Japan cosmetic firms see hope in $1,000 face creams

Mon Dec 28, 2009 12:16pm EST
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By Yumiko Nishitani - Analysis

TOKYO (Reuters) - Japanese main cosmetics firms' bet that their women customers will pay top dollar for anti-aging creams have paid off and now all three may shift strategies to focus on recession-proof luxury items.

Shiseido Co Ltd, Kao Corp and Kose Corp, Japan's three biggest cosmetics firms, each launched a new 120,000 yen ($1,316) face cream since August 2008 despite the country's economic slump, with enough success for them to upgrade their bullish views on demand for high-end products.

All three are now reviewing their strategies to focus more on luxury items instead of the mid-priced segment, the traditional center of demand.

"It will be crucial for them to offer appealing, value-added products for those women in their 40s and older, who make up a big part of Japan's population and have the money to spend," said Katsuro Hirozumi, an analyst at Daiwa Securities SMBC.

"High-end products in Japan could also serve for wealthy Chinese women, if cosmetics companies can find a way to promote the use of beauty care products among people who do not have a habit of using such products," he said.

Each of the firms says their cream has topped targeted sales, although they do not unveil exact amounts. The rival creams are sold in 40 to 50 grams sizes and target anti-aging effects.

Prices of items priced 5,000 yen or higher account for roughly 20 percent of total Japanese cosmetics business sales at Shiseido and nearly 40 percent at Kose.

Nomura Securities analyst Kyoichiro Shigemura says the demand from Japanese women in their 40s is polarizing into high and low-price segments and a strategy to introduce higher value, high-price items was especially important.   Continued...

<p>A japanese beauty expert demonstrates her skills at her salon in Tokyo March 2, 2009. REUTERS/Yuriko Nakao</p>