Kanebo Cosmetics Eyes Overseas Growth

Tokyo-based Kanebo Cosmetics Inc., whose acquisition by Kao Corp. was officially completed this week, is eyeing China, Europe and the U.S. as growth markets.

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NEW YORK — Tokyo-based Kanebo Cosmetics Inc., whose acquisition by Kao Corp. was officially completed this week, is eyeing China, Europe and the U.S. as growth markets.

Meanwhile, Kanebo Cosmetics is set to introduce in the U.S. a nine-item antiaging line called Sensai Silk, designed to target those in their late 20s and early 30s.

"In terms of growth, Asia — especially China — Europe and the U.S. have potential," said Kunihiko Yogo, chairman and chief executive officer of Kanebo Cosmetics Inc. Yogo, 48, was appointed to head the company when it was spun off from Kanebo Ltd. in May 2004 as part of a rescue deal with the Industrial Revitalization Corp. of Japan, which bought 86 percent of beleaguered Kanebo Ltd.

Among Yogo's first moves as ceo of Kanebo Cosmetics was to retrench the brand's distribution scheme in Europe and Asia. Kanebo Cosmetics, which at one time had a high-end positioning in Europe, Yogo said during an interview here last week, began "eroding" in Europe's mass market channel. So the company began closing European doors in fall 2004 and focused distribution on upscale venues. For instance, in the U.K. alone, Kanebo Cosmetics closed more than 180 doors — with the exception of Harrods.

"We had brand equity as prestige in Europe," said Yogo, who added that, once again, "the [European] strategy is focused on superprestige." Kanebo Cosmetics' European sales are roughly $60 million, according to industry sources, and its biggest markets are Germany, Italy and Spain.

Similarly, in China, Kanebo Cosmetics' distribution network stood at 260 doors, a number Yogo reduced to about 180 department store doors in major cities today. The company's major department store brand in that country is the Aqua assortment, which ranges in price from $80 to $100. Kanebo also was launched in the pharmacy channel in China in December.

"With China exploding now, we expect the drugstore channel to open up," said Yogo. Kanebo Cosmetics' biggest Asian markets include Taiwan, Thailand and Indonesia.

In the U.S., Yogo asserted, Kanebo Cosmetics will employ a strategy similar to the one implemented in Europe — "gradual, step-by-step distribution [growth]." There are now 27 doors of distribution in the U.S., including Saks Fifth Avenue, Barneys New York, Bergdorf Goodman and Takashimaya. Kanebo Cosmetics expects to open 10 new doors in the U.S. this year, all within existing retail chains. Kanebo Cosmetics' U.S. business is projected to reach about $10 million at retail this year, according to industry sources.

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