Make or break: Kao hopes new Essential range will save hair care business from stagnation – CEO

The new range, Essentials The Beauty will debut on the market on August 28 and is said to help improve the texture of hair.

Kao developed this line in response to the growing interest in hair treatment products, especially now during the pandemic when people are looking for high efficacy products that can be used at home.

The key ingredient in the new products is 18-methyleicosanoic acid (18-MEA), which Kao says is an essential ingredient to even hair texture and beautiful hair overall.

Speaking during the firm’s first-half earnings conference on August 3, president and CEO Yoshihiro Hasebe highlighted the significance of Essentials The Beauty for the company’s hair care portfolio.

“For Essential, we have taken all the various technologies and products that we have deployed in our brand and distilled those values into Essential The Beauty. These are new products that we have created with all of our hair care technology.”​

Hasebe emphasised that this upcoming launch was critical for the health of its hair care business.

“If this brand is not revived, our hair care business may stay stagnant for a long time to come. That is how seriously we are banking on this,” ​he said.

Along with Essential, the company will also be focusing on its home care brand Magiclean and diaper brand Merries.

“These are new products that aim not to realise big increase in numbers, but to maximise our brand value. They are products for which we have very high expectations,”​ said Hasebe.

He added that given the potential of these brands, Kao would not hold back when it comes to boost these brands moving forward.

“They have been long-standing products, but we’ve reached a point of launching new products without any hesitation and investments in marketing will be made to capture market share.”​

Pandemic struggles continue

In the first half of 2021, Kao recorded a 0.6% like-for-like decrease in net sales to JPY675.2bn (U$6.1bn) while operating income decreased 5.3% to JPY70.6bn (U$644.2m)

Its health and beauty care division, of which Essential falls under, saw sales decline 2.6% like for like.
Zooming in on hair care, Kao saw sales of its mass portfolio decrease due to the delayed market recovery in Japan.

Its professional hair care business was also affected by lockdowns in Europe. However, with market recovery underway, the company said it was starting to see positive results, aided by the strong e-commerce sales of high-end hair care brand Oribe in the Americas.

Similarly, the company’s cosmetics business, which consists of Kanebo, KATE, and Curél suffered a decline of 1.5% like for like.

This was attributed to the delay in market recovery of its home market with the state of emergency extensions.

On a positive note, the company has begun to see a sales increase in make-up products in the second quarter thanks to its marketing efforts.

Sales in China remained robust thanks to a strong showing from skin care brands freeplus and Curél.

In Europe, sales were also seen to be increasing due to the general market recovery and the strengthening of Kao’s e-commerce channels.