Japanese demand is up for anti-aging and sun care products

Japan's Bright Spots

20 October 2009 00:00  [Source: ICB]

Antiaging, sun care, and natural cosmetic products are boosting Japan's cosmetics and toiletries sales

AMID A sagging global economy, sales continue to lift for anti-aging, sun care and natural-based cosmetic products in Japan.

Cosmetics and toiletries (C&T) in Japan experienced an overall flat to slight decline in sales in 2008, according to global consulting firm Euromonitor. The decline was mainly due to consumers changing their buying patterns as they switched from premium to mass brands.

Product categories such as antiaging skin care, sun care and oral hygiene, however, saw growth as people continued to be concerned about the preservation of their health and beauty, says Irina Barbalova, global C&T research manager at Euromonitor.

The consulting firm estimates Japan's total C&T retail value in 2008 at yen (Y) 3.52 trillion ($33.8bn), down by 1% from 2007. Sun care sales in 2008 were pegged at Y38.1bn, oral hygiene products at Y235bn, and skin care sales at Y1.5 trillion.

"Consumers are starting to understand that it is cheaper to prevent problems rather than fix them at a later stage in life. Still, with the economic slowdown, consumers are becoming more selective and sophisticated in their search for products that work and are affordable, instead of blindly using premium products," says Barbalova.

The largest target group for antiaging products is female baby boomers. Future growth will depend on the younger generation, who are becoming more conscious of their skin conditions, says Barbalova.

She cites successful product launches last year such as Shiseido'sElixir Prior targeting women in their 60s and Elixir Superieur targeting a younger generation.

Facial treatments are also showing strength, driven by the demand for anti-aging products, says Karen Doskow, associate project manager, consumer products for US-based consulting firm Kline & Company.

Kline estimates Japan's C&T sales last year at $23.1bn (€15.4bn) at the manufacturers' level. Doskow notes strong overall demand for antiaging products because of Japan's aging population. Professional/doctor skin care brands, she adds, are seeing increases as well.

THE BEAUTY DOCTOR IS IN
Drug outlets are popular destinations for shoppers, particularly the younger set, reports Kline. Doskow notes that drug retailers are even opening sister stores that are more specialized in cosmetics and toiletry products.

However, drug stores are not the only general retailers entering the C&T field in Japan, says Yukihiko Morita, personal care sales manager for the global AkzoNobel Surface Chemistry in Japan. Even sake manufacturers and electronic companies are moving into the market, he says.

"It started with pharmaceutical companies offering doctors cosmetics," says Morita. "Now the entry of newcomers from other fields into the cosmetic market, which began several years ago, is picking up again."

Some of the focus for pharmaceutical-based cosmetics has now expanded to men, says Euromonitor's Barbalova.

She cites examples of sun care and skin care products launched late last year by Rohto Pharmaceutical's OXY business, which targets men in their 20s; and Otsuka Pharmaceutical'sUL·OS cosmedics line, launched in September last year, which target men in their 40s.

Japanese retailers have even launched dedicated sales areas enabling men to select and purchase men's grooming products more easily, says Barbalova. "Retailers are looking at the growth of men's grooming products as an opportunity to increase overall sales and thus reorganize their shelf or floor space in order to attract more male consumers." Euromonitor estimates men's grooming product sales in Japan last year at Y184bn.

SHINING BRIGHT FOR SUN CARE
The antiaging products market is considerably important in Japan, but Morita notes increasing demand for sun care products - currently a small but high-growth area.

"Mothers in Japan are more educated and conscious about the potential serious effects of the sun's ultraviolet (UV) rays on their children's skin," says Morita. "As a result, UV-protection products for children are increasing in popularity."

Among all sectors, sun care had the highest aggregate growth rate from 2003-2008, with 7.4%, according to Euromonitor. Sun care sales in 2008 were up by 1.6% over 2007.

Japan has the highest per capita use of zinc oxide in the world, which is a major sunscreen ingredient, says Jim Gall, strategic marketing manager for US-based Dow Chemical's personal care business.

The company launched in Asia last year its naturally derived sun protection filter (SPF) booster ingredient, SolTerra Boost, which Gall says is gaining traction in the Japanese market.

Other sun care ingredient offerings the company is promoting in Japan include its ZinClear zinc oxide dispersions for daily wear and cosmetic products; and Soltex OPT waterproofing polymer, which reportedly helps extend wear for sunscreens and cosmetics.

