The Japanese cosmetics firm launched the G11 strategy in 2018, bringing together mass and prestige brands such as Sensai, Kanebo, Curél and freeplus, which were selected for their potential in the global market.
For 2019, total sales of the G11 brands increased 18% year-on-year, encompassing 55% of net sales in the cosmetics division.
“The growth strategy for the cosmetics business proceeded smoothly. Sales remained strong in Asia and are tracking growth in Japan,” said the company in statement.
It noted that this was achieved despite signs of slowdown in inbound demand in the market.
Overall, its cosmetics division grew by 9% on a like-for-like basis to JPY 301.5bn while operating income increased by JPY13.7bn to JPY41.4bn.
In particular, Kao highlighted that its cosmetics sales in China increased by 1.5 times yoy due to the popularity of brands such as Curél and freeplus.
“The expansion of the cosmetics business went much better than what we expected... For two years in a row it generated JPY10bn in profit,” said President and CEO, Michitaka Sawada.
Kao attributed the growth of the G11 brands to its reinforced activities in e-commerce and travel retail channels, as well as a shift to digital marketing.
Additionally, the company placed focus on strengthening its prestige brands, SENSAI, Kanebo, est, RMK, SUQQU and Sofina iP, to reinforce Kao’s position globally.
This led the company to rebrand SENSAI and introduce it to the Japanese market.
“To strengthen the high-prestige range, the Kao Group made a strong start with the rebranding of the super-prestige brand SENSAI in Europe in May,” said the company.
According to the company, SENSAI reported strong growth in Europe following the rebrand and hopes to drive further growth with the China launch of SENSAI.
For 2020, the company said it will be aiming for another year of double-digit growth for the G11 brands.
Kao noted that it would continue to ‘nurture’ its prestige brand portfolio by launching its new brand athletia and hinted it would be launching new products to stimulate growth.
“In addition to launching athletia, a lifestyle brand that takes an environmentally conscious and ethical approach, the Kao Group will work to create high-value-added products that leverage its original technologies.”
The firm said it would continue to cultivate other brands such as est and Kanebo, which has undergone a rebranding and will be launching new products.
It added: “The Kao Group will reinforce initiatives in the growing e-commerce and travel retail channels and work to further step up its operations in Asia as it makes greater progress in structural reforms in Japan.”
With these initiatives, Kao forecasted that its sales in this business will increase 5.1% yoy on a like-for-like basis to JPY319bn.
By 2025, the company aims to achieve a sales target of JPY400bn and an operating margin of 15%.