TOKYO — Kanebo Cosmetics Inc. has been a significant beauty player in its home market of Japan for many years, but only now is it making a serious push to become a global contender.
Kanebo Cosmetics president Masumi Natsusaka, who took the company’s helm during the summer, said the firm really has little choice but to think internationally in light of Japan’s mature market.
“I think the cosmetics industry has the potential to grow into one of Japan’s leading industries, which can compete in the international market. Shiseido has already achieved this and, now, as [the second-largest Japanese cosmetics company], we need to do the same.”
A rather traditional Japanese company, Kanebo admits it is late arriving to the international beauty game. The company, which got its start in 1887 as a cotton trader, expanded and diversified into other businesses over the years and decades. The cosmetics business served as a cash cow to offset other underperforming businesses within Kanebo’s corporate structure and never got the necessary investment required to compete seriously on an international scale.
Kanebo spun off its cosmetics business in 2004 and sold it in 2005 to beauty and cosmetics giant Kao Corp. Kao consolidated it as part of its corporate structure the following year but continued to operate its new acquisition as Kanebo Cosmetics. Over the subsequent period, management kept the company very much focused on the domestic market, slugging it out with its bigger rival, Shiseido.
Natsusaka, a lifetime Kao employee with an M.B.A. from the University of Washington and work experience in Germany, is also president of Kao Group’s global beauty-care unit, in addition to his Kanebo duties. Kanebo is focusing its expansion efforts particularly on China, Russia and Southeast Asia, where he said he sees the most growth potential.
“In the case of Asia, [the market] is rapidly changing, and in those changing markets there is actually an opportunity to grow as the market grows. So for emerging and growing markets, I don’t think it’s too late. But in the U.S. and Europe, which are mature markets, the pie isn’t very big, so I don’t think we can expand as quickly. However, [our presence] in the U.S. and Europe is still small, so I think we can still expand quite a bit,” he said.
The company sells its products in 55 countries and regions. But reflecting the lack of a focused global strategy, international sales only make up about 10 percent of the business, with China, Germany and Taiwan being its three biggest markets. The company aims to lift that percentage to 15 by 2015 and at least 30 percent by 2020.
Kanebo has fallen into step as part of what has become a movement among Japanese companies. Shiseido and Pola are also prioritizing international growth. But unlike one key component of its competitors’ strategy, Kanebo isn’t looking to grow through acquisitions. Instead, it wants to focus on its existing brand portfolio. “Right now, we’re not thinking of M&A. On the contrary, we have too many brands, so we have to narrow down our focus,” Natsusaka said.
Kanebo posted sales of 190 billion yen, or $2.41 billion at average exchange rates, for the 2011 fiscal year ended March 31. The Japanese beauty player is aiming to reach sales of 200 billion yen to 220 billion yen ($2.43 billion to $2.67 billion at current exchange) by 2015.
Natsusaka said the company will take a series of steps to boost its competitive edge. He has weeded through Kanebo’s vast brand and product portfolio and plans to focus international efforts on five key brands: prestige skin-care brands Sensai and Impress (the latter of which will be rebranded Kanebo), as well as masstige skin-care line Freshel and color cosmetics brands Lunasol and Kate.
Natsusaka estimated that roughly 80 percent of these brands’ existing product lineups are already suitable for international consumers — Sensai for example has specifically targeted the European and American markets — while the company will need to beef up its research and development to tweak formulas and come up with products better suited for customers around the world. For example, he explained that Japanese consumers are accustomed to lotions containing alcohol while people in other countries find the ingredient off-putting. Similarly, Japanese women tend to prefer heavier coverage in terms of base makeup than their counterparts elsewhere in Asia.
“Here in Kanebo, we have people, we have brands, but the products are missing,” he said, breaking out of his Japanese to speak in English, as he did several times during the interview.
Kanebo has R&D and manufacturing facilities in Paris and Shanghai and a single factory in China that produces Aqua, a skin-care range made exclusively for the Chinese market. Everything else it produces is in Japan.
Natsusaka said Kanebo needs to capitalize on Kao’s more diversified manufacturing and R&D facilities in other countries to produce closer to the markets where it sells. Doing so would also cut costs as it is expensive to produce in Japan. The ceo said Kanebo might even choose to sell those foreign-made products in Japan in a margin-boosting move.
The executive said he learned a valuable lesson about the wrong way to approach international markets when he oversaw Kao’s beauty-care unit in Germany in the late Eighties and early Nineties. At the end of his six-year stint in Europe, he oversaw the closure of Kao’s cosmetics operations in Germany, France and Spain.
Natsusaka said Kao failed at that time because the company’s products catered too much to Japanese consumers. More importantly, he noted that there was a revolving door of managers coming and going from the Continent.
“The commitment was lost at a certain time. I was somehow alone,” he said.
The executive said his experiences living abroad have taught him the importance of understanding the local culture and demands of different countries.
“When you go abroad, you have to understand both your own identity and your identity among [others],” he said. “In business, I think companies also have to place importance on their identities, while also looking at the market of that country and thinking how they can match it and expand.”
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty