made it a consolidated subsidiary.

The following month, Kao announced a partnership with SCG Chemicals and Dow Thailand Group to develop packaging designed for recyclability. The partnership aims to provide consumers with more sustainable packaging options, with a focus on high-quality packaging that has a lower carbon footprint and is recyclable. Kao plans to use the new, sustainable packaging across a wide range of its product portfolio in Thailand in the near future.

Also in December 2023, Kao launched Molton Brown, its British luxury fragrance brand, in the Malaysia market, opening a Molton Brown flagship store in partnership with Valiram, Southeast Asia’s leading luxury and lifestyle group, in the Exchange TRX Mall, an upscale shopping center located in Kuala Lumpur’s international financial district. Following the expansion into Malaysia, Molton Brown plans to move into B-to-C businesses in Singapore, Thailand, and Hong Kong in 2024, and then to debut in Indonesia and Macau. The brand aims to position itself for further globalization by strengthening its business in Asia.

In July 2024, Kao announced it had reviewed the market from a global perspective and would initiate a reorganization of its three existing brand groups into newly established three newly titled groups: Global Leading Business Group, Prestige Business Group, and Masstige Business Group. The reorg, it said, was to cultivate a strong brand that can demonstrate its presence on a global scale.

Looking Ahead:

In Q1 2024, corporate sales rose nearly 5.2% with Health & Beauty care sales increasing 9.1% and Cosmetics sales climbing 5.4%. For the full year, company executives expect corporate sales to grow 3.1% to $9.8 billion at current exchange rates.

Kao also expressed its aim to achieve plastic packaging net zero waste by 2040 and negative waste by 2050 for plastic containers used and discharged in its business activities to realize “resource circularity in society.” They’ll do this by first reducing the plastic packaging used in its business activities as much as possible and then by “recycling plastic waste generated in society to create useful products and services.”

Corporate Sales: $11.8 billion
Beauty Sales: $4.7 billion

Major Products/Brands: Bioré, Jergens, MyKirei, Success, Kao Sekken White, Asience, Blauné, Cape, Essential, Guhl, John Frieda, Liese, Merit, MyKirei, Rerise, Segreta, Goldwell, kms, Oribe, ClearClean, DeepClean, PureOra, athletia, est, Kenebo, Molton Brown, RMK, Sensai, Suqqu, Curél, Freeplus, KATE, Sofina iP, Unlics.

New Products: Bioré Nose Pack Sheet, Blaune Foam Hair Color, Curél skincare range, Space Shampoo Sheet, Jergens Natural Glow Tanning Moisturizers, MyKirei Onsen Therapy wellness collection, Oribe Body Wash & Créme Liter Refills, Oribe Bar Soap Collection, Unlics Impress Color Wear.

Financial Summary:

The Kao Group’s key markets—the household and personal care products market and the cosmetics market—grew compared with the previous fiscal year, although the cosmetics market has not recovered to the pre-pandemic level of 2019.

Amid these circumstances, the Kao Group’s net sales increased 9.3% compared with the previous fiscal year to $11.8 billion. On a like-for-like basis, net sales increased 3.7%. The shares of net sales in FY2022 by business segment were 33.3% for Hygiene and Living Care, 23.8% for Health and Beauty Care, 3.6% for Life Care, 16.2% for Cosmetics and 23.1% for Chemical.

Since it was launched in 2021, Kao’s vision of “protecting future lives” and “sustainability as the only path” as outlined in its Midterm Plan 2025 (K25) has guided and accelerated its commitment to ESG management. K25 is designed to achieve two strategic objectives: first, to focus on Kao’s current business and implement structural reforms through “Reborn Kao” initiatives, and second, to establish new business fields and categories that align with Kao’s future strategy, referred to as “Another Kao” initiatives. What unites this parallel approach is a focus on unique, state-of-the-art technology to drive global expansion. Kao says it is committed to fostering growth in both approaches to achieve its vision.

In the past two years, through Reborn Kao and Another Kao, the company has built the foundation for globalization. It has appointed three executive officers in AEMEA (the Americas, Europe, the Middle East and Africa) and developed a structure for local business execution. Furthermore, the company claims it is ready for the expansion of its business in Brazil.

2022/2023 Highlights:

In December 2022, Kao launched Unlics, a cosmetic brand for Gen Z men. Two products were released: Unlics Impress Color Wear, a clarifying makeup base, and Unlics Aqua Hug Water, a lotion. By launching a cosmetic brand that nourishes the aspiration for beauty in Gen Z men, Kao aims to realize “a society where everyone can seek and express beauty freely, regardless of gender.”

In March 2023, operations began at Kao’s newly-constructed next-gen warehouse capable of full automation. The Toyohashi Plant, which produces a wide variety of products, mainly skincare and hair care products, will be able to flexibly handle high-mix low-volume products, and Kao aims to build a sustainable supply chain with the Toyohashi Connected Flexible Factory, an integrated base for production and logistics that links efficient high-mix low-volume manufacturing with highly flexible distribution functions.

In April 2023, Kao launched a new dry shampoo called Space Shampoo Sheet. A light massage of the contoured sheet over the hair removes excess sebum and refreshes the scalp. The same sheets were used by Japan’s veteran astronaut Koichi Wakata when he lived on the International Space Station (ISS) on a five-month mission from October 6, 2022 to March 12, 2023.

In May 2023, Kao developed a product making partial use of recycled materials to produce the same type of packaging by recycling used refill packs, later used for Kao’s Attack ZERO. Kao says it is one of the first companies to use film-to-film recycling technology to transform used refill packs collected from the public and other sources into new refill packs.

Also in May, Kao released progress reports on its ESG (Environmental, Social, and Governance) strategy—the Kirei Lifestyle Plan.

In June 2023, Kao created a new Diversity, Equity and Inclusion Policy. Kao’s corporate philosophy, the Kao Way, upholds “walking the right path” (integrity) as one of its core values. Based on this idea, the company has been striving to protect human rights and honor the diversity of employees across all its business activities. Targets include a ratio of women in management equal to the ratio of women in the organization overall by 2030.

In August 2022, Kao and its wholly owned subsidiaries Kao Australia Pty. Limited and Kao USA Inc., signed an agreement to acquire the Bondi Sands brands via the acquisition of Bondi Sands, a renowned Australian sun product company that specializes in self-tanning, suncare, skincare and body products.

Looking Ahead:

Kao’s net sales for the six months ended June 30, 2023 increased 0.6% year-over-year to $5.1 billion. Although the world has been returning to conditions prior to the Covid-19 pandemic, the business environment remained unclear due to geopolitical risk in Europe, a slowdown in the previously growing market of China, and persisting high costs due to inflation. Sales of skincare products increased while sales of hair care were basically unchanged and sales of cosmetics decreased 0.2%.

Corporate Sales: $12 billion
Beauty Sales: $5 billion

Major Products/Brands: athletia, Curél, est, freeplus, Kanebo, Kate, Molton Brown, RMK, Sensai, Sofina iP, Suqqu, and and, Asience, Bioré, Blauné, Cape, Essential, Guhl, Jergens, John Frieda, Kao Sekken White, Liese, Merit, My Kirei, Rerise, Segreta, Success, Goldwell, kms, Oribe.

