Soap in Japan

Industry Profile

Reference Code: 0104-0208

Publication date: February 2004

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Japan - Soap
© Datamonitor (Published February 2004) Page 2
EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

Market Value

The Japanese soap market shrank by 5.1% in 2003 to reach a value of $556.1
million.

Market Value Forecast

In 2008 the market is forecast to have a value of $412.0 million, a decrease of 25.9%
since 2003.

Market Volume

The market shrank by 5.6% in 2003 to reach a volume of 220.7 million units.

Market Volume Forecast

In 2008 the market is forecast to have a volume of 157.5 million units, a decrease of
28.6% since 2003.

Market Segmentation I

The largest sector of the market is liquid soap, which accounts for 60.9% of the
market value share.

Market Segmentation II

In terms of value, Japan accounts for 18.7% of the Asia-Pacific soap market.

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© Datamonitor (Published February 2004) Page 3
CONTENTS

TABLE OF CONTENTS

EXECUTIVE SUMMARY 3

CHAPTER 1 Market Overview 7

1.1 Market Definition 7

1.2 Research Highlights 7

1.3 Market Analysis 7

CHAPTER 2 Market Value 9

CHAPTER 3 Market Volume 10

CHAPTER 4 Market Segmentation I 11

CHAPTER 5 Market Segmentation II 12

CHAPTER 6 Competitive Landscape 13

CHAPTER 7 Leading Companies 14

7.1 Kao Corporation 14

7.2 Lion Corporation 14

7.3 Shiseido Company, Limited 14

7.4 Kanebo, Ltd. 14

7.5 Procter & Gamble 15

CHAPTER 8 Market Forecasts 16

8.1 Market Value Forecast 16

8.2 Market Volume Forecast 17

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CONTENTS

CHAPTER 9 Further Reading 18

9.1 Related Datamonitor Research 18

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CONTENTS

LIST OF TABLES

Table 1: Japan Soap Market Value: $ million, 1999-2003 ................................................. 9

Table 2: Japan Soap Market Volume: Units million, 1999-2003 ...................................... 10

Table 3: Japan Soap Market Segmentation I: % Share, by Value, 2003......................... 11

Table 4: Japan Soap Market Segmentation II: % Share, by Value, 2003........................ 12

Table 5: Japan Soap Market Value Forecast: $ million, 2003-2008 ................................ 16

Table 6: Japan Soap Market Volume Forecast: Units million, 2003-2008....................... 17

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MARKET OVERVIEW

CHAPTER 1 MARKET OVERVIEW

1.1 Market Definition

The soap market includes all bar and liquid soaps. Market value has been calculated
at the retail selling price (RSP). Any currency conversions used in this report have
been calculated at the 2003 annual average exchange rate.

1.2 Research Highlights

During the 1999-2003 period, the Japanese soap market experienced negative
growth rates, ending the period on a rate of -5.10%.

Mostly domestic companies hold major shares of the Japanese soap market,
including Kao, Lion, Shiseido and Kanebo.

During the next five years, the market is expected to experience even weaker growth
rates.

1.3 Market Analysis

During the 1999-2003 period, the Japanese soap market experienced negative
growth rates, ending the period on a rate of -5.10%. The market decreased in value
by 17.7% over the period, but despite negative growth, held the largest share of the
Asia-Pacific soap market in 2003.

The Japanese soap market reached a value of $556 million in 2003, having grown
with a compound annual growth rate (CAGR) of 4.8% in the 1999-2003 period. This
growth was considerably weaker than that of the Asia-Pacific market itself, leading to
the Japanese market’s share decreasing by 6.5 percentage points between 1999 and
2003, accounting for 18.7% of the Asia-Pacific market by the end of this period.

The leading revenue source for the Japanese soap market in 2003 was the liquid
soap sector, which accounted for nearly 61% of the market’s value. In value terms
this sector was worth $339 million in 2003. The bar soap sector generated the
remainder of the market’s revenues in 2003, reaching a value of $217 million,
equivalent to 39.1% of the market’s value. It is unlikely that this sector will challenge
the leading sector’s position going forward.

During the next five years, the market is expected to experience even weaker growth
rates. By 2008 the market is forecast to reach a value of $412 million, a CAGR of –
5.8% in the 2003-2008 period, lower than the Asia-Pacific market. The Japanese

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MARKET OVERVIEW

market’s negative growth means that its share of the Asia-Pacific market is likely to
decline; from its 18.7% share of the Asia-Pacific market in 2003, the Japanese
market is forecast to account for 12.4% by 2008, a 6.3 percentage point decline.

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MARKET VALUE

CHAPTER 2 MARKET VALUE

The Japanese soap market shrank by 5.1% in 2003 to reach a value of $556.1
million.

The compound annual rate of change of the market in the period 1999-2003 was -
4.8%.

