Jar Wars: Nippon Cosmetics Giant Targets Cut-Price Rival

22 August 2006

Japan's Shiseido Corporation - one of the planet's largest manufacturers of beauty products - is under attack in its own backyard from low-end leader Kanebo Cosmetics.

Shiseido, market monarch in Japan, has seen its share of the domestic low-price business segment gradually eroded by Kanebo. It is set to counter-attack with the introduction of a new cheap brand range: Integrate.

This will supersede two existing lines and is one of six new brands the company is introducing under its so-called "mega-brand" strategy - a technique that swamps rival brands by introducing a swathe of competing products.

The Integrate line includes lipsticks, mascaras and nail products, all priced at ¥2,000 ($1.72; €1.35; £0.92) or less. Directly in the line of fire is Kanebo's current segment leader Kate, with annual sales in excess of ¥10 billion and an annual growth rate of over ten percent.

Shiseido is spending from ¥1.5bn to ¥5bn annually on advertising for each of six mega-brands, with ¥2bn slated for Integrate. Sales of the latter are expected to reach the same level as Kate in just seven months, to March 2007. Its third-year target is an ambitious ¥30bn.

Analyst Daisuke Yamaguchi of Nikko Citigroup believes that Integrate will outsell Kate within one year, with annual sales projections of about ¥15bn. "The two brands that Integrate will replace are far from hot. But they will be reborn as the hottest brand," he opines.

But Shiseido's crosswires are trained on the Japanese market as a whole, already under attack by US brands Maybelline and Revlon. Also poised to strike is Rimmel, a popular UK brand to be marketed in Nippon by local firm Kose Corporation.

The traffic is far from one-way. Shiseido products are currently marketed in 65 countries and regions, with Europe accounting for around 41.9% of overseas sales, Asia/Oceania with 29.9% and the Americas 28.2%.

Data sourced from Asahi Shimbun Online; additional content by WARC staff