New Products: Bioré Guard Mos Block Serum, Sensai Absolute Silk Illuminative Cream, Allie Chrono Beauty Line, Goldwell Rainbow Dye, Sensai Contouring Lipstick.

Financial Summary:

In fiscal 2021, Covid-19 continued to have a major impact on society, economies and people’s lives worldwide. As a result, Kao Group’s operations were impacted by significantly delayed market recovery, particularly in Japan, where inbound demand disappeared and a state of emergency was repeatedly declared, among other factors. In Kao’s key markets, the household and personal care markets remained on par with the previous fiscal year. The cosmetics market also remained on par with the previous fiscal year, but has not recovered to its pre-pandemic level.

Amid these circumstances, the Kao Group’s net sales increased 2.7% compared with the previous fiscal year to $12 billion. On a like-for-like basis, net sales increased 0.3%. The shares of net sales in FY2021 by business segment were 35.0% for Hygiene and Living Care, 25.0% for Health and Beauty Care, 3.7% for Life Care, 16.9% for Cosmetics and 19.4% for Chemical.

In fiscal 2021, the group kicked off K25, the new Kao Group Mid-term Plan. The strategic approach of K25 consists of three goals with a focus on the year 2030: 1. Become an essential company in a sustainable world; 2. Transform and build robust business through investment; 3. Maximize the power and potential of employees. As a part of K25, Kao says it will take its promotion of ESG-driven management a step further, striving to make both a positive contribution to society and achieve financial growth.

Also, since last year, Kao has been implementing dual-track reforms using the concepts of Reborn Kao, which aims to revitalize existing business, and Another Kao, which aims to create future-focused new business. Reborn Kao is about reinforcing the company’s current business with dynamic investments and fortifying its brand strategy, while Another Kao focuses on themes that Kao has not done, or has not been able to do, in the past. In order to deliver the dual-track approach, Kao has reset its innovation agenda and mobilized the team to ensure new business investments are highly leveraged against its current business competencies, capabilities and technologies.

2021/2022 Highlights:

In October 2021, Kao joined forces with another leading Japanese beauty company—Kosé Corporation—with the aim of realizing a sustainable society. Together, both parties will pool their strengths to collaborate in a wide range of fields, including people, society, and the environment, to identify solutions in the cosmetics business that can contribute to the realization of a sustainable society. Planned initiatives range from jointly promoting resource circulation and upcycle measures, to jointly deploying awareness-raising activities relating to skincare and UV care.

As a first step, Kao and Kosé have initiated a collaboration between Kao’s Horizontal Recycling of Cosmetic Plastic Bottles and Kosé’s cooperative venture, Recycling Cosmetics into Paints Initiative. Going forward, both companies that have been respectively promoting these initiatives will work together to promote and develop them while making use of each other’s knowledge.

In November 2021, the Japan Aerospace Exploration Agency (JAXA) selected Kao’s proposal for a 3D Space Shampoo for wiping away dirt and sebum from the scalp and hair. The unique hair care product will be used onboard the International Space Station (ISS) starting around 2022.

In December 2021, international nonprofit organization, CDP, included Kao Corporation in its prestigious ‘A List’ across three categories for the second year in a row. Kao received the highest triple-A score for its sustainability initiatives involving climate change, forests and water security.

In January 2022, Kao implemented field testing aimed at recycling used cosmetic bottles that have been collected, and transforming them back into new bottles. The goal of the project is to achieve material recycling of cosmetic bottles that are made from plastic, and to eventually realize plastic circularity in society. Used cosmetic bottles were collected at select retail outlets and used for field testing of material recycling to turn used cosmetic bottles into new cosmetic bottles, utilizing the BRING Technology chemical recycling technology of Jeplan Inc.

In February 2022, Kao announced that it would be eliminating the use of eye-catching plastic stickers on its product packaging, in order to reduce the amount of plastic it uses. Instead, the company will make the design of the packaging itself and presentation of information that is printed directly on it more eye-catching. In the case of products that require stickers to inform consumers of correct usage, Kao will switch to using eco-friendly materials such as FSC-certified paper instead of plastic.

Also in February, Kao announced it was considering divesting or discontinuing 13 more cosmetic brands by 2024. Shedding the 13 as-yet-unnamed brands will allow Kao to allocate investment toward growth-driver brands and regional strategy brands, said the Tokyo-headquartered company. In total, 28 brands had been scheduled by Kao for discontinuation with 15 having already been axed.

In March 2022, the Kao Group joined the global call for support in Ukraine and made a donation of €500,000 ($502,000) to UNHCR, the UN Refugee Agency for humanitarian assistance to those affected in Ukraine and neighboring countries. Kao also promised to donate Kao products such as disposable baby diapers, personal hygiene and sanitary products through Japanese industrial associations and other organizations to help people in Ukraine and in evacuation centers. With regard to business, Kao suspended export sales to Russia and advertising activities in Russia.

In July 2022, Kao began incorporating the use of chemically recycled PET material manufactured by PET Refine Technology Co., Ltd., a group company of JEPLAN Inc., using the chemical recycling technology maintained by JEPLAN. Through this initiative, Kao will reduce the amount of virgin plastic used in the makeup category of the Kao cosmetics business, promote sustainable manufacturing, and further promote efforts to realize horizontal recycling of plastic cosmetic containers.

In August 2022, Kao signed The Climate Pledge, a commitment co-founded by online retailer Amazon and environmental advocacy group Global Optimism. As a signatory of The Climate Pledge, Kao agrees to measure and report greenhouse gas emissions on a regular basis, implement decarbonization strategies in line with the Paris Agreement and take action to neutralize any remaining emissions with additional, quantifiable, real, permanent, and socially beneficial offsets to achieve net-zero annual carbon emissions by 2040 – 10 years ahead of the Paris Agreement on climate change.

Looking Ahead

Kao’s net sales for the six months ended June 30, 2022 increased 8.7% year-over-year to $5.4 billion. Amid factors including hikes in raw material prices and rapid exchange rate fluctuations, as well as the Russia-Ukraine crisis and the spread of variants of Covid-19, sales of skincare and hair care products decreased while cosmetic sales growth was 4.9%. This was driven by new product launches from global beauty businesses such as G11, the prestige skincare and make-up brand SUQQU and makeup company Kate.

Corporate Sales: $13.4 billion
Beauty Sales: $5.2 billion

Major Products/Brands: athletia, Curél, est, freeplus, Kanebo, Kate, Molton Brown, RMK, Sensai, Sofina iP, Suqqu, and and, Asience, Bioré, Blauné, Cape, Essential, Guhl, Jergens, John Frieda, Kao Sekken White, Liese, Merit, My Kirei, Rerise, Segreta, Success, Goldwell, kms, Oribe

New Products: Oribe Signature Hair Care Line, Sofina iP Interlink Serum Pore Refining Moisture, Smile Performer Sheet Mask, Wakati Hair Care

Comments: In Kao Group’s key markets in 2020, the domestic cosmetics market shrank significantly from the previous year due to a substantial decline in inbound demand and people’s voluntary restraint in going outside. On the other hand, the household and personal care products market grew because of an increase in demand for hygiene-related products, among other factors.

