A Shiseido outpost at Bloomingdale's.

PARIS — Shiseido aims to grow its share of the global fragrance market to 9 percent by 2020, up from 5.8 percent today.

Outlining plans for a new organization of its Europe, Middle East and Asia region at a conference here Friday, Shiseido Group EMEA president and chief executive officer Louis Desazars said acquiring the license for Dolce & Gabbana more than doubled Shiseido’s share of the global fragrance market from 2.2 percent to 5.8 percent. Japan’s largest beauty firm aims to turn its purchase of the license, which was completed on Oct. 1., into a 1 billion euro, or $1.12 billion, beauty business within 10 years.

Following its latest acquisitions, including Laura Mercier and RéVive, which Shiseido bought for $200 million this July, and Serge Lutens last December, Shiseido group president and ceo Masahiko Uotani told the conference that the company’s priority is growing its existing portfolio while remaining open to buying smaller start-ups. Uotani said innovative start-ups were on his radar, including some on the West Coast of the U.S. that could benefit from Shiseido’s resources to create “a win-win growth model.”

But he ruled out any major mergers. “When you count the top-five [beauty] companies, we are unique in having a Japanese identity and heritage and that’s a source driving our business, so I don’t think consolidation is going to happen for us,” he said. “We don’t want to lose that identity.”

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In a move to strengthen that identity, Beauté Prestige International will become part of Shiseido Group EMEA from Jan. 1. In the EMEA region, Shiseido aims to increase its share of the prestige beauty market from eighth place today, to match its fifth place ranking globally. Growth should be driven by the expansion of brands currently underpenetrated in Europe, including Laura Mercier, Nars and Bare Escentuals plus expansion in Africa, a continent that will represent 25 percent of the world population by 2050, Uotani noted.

Product innovation will be driven by the group’s three Centers of Excellence: Makeup in New York, the world’s biggest makeup market; skin care in Tokyo, where it represents 70 percent of the prestige market, and fragrance at the firm’s new European headquarters in Paris. Underscoring Shiseido’s heritage in fragrance, Desazars reminded the conference that the company introduced its first fragrance in 1917 and repeated the vision of Shinzo Fukuhara, son of Shiseido’s founder: “I want to elevate fragrance into a work of art.”

The marketing budget to fund the brand building will rise to an estimated 27 percent of revenues by 2020, up from 22 percent today. And in moves to become a digitally advanced company, Shiseido’s Global Digital Academy is training 600 people a year, while Uotani himself benefits from reverse mentoring, where younger employees keep him apace with digital changes every month.

“We need to shake up and review our marketing strategy,” said Desazars, while noting that brands like Nars and Laura Mercier are digitally and influencer-driven.

In research and development, the company revealed a 400 million euro, or $448 million, investment in a new center outside Tokyo for 2018. Uotani told the conference the funds would come not from a head-count reduction, but rather cost cutting and efficiencies gained with suppliers.

Shiseido Group EMEA will be divided into three business divisions: The Global Brandholding division, The Creator’s Corner, which will group Beauté Prestige International’s brands and the Dolce & Gabbana business with niche fragrances like Serge Lutens in a small brand incubator called The Boutique. The Regional Business Division, The Business Corner, will unite Shiseido’s EMEA affiliates alongside makeup and skincare including Nars, Laura Mercier and RéVive. The third division, The Center of Expertise, The Expert’s Corner, will combine everything from digital development to sustainability.

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