Table 1: Japan Soap Market Value: $ million, 1999-2003

Year $ million Ja¥ million % Growth

1999 675.6 78,706.2

2000 645.8 75,225.0 -4.40%
2001 615.9 71,743.8 -4.60%
2002 586.0 68,262.6 -4.90%
2003 556.1 64,781.4 -5.10%

CAGR, 1999-2003: -4.8%

Source: Datamonitor DAT AMONITOR

Figure 1: Japan Soap Market Value: $ million, 1999-2003

$ million % Growth

800 -4.0%
700
-4.2%
600
-4.4%
% Growth
$ million

500
400 -4.6%
300
-4.8%
200
-5.0%
100
0 -5.2%
1999 2000 2001 2002 2003

Source: Datamonitor DAT AMONITOR

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MARKET VOLUME

CHAPTER 3 MARKET VOLUME

The Japanese soap market shrank by 5.6% in 2003 to reach a volume of 220.7
million units.

The compound annual rate of change of the market volume in the period 1999-2003
was -5.3%.

The largest fall came in 2003 when the market shrank by 5.6%.

Table 2: Japan Soap Market Volume: Units million, 1999-2003

Year Units million % Growth

1999 274.4
2000 261.2 -4.80%
2001 246.9 -5.50%
2002 233.8 -5.30%
2003 220.7 -5.60%

CAGR, 1999-2003: -5.3%

Source: Datamonitor DAT AMONITOR

Figure 2: Japan Soap Market Volume: Units million, 1999-2003

Units million % Growth

300 -4.4%

250 -4.6%
-4.8%
Units million

200
% Growth

-5.0%
150
-5.2%
100
-5.4%
50 -5.6%
0 -5.8%
1999 2000 2001 2002 2003

Source: Datamonitor DAT AMONITOR

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MARKET SEGMENTATION I

CHAPTER 4 MARKET SEGMENTATION I

The largest sector of the Japanese soap market is liquid soap, which accounts for
60.9% of the market value share.

Bar soap generates the remaining 39.1% share of the market's value.

Table 3: Japan Soap Market Segmentation I: % Share, by Value, 2003

Category % Share

Liquid soap 60.90%

Bar soap 39.10%

Total 100.0%

Source: Datamonitor DAT AMONITOR

Figure 3: Japan Soap Market Segmentation I: % Share, by Value, 2003

Bar soap
39.1%

Liquid soap
60.9%

Source: Datamonitor DAT AMONITOR

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MARKET SEGMENTATION II

CHAPTER 5 MARKET SEGMENTATION II

In terms of value, Japan accounts for 18.7% of the Asia-Pacific soap market.

Table 4: Japan Soap Market Segmentation II: % Share, by Value, 2003

Geography % Share

Rest of Asia Pacific 81.30%

Japan 18.70%

Total 100.0%

Source: Datamonitor DAT AMONITOR

Figure 4: Japan Soap Market Segmentation II: % Share, by Value, 2003

Japan
18.7%

Rest of Asia
Pacific
81.3%

Source: Datamonitor DAT AMONITOR

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COMPETITIVE LANDSCAPE

CHAPTER 6 COMPETITIVE LANDSCAPE

Mostly domestic companies hold major shares of the Japanese soap market,
including Kao, Lion, Shiseido and Kanebo. Procter & Gamble are the only non-
Japanese company to stand out as a major player of the market. Unlike other
markets in the Asia-Pacific region, liquid soap is the dominant sector of the Japanese
market. Nonetheless, there is still a wide scope for product innovations within the
sector.

Since its launch of the first-ever high quality domestic facial soap in Japan in 1890,
Kao Corp has been a key player within the Japanese soap market. The dominance of
the Kao Corporation can be largely attributed to its aggressive marketing aimed at
strengthening core brands.

Lion Corporation is another major player of the Japanese soap market. One of the
reasons for Lion’s strong position is that despite the decline in the Japanese economy
it launched new products and invested in the marketing of principal brands. Lion
introduced a new and improved Kireikirei medical liquid hand soap which
strengthened its position in the liquid-hand-soap market- largely the result of
increased awareness about hygiene following the SARS outbreak.

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LEADING COMPANIES

CHAPTER 7 LEADING COMPANIES

7.1 Kao Corporation

Kao produces personal care products, cosmetics, laundry and cleaning products and
hygiene products in Japan. The company also manufactures chemical products. For
the fiscal year ended March 2003, the company generated revenues of Y865.2 billion
($7.2 billion), an increase of 3.1% on the previous year.

Kao has operations in Asia, North America, Europe and other parts of the world. In
August 2002, it agreed to buy US haircare products maker John Frieda Professional
Hair Care in the latest of a series of overseas deals. Kao is headquartered in Tokyo,
Japan.