Outside Japan, the Kao Group was affected by mandated temporary store closures and restrictions on going outside all over the world except China, and also incurred extra expenses to respond to the pandemic, resulting in an overall decrease in consolidated financial results compared with the previous fiscal year.

Amid these circumstances, net sales decreased 8% compared with the previous fiscal year to $13.4 billion. On a like-for-like basis, net sales decreased 5.2% in every product category, but the share of the e-commerce channel increased further.

In April 2020, Kao USA Inc unveiled MyKirei by Kao. The brand’s innovations include vegan-friendly, plant-based formulas that are 95% biodegradable and eco-friendly delivery systems. But the biggest leap forward was the bottle—the packaging uses up to 50% less plastic than traditional bottles, addressing the global reliance on plastic.

Toward the end of the year, Kao announced two key leadership changes, with Michitaka Sawada being promoted to director, chair, and Yoshihiro Hasebe to representative director, president and CEO. Prior to this appointment, Hasebe was senior managing executive officer.

2020 was also the final year of the Kao Group Mid-term Plan “K20,” under which the group set and aimed to achieve three goals: fostering a distinctive corporate image, profitable growth, and returns to stakeholders. By making a major shift toward ESG-driven management and further strengthening its initiatives, the group says it succeeded in improving its image globally as a company that is contributing toward the realization of a sustainable society. At the same time, it has committed to delivering returns to stakeholders, achieving objectives such as continuing to increase cash dividends to shareholders. Despite these accomplishments, the group was unable to fulfill its commitment to profitable growth.

After wrapping up K20, the group initiated the Kao Group Mid-term Plan 2025 “K25,” covering the next five years from 2021 to 2025. To this end, Kao formulated three new policies focused on the Sustainable Development Goals adopted as international targets for global action to create a better world by 2030: becoming an essential company in a sustainable world, transforming to build robust business through investment, and maximizing the power and potential of employees.

As a part of K25, Kao says it will take its promotion of ESG-driven management a step further, striving to make both a positive contribution to society and achieve financial growth.

2021 Highlights

Expectations for vaccines grew at the start of 2021, but conditions in the global economy remained unclear. As a result of delays in the recovery of consumption, Kao Corporation reported net sales of $2.92 billion for the first quarter of 2021, a decline of 5.1% compared to the first quarter of the previous year.

In February 2021, Kao Corporation merged Sofina Beauty Counseling Co. Ltd. and Kanebo Beauty Counseling Co. Ltd. to establish a new business unit called Kao Beauty Brands Counseling Co. Ltd. The new company will develop synergies within the group by stepping up the productivity of its beauty consultants and the appropriate allocation of personnel.

Kao also launched Wakati, a new product line designed for natural hair textures—a first for the company. Wakati was developed to answer one question, “Why are there not more effective hair care formulas specifically designed for natural, Black hair?”  The product line includes a conditioner, shampoo, oil-infused cream and conditioning mist.

In March, Kao eliminated words such as “whitening” and “lightening” from its products, citing concerns surrounding racial inequality as highlighted by the Black Lives Matter movement. Kao said it didn’t want to send out the message that one skin tone is inferior or superior to another, and decided to drop the wording as a part of its commitment to promoting diversity.

In May, the Kao Group set new sustainability goals—and a target to reduce its carbon dioxide (CO2) emissions to zero by 2040. Furthermore, by 2050, the company plans to be carbon-negative.

The group also signed the “Business Ambition for 1.5°C” initiative, a corporate pledge for businesses to set science-based targets aligned with limiting global temperature rise to 1.5°C instead of 2.0°C. In addition, Kao is aiming to join RE100, an international program which brings together hundreds of large businesses committed to 100% renewable electricity.

Corporate Sales: $13.8 billion
Beauty Sales: $5.9 billion

Major Products/Brands:

• Athletia, Curél, Est
• Freeplus, Kanebo, Kate
• Molton Brown, Sensai, Sofina iP
• And And, Asience, Bioré
• Blauné, Jergens, John Frieda
• Kao Sekken White, Liese, Merit
• MyKirei, Rerise, Segreta Success
• Goldwell, KMS, Oribe

New Products:

• Curél Deep Moisture Spray
• MyKirei by Kao (U.S.)
• Sol by Jergens

Comments: A minor 1% slip in Kao’s 2019 corporate sales largely attributed to its chemical business was overshadowed by an 8% climb in cosmetics sales fueled by strong activity in Asia and on-track growth in Japan. Kao Group’s eleven “G11” global strategy brands (which include Curél and freeplus) and its eight “R8” regional brands performed well, and the company strengthened its high-prestige range with the rebranding of its super prestige Sensai brand for the European market. It also offered the est G.P. line of skin care cosmetics and products that apply Fine Fiber Technology for the formation of layered ultra-thin membranes.

Combined sales in Kao’s Skin Care and Hair Care units decreased a nominal 0.2% compared to 2019. Sales of skin care products increased. Bioré u The Body helped boost sales and market share in Japan. Hair care product sales were flat, save for strong sales turned in by hair color products in Japan, and for the Oribe hair salon brand in the Americas. Kao also launched new and improved premium priced shampoos, conditioners and related products in Japan and Europe. However, Kao pointed to overall sales of hair care products being affected by the shrinking mass market.

On the new product front, Kao utilized its partnership with Panasonic to launch a small Fine Fiber Technology diffuser to be used with est and Sensai brand skin care routine products to disburse an ultra-thin membrane of essence product on the face at nighttime, which is then peeled off the following morning.

In October 2019, Kao launched the Curél face care range in the UK and U.S. with the goal of growing the brand and strengthening its position in both Japan and overseas by extending Curél’s technologies for the care of dry, sensitive skin.

2020 Highlights

Like most companies, Kao felt the crunch from Covid. While some skin care products did well (Bioré hand soap and hand sanitizer specifically), overall skin and hair sales dropped 8.1%. Cosmetics fared worse, falling 12.1% year-on -year.

Undeterred, in April, Kao USA Inc. launched MyKirei by Kao, a personal care collection rooted in the Japanese aesthetic honoring simplicity, beauty and cleanliness. The launch set in motion Kao’s Kirei Lifestyle Plan, which pledges to lead global change and better serve the environment. With global challenges—like climate change, aging societies, resource scarcity, and plastic waste in the ocean in mind—MyKirei is comprised of vegan-friendly, plant-based formulas that are 95% biodegradable. The packaging for the Nourishing Shampoo, Conditioner and Hand Wash uses up to 50% less plastic and features eco-friendly delivery systems and unique, watertight bottles that gain rigidity through an air fill that allows them to stand upright like a traditional bottle. The design, according to Kao, prevents contamination and allows consumers to evacuate nearly every drop of product from the bottle.

