Kao reveals global growth strategy aiming to emerge as top player in skin protection
28 Sep 2023 --- Chemicals and cosmetics company Kao has unveiled a new global growth strategy for its cosmetics and skin protection businesses. It ultimately aims to move away from the framework of international marketing – placing Japan as the center from where activities branch out. Instead, it aims for global marketing – positioning the globe as a worldwide market.
Toru Nishiguchi, senior managing executive officer of Consumer Products, presented Kao’s new “Global Sharp Top Strategy.”
Between this year and next year, the company plans to make structural reforms in its human capital and inefficient business to increase its competitiveness.
From next year onwards, the second strategy will focus on global expansion, mainly focusing on its skin care protection business, followed by the cosmetics business (mainly Curél, Sensei and Molton Brown) then the chemical business (resolving social issues, such as skin disease or cancer).
Global expansion strategies
Yosuke Maezawa, head of Kao’s Cosmetics division, and Mark Johnson, manager of Kao’s Cosmetics business in Europe and the US, presented the company’s cosmetics business strategy.
Kao aims to enter the top ten global cosmetics sales by 2030.
They note that the dermatological cosmetics sector is growing, and skin care accounts for 54% of the 37 trillion yen cosmetics market in 2022. In 2027, skin care is expected to occupy 52% of the 53 trillion yen cosmetics market.
They highlight opportunities in the growth of the Asian market, fragrance and sensitive skin market alongside genderless beauty. However, uncertain geopolitical tensions and changes in Japan’s distribution pose challenges.
Yet, Kao aims to enter the top ten global cosmetics sales by 2030 by harnessing its strengths in technology, formulas, production technology and international locations.
Kao targets “rich and smart” consumers in the EMEA with its luxury Sensai brand to expand into China, ASEAN and Japan, targeting similar customers.
With its Molton Brown brand, it will maintain a British style with original fragrances, focusing on luxury and ESG goals. Similarly, Kao will expand the brand from the EMEA to Asia and Japan, targeting those who admire sophistication and hotel-like lifestyles.
Lastly, it will grow Curél, a derma brand focused on ceramides for dry and sensitive skin, from Japan to Asia and Europe.
Investing in skin protection
For its skin care business, Kao has been working to top the UV care business in Japan and create a global technology platform.
This will form the basis from which it can establish its business in the Americas and Europe, focusing on UV care and self-tanning in 2024, notes the company. It will do this by expanding its brand portfolio through M&A. For instance, this summer, Kao Australia and Kao USA signed an agreement to acquire Bondi Sands Australia and its related companies and brands.
From 2027 onwards, Kao expects to become the top global skin protection provider.
From 2027 onwards, Kao expects to become the top global skin protection provider, with established UV care, self-tanning and environmental protection (infrared radiation, infections and allergens).
A development in the latter category saw Kao launching its natural citronella oil-formulated Bioré Guard Mos Block Serum mosquito repellent in Thailand.
Why UV Care?
Kotaro Nuriya, head of Health & Beauty Care and Karen Frank, president of Kao’s AEMEA Consumer Care, recently presented the company’s perspectives on Kao’s Skin Protection business. They explain that “sunscreen is the most important thing to keep the skin healthy and beautiful.”
Due to scorching weather on a global scale, especially due to climate change, whose impacts will persist, Kao notes there is “space for growth in” the sunscreen market, which has a global market of over ¥1 trillion (US$6.7 trillion). The year-over-year growth in this market is 112%, with a CAGR of 105%.
Additionally, Kao notes that there are no top global brands in terms of competition due to the challenging market entry, laws and regulations.
Furthermore, on a consumer level, people face the risk of cancer due to UV exposure and face rapid signs of aging. Kao observes that consumers largely express dissatisfaction with sunscreen textures, with many experiencing sunburn despite sunscreen application.
Via its chemical business, Kao has developed manufacturing technologies – including an even long-lasting UV protective coating technology – that can provide a pleasant texture to sunscreens.
Since the COVID-19 pandemic, where people were confined indoors, more people are now “adapting to the new normal” and participating in outdoor activities. There is a shift away from beach-resilient and daily use sunscreen to consumers looking for sunscreen that will make the skin look good and withstand extreme environments.
Kao notes that there are no top global brands in terms of competition in UV care.
“By 2030, we aim to achieve sales of ¥100 billion (US$669.7 billion) by combining repellents and technologies with brand synergy,” shares the presenters.
Brands in frontline
For its cosmetics business, Kao plans on ramping up global rollouts of its brands Curél, Sensei and Molton Brown. This year, it has been building a foundation for these brands in preparation for international competition.
For instance, Sensai had plans to open a flagship store in Shanghai this year, introducing a luxury business model unique to the brand in China.
In 2025, the company will accelerate brand growth via “aggressive investments” and establishing portfolio strategies in Japan, Europe and Asia.
Looking ahead in 2027, it will focus efforts on establishing a “full-fledged” global business – with aims to achieve first ranking in brand and category positions while beginning to expand other brands and building infrastructure to support the growth.
By Venya Patel
