From Japan to Brazil: Mitsui & Co.’s investment in Kao subsidiary scales skincare markets

28 Feb 2023 --- General trading company Mitsui & Co. is investing in Kao’s subsidiary TBP Importação e Comércio de Cosméticos – striking a strategic partnership in the company’s skincare business in Brazil. Based on their agreement, Mitsui will subscribe to new quotas in the subsidiary with the goal of expanding the business in the country.

The arrangement under the signed Quota Subscription Agreement will be effective in April this year once Cade, a Brazilian antitrust authority, provides its approval. The investment ratio for Kao will be 70% and 30% for Mitsui.

Brazil is a hotspot for beauty and personal care, making it the world’s fourth-largest market in this sector. Its market is valued at ¥3 trillion (US$21.95 billion), according to Kao.

Between January and December 2022, Brazil’s toiletries, perfumery and cosmetics sectors grew by 9.4% – worth US$1.52 billion. The Brazilian Association of the Toiletries, Perfumery and Cosmetics Industry (ABIHPEC) shares that the trade balance was in surplus of US$35.5 million, with an increase of 206% compared to the surplus balance recorded in the same period of 2021 (US$11.6 million).Brazillian consumers indicate a “strong acceptance” of Bioré (Image credit: Kao).

The three main items exported were hair products (23.7%), soaps (19.1%) and oral hygiene products (11.6%), according to ABIHPEC.

Brazil and beyond
Kao has had a tie-up with Mitsui for the sales and marketing of Kao’s Bioré skincare brand since 2017 and has also carried out trial sales as part of market research activities. Bioré is touted as a skin care brand “with effective, efficient products developed through Japanese R&D.” It has products ranging from UV sunscreens, makeup removers, facial cleansing, pore packs, body wipes and hand hygiene.

Resulting from their collaborative research, the companies found that Brazilian consumers indicate a “strong acceptance” of Bioré. This is leading the two companies to partner and begin sales in the country. “The companies will expand this business further, and products may be manufactured locally,” says Kao.

“Kao and Mitsui plan to work together in the beauty and personal care field, mainly in emerging economies, and will also explore how they can further expand their partnership in their areas of interest.”

The company has observed year-on-year growth across its key markets for household, personal care and cosmetics products. However, the company states that the cosmetics market has not recovered to the pre-pandemic level of 2019. Net sales increased 9.3% compared to the previous fiscal year to ¥1,55 trillion (US$11.82 billion). 

In recent months, Kao invested in core brands and promoted a “digital transformation” while strategically raising prices. Sales of skincare products increased, especially the sales of UV care and seasonal products. However, sales in the US decreased due to an inflation-triggered decline in consumption.

Skincare business as a global driverBrazil is the world’s fourth-largest market for beauty and personal care, valued at US$21.95 billion, according to Kao (Image credit: Kao).
Kao is focusing on expanding its skincare business, providing “Only One” value as its global growth driver.

In recent skincare innovation highlights, Kao launched a cosmetics brand called Unlics branded “Hungry for Beauty” to provide beauty for Gen Z men who are interested in more than simple grooming.

The company also signed an agreement with Daiichi Sankyo Healthcare to collaborate on a skincare-related joint development in the company’s Life Care Business segment. The partnership has synergized the two companies’ formulation technologies toward developing healthcare products.

Meanwhile, Kao also introduced Skin Potential Analysis, a service powered by skin surface lipids-ribonucleic acid monitoring technology, allowing customers to learn about their skin’s condition and an appropriate skincare regimen.

By Venya Patel