In September, Kanebo Cosmetics released a dual-phase oil serum from Sensai, its super prestige brand. The Sensai “Expert Items” represent a new category of optional care products.

As of January 2021, Michitaka Sawada, president and chief executive officer, will be replaced by Yoshihiro Hasebe, currently one of two senior managing executive officers. Moving forward, Sawada will serve as director, chair.

Corporate Sales: $14 billion
Beauty Sales: $5.7 billion

Major Products:
Cosmetics, Skincare, Hair Care and Personal Care sold under brands including:

• Sofina iP, RMK, Suqqu
• Primavista, Coffret D’Or, Kate
• Molton Brown, Sensai, est
• Kanebo, Curél, freeplus
• Bioré, Jergens, Merit
• Essential, Liese, Carpe
• Rerise, John Freida, Success
• Goldwell, Oribe

New Products:

• Rerise
• Bioré UV Aqua Rich
• Bioré UV Athlizm
• Bioré Baking Soda + Agave collection
• Oribe Gold Lust Power Drops

Comments: In 2018, Kao marked nine consecutive years of fiscal profitability, posting a corporate sales gain of 1.2% and overall consumer product sales increased 1.4%.

CEO Michitaka Sawada described Kao’s cosmetics business as “struggling” but “recovering” in his CEO address. To help grow that segment of its business, Kao restructured the unit into a New Global Portfolio built upon 11 high-end global brands (“G11”) and eight regional brands (“R8”). Specifically, the G11 pillar will focus on Kanebo Cosmetics to help globalize the Sensai brand that’s prominently marketed in Europe and will also accelerate the growth of prestige brands est, Kanebo, RMK and Suqqu. The company also hopes to accelerate the global expansion of the three mass brands Curél, freeplus and Kate beyond Japan and China, where they already do well.

Kao worked hard to revitalize the segment and in 2018, realized a 5% increase in profits to $2.6 billion. In the Americas and Europe, Jergens was a top performer but sales were offset by competitors launching a flurry of products similar to Bioré pore cleansers. Activity in the China market was boosted with the launch of Sofina iP Base Essence in September. The product uses carbon dioxide gas propellant to transform the beauty essence into a creamy foam meant to be used directly after facial cleansing. In addition, Kao introduced the Sofina line to Singapore in April 2018.

Kao’s skincare and hair care sales increased 2.6% to $3.1 billion. The John Frieda hair care brand stood up to intense market competition in Europe, however the U.S. business was strengthened with the January acquisition of the Oribe prestige hair care brand, and performance in Japan was led by the launch of Rerise, an innovative new product range for gray hair care. In September, Kao released three new Jergens Brilliance lotions in the Japan market. The brand is already sold in 41 countries and regions including the U.S.

In October 2018 the company released “Our Philosophy & Action on Plastic Packaging,” defining its current approach and future activities regarding responsible plastic use and disposal to reduce its environmental impact.

News of Note in 2019

In April, Kao announced a new global Environmental, Social and Governance strategy (ESG) called the Kirei Lifesyle Plan to address sustainable consumer lifestyle changes in the face of global challenges like climate change, aging societies, resource scarcity and the management of materials such as plastics. The Japanese word “kirei” describes something that is clean, well-ordered and beautiful, all at the same time. For Kao, this concept of Kirei not only describes appearance, but also attitude, which the company said it would translate into seeking to create beauty for oneself, and also for other people and the surrounding natural world.

Fiscally speaking, the first six months of 2019 were a mixed bag for Kao. Net sales dipped 1% compared to the same period last year. However, on a like-for-like basis, net sales decreased just 0.2%. Sales in the company’s cosmetic business were strong, posting a 9.3% net sales increase, while skincare and hair care sales dipped 1.3%.

In September, Kao Corporation was named to the 2019 Dow Jones Sustainability World Index for the sixth year in a row.

Corporate Sales: $13.3 billion
Beauty Sales: $5.2 billion (FY 2017 Beauty Sales: $5.3 billion)

Major Products/Brands:

• Sofina, Kanebo, Molton Brown, Bioré,
• Jergens, Asience, John Frieda,
• Goldwell, and Oribe

New Products:

• Sofina iP base essence
• Est the Lotion
• Oribe Dry Texturizing Spray
• Molton Brown Fiery Pink Pepper Eau de Toilette

Kao Reports Sales & Commits To An Eco-Conscious Packaging

The penchant for Asian skincare and beauty products in the Americas and Europe–especially those featuring natural ingredients—is a momentum Kao is hoping to capitalize on. Already boasting a No. 1 share in North America with its Jergens brand lotions, Kao has its eye on positioning its Biore and John Frieda brands similarly. The company’s global haircare presence was significantly bolstered with the acquisition of Oribe Hair Care brand in late 2017, which Kao plans to grow by expanding the brand’s availability outside of the 40 international market distribution channels it’s currently sold in.

Fiscally speaking, Kao’s consumer product sales slipped 2.1%, however the company’s overall sales increased 2.6%. Sales gains were made in China and Indonesia, and Asia ranked as the company’s most profitable region with sales posting gains of 7.1% over the previous year. In the Americas, sales jumped 5.5%, but European sales dipped -1.5%.

Kao’s beauty care business sales dipped 2.6%; however operating incomes climbed 6.5 billion yen, and the operating margin grew 1.3%. The company said sales of its cosmetics declined 4.8% year on year but were up 2.1% on a like-for-like basis. Outside of Japan, sales were solid in Asia but decreased slightly in Japan. The company pointed to beauty bright spots such as the successful rollouts of Sofina iP in Asia, Kanebo in Japan, Asia and Europe, and the boost to its prestige brands Suqqu and Est The Lotion added in Japanese store sales channels.

On the packaging front, Kao doubled down on its commitment to environmentally-conscious packaging with the development of Raku-Raku Eco Pack Refill. The new film package is the culmination of four years of R&D and resembles a bottle but features a gusseted top and bottom plus a cap for easy pouring into the package that’s being refilled.  According to Kao, the package uses about half of the plastic of conventional refill products.

Last year the company also developed Smart Holder, which elevates the Raku-Raku Eco Pack Refill to a primary package. The refill is simply popped into the Smart Holder and the cap is swapped out with a pump for easy dispensing. The developments, according to Kao, are examples of how the company plans to innovate while reducing its environmental impact, with the goal of ultimately developing products and technologies with zero environmental impact.

News of Note in 2018

E-commerce and tourism sales in Japan positively jumpstarted first quarter 2018 sales. The company’s total net sales climbed 1.6%.

Looking Ahead

With Kao’s K20 Mid-Term Growth Strategy (for 2017-2020) chugging along promisingly, the company implemented a long-term plan for 2030, with goals including sales of ¥2.5 trillion (with ¥1.0 trillion coming from outside Japan), plus a 17% operating margin and a 20% return on investments. For the beauty and skin/haircare segments, the company forecasted 2018 net cosmetic sales to grow 2.3% to ¥273.8 billion, and 7.1% to ¥356.2 billion, respectively.

