Kao’s acquisition of Bondi Sands shows ‘foresight’ in uncertain times – consumer analyst

By Amanda Lim

- Last updated on GMT

Kao's intention to acquire Australian self-tanning and sun care brand Bondi Sands could prove to be a masterstroke amid inflationary woes and economic downturns. [Bondi Sands]
Kao's intention to acquire Australian self-tanning and sun care brand Bondi Sands could prove to be a masterstroke amid inflationary woes and economic downturns. [Bondi Sands]
Kao Corporation’s intention to acquire Australian self-tanning and sun care brand Bondi Sands could prove to be a masterstroke amid inflationary woes and economic downturns, according to a market analyst.

Following a tumultuous 2022, the landscape of 2023 has been shrouded in uncertainty. Consumer confidence continued to experience significant fluctuations in the wake of the global pandemic.

In periods of turmoil, consumers are expected to cut back by bringing their self-care routines back into the comfort of their own homes.

“During times of economic crisis, people will bring pampering back into their homes. After the 2008 financial crisis, pedicure tools were very popular in Europe and America because rather than go out for a pedicure, women would do it themselves at home to save money,” ​said Craig Houliston, regional executive director of Nielsen IQ, a consumer intelligence firm.

“With Kao buying the leading self-tanning product company in Australia, it could be foresight because of the uncertainty in the market. A lot of people are worried about potential recessions and the challenges of inflation. But there will always be people who want to do self-tanning, but obviously those machines are very expensive and going to a salon may cost more money,” ​he added.

Australian brands highly prized

The Japanese personal care giant announced its intention to acquire Bondi Sands on August 1.

This follows the acquisitions of fellow Australian beauty brands Aesop and Grown Alchemist by L’Oréal and L’Occitane respectively.

Houliston highlighted that Australian brands were in high demand for their reputation for quality and safety. This was observed across multiple categories, including food.

He added that Australian sun care product tend to be held in high esteem in the industry as Australia’s regulators, the Therapeutic Goods Administration (TGA), have stringent rules about sun care formulations.

Furthermore, consumers have exhibited heightened sensitivity towards product quality across most categories following the COVID-19 pandemic.

“Over the last few years, we’ve seen quite a few acquisitions of Australian companies. Generally, Australian products are very popular, especially among the rising middle classes in Asia. It's very attractive for companies to buy Australian skin care products because they know they're buying high-quality products,” ​he said.

Kao’s focus on protection

Kao previously stated​ that its acquisition of Bondi Sands would strengthen its position in the skin protection category, where it was aiming to become a market leader.

The firm believes that skin protection was set to become a crucial segment within the skin care category. It said it would focus on ultraviolet (UV) protection, self-tanning, and protection from risks like allergens.

“These are the three categories that will become increasingly important for us. We define them comprehensively as skin protection,”​ said Yoshihiro Hasebe, representative director, president, and CEO of Kao.

“A new force that will accelerate this is the acquisition of Bondi Sands announced on August 1. Bondi Sands has a strong brand equity in Australia and continues to grow in Europe and North America even today.”

 

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