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Shiseido Sets Subsidiary in India

Japanese company plans to target the masstige segment.

TOKYO — Japan’s largest cosmetics company said Friday that it has established a wholly owned subsidiary in India. The move is the latest in a series of measures Shiseido has taken to increase its foothold in emerging markets.

 

The new subsidiary, called Shiseido India Private Ltd., is based in Mumbai and will be tasked with targeting the country’s growing masstige market. The company plans to introduce there the skin-care and makeup brand Za, which is currently offered in 12 markets in the Asia-Pacific region and has yearly sales of about $200 million. The average price of Za products is about $10.

 

“With optimistic forecasts for long-term growth, the line is expected to bow in April 2014 with plans to be offered in 250 doors by the end of 2014, 650 doors in 2015 and expansion plans in place to reach over 1,700 doors by 2018,” according to Shiseido.

 

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Carsten Fischer, Shiseido’s representative director, corporate senior executive officer and chief operating officer of global business, said Friday that the company has already enjoyed considerable success in emerging markets. From 2007 to 2012, it saw consolidated sales growth of 20 percent in these countries, and increased its footprint by four times.

“The Indian cosmetic market is already large, but it’s mainly mass, lower mass and a little bit upper mass. Now recently, for a couple of years, there has been a masstige segment being developed,” Fischer said.
The company already has a presence in India, through a distribution agreement with a local partner for its namesake Shiseido prestige brand. Fischer said that business arrangement will remain unchanged for the moment, and the new company will focus on the masstige market only.

In terms of adding more brands or product types to Shiseido’s offering in India, Fischer said the company is proceeding with caution for now.

“We could branch out in other categories where we have strong brands. Hair care is one, and eventually body and men’s, obviously,” he said. “But it has to evolve, and we don’t want to have an immediate plan to roll out a lot of brands. We’d rather build equity with the brands we have and make them sizable, and then on that platform, move on to the next step.

“We have an existing prestige business now, and we’re entering into the masstige segment. We’ll slowly start, and once we feel more comfortable we’ll invest more. India — not only India, but every emerging market with a huge cultural background and a strong cultural identity and strong regional differences — is full of surprises. And we are learning, adjusting and improving,” the executive said.

While Fischer stressed the importance of digital markets and digital communications to Shiseido’s overall growth plan, he said the company will not be launching e-commerce in India in the immediate future.

“We are not an online-only company nor brand,” he said. “We value personal contact, yet we believe that in a diverse shopping environment and a very busy woman’s shopping environment and lifestyle, online is a very important factor, yet it comes after you have established a certain brick business.”