Corporate Sales: $12.8 billion
Beauty Sales: $5.3 billion

Major Products/Brands: Sofina, Kanebo, RMK, Molton Brown, Bioré, Jergens, Asience, John Frieda, Goldwell, Essential, Liese.

New Products: Sofina Deep Shiny Eyes, Sofina Smooth Color Rouge, Molton Brown Black Peppercorn body wash, Molton Brown Bursting Caju & Lime Bath & Shower Gel, Kanebo-Sensai Cellular Performance Emulsion II-Moist.

Comments: In-store beauty counseling and merchandising is a priority for Kao, which has plans to expand its services in department stores, as well as continue to grow its business outside of Japan. For the year, Kao reached $5.3 billion in beauty sales (41.3% of net sales). Personal Care increased 1% year on year, while Cosmetics remained flat.

Michitaka Sawada, president and chief executive officer, says the cosmetics industry remains “a challenge.” He said Sofina and Kanebo—the company’s two main beauty brands—face stiff competition from others entering the market. Thus, branding is critical, says Sawada.

With a mission to bring positive changes to everyday life and make a “significant impact on the global environment,” Kao says it strives to always innovate to improve products and packaging. One advance in 2016: the Raku-raku eco-pack refill that makes it easier for all consumers, from children to the elderly, to easily refill containers of shampoo and conditioner, as well as other liquids. Last fall, Kao established a new beauty research and innovation center focusing on Sofina and Kanebo.

Now in the midst of its mid-term plan, the company continues to refine its goals. By 2030, as it continues in its aims to establish a global presence, it plans to also establish a distinct corporate image—and achieve sales of 2.5 trillion yen (approximately $23 billion at current rates), including 1 trillion yen from outside of Japan. In building its business in China, Kao continues to focus on products designed with “area innovation,” such as products that appeal to Millennials and those with long-lasting properties to address the hot and humid climate.

Sales of skin care products and Molton Brown were strong in The Americas and in Europe.

2017 News of Note

In June, Kao announced that it would reorganize its domestic sales subsidiaries relating to the Consumer Products business, a move that includes two companies specializing in in-store beauty counseling. Both are planned for operation by January 2018. Kao and Kanebo companies will be combined.

Kao Corporation took Sofina iP, its new brand released in Japan in 2015 and the basic skincare line of Sofina beauté, completely updated in 2016, to Taiwan and Hong Kong for a series of launches in March 2017. A section at the Sofina counter of the Uni-President Department Store Taipei, was installed to offer customers fine-tuned counseling (personalized skincare advice etc.) based on the most advanced skin-analysis technology. Kao says it will also continue to reform Sofina overseas, following efforts in Taiwan and Hong Kong.

Corporate Sales: $12 billion
Beauty Sales: $5 billion

Major Products/Brands: Ban, Bioré, Curel, Goldwell, Jergens, John Frieda, Kanebo, Molton Brown

New Products: Molton Brown Vintage 2015 Elderflower Collection, Biore Deep Pore Charcoal Cleanser, John Frieda Brilliant Brunette Luminous Color Glaze, Jergen’s Wet Skin Moisturizer.

Comments: Kao’s 2015 net sales experienced a 5% growth over 2014. Likewise, the company’s beauty care business also enjoyed a 3% boost, with consolidated net sales growing from $4.8 billion in 2014 to $5 billion in 2015.

In the company’s key regions of Japan, Asia and the Americas, the Biore skin care line helped drive sales. In Europe, the sales of hair care products and professional hair care products helped boost the bottom line.

In November, Kao debuted a new prestige cosmetics brand, Sofina iP in its Ginza, Tokyo flagship store and later rolled it out in department stores across Japan in 2016. The two-product line takes an internal and external approach to beauty, combining Sofina Bare Essence, a foam with carbonic acid for the skin, with Sofina Drink, which is formulated with chlorogenic acid, a plant polyphenol, and other ingredients that the company says activate “the ability to regain beauty often reduced by fatigue and stress.”

In the U.S., the company launched Jergen’s for Wet Skin Moisturizer in July, an in-shower moisturizer that promises twice the moisture in half the time.

News of Note in 2016

In 2009, Kao publicly affirmed its commitment to improve its overall sustainability efforts and this June, the company took another step in the eco-conscious direction, becoming the first company in Japan to use corrugated cartons accredited by the Forest Stewardship Council (FSC). Described as the first trial of its kind in Japan, Kao began procurement of the cartons in March 2016, and by the end of 2016, approximately 50% of the company’s corrugated cartons will be FSC-certified.

Kao also established the Sustainable Paper and Pulp Procurement Guidelines, under which it pledged to commit zero deforestation for its paper and pulp procurement. The following goals of these guidelines are expected to be in full compliance by 2020: Kao will purchase only recycled paper or sustainably sourced paper and pulp for use in its consumer products, packaging and office paper; when Kao uses virgin pulp, Kao commits to zero deforestation at the source of wood fiber for raw materials; Kao will purchase only pulp for raw materials that is traceable to the source.

Looking Ahead

The company’s own projections for 2016 include self-issued challenges to revitalize the market by adding greater value to its products, as well as “assessing changes in consumer attitudes toward beauty and lifestyle habits.” This work, it said, includes launching “distinctive” new products promoted with reformed marketing activities and sales activities. For example, the company said it would launch new refill options for shampoos and conditioners that were not only easy-to-use but also more environmentally conscious.

Corporate Sales: $11.7 billion
Beauty Sales: $5 billion

Major Products/Brands: Sofina, Kanebo, Molton Brown, Lissage, Essential, Bioré, Jergens, Asience, John Frieda, Goldwell.

New Products: Sofina iP, Kanebo Cosmetics Lissage Men, Bioré Deep Pore Charcoal Cleansing Strips, Goldwell Soft Color, Molton Brown Black Peppercorn Body Wash.

Comments: Kao maintains its goal of becoming a global presence, and so far, can claim a large domestic market share in Japan. The company strongly invests in R&D, in the pursuit of creating meaningful products—and solving social issues. Research expenditures in 2014 went beyond $185 million.

Total net sales for the Japanese manufacturer, whose Beauty business includes prestige cosmetics and premium skin care and hair care products, reached $11.7 billion for 2014, for a 25th consecutive period of increase. Beauty Care, which accounts for about 42% of the company’s business, reached $5 billion, compared to $5.4 billion in the previous year (with devaluation taken into account).

Michitaka Sawada, president and chief executive officer, said he felt they had made great strides in 2014, achieving numerous targets and making structural changes that will provide a sustainable growth model. He said they are working to bring the beauty segment to a phase of profitable growth, especially with its core Kanebo and Sofina brands.

News of Note

With an eye on the potential of the Men’s market, earlier this year, Kanebo Cosmetics introduced Lissage Men, the company’s first prestige men’s skin care line in the domestic Japanese market. The initial release featured a moisturizing beauty essence and a foaming soap that doubles as shaving cream, items that Kanebo said “are particularly well suited for men who have not engaged in skin care before.” The bottle design and the fragrance were created with female customers in mind as well, “as they often purchase products for the men in their lives.”

