Jamie Matusow, Editor10.01.14
Update: Shiseido ranks at #5 on our latest report Top 20 Global Beauty Companies 2021.
Tokyo, Japan
www.shiseidogroup.com
Beauty Sales: $7.4 billion
Key Personnel: Masahiko Uotani, president and CEO; Yu Okazawa, corporate executive officer Asian strategy; Shigekazu Sugiyama, corporate officer Japan, chief marketing officer Domestic Cosmetics Business and Clé de Peau Beauté global; Carsten Fischer, representative director, corporate senior executive officer, global business; Yu Okazawa, director, corporate executive officer Asian strategy; Toru Sakai, director, corporate executive officer, domestic cosmetics business.
Major Products: Skincare, fragrance, hair care, sun care, body care and makeup sold in both mass and prestige channels, domestically and globally, through divisions and under brands including: Shiseido, Clé de Peau Beauté, Za, Aupres, Tsubaki, Senka, Haku, Elixir Superieur, Anessa, Maquillage, Sea Breeze, Beauté Prestige International (Narciso Rodriguez, Jean Paul Gaultier, Issey Miyake, Azzedine Alaïa, Elie Saab), Nars, Bare Escentuals.
New Products: Shiseido Ibuki, Shiseido Ultimune Power Infusing Concentrate, Za Cosmetics, Bare Escentuals bareSkin, Clé de Peau Beauté le serum, Narciso fragrance, Elixir Superieur Enriched Serum, Nars Fall 2014 color collection, Maquillage True Cheek Blush, Adenovital Scalp Essence V.
Comments: Shiseido underwent some major changes during 2013-14, most notably the installation of a new president and CEO who aims to take the company to new heights. The newly named executive, Masahiko Uotani, with an MBA from New York’s Columbia University, had previously spent 17 years at Coca-Cola Japan where he had risen to the position of chairman, and then later served at BrandVision as Shiseido’s chief outside marketing advisor.
Uotani took control of the company at a good time. The Japanese economy had recovered moderately, due partly to governmental assistance. Things had started looking up for the domestic cosmetics market, and there was a temporary surge in demand ahead of the consumption tax hike in April 2014.
Sales rose more than 12% for the year ended March 31, 2014, to $7.4 billion. Sales in Japan accounted for 46% of corporate sales, $3.4 billion, an increase of 1.1% from the previous year, while international sales reached $3.9 billion, exceeding 52% of total sales for the first time—not to mention skyrocketing more than 26%.
Sales in The Americas reached $1.2 billion; in Europe, $993 million; and in Asia/Oceana, $1.6 billion.
Shiseido’s annual increase was attributed to a marginal gain in higher net sales and favorable exchange rates. Much success is due to the global brand Shiseido.
In presenting the annual report, Uotani said he planned to overhaul Shiseido’s marketing strategy and focus on the company’s image as one that sells everything from mass-market toiletries to prestige skincare items. Another goal is to become the global expert in skin brightening/lightening.
During FY14, the Shiseido Group had continued implementing its Three-Year Plan, targeting cost and business structure reforms. Successful and static brands were assessed, as were regions. A plan was put in place to reinforce the company’s strengths in three areas: Japan, China and Bare Escentuals, Inc.
Segment sales increased 1.1% year on year while sales in the counseling category increased 4.7% as the company strengthened prestige products and promotions. However, sales in the self-selection category decreased by 4.6%, which Shiseido attributed to an excess lineup of summer products in the previous fiscal year. Sales in the toiletries category decreased 6.3% despite healthy sales of Senka.
In the cosmetics business, counseling is Shiseido’s strongest category, in which beauty consultants who personify omotenashi, the Japanese word for hospitality, offer counseling to propose the most suitable cosmetics, thus playing a key role in increasing the value of Shiseido’s brands. A company policy was added in the last quarter to evaluate beauty consultants based on retail sales targets for each store. As a result, sales increased 4-5%, with growth most apparent in mid- and high-priced cosmetics.
Domestic Market
However positive this all seems, Uotani cautioned that the company has not yet achieved a full-scale recovery. One major concern of his is that Shiseido has not responded rapidly enough to changing markets, consumer values and purchasing behavior—so he has effected strategies for both domestic and overseas business, and hired lots of women and young people. The No. 1 focus remains on its leading pillar, Shiseido, as the springboard to global markets. Other brands in the spotlight for growth include Maquillage, Elixir, Benefique and Haku. Aupres, Bare Minerals, Nars, clé de peau Beauté (which accounts for the largest share of sales in the domestic cosmetics business and is Shiseido’s top-end prestige brand) and its designer fragrance brands (Beauté Prestige International) are also at the top of the list as revenue generators and brand leaders.