7.2 Lion Corporation

Lion is the number one Japanese toothpaste manufacturer. The company also
produces and sells laundry detergent, bleach, cleaners, shampoo, deodorant, and
beauty products in eight countries, mainly in Asia. For the fiscal year 2002, it
generated revenues of $2.6 billion (Y308.6 billion).

In recent years Lion has allied with German chemical conglomerate Henkel to launch
new laundry products, and conduct a joint venture to sell hair colorants, in Japan.
Household and beauty products account for about 75% of sales. Lion is
headquartered in Tokyo, Japan.

7.3 Shiseido Company, Limited

Shiseido is one of Japan's largest cosmetics company, produces makeup and skin
care products for men and women. For the fiscal year ending March 2003, net sales
totaled $5205 million.

The company specializes in brand value as a vital management asset for improving
corporate value. It is promoting international growth by intently pursuing its global
multibrand strategy, which comprises diverse brands reflecting a wide range of values
and needs. Shiseido is headquartered in Tokyo, Japan.

7.4 Kanebo, Ltd.

Kanebo specializes in the manufacture of consumer products including cosmetics,

toiletries, pharmaceuticals, fashions, and chemical products. For the fiscal year

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LEADING COMPANIES

ending March 31, 2002, the company generated revenues of $4,008.12 million (JPY
533 million), a decrease of 11.6% on the previous year.

Kanebo is split into eight separate divisions: Cosmetics Division, Pharmaceuticals

Division, New Materials Division, Textiles Division, Toiletries Division, Fashion
Division, Foods Division and the Associated Companies Division. The company
operates facilities in Asia, Europe, and North and South America, and is
headquartered in Tokyo.

7.5 Procter & Gamble

Procter & Gamble manufactures and markets a broad range of household consumer
products on an international basis. The company is ranked by Fortune in the top 50
global companies. For the fiscal year ended June 2003, the company reported
revenues of $43,377 million an increase of 7.8% on the previous year.

Procter & Gamble has operations in North America, Europe, Middle East, Africa, Asia
and Latin America. The company’s well-known branded products are sold in over 140
countries and range from detergents to pet food. Around half of its sales come from
its 10 leading brands. Procter & Gamble is headquartered in Cincinnati, Ohio.

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MARKET FORECASTS

CHAPTER 8 MARKET FORECASTS

8.1 Market Value Forecast

In 2008 the Japanese soap market is forecast to have a value of $412.0 million, a
decrease of 25.9% since 2003.

The compound annual rate of change of the market in the period 2003-2008 is
predicted to be -5.8%.

Table 5: Japan Soap Market Value Forecast: $ million, 2003-2008

Year $ million Ja¥ million % Growth

2003 556.1 64,781.4 -5.10%

2004 526.2 61,300.2 -5.40%
2005 496.3 57,819.0 -5.70%
2006 466.5 54,337.9 -6.00%
2007 437.9 51,012.4 -6.10%
2008 412.0 47,998.5 -5.90%

CAGR, 2003-2008: -5.8%

Source: Datamonitor DAT AMONITOR

Figure 5: Japan Soap Market Value Forecast: $ million, 2003-2008

$ million % Growth

600 0.0%

500 -1.0%
-2.0%
400
% Growth
$ million

-3.0%
300
-4.0%
200
-5.0%
100 -6.0%
0 -7.0%
2003 2004 2005 2006 2007 2008

Source: Datamonitor DAT AMONITOR

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MARKET FORECASTS

8.2 Market Volume Forecast

In 2008 the Japanese soap market is forecast to have a volume of 157.5 million units,
a decrease of 28.6% since 2003.

The compound annual rate of change of the market volume in the period 2003-2008
is predicted to be -6.5%.

Table 6: Japan Soap Market Volume Forecast: Units million, 2003-2008

Year Units million % Growth

2003 220.7 -5.60%

2004 207.6 -5.90%
2005 194.5 -6.30%
2006 181.4 -6.70%
2007 169.0 -6.80%
2008 157.5 -6.80%

CAGR, 2003-2008: -6.5%

Source: Datamonitor DAT AMONITOR

Figure 6: Japan Soap Market Volume Forecast: Units million, 2003-2008

Units million % Growth

250 0.0%
-1.0%
200
-2.0%
Units million

% Growth

150 -3.0%
-4.0%
100 -5.0%
-6.0%
50
-7.0%
0 -8.0%
2003 2004 2005 2006 2007 2008

Source: Datamonitor DAT AMONITOR

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CONTENTS

CHAPTER 9 FURTHER READING

9.1 Related Datamonitor Research

Datamonitor Industry Profiles

Global Soap ($200)

Soap in Asia-Pacific ($200)
Soap in Europe ($200)
Soap in France ($200)
Soap in Germany ($200)
Soap in the United Kingdom ($200)
Soap in the United States ($200)

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