In August, Kao announced the November launch of a new prestige cosmetics brand with an inside-out approach. Sofina iP is described as appealing to women in the “quest for long-lasting beauty.” The brand consists of two items—Sofina base essence, an essence with high-concentration carbonated foam for use as a skin care base after facial cleansing, and Sofina drink, a beauty drink formulated with high-purity chlorogenic acid.

Kao has received top marks for economic initiatives including producing high-value-added products and supply chain management, environmental initiatives such as reducing its environmental impact through Life Cycle Assessment and package development based on the 4Rs (Reduce, Renewable, Reuse, and Recycle), and social initiatives such as human capital development and corporate citizenship activities.

Corporate Sales: $12.5 billion
Beauty Sales: $5.4 billion

Major Products: Cosmetics, skincare, facial and body cleansers and hair care under brands including Sofina, Kanebo, Molton Brown, Bioré, Jergens, Asience, John Frieda, Goldwell.

New Products: Segreta Volumizing Shampoo, Megurhythm steam mask, Sofina Primavista Base Makeup, Jergens Natural Glow sunless self-tanner, Kerasilk Keratin Treatment, John Frieda Colour Refreshing Gloss.

Comments: Kao continues to pursue its multi-year plan, which aims to achieve net sales of more than $13.5 billion by 2015, as well as an overseas sales ratio of at least 30%, which will help reach its goal of becoming a company with a global presence.

Market conditions improved in Japan, and results from 2013 showed that the Tokyo-based manufacturer was on track, with its fourth consecutive year of sales and earnings growth. Corporate sales rose 7.8% to $12.5 billion.

Kao’s Beauty business accounts for slightly more than 43% of corporate revenue. Sales of beauty products increased 6% to $5.4 billion.

The company credited the gains in part to the success of Sofina Primavista makeup and Grace Sofine skincare, as well as Kate makeup and Allie UV care. Results were also helped along by the success of Bioré cleansers throughout Asia and higher demand for Goldwell professional hair care products in The Americas and Europe. A major challenge in Cosmetics came when Kanebo, a subsidiary of Kao, voluntarily recalled some skin-brightening products in Japan and other Asian countries due to skin discoloration issues possible caused by Rhododenol. About $114 million was spent on the recall, and Kao estimates that the company lost more than $22 million in profit, leading to a corporate reorganization and a focus on safety and reliability.

Kao’s new Megurhythm steam mask proved to be a hit in Japan and Hong Kong, creating what Kao calls “a new market with its concept of improving blood circulation.” Overall, the top of mind goal for Beauty is to increase penetration—and growth—in the mass market, through quality and cost. Nearly $200 million was spent on R&D in the Beauty arena.

One particularly successful launch in 2013 was a double-duty hair care product: Segreta volumizing shampoo combines ingredients with a styling effect to volumize hair without the necessity of a conditioner.

Cosmetic sales declined about 1% in Japan due mostly to the Kanebo recall. The Kao Group worked to boost top-selling brands, leading to growth in sales of counseling brands Sofina Primavista and Grace Sofina skin care line as well as self-selection brands such as Kate makeup and Allie UV care.

Sales of skincare products increased in Japan, with growth in Bioré products. In The Americas, sales of Jergens Natural Glow sunless self-tanner were strong, as were sales of the Goldwell professional hair care brand.

Kerasilk professional hair-care range for Kao Group’s Goldwell brand was updated with new packaging to highlight the elegant line’s premium platform and high efficiency.

Still on a Growth Path

Net sales for the first half of 2014 grew 6.6% to approximately $6.5 billion. Beauty sales grew 1.8% to around $2.77 billion. While sales of cosmetics decreased compared with the same period a year earlier, sales of skincare products increased; hair care product sales were flat. Geographically, Kao saw increased sales in every region in which it operates, with the largest growth coming from Asia, excluding Japan, where net sales rose more than 22%—to about $1.14 billion.

The company expects 2014 sales to reach $13.65 billion.

Corporate Sales: $11.7 billion
Beauty Sales: $5.1 billion

Major Products: Prestige cosmetics and skin care and hair care brands including Bioré, Goldwell, Jergens, Curél, John Frieda, Kanebo, Molton Brown, Aube, Coffret d’Or and Kate.

New Products: Jergens Natural Glow sunless tanner, Goldwell Nectaya hair color, Bioré U body cleanser, John Frieda Fine to Full Blow Out Spray.

Kao’s portfolio of beauty brands includes John Frieda and Molton Brown, among many others.

Comments: Kao changed its fiscal year dates in 2012, reporting results in Japan for the nine months from April 1 to December 31, 2012 and results outside Japan for the 12 months ended Dec. 31, 2012. With tough economic situations in Japan as well as the rest of the world, and stiff competition, Kao’s restated net sales for the year were $11.7 billion up 0.4%, which president and chief executive officer, Michitaka Sawada, referred to as “reasonable results.”

He said the company had worked hard to launch products that held high added value. Sawada added that it had been the company’s third consecutive period of increases in sales and operating income, which he believes sets the tone for future growth.

In Beauty, sales of prestige cosmetics and premium skin care products performed well, accounting for 43.9% of company sales, about $5.1 billion. Premium hair care, however, proved weak in Japan, as well as in the Americas and Europe. So, total sales in Beauty remained pretty much flat to 2011, in the restated 2012 period. Sales of prestige cosmetics increased 0.1%. Japanese consumers seemed to show a preference for lower-priced products, so Kao responded by boosting focal brands such as Aube, Coffret d’Or and Kate. Cosmetics sales outside Japan decreased based on the restated fiscal year. However, sales of premium skin care increased in Japan and Asia, particularly behind Bioré products. In the Americas, sales of Jergens body lotions increased, as did sales of John Frieda foam hair color.

Sawada said the company’s overall goal is to become “a global presence.” To achieve that, he said they must enrich people’s lives as well as contribute to the sustainability of the world. In addition to an ambitious plan to increase revenues, Kao also has targeted an overseas sales ratio of at least 30%, which Sawada concedes, “will not be easy to reach.” Strengthening the company’s prestige cosmetics business is part of the plan. Innovation will be central to growth.

As part of its global expansion, Kao sees promise in Vietnam, where it is looking to double the size of its business, particularly in bath and shower products.

In March, Kao was named one of the World’s Most Ethical Companies 2013, announced by Ethisphere Institute, a U.S. think tank. Since the list’s first publication in 2007, Kao has received this recognition for seven straight years, and is the only Japanese company included.

But in Kao’s rush toward global expansion, it may have made an error. Just last month, one of its cosmetics holdings, Kanebo, came under fire for shipping cosmetics following a recall decision. The recall involved more than 4.5 million products on retail shelves. The 54 skin-whitening products named—sold in Japan, the UK, and parts of Asia—were blamed for causing skin blotches.

Masumi Natsusaka, managing executive officer, beauty, offered a public apology, vowing to overhaul safety controls and additionally, cutting his salary by 50% for six months to atone for the scandal. He said other executives would also take temporary pay cuts.

