Manufacturers and reatailers in Japan are hoping that the stagnation of the last few years is finally over
The strong growth in Japan’s domestic C&T sales in 2005 boosted company expectations for 2006, with demand in the first half above forecasts in most sectors. For some years Japan’s economy stagnated, and the C&T market survived mainly through low prices and rationalisation of company distribution systems. The collaboration of cosmetics makers and drugstore chains was essential, and this also instituted changes in the way cosmetics were sold.
Figures from the Ministry of Economy, Trade and Industry showed cosmetics sales in 2005 reached ¥1.5 trillion for the first time in eight years, and although sales were up 6% on 2004, the first increase in two years, sales were still ¥3bn below the 1997 level. Auspiciously, cosmetic shipments increased both in value and unit terms for the first time in three years.
Industry figures indicate that in 2005 a leading sector was foundations (sales up 14% on 2004), with anti-ageing and skin whitening segments setting an upward trend. Anti-ageing make-up has a strong following among baby boomers who are well aware of the effects ageing has on skin, while whitening make-up appeals to the younger generation. A very important consumer sector is working women in their 20s and 30s since their high disposable income and tastes directly affects C&T sales. They are currently buying expensive items, especially lipsticks with an RRP of ¥2000-5000.
Assisting in this recovery are the growing sales of mens toiletries, especially skin care preparations, which were up 12% in 2005 over 2004, and this trend is expected to continue. The market for men’s cosmetics was previously focused on shaving or hair styling agents, with emphasis on customers in their 20s and 30s. Recently however, demand has been expanding in the 40+ age group, due to an interest in slowing the effects of ageing.
Colour control
Cosmetics comprise about 30% of all drugstore sales, and last year the most popular products sold were below ¥2000, but this changed with the launch last August of Shiseido make-up series Maquillage. Best-selling products are now in the ¥3000 range. At Tokyo’s Seijo drugstore chain, foundation in the medium price range of ¥2000-5000 is selling well, as well as ¥3000 lipsticks.
A Kanebo marketing executive stated: “The medium price range is a hot zone where sales volume is the highest. Sales of our Revue make-up range was up 27% in 2005 from 2004. Lipsticks are priced at ¥l000 to ¥5000, with the T’estimo line as the company’s top seller averaging ¥3000.”
In an interview Shiseido president Shinzo Maeda said: “Shiseido’s multipronged PR offensive targeting department stores, specialty stores, discount stores and drugstores boosted brand recognition and reaped a handsome return. The company initially projected ¥50bn in sales during the first year of Maquillage’s debut, but ended 13% up on that target.” Maeda quoted a Shiseido survey of women aged 18-60, which showed make-up usage increased significantly during the five years to 2005. Women who buy mascara increased to 46% from 32% in 2000, while women buying eyeshadow rose to 60% from 52%. Most of these products are in the medium price range and Shiseido describes this trend as driven by value consciousness rather than price.
A recent trend is to accentuate the eyes when applying make-up, with the market driven by women in their teens and 20s, the majority using mascara. The mascara segment is relatively new compared to other make-up products, but according to a survey by Fuji Research Institute, mascara has sales of ¥26bn in an overall make-up market of ¥480bn. The segment has long been dominated by overseas makers, but in recent years domestic products have been gaining market share due to low prices and good performance.
Among overseas cosmetics manufacturers, three products from L’Oréal’s Maybelline brand, which feature the ability to increase eyelash volume, have been popular. The products are distributed by Nihon.
Maybelline’s mascara is formulated with two kinds of fibre and is claimed to lengthen lashes up to 50%, while vitamin E provides protection. Volum’Express turbo-boost waterproof mascara uses a special brush to avoid clumping, while Intense XXL applies a base coat with fibres, then a top coat to add volume to eyelashes.
A review of a Tokyo drugstore chains’ sales from 16 February to 15 May indicated that products from Imju were most popular due to its inexpensive range of cosmetics. Its Dejavu Fiberwig led with Opera Mylash fourth. Dejavu is said to be formulated with special fibres to give an extended look to eyelashes, and its label reads “this is not mascara, this is a way of painting on false eyelashes”. Imju claims the type of mascara used in both Dejavu and Opera Mylash solidifies on eyelashes and forms a lasting film, yet comes off easily with ordinary make-up remover.
Competitor Kosé developed a unique liquid formula to prevent mascara from running, to narrow the gap with market leader Imju, and two products from Kosé’s Fasio series ranked second and third. Fasio is a comprehensive make-up line including mascaras, lipsticks and eyeshadows, with mascaras the most popular accounting for a third of all Fasio unit sales. Kosé’s Visee Good Curl Mascara ranked eighth. Even though Visee is the most expensive mascara among the top 10, it is gaining popularity because adding a top coat provides a blue and green sheen.
Male angle
With slow growth predicted in the women’s cosmetics sector, companies are more optimistic about men’s toiletries, especially skin care products, whose sales were up 12% in 2005 to ¥14.5bn.
Nearly three quarters of men surveyed by Shiseido considered it important to take care of one’s appearance and 15% spent ¥2000 a month on cosmetics. The Shinjuku store of Isetan’s Men’s Annex reported that men’s cosmetics sales in the fiscal year ended 31 March were up 20% on the previous year, with manager Kanome commenting that: “our male customers care for their skin as well as their clothes in order to make a good impression at work.”
Overseas companies were quick to follow the trend, with the Estée Lauder Group launching the Lab Series Instant Moisture Eye Gel (¥4725) under its Aramis men’s cosmetics brand. Under the Biotherm Homme cosmetics brand from Nihon, L’Oréal marketed Line Peel Homme (¥7350), which is claimed to remove keratin. Nivea-Kao also introduced Nivea For Men Revitalizing Lotion Q10, which contains Coenzyme Q10 (¥l575).
Natural strengths
Another sector which could grow more rapidly in the future is cosmetics containing herbs and natural ingredients, as both male and female Japanese consumers say they are attracted to the delicate scents and soft feel. Department stores and other retailers are expanding sales space for natural cosmetics, mainly imported western brands.
The French-made Patyka cosmetics containing herbal and rose oils are popular, while US-based Aveda is predicting its Japanese sales will rise 50% this year based on first half sales, despite their relatively high prices. Aveda shampoos are popular because of their moisturising and refreshing effects, and sales of Swiss-made Weleda cosmetics are up 30% over 2005. Weleda plans to add six baby items, a face cream at ¥2520, and a shaving cream at ¥1050.
With the Bank of Japan predicting that the economy has at last begun to improve, and with more disposable income in Japanese consumers pockets, cosmetic companies are sincerely hoping that the stagnation of the last few years is finally over.