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The Japanese beauty market has been struggling for two decades, as recession-hit consumers have traded down to less-expensive products in a country with an aging population, a deflationary economy and high public-debt levels. The tragic earthquake and tsunami that hit Japan in March 2011 did nothing to alleviate its woes, forcing businesses to close and causing damage to facilities, including manufacturing and distribution centers.
The Japanese cosmetics and household products industry as a whole registered a 1 percent sales contraction, according to market sources. Kao Group, the country’s second-largest cosmetics player, recorded a ¥4.1 billion loss directly related to the natural disaster in its fiscal year ended March 31, 2011. Market leader Shiseido Co., meanwhile, posted a 3.3 percent decline in its domestic business last year, while Kosé Corp.’s global cosmetics revenues shrank 3.5 percent.
Many of the leading Japanese companies have launched lower-priced product lines—for example Shiseido’s Senka and Kanebo’s Ururi—in order to attract cost-sensitive consumers. They have also been trying to bolster their export businesses. That strategy has largely been successful, although the yen’s ongoing strength has meant the impact on Japanese companies’ overall revenues has been marginal. There’s no sign that the business will get better this year.