Corporate Sales: $14.8 billion
Beauty Sales: $6.5 billion

Major Products: Prestige and mass beauty, including cosmetics, skincare and hair care products Sofina, Kanebo, Molton Brown, Ban, Curél, Bioré, Jergens, Asience, John Frieda, Goldwell, Liese.

John Frieda Hair Care’s Full Repair collection was an instant hit for Kao.

New Products: Molton Brown Navigations Through Scent, Bioré Skin Care Facial Foam, Sofina Primavista Base Makeup, Jergens Glow & Protect, John Frieda Luxurious Volume Lavish Lift Root Booster, John Frieda Hair Care’s Full Repair collection, Curél Foot Therapy, Asience Inner Rich Hair Mask.

Comments: At Kao, focus remained on continuous innovation—and sustainable practices—to raise the company’s competitive advantage in competing in the global marketplace. Corporate net sales rose 2.5% to $14.8 billion for Kao’s fiscal year ended March 31, 2012. Beauty care comprised the largest sector of Kao’s business—44.2%—and sales rose 0.8% to more than $6.5 billion.

Japan is the company’s largest market, but overseas markets may offer the greatest opportunity for expansion. Sales of prestige cosmetics grew in Japan and premium hair care sales performed well outside Japan, according to Kao. Sales of prestige cosmetics increased 2.2% due to new product introductions. However, Kao noted that the overall downward trend in prestige cosmetics continued in Japan, due to the lasting effects of the earthquake as well as a shift in consumer preference for lower-priced products. With that in mind, Kao introduced new products under its self-selection brands such as Kate and Evita. In counseling cosmetics, the company improved its Blanchir Superior whitening skincare line as well as its Sofina Beauté skincare brand. The company also revamped its sales methods in an effort to get a lift within a declining market.

Sales of premium skin care products rose in Japan on the strength of new Bioré facial cleansers and Bioré U body cleansers. Outside Japan, Bioré sales were strong in Hong Kong, Taiwan and Indonesia. In North America, Jergens sales rose in the hand and body category.

John Nosek was named president of the newly restructured Kao USA Inc.

Premium hair care product sales fell in Japan, due to a decline in hair coloring product sales, which Kao blamed on market contraction and tough competition. Meanwhile, sales of Merit shampoo and conditioner were strong in Japan. Hair care sales in the rest of Asia were up, driven by the popularity of Liese foam hair color in Hong Kong, Taiwan and Thailand. In North America and Europe, sales of foam hair color, hair styling products and other new John Frieda products, provided a lift.

In January, John Nosek was named president of the newly restructured Kao USA Inc., which merged Kao’s prestige, mass and salon businesses.

In February, Kao USA Inc. announced plans to relocate the company’s corporate headquarters and more than 200 employees from its current facility in Cincinnati to the downtown area and make significant investments in its R&D and manufacturing facilities there, as well as adding about 50 new jobs.

In March, Kao was named one of the World’s Most Ethical Companies of 2012, announced by Ethisphere Institute, a U.S. think tank. Since the first listing in 2007, Kao is the only Japanese company that has been included on the list for six consecutive years.

Beauty Sales: $6.4 billion
Corporate Sales: $14.3 billion

Major Brands/Products: John Frieda foam color gave a big boost to Kao sales.

Prestige cosmetics, and premium skin care and hair care products, from brands including Kao, Sofina, Kanebo, Molton Brown, John Frieda, Goldwell, Asience, Bioré, Jergens, KMS.

New Products: John Frieda Foam Hair Color, Molton Brown Navigations Through Scent fine fragrance collection, Bioré Steam Activated Cleanser, Grace Sofina anti-aging cream, Goldwell Soft Color Foam.

Comments: Beauty accounted for 45% of company sales in FY 2010, equaling slightly more than $6.4 billion. Overall corporate sales were strongest in Japan, followed by Asia & Oceana, North America and Europe.

In a year that showed moderate global improvement, local preferences in Japan turned to more economical choices in part due to deflation and employment uncertainty. Thus, the Kao Group focused on consumer-driven product development, efficient marketing and cost reduction activities, while simultaneously rebuilding its prestige cosmetics business and introducing high-value-added products.

Despite the efforts, beauty care sales declined 2.6% to $6.4 billion. Sales of prestige cosmetics fell 4% to just under $3 billion, due to the preference for lower priced products as well as the Great East Japan Earthquake of March 11. To encourage consumers to buy again, Kao introduced a multifunctional cream and a low-priced line of skin care products to its Fréshel brand. It also concentrated on boosting megabrands such as Coffret D’Or makeup and Sofina Beauté skin care products (including a new line of skin whitening products) and Sofina Primavista base makeup, which reached sales in excess of $120 million. While sales in general declined in China, sales of prestige cosmetics were strong in Asia, specifically in Taiwan and Thailand. The Bioré brand played a large role in contributing to premium skin care sales in Japan and the rest of Asia. In the U.S., Kao launched a new version of Curél sensitive skin care products and expanded distribution.

Hair care sales were flat in Japan, but sales rose in the rest of Asia due to the launch of Liese hair color foam in Asia. In North America, sales of Goldwell and KMS professional hair care brands rose, while in Europe, the launch of hair color foam contributed to John Frieda sales.

Kao also stepped up its anti-aging offerings, taking advantage of the global baby boomer market, introducing a Grace Sofina cream for women in their 60s and above, and the anti-aging Segreta hair care series.

In February, Kao filed infringement lawsuits against Henkel AG & Co. for sales of foam type hair color products.

In March, Kao was named one of the World’s Most Ethical Companies 2011, announced by Ethisphere Institute, a U.S. think tank. Kao is the only Japanese company that has been included in the lists for five consecutive years.

For fiscal 2011, Kao determined to continue concentrating efforts on a select number of brands and improving efficiency in marketing, personnel and other areas to reduce costs.

At the end of July, Kao’s announcement of better-than-expected first quarter sales, in general, indicated that its strategies might be working. But its beauty division continued to struggle, falling half a percent to about $1.6 billion. Kao said while new products did well in North America and Europe—in particular, John Frieda foam color—the cosmetics market in Japan continued to slide.

In August, Molton Brown launched its first artisanal fine fragrance collection, with five unisex fragrances inspired by countries along the ancient spice route.

Goldwell recently revamped its U.S. website, and products are currently undergoing packaging and formulation updates.

Beauty Sales: $5.9 billion
Corporate Sales: $8.8 billion

Major Products: Beauty care brands include Sofina, Kanebo and Molton Brown cosmetics, Bioré and Jergens skin care and Asience, John Frieda and Goldwell hair care.

New Products: Sofina Jenne, Asience Customized Treatment, Medicated Pyuora Nano-bright toothpaste.

Comments: As evidenced with Shiseido, Japanese brands suffered from a weakened economy, and Kao, too, paid the price for a soft cosmetics market. Corporate sales fell 7.2%. Beauty care sales fell 6.9% to $5.9 billion. Prestige cosmetics sales were weak due to the impact of changes in the market structure in Japan, causing the Kao Group, like Shiseido, to embark on aggressive initiatives to strengthen and increase its cosmetics megabrands. However, sales in Japan decreased due to a consumer preference for lower priced products and inventory reductions by retailers. In China, sales increased with aggressive initiatives that included the introduction of new brands. In Russia, the Kao Group strengthened its business operations with the establishment of a Kanebo Cosmetics Inc. subsidiary.