Hair care and hair color were also a priority in Japan. In May, Shiseido opened the Shiseido Cell-Processing and Expansion Center, which will centralize research and development on hair regenerative medicine.
With aging baby boomers a large part of Japan’s population, Shiseido has also focused on this demographic and is in the process of launching a targeted anti-aging line.
Global Market
International sales jumped, thanks to big gains in the U.S. via the Shiseido and Nars brands. Results in China were hurt by the Senkaku Islands dispute and sales there declined slightly. As stated earlier, Beauté Prestige International had a very good year, adding a fragrance license for fashion designer Azzedine Alaïa, on top of other successes. In April it became the exclusive distributor of Burberry fragrances and cosmetics in Spain, France and the U.S., as well as for most travel retail markets in Europe.
Most recently, BPI announced it had added a fragrance license for French fashion brand Zadig & Voltaire.
Sustainable Packaging
Shiseido also revealed a new focus on sustainable packaging, with about 50 cosmetic product containers—including those for Elixir, Tsubaki and Anessa brands—made of sugar cane-derived polyethylene. Attention is also on refill products and expanding the use of environmentally friendly bagasse paper.
Into the Future
All plans aside, at the end of July, Shiseido announced a mixed bag for first quarter 2015. The company reported a loss of about $17 million, blaming higher personnel expenses stemming from bonus payments.
However, first-quarter sales rose 3.7% to over $1.6 billion. First-quarter sales from the company’s Global Business unit grew 9.8%, but lost 1.8% in local currency terms. Shiseido said it posted growth in its Chinese business, and the Aupres brand performed well. As for the Americas and Europe, the company said Nars sold well, but sales of fragrances and bareMinerals products declined. Shiseido said first-quarter sales for its Japanese cosmetics business lost 3.3%. The company said consumers pulled back after April’s sales tax hike, but demand “appears to be recovering with each passing month.”
With Uotani’s projection that the number of cosmetics users in the Chinese market will top 330 million in 2020, it’s a good bet that Shiseido’s move toward reaching global success will include building on the renewal of the skin-brightening line of the China-only department store brand Aupres.
Tokyo, Japan
www.shiseidogroup.com
Beauty Sales: $7.4 billion
Key Personnel: Masahiko Uotani, president and CEO; Yu Okazawa, corporate executive officer Asian strategy; Shigekazu Sugiyama, corporate officer Japan, chief marketing officer Domestic Cosmetics Business and Clé de Peau Beauté global; Carsten Fischer, representative director, corporate senior executive officer, global business; Yu Okazawa, director, corporate executive officer Asian strategy; Toru Sakai, director, corporate executive officer, domestic cosmetics business.
Major Products: Skincare, fragrance, hair care, sun care, body care and makeup sold in both mass and prestige channels, domestically and globally, through divisions and under brands including: Shiseido, Clé de Peau Beauté, Za, Aupres, Tsubaki, Senka, Haku, Elixir Superieur, Anessa, Maquillage, Sea Breeze, Beauté Prestige International (Narciso Rodriguez, Jean Paul Gaultier, Issey Miyake, Azzedine Alaïa, Elie Saab), Nars, Bare Escentuals.
New Products: Shiseido Ibuki, Shiseido Ultimune Power Infusing Concentrate, Za Cosmetics, Bare Escentuals bareSkin, Clé de Peau Beauté le serum, Narciso fragrance, Elixir Superieur Enriched Serum, Nars Fall 2014 color collection, Maquillage True Cheek Blush, Adenovital Scalp Essence V.
Comments: Shiseido underwent some major changes during 2013-14, most notably the installation of a new president and CEO who aims to take the company to new heights. The newly named executive, Masahiko Uotani, with an MBA from New York’s Columbia University, had previously spent 17 years at Coca-Cola Japan where he had risen to the position of chairman, and then later served at BrandVision as Shiseido’s chief outside marketing advisor.
Uotani took control of the company at a good time. The Japanese economy had recovered moderately, due partly to governmental assistance. Things had started looking up for the domestic cosmetics market, and there was a temporary surge in demand ahead of the consumption tax hike in April 2014.
Sales rose more than 12% for the year ended March 31, 2014, to $7.4 billion. Sales in Japan accounted for 46% of corporate sales, $3.4 billion, an increase of 1.1% from the previous year, while international sales reached $3.9 billion, exceeding 52% of total sales for the first time—not to mention skyrocketing more than 26%.
