Cosmetics to Japan

Trends and opportunities

The market

Japan’s cosmetics market in 2013 was valued at JPY2320 billion, with a 1.3 per cent growth rate year-on-year (Source: Yano Keiza Kenkyusho, Cosmetics Industry 2014, Sep 2014). The Japanese cosmetics market places high value on quality and functionality and sets the trends in cosmetics for the rest of Asia. Japan has shrinking demographics and is quickly ageing, leading to the development and marketing of functional products targeting mature skin as well as men’s products.

Product development is carried out with even more attention to consumer needs and despite a smaller population size, sales are not expected to decline but remain flat or even grow slightly over the next few years.

The demographic of mature women (over 50s) accounts for more than half of the cosmetics market and is estimated to be worth approximately JPY1650 billion. Major Japanese brands have rebranded their offerings to fit this market segment by implementing bright oranges and pinks as brand colours, improving functionality with pump-type products and easy to use brushes. Females in their 50s and 60s started to use cosmetics during Japan’s ‘bubble era’ and see themselves as fashion creators and leaders and are keen to experiment with new products. Brands that are able to capture the interest of this market are expected to do well. (Source: Nikkei MJ (Japanese only), Cosmetics for the mature market, harnessing women’s minds, 25 Feb 2015)

According to the Japan Meteorological Agency, Japan has experienced summer seasons that are longer in duration and heat since 2010. This has led to a reclassification of sunscreen products to an upper limit of SPF 50/PA+++, encouraging cosmetics manufacturers to introduce new products. Products in this category saw three per cent growth in 2013. (Source: Euromonitor, Beauty and Personal Care in Japan, 22 Sep 2014)

As Japan’s core consumer group shifts from the baby boomer generation to their children, a change in preference for scented products from no/slight scent to definite/stronger scents. This younger generation is also more sensitive to smell and body odours, which has led to increased sales of deodorisers and bath products that prevent odours. Products in this category are expected to continue to see robust demand. (Source: Euromonitor, Beauty and Personal Care in Japan, 22 Sep 2014)

The organic/natural cosmetics market grew 5.9 per cent from 2013-14 to JPY104 billion (Source: Yano Keizai Kenkyusho, Natural and Organic Cosmetics Market 2014, Jun 2014). Consumers are becoming increasingly interested in ‘safe’ products, as well as environmentally friendly lifestyles and ethical consumption. At the same time, it is important for products in this category to incorporate scientifically proven anti-aging as well as whitening functionalities to ‘convince’ consumers to switch from generic cosmetics brands.

Opportunities

Japanese cosmetics companies are actively sourcing innovative products from overseas. Australian cosmetics and beauty products are gradually establishing a reputation for containing pure essential oils and unique natural materials.

Australian cosmetics are expected to be made in Australia and contain natural ingredients. Those that are made of natural ingredients should be:

  • organic certified products
  • cosmeceuticals products with proven scientific evidence of their effectiveness.

Competitive environment

The cosmetics market in Japan is known to be one of the most sophisticated and competitive markets worldwide. Over 1000 cosmetic manufacturers operate in Japan, including foreign companies. However, there is an overwhelming presence of domestic manufacturers who command a large majority of the market e.g. Kanebo, Shiseido and Kao each occupy 10 to 15 per cent of the cosmetics market.

Although Japan’s strong domestic brands have a big presence and comprise a large majority of the market, imported brands. Despite the increasing number of companies that have entered the market in recent years, Australia is yet to be seen as a major supplier of cosmetics or beauty products in Japan – or at least, on par with countries such as France and the USA.

France and the USA continue to make up close to half of imported cosmetics to Japan and are the first and second largest exporters of cosmetics to Japan respectively. In 2014, the value of imported cosmetics rose one per cent year-on-year to JPY217 billion. Although sales were strong the first half of the year, this was largely impacted by the increase in the Japanese consumption tax in April 2014 to eight per cent and a weaker Japanese yen. (Source: Cosmetic Importers Association of Japan, Cosmetics Import Summary Jan to Dec 2014, 10 Feb 2015)

Tariffs, regulations and customs

Under the Japanese Pharmaceutical Affairs Law, companies that import, wholesale, retail and market cosmetics for business purposes require a manufacture/import and distribution of cosmetics license from the Ministry of Health, Labour and Welfare.

In addition, the information required must be printed directly on both containers/vessel or external packaging. All information must be written in Japanese.

A list of ingredients, together with details of the manufacturing process must be provided to the regulatory authorities via an importer, in order to comply with importing procedures.

Marketing your products and services

A unique value proposition is necessary to make brands attempting to enter the market attractive to potential customers. This could be an exclusive or unique ingredient or a story to tell potential partners and consumers – simply being Australian and natural is not enough. The Japanese market is far more price sensitive than Australian perceptions and/or expectations. Successful market entry also depends on competitive pricing and excellent packaging.

There are two main groups of consumers:

  1. low-price oriented young women
  2. middle aged/older women who seek functionality and higher value added items.

Demonstrating unique features (natural anti-aging or whitening effects) is ever more important in a weak economic environment that has seen consumers switch from premium products (sold in department stores) to more affordable products offered at drugstores, particularly as domestic manufacturers offer innovative products at attractive prices.

Although economic recovery and consumer expenditure it is hoped for, the current reality is that consumers are well educated about product functionality at the same time as being price conscious.

The use of media and recruitment of celebrities as spokespeople for a specific brand or product is a major marketing tool for cosmetics companies. Products are better recognised and often become trendy as a result of commercials, magazine ads and poster advertisements.

Market entry

To successfully market your product in Japan, exporters should consider the following points:

  • Work with and being guided by your local Austrade representative to ensure a customised market entry strategy is implemented and your product(s) meet the specific needs of the consumer.
  • Monitor the cosmetics industry to identify changes and growing trends that may affect marketing strategies.
  • Develop relationships with local partners and/or distributors to facilitate ease of entry.
  • Be creative, unique and have long-term commitment to the market.

Distribution channels

The Japanese cosmetics market in recent years has divided into two separate markets: a high-end market and a budget market. The high-end market is comprised of top domestic and foreign brands. These can usually be found in department stores and are sold over the counter by personal advisors and make-up artists.

The lower-end budget market, which has expanded in recent years, covers supermarkets, convenience stores and drugstores. These products can be foreign brands that are in the initial stages of gaining recognition in the market and are sold at largely discounted prices for a limited time. Otherwise, they tend to be domestic products that are second tier brands of top manufacturers.

Australian exporters should note that due to Australia’s labour costs, a strong Australian dollar and the mark-up on imported cosmetics items, ‘Made in Australia’ products tend to be sold in department stores or cosmetics specialty/lifestyle stores.

Links and industry contacts

Cosmetics–related resources

Cosmetics Importers’ Association of Japan (in Japanese)
Japan Cosmetics Industry Association (in Japanese)
Japan Cosmetic Suppliers Association

Government, business and trade resources

Ministry of Health, Labour and Welfare
Ministry of the Economy, Trade and Industry

Australian resources

Japan External Trade Organization (JETRO)

Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

  • develop international markets
  • win productive foreign direct investment
  • promote international education
  • strengthen Australia's tourism industry
  • seek consular and passport services.

Austrade provides information and advice that can help you reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.