Sales of skin care products grew in Japan due to strong sales of the Curél and Bioré U brands. In Asia, Bioré performed well and sales grew on a local-currency basis. In North America and Europe, despite a recovery trend, sales decreased due to the weak markets and the effect of currency translation.
In premium hair care products, the market in Japan contracted on a value basis, with structural changes such as an increase in the proportion of shampoo and conditioner refill products. However, the Kao Group maintained sales at the previous year’s level and increased its market share due primarily to the improved Segreta premium hair care brand and growth in sales of foam-type hair color. Sales in Asia increased with expanded rollouts of the Asience and Essential Damage Care premium hair care brands. Sales in North America and Europe decreased due to the weak markets and the effect of currency translation.

For the current year, Kao expects beauty sales to grow less than 1%.

In June, Kao launched Sofina Jenne, a new skin care line for young women in their 20s.

With Japan’s cosmetics market remaining weak, Kanebo, which has belonged to the Kao Group since 2006, strove to gain market share outside of Japan, which currently accounts for 90% of its turnover. With the goal of becoming a real global player, Kanebo’s strategy targets China, Asia and Europe-USA.
Kanebo launched Kate, Japan’s leading makeup brand in the self-service beauty segment, into Shanghai and Beijing, where it entered drugstores, starting with Watsons, Asia’s leading health and beauty retailer. The number of sales outlets is expected to grow to 50 stores by the end of 2010, and double that by the end of 2011.

For the first quarter of 2010, beauty sales at Kao continued to fall. The company blamed poor performance of its prestige beauty brands, particularly in the domestic market of Japan, where consumers remain cautious with their spending and where many have switched to less expensive brands. However, in announcing the results, a statement referred to “an emerging sense that Japan’s cosmetics market was bottoming out,” suggesting that the future may be brighter.

Sales figures for China were more optimistic. Kao said that its beauty division had performed stronger in China, and in Asia as a whole, the Men’s Biore skin care brand contributed to sales growth.

Kanebo is about to further strengthen its portfolio domestically and throughout Asia with the launch of its new Impress Granmula (Grand Formula) range, a high-end skin care collection ranging from$240-$1,450. The active ingredients have reportedly been in development for more than 10 years.

Looking ahead, Kao anticipates growth in the next fiscal year.

Beauty Sales: $5.9 billion
Corporate Sales: $12.9 billion

Major Brands: Personal care products and color cosmetics sold under brands including Sofina, Kanebo, Molton Brown, Bioré, Jergens, Asience, John Frieda and Goldwell. New Products: Kanebo Blanchir Superior whitening skin care, Essential Damage Care hair care, Asience Nature Smooth, Aube couture makeup, Blauné hair color foam.

Comments: Like its Japanese counterpart Shiseido, Kao Corp. took a hit in 2008. For the year ended March 31, 2009, Kao Corp.’s corporate sales were $12.7 billion. Consumer product sales were $10.5 billion, down 3.7%. Beauty sales were $5.8 billion, a decline of 6.3%.

In Japan, beauty sales decreased 2.7%. Overall sales of prestige cosmetics decreased 8%, despite proactive moves. Kanebo Cosmetics tried to infuse counseling brands by launching the Blanchir Superior whitening skin cream line and extended products in the Coffret d’Or brand. Kao Sofina tried to strengthen its brands with Sofina Primavista base makeup and Aube couture makeup. According to Kao, sales of premium skin care products increased steadily, with strong performance from new products from Bioré and Curél. Sales of premium hair care products also rose, bolstered by a robust performance from Blauné hair color foam.

London-based Molton Brown, which was acquired by Kao in 2005, recently boosted its successful men’s line with a number of new products.

In Asia, Bioré turned in a steady performance, particularly in China and Indonesia. The company also launched Asience, a premium hair care line, in China and Thailand. In North America and Europe, sales were impacted by the economy, however Kao said sales of John Frieda and Guhl premium hair care brands were steady in Europe.

With negative growth forecast for the Japanese economy, the Kao Group says it aims to achieve profitable growth by continuing to promote products with added value, and continue to push ahead with new products and establish relationships with retailers. Still, while the Kao Group continues to focus on needs of particular markets and aims to further develop brands including Molton Brown and Bioré, looking ahead to the end of fiscal year 2009, the Kao Group forecasts a 2.8% year-on-year decrease in sales in its beauty care business.

Beauty Sales: $6.3 billion
Corporate Sales: $13.2 billion

Products/Brands: Personal care, skin care, hair care and color cosmetics, such as Kanebo, Bioré, Curél, Sofina, Segreta, Asience, Merit, Goldwell, Molton Brown, John Frieda and Jergens.

New Products: Sofina Beauté, Bioré Deep Moisturizing Cotton lotion, Segreta hair esthetic treatment, Kanebo Dew Superior.

Comments: Kao’s beauty care business was the impetus behind its corporate sales rising 7.0% for the fiscal year ending March 31, 2008, with beauty net sales increasing 7.5% to $6.3 billion. The beauty sector, which includes prestige cosmetics and premium skin care and hair care products, accounted for almost 50% of total sales. Kanebo Cosmetics was a major contributor to growth. Overall sales were the strongest in Asia and Europe. In the Asia and Oceania regions, sales increased a whopping 25% over the previous year, while European sales jumped nearly 14%. Both Japan and the Americas showed single-digit growth rates below 5%.

Kao underwent a major reorganization in 2007, combining the consumer products and cosmetics business, which has reportedly revitalized the organization. Despite rising raw material prices, Kao’s CEO Motaki Ozaki said that the company had exceeded its performance projections due to “aggressive launches of high-value-added products and successful efforts to strengthen sales capabilities…in Japan and Asia.” In 2008, Ozaki said the company will continue its focus on “strongly growing Asian markets,” particularly China, which he says is key to its growth. He admits, however, that while his company was an early entry into the Asian markets more than 40 years ago, it has not kept pace with changing lifestyles and distribution patterns. Focus will now be more on improving sales per store rather than adding doors.

Kao plans on doubling its mega-brands with sales of 10 billion yen or more to 16 by 2010. In fiscal 2007, Kanebo Cosmetics launched mega-brands Dew Superior, a skin care line, and Coffret, a makeup brand. Kanebo is the major target for expansion.

In the U.S. and Europe, Kanebo Cosmetics underwent a total renewal of the Sensai premium skin care range, resulting in growth. British brand Molton Brown also performed well. Sofina Beauté, an anti-aging skin care line, got off to a good start and helped to strengthen the Sofina brand. Bioré and Bioré U also did well. The company also launched Bioré Shower Cream in four countries—Thailand, Indonesia, Malaysia and Vietnam—where the use of body soap
is increasing. However, sales of brands such as John Frieda and Jergens were sluggish due to increased competition in U.S. markets.