CBD cosmetics: Japan will be the 'single largest market' in Asia for the next decade

By Amanda Lim

- Last updated on GMT

APO Organics is setting sights on Japan's cosmetics market for growth outside of Europe. ©GettyImages
APO Organics is setting sights on Japan's cosmetics market for growth outside of Europe. ©GettyImages

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Swiss-British company AP Organics is setting sights on Japan's cosmetics market for growth outside of Europe, with the firm believing it holds great prospects for its CBD ingredients and services.

The company supplies hemp and cannabinoid (CBD) materials to manufacturers across multiple sectors, including cosmetics. It also operates as an OEM manufacturer for companies that do not have the infrastructure to produce CBD products themselves.

It recently entered the Japanese market around seven months ago, dealing mainly with players in the vape industry.

However, its hoping to break into Japan’s cosmetics industry, where managing director Gavin Ogilvie sees the most potential for CBD because of the clear regulations in place.

He elaborated by explaining that while there are huge opportunities in the medical and food sectors, they were hindered by regulations, causing an imbalance within the industry.

While Ogilvie believes medicine is the ‘number one’ industry for CBD, the amount of resources needed to register and test products has pushed out small players, allowing big pharma companies to dominate.

However, the reverse was true for the food industry, he continued.

“Clearly, there is demand for CBD as a food supplement. However, to sell it in Europe, you have to put in a huge application that costs about 300,000 euros. At the moment, none of the member states of the EU have decided to follow through on this application.

“This is really interesting because now you won’t find a large business investing in CBD. They are holding back while small and medium-sized business want to invest because even though there’s a risk attached to it, there’s also a huge reward,” ​said Ogilvie.

This makes the cosmetics sector a real sweet spot for CBD producers because the regulations are very clear on CBD being a registered cosmetics ingredient.

Ogilvie said: “For me, [the cosmetics industry] is the most exciting because it allows all businesses – small, medium, large – to be involved. It’s a full spectrum. There's a lot more investments from big cosmetic companies in CBD because they don’t have that same fear of investing. And there are also smaller businesses that bring that entrepreneurial innovation into the market.”

Firm looks to Japan for growth

Outside of the US and Europe, the firm has identified Japan as the market with the largest potential.

“The market in Japan is small compared to what we see in Europe. However, out of all the export markets for us outside of Europe, Japan is the single fastest-growing market. The next fastest-growing is Israel, but Japan is growing at almost twice the pace of that,” ​said Ogilvie.

He believes it will remain this way for the next five years to a decade.

“Probably China will overtake Japan massively in 30 years, but in the next decade, Japan will be the market with most potential. Followed by South Korea. We see these two as the early adopters in the region.”

He added that the company was in Japan first because of its position as a leader in the region.

“We have people from all over Asia and the world travelling to see what the Japanese are doing in cosmetics especially because they are the global trendsetters.”

However, Ogilvie added that there was still a long way to go for the company, and the industry as a whole.

“People still look at it as a drug. Compared to the US or Europe, the perception in Asia is a lot worse. This makes it an awkward conversation to have. It’s a big challenge for sure. My goal in the short-term is to begin that conversation. If we can start working with companies in the region, that would be great, but I think it will still be another six to 12 months before we see this exciting industry take off.”

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