Sales in The Americas reached $1.2 billion; in Europe, $993 million; and in Asia/Oceana, $1.6 billion.
Shiseido’s annual increase was attributed to a marginal gain in higher net sales and favorable exchange rates. Much success is due to the global brand Shiseido.
In presenting the annual report, Uotani said he planned to overhaul Shiseido’s marketing strategy and focus on the company’s image as one that sells everything from mass-market toiletries to prestige skincare items. Another goal is to become the global expert in skin brightening/lightening.
During FY14, the Shiseido Group had continued implementing its Three-Year Plan, targeting cost and business structure reforms. Successful and static brands were assessed, as were regions. A plan was put in place to reinforce the company’s strengths in three areas: Japan, China and Bare Escentuals, Inc.
Segment sales increased 1.1% year on year while sales in the counseling category increased 4.7% as the company strengthened prestige products and promotions. However, sales in the self-selection category decreased by 4.6%, which Shiseido attributed to an excess lineup of summer products in the previous fiscal year. Sales in the toiletries category decreased 6.3% despite healthy sales of Senka.
In the cosmetics business, counseling is Shiseido’s strongest category, in which beauty consultants who personify omotenashi, the Japanese word for hospitality, offer counseling to propose the most suitable cosmetics, thus playing a key role in increasing the value of Shiseido’s brands. A company policy was added in the last quarter to evaluate beauty consultants based on retail sales targets for each store. As a result, sales increased 4-5%, with growth most apparent in mid- and high-priced cosmetics.
Domestic Market
However positive this all seems, Uotani cautioned that the company has not yet achieved a full-scale recovery. One major concern of his is that Shiseido has not responded rapidly enough to changing markets, consumer values and purchasing behavior—so he has effected strategies for both domestic and overseas business, and hired lots of women and young people. The No. 1 focus remains on its leading pillar, Shiseido, as the springboard to global markets. Other brands in the spotlight for growth include Maquillage, Elixir, Benefique and Haku. Aupres, Bare Minerals, Nars, clé de peau Beauté (which accounts for the largest share of sales in the domestic cosmetics business and is Shiseido’s top-end prestige brand) and its designer fragrance brands (Beauté Prestige International) are also at the top of the list as revenue generators and brand leaders.
Hair care and hair color were also a priority in Japan. In May, Shiseido opened the Shiseido Cell-Processing and Expansion Center, which will centralize research and development on hair regenerative medicine.
With aging baby boomers a large part of Japan’s population, Shiseido has also focused on this demographic and is in the process of launching a targeted anti-aging line.
Global Market
International sales jumped, thanks to big gains in the U.S. via the Shiseido and Nars brands. Results in China were hurt by the Senkaku Islands dispute and sales there declined slightly. As stated earlier, Beauté Prestige International had a very good year, adding a fragrance license for fashion designer Azzedine Alaïa, on top of other successes. In April it became the exclusive distributor of Burberry fragrances and cosmetics in Spain, France and the U.S., as well as for most travel retail markets in Europe.
Most recently, BPI announced it had added a fragrance license for French fashion brand Zadig & Voltaire.
Sustainable Packaging
Shiseido also revealed a new focus on sustainable packaging, with about 50 cosmetic product containers—including those for Elixir, Tsubaki and Anessa brands—made of sugar cane-derived polyethylene. Attention is also on refill products and expanding the use of environmentally friendly bagasse paper.
Into the Future
All plans aside, at the end of July, Shiseido announced a mixed bag for first quarter 2015. The company reported a loss of about $17 million, blaming higher personnel expenses stemming from bonus payments.
However, first-quarter sales rose 3.7% to over $1.6 billion. First-quarter sales from the company’s Global Business unit grew 9.8%, but lost 1.8% in local currency terms. Shiseido said it posted growth in its Chinese business, and the Aupres brand performed well. As for the Americas and Europe, the company said Nars sold well, but sales of fragrances and bareMinerals products declined. Shiseido said first-quarter sales for its Japanese cosmetics business lost 3.3%. The company said consumers pulled back after April’s sales tax hike, but demand “appears to be recovering with each passing month.”
With Uotani’s projection that the number of cosmetics users in the Chinese market will top 330 million in 2020, it’s a good bet that Shiseido’s move toward reaching global success will include building on the renewal of the skin-brightening line of the China-only department store brand Aupres.