"We expect that combinations of these practical technologies will help give formulators for the Japanese sunscreen market a competitive edge," says Gall. "The key to success in Japan's cosmetics market is in understanding and customizing our technologies to meet the ultra-sophisticated preferences of Japan's consumers," he adds.

Customized solutions, according to Dow Corning's Dirk Soontjens, market leader for hair care, have penetrated the Japanese market more than anywhere else in the world.

"Consumers demand customized products and are very receptive to the latest technologies," adds Soontjens.

He also notes continued growth in multifunctional skin care products that whiten and moisturize, as well as increased use of collagen in a number of product launches.

In the hair styling segment, hair wax has been a dominant application for more than 10 years, and cosmetics companies, says Morita, are struggling to counter this trend with new alternatives.

"Shiseido launched its new hair styling spray for men called Uno Fog Bar in August. This could mark the beginning of a new trend, which could open new demand for AkzoNobel's hair styling polymers," he adds.

Another growth area, says Morita, is natural cosmetics. "Clearly, the demand for natural materials is increasing. Japan declared a goal to reduce volatile organic compounds [VOCs] by 25% by 2020. Such aspirations may compel cosmetic companies seeking to sell their products in Japan to look more closely at nonsynthetic materials."

Euromonitor and Kline note the strong trend across the board in natural and organic C&T products. Japan is believed to offer the largest consumer base for organic C&T in the world as consumers become more conscious about ingredient safety - not only in food but also in products that are directly applied to the skin, such as cosmetics and toiletries.

"The market for organic products is becoming more than just a fad in Japan as it has a general image of being safe to use," says Barbalova. "However, the market is very small because of lack of offerings from major domestic players, such as Shiseido, Kao and Kose. Sales of organic brands are currently minimal, and product availability is limited to small independent beauty specialists," she adds.

Rather than organics, interest is higher in natural or preservative-free products.

In the short term, the organic C&T market is expected to get a boost as domestic companies apply for international organic certification accreditation, such as the European ECOCERT. Currently, there is no domestic official certification in Japan for organic C&T, notes Barbalova.

"Domestic guidelines for organic C&T might be established in the future to regulate such products. This will increase Japanese awareness of the market," she adds.

Japan's C&T market as a whole is likely to see a slight constant value decline by 2013 because of the recession, according to Euromonitor. Still, pockets of growth will continue in markets such as in antiaging skin care; antibacterial and moisturizing personal care products; men's grooming products; and natural cosmetics.

SLOW PROGRESS
Euromonitor forecasts that the market will reach a retail sales value of $32bn by 2013, based on current exchange rates. Kline expects slow growth as well for the market at just under 1% for the period of 2008-2013. "Japan is the second-largest market for C&T products in the world after the US," notes Doskow. "Like the US, it is a very saturated and mature market."

Japan accounts for 50% of the total Asian personal care market, notes Gall. "While some market shrinkage is expected to occur, the Japanese market will remain highly attractive to global suppliers of personal care products." Soontjens expects continued success for local manufacturers, with their long-established distribution networks.

Morita also notes a decline in significant investment from international chemical companies dealing with raw materials.

"The main challenges in Japan stem from local regulations such as varying safety requirements for raw materials. Foreign chemical companies might find these to be too much of an obstacle," he adds.

Who's Who in Japan Cosmetics/Toiletries?*
Overall top three players	Men's grooming products	Baby care
1. Kao	1. Mandom	1. Pigeon
2. Shiseido	2. Shiseido	2. Johnson & Johnson
3. Kose	3. Energizer Holdings	3. Wakodo
Oral hygiene products	Bath and shower products	Fragrances
1. Lion	1. Kao	1. Chanel
2. Sunstar	2. Unilever	2. Procter & Gamble
3. Kao	3. Tsumura & Co.	3. LVMH Moet Hennessy Louis Vuitton
Deodorants	Skin care	Hair care
1. Kao	1. Kao	1. Shiseido
2. Lion	2. Shiseido	2. Kao
3. Beiersdorf	3. Kose	3. Unilever
Depilatories	Color cosmetics	Sun care products
1. Energizer Holdings	1. Shiseido	1. Kao
2. Kai	2. Kao	2. Shiseido
3. Procter & Gamble	3. Kose	3. Kose
Premium cosmetics
1. Shiseido
2. Kao
3. Kose

*2008 Company market shares (by global brand owner) based on retail sales value in $.
SOURCE: EUROMONITOR INTERNATIONAL

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By: Doris de Guzman
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