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Business

Shiseido to use acquisitions to boost global cosmetics market share

Japanese maker wants luxury D&G and LM brands to account for 10% of total sales

Dolce & Gabbana shop at Milano, Italy

TOKYO -- Shiseido plans to entice global consumers by expanding its line of luxury beauty products, including sales of perfumes co-developed under the Dolce & Gabbana brand. 

In June last year, the Japanese cosmetics giant landed exclusive global production and sales licenses for the Italian fashion house's cosmetics products. Procter & Gamble was the previous license holder.

In addition, the company in 2016 obtained the Laura Mercier cosmetics brand through the acquisition of an American company.

The goal is to develop the two brands into a new pillar of Shiseido's global business and have them make up 10% of the company's total sales as early as fiscal 2020.

Shiseido President Masahiko Uotani unveiled the plan on Tuesday in an interview with The Nikkei.

The company will start manufacturing existing D&G brand perfumes in May. In 2018 at the earliest, Shiseido will begin production of jointly developed perfumes, Uotani said.

Although D&G's flagship cosmetics are fragrances, including perfumes, Shiseido will go on to market makeup products in 2019 at the earliest and the brand's first skin care items, such as toners and beauty essense, as early as 2020. 

D&G product development will be handled by Shiseido's European regional headquarters and the brand. Shