Kao is #12 on this year's list of Top Global Beauty Companies.
Below is a look at the company's 2022 highlights, recent acquisitions, best-selling brands, and latest innovations.
Corporate Sales:
$12 billion
Beauty Sales:
$5 billion
Key Personnel:
- Yoshihiro Hasebe, president and CEO
- Toshiaki Takeuchi, senior managing executive officer
- Tomoharu Matsuda, senior managing executive officer
- Managing executive officers: Masakazu Negoro, Yasushi Wada, Osamu Tabata, Yoshihiro Murakami, Hideaki Kubo, Toru Nishiguchi, Satoru Tanaka, David J. Muenz.
Major Products/Brands:
athletia, Curél, est, freeplus, Kanebo, Kate, Molton Brown, RMK, Sensai, Sofina iP, Suqqu, and and, Asience, Bioré, Blauné, Cape, Essential, Guhl, Jergens, John Frieda, Kao Sekken White, Liese, Merit, My Kirei, Rerise, Segreta, Success, Goldwell, kms, Oribe.
New Products:
Bioré Guard Mos Block Serum, Sensai Absolute Silk Illuminative Cream, Allie Chrono Beauty Line, Goldwell Rainbow Dye, Sensai Contouring Lipstick.
Financial Summary:
In fiscal 2021, Covid-19 continued to have a major impact on society, economies and people’s lives worldwide. As a result, Kao Group’s operations were impacted by significantly delayed market recovery, particularly in Japan, where inbound demand disappeared and a state of emergency was repeatedly declared, among other factors. In Kao’s key markets, the household and personal care markets remained on par with the previous fiscal year. The cosmetics market also remained on par with the previous fiscal year, but has not recovered to its pre-pandemic level.
Amid these circumstances, the Kao Group’s net sales increased 2.7% compared with the previous fiscal year to $12 billion. On a like-for-like basis, net sales increased 0.3%. The shares of net sales in FY2021 by business segment were 35.0% for Hygiene and Living Care, 25.0% for Health and Beauty Care, 3.7% for Life Care, 16.9% for Cosmetics and 19.4% for Chemical.
In fiscal 2021, the group kicked off K25, the new Kao Group Mid-term Plan. The strategic approach of K25 consists of three goals with a focus on the year 2030: 1. Become an essential company in a sustainable world; 2. Transform and build robust business through investment; 3. Maximize the power and potential of employees. As a part of K25, Kao says it will take its promotion of ESG-driven management a step further, striving to make both a positive contribution to society and achieve financial growth.
Also, since last year, Kao has been implementing dual-track reforms using the concepts of Reborn Kao, which aims to revitalize existing business, and Another Kao, which aims to create future-focused new business. Reborn Kao is about reinforcing the company’s current business with dynamic investments and fortifying its brand strategy, while Another Kao focuses on themes that Kao has not done, or has not been able to do, in the past. In order to deliver the dual-track approach, Kao has reset its innovation agenda and mobilized the team to ensure new business investments are highly leveraged against its current business competencies, capabilities and technologies.
2021/2022 Highlights:
In October 2021, Kao joined forces with another leading Japanese beauty company—Kosé Corporation—with the aim of realizing a sustainable society. Together, both parties will pool their strengths to collaborate in a wide range of fields, including people, society, and the environment, to identify solutions in the cosmetics business that can contribute to the realization of a sustainable society. Planned initiatives range from jointly promoting resource circulation and upcycle measures, to jointly deploying awareness-raising activities relating to skincare and UV care.
As a first step, Kao and Kosé have initiated a collaboration between Kao’s Horizontal Recycling of Cosmetic Plastic Bottles and Kosé’s cooperative venture, Recycling Cosmetics into Paints Initiative. Going forward, both companies that have been respectively promoting these initiatives will work together to promote and develop them while making use of each other’s knowledge.
In November 2021, the Japan Aerospace Exploration Agency (JAXA) selected Kao’s proposal for a 3D Space Shampoo for wiping away dirt and sebum from the scalp and hair. The unique hair care product will be used onboard the International Space Station (ISS) starting around 2022.
In December 2021, international nonprofit organization, CDP, included Kao Corporation in its prestigious ‘A List’ across three categories for the second year in a row. Kao received the highest triple-A score for its sustainability initiatives involving climate change, forests and water security.
In January 2022, Kao implemented field testing aimed at recycling used cosmetic bottles that have been collected, and transforming them back into new bottles. The goal of the project is to achieve material recycling of cosmetic bottles that are made from plastic, and to eventually realize plastic circularity in society. Used cosmetic bottles were collected at select retail outlets and used for field testing of material recycling to turn used cosmetic bottles into new cosmetic bottles, utilizing the BRING Technology chemical recycling technology of Jeplan Inc.
In February 2022, Kao announced that it would be eliminating the use of eye-catching plastic stickers on its product packaging, in order to reduce the amount of plastic it uses. Instead, the company will make the design of the packaging itself and presentation of information that is printed directly on it more eye-catching. In the case of products that require stickers to inform consumers of correct usage, Kao will switch to using eco-friendly materials such as FSC-certified paper instead of plastic.
Also in February, Kao announced it was considering divesting or discontinuing 13 more cosmetic brands by 2024. Shedding the 13 as-yet-unnamed brands will allow Kao to allocate investment toward growth-driver brands and regional strategy brands, said the Tokyo-headquartered company. In total, 28 brands had been scheduled by Kao for discontinuation with 15 having already been axed.
In March 2022, the Kao Group joined the global call for support in Ukraine and made a donation of €500,000 ($502,000) to UNHCR, the UN Refugee Agency for humanitarian assistance to those affected in Ukraine and neighboring countries. Kao also promised to donate Kao products such as disposable baby diapers, personal hygiene and sanitary products through Japanese industrial associations and other organizations to help people in Ukraine and in evacuation centers. With regard to business, Kao suspended export sales to Russia and advertising activities in Russia.
In July 2022, Kao began incorporating the use of chemically recycled PET material manufactured by PET Refine Technology Co., Ltd., a group company of JEPLAN Inc., using the chemical recycling technology maintained by JEPLAN. Through this initiative, Kao will reduce the amount of virgin plastic used in the makeup category of the Kao cosmetics business, promote sustainable manufacturing, and further promote efforts to realize horizontal recycling of plastic cosmetic containers.
In August 2022, Kao signed The Climate Pledge, a commitment co-founded by online retailer Amazon and environmental advocacy group Global Optimism. As a signatory of The Climate Pledge, Kao agrees to measure and report greenhouse gas emissions on a regular basis, implement decarbonization strategies in line with the Paris Agreement and take action to neutralize any remaining emissions with additional, quantifiable, real, permanent, and socially beneficial offsets to achieve net-zero annual carbon emissions by 2040 – 10 years ahead of the Paris Agreement on climate change.
Looking Ahead
Kao’s net sales for the six months ended June 30, 2022 increased 8.7% year-over-year to $5.4 billion. Amid factors including hikes in raw material prices and rapid exchange rate fluctuations, as well as the Russia-Ukraine crisis and the spread of variants of Covid-19, sales of skincare and hair care products decreased while cosmetic sales growth was 4.9%. This was driven by new product launches from global beauty businesses such as G11, the prestige skincare and make-up brand SUQQU and makeup company Kate.
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