Kao Corporation's new global portfolio is a pillar of its new growth strategy within the Kao Group cosmetics business. The five cosmetics businesses entities in the group, including Kanebo Cosmetics, are strengthening their brand management and optimizing the portfolios for all of the brands they develop, according to Kao.


Kao created the portfolio by selecting 11 global strategy brands, some of them new, and refining each by highlighting the benefits of the products in combination with distinct beauty-enhancing qualities empowered by emotional and sensory appeal. The group will focus most on prestige ranges, with Kanebo Cosmetics accelerating the globalization of Sensai, a brand now marketed mainly in Europe. By refining its strategic brands into a portfolio of distinct, stand-out brand personalities, Kao Group will accelerate growth in Europe and Asia, including Japan. A sales target of over 300 billion yen ($2.7 billion at current exchange rates) is set for 2020, with an operating profit ratio of 10% and overseas sales ratio of 25%.


Japan's home cosmetics market is now active thanks to strong domestic consumption and growth of inbound demand from overseas visitors. The market is largely polarized into two segments, prestige and mass. Good performance of the prestige segment continues to drive much of the current expansion of the Japanese cosmetics market. On the global level, powerful growth in Asia, particularly China, is driving the market. In parallel, dramatic changes in consumer purchasing behavior in the digital age call for new marketing strategies, according to Kao.


Against this backdrop, Kao Group's cosmetics sales are expanding in Japan and the rest of Asia, especially the prestige brands RMK and Suqqu (marketed by the E'Quipe Ltd., a subsidiary wholly owned by Kanebo Cosmetics), Cure, a dedicated skin care brand for dry and sensitive skin, and Kanebo's Freeplus and Kate brands. Business in China, which is growing again after restructuring, is driving sales and market gains, according to Kao. For the whole of Kao Group, meanwhile, a branching out of businesses running myriad group brands in separate directions has created challenges for strategic brand growth.


The New Global Portfolio was formed around the five cosmetics businesses of Kanebo Cosmetics, Sofina, Cure, E'Quipe Ltd. and Molton Brown. The portfolio consists of 11 global (G11) and eight regional (R8) brands, the former including a small number of brands selected from the domestic portfolio for their global potential. Kao Group will be stepping up growth in Europe and Asia, including Japan, with a focus on a stronger travel retail business. The R8 regional component encompasses strategic brands marketed mainly in the Japan market. By concentrating what once were far-flung investments on myriad brands, the Kao Group aims to cultivate stronger brands and facilitate growth.


Focus on prestige global brands

To reinforce the presence of Kao Group Cosmetics businesses globally, prestige brands in the global portfolio will receive special focus:

• Sensai is the super prestige brand marketed by Kanebo Cosmetics in over 40 countries of Europe and the Middle East will be expanded to other global markets. Launched in 1983 in Europe, Sensai is known for its rare signature ingredient Koishimaru silk and its original Saho skin care method. An additional line created for the global market will be launched in Europe in 2019. Plans are also in place to strengthen the international brand presence of Sensai by opening a flagship store in Japan in the autumn of 2019. The store presence will be second only to that of the Sensai flagship store in Le Bon Marche in Paris, France. A Sensai launch in China is projected for 2020.


• The prestige skin care brands Est by Sofina and Kanebo by Kanebo Cosmetics will expand their value-added product lineups and embark on a style of brand communication with a more defined world view.


• E'quipe, a 100% subsidiary of Kanebo Cosmetics, will strengthen its overseas business for RMK and Suqqu, popular brands both in Japan and abroad, with a focus on travel retail business. The global presence of the company will be rising even higher. e'quipe is also planning to launch a brand to offer beauty from a new perspective, aimed for 2020.


• Sofina will develop a new range, Sofina iP. Since its nationwide launch in 2016, more than 3 million units of Sofina iP Base Essence [Essence] have been shipped, making it Japan's top-selling beauty serum. With this best-selling Base Essence at the core, Sofina IP will be extended to a whole new line. 


• The three mass brands within the global portfolio—the skin care lines Cure?l, freeplus and the makeup brand Kate—have been performing strongly, especially in Japan and China. Cure will be expanded in Japan and Asia and is projected to launch in Europe and the US from 2019. freeplus, already a strong seller in China, will be accelerated throughout the whole Asia market through focused growth in Japan and a brand launch in ASEAN. Kate, a mega brand with a top sales share in Japan for 16 years running, is poised to become Asia's No. 1 makeup. Expansion will continue for brick-and-mortar stores in Asia, in parallel with growth in the presence of digital.



As it builds this new portfolio, Kao Group is also advancing efforts to create strong brands for its domestic business through sharper marketing. In a departure from the conventional classification of "prestige," "mass-tige, and "mass" brands, Kao will be moving its brands into "counseling" (beauty counselor retailing at stores) and "self-service" categories. In parallel with the clearer brand positioning, the group will also be thoroughly reviewing its manufacturing and sales methods. The manufacturing and marketing focuses for counseling brands will shift to customized suggestions for customers through professional beauty counselors prepared for their role by sophisticated, specialized training. The self-service brands, meanwhile, will realign around star items with distinct benefits. Kao Group's communication and storefront strategies will be reshaped to best suit the brands, and proactive advances into e-commerce will continue.