Sales: $11.1 billion for personal care, home care and cosmetics. Corporate sales: $14 billion.
Key Personnel: Michitaka Sawada, president and chief executive officer; Toshiaki Takeuchi, senior managing executive officer; Yoshihiro Hasebe, senior managing executive officer; Masumi Natsusaka, managing executive officer; Yasushi Aoki, managing executive officer; Tomoharu Matsuda, managing executive officer; Shigeru Ueyama, managing executive officer; Masakazu Negoro, managing executive director; Yasushi Wada, managing executive director; Osamu Tabata, managing executive director.
Major Products: Beauty Care—Sofina, Kanebo, Molton Brown, Bioré, Jergens, Asience, John Frieda, Goldwell; Fabric and Home Care—Attack, Haiter, Magiclean; Human Health Care—Pyoura and Clear Clean oral care, Bub bath additives.
New Products: Personal care—Rerise, Bioré UV, Bioré Baking Soda + Agave collection; Laundry care—Attack Zero; Acquisitions—Oribe hair care and Washing Systems.
Comments: Corporate sales rose 1.2% last year, but certain segments performed much better than that. For example, cosmetic sales rose 5% to $2.6 billion, skin and hair care sales increased 2.6% to $3.1 billion, and fabric and home care sales improved 2.5% to $3.2 billion. The drag on results was human health care, where sales fell 4.8% to about $2.5 billion. Overall, consumer product sales increased 1.4% to $11.1 billion.
Within the cosmetics business, Sofina iP base essence was improved in September 2018, and sales grew steadily as it gained acceptance among an increasing number of consumers. Sales increased substantially in Asia region, led by China.
In skin care, sales of the Bioré brand grew steadily in Japan and Asia, but were impacted by stiff competition in the Americas. Jergens hand and body lotions performed steadily in the Americas. In hair care, Kao launched Rerise, which is billed as a next-generation brand for gray hair care, and its performance was strong but sales of shampoos and conditioners decreased due to a delayed response to the growing premium market and the impact of the shrinking mass market. In Europe, the John Frieda hair care brand was affected by intense market competition, according to Kao.
In January 2018, Kao acquired Oribe, a premium hair care company.
Sales of fabric care products remained steady despite price wars in Japan. The segment was helped by an Attack laundry detergent claim that the formula is “changing tap water for washing to antibacterial water.” Kao increased the market share of fabric softeners by improving Flair Fragrance amid the ongoing expansion of the market for high-value-added products. A year ago, Kao acquired US-based Washing Systems, LLC. Sales of home care products were firm. In Japan, the Kao Group cultivated new users by improving foam spray-type CuCute dishwashing detergent, and sales grew steadily. While sales fell in the human health care segment, there were some bright spots; oral care and bath additive sales rose.
In an interview with Happi last year, CEO Michitaka Sawada explained “In the past 10 years, our Asian business has quadrupled, while sales have been flat in Europe and the US,” adding that China and Indonesia are Kao’s largest markets outside Japan. “Going forward, I want to focus on the US and Europe.”
And yet, in the beginning of 2019, Kao’s business remained rooted in Japan as net sales to foreign customers declined to 39.9% from 41.8% the previous year.
For Q1, 2019, corporate sales declined 1.1%, but the drop was due to a 12% decline in Kao’s human health care business. All other categories posted increases: cosmetics’ sales rose 11.2%; skin and hair care sales rose 1.6%; and fabric and home care sales were up 6.5%
In April, Kao introduced its Kirei Lifestyle Plan, a new global environmental, social and governance (ESG) strategy to support consumer lifestyle changes. According to the company, in the face of global challenges such as climate change, aging societies, resource scarcity and the management of materials such as plastics, consumers around the world have expressed growing desire for a gentler and more sustainable way of living, which Kao has named the Kirei Lifestyle. The Japanese word “kirei” describes something that is clean, well-ordered and beautiful, all at the same time. For Kao, this concept not only describes appearance, but also attitude—to seek to create beauty for oneself, and also for other people and for the natural world around us.
To deliver this vision of a Kirei Lifestyle for all, Kao has set three bold commitments supported by 19 detailed leadership actions for the business to deliver by 2030:
- “Make my everyday more beautiful” by empowering at least 1 billion people by 2030 to enjoy more beautiful lives—greater cleanliness, easier aging, better health and confidence in self expression;
- “Make thoughtful choices for society” by ensuring that 100% of Kao brands make it easy for people to make small but meaningful choices that, together, will shape a more resilient and compassionate society; and
- “Make the world healthier and cleaner” by promising that 100% of Kao products will leave a full life cycle environmental footprint that science says our natural world can safely absorb.
For the full year, Kao expects sales to rise 4.8%, led by an 8% increase within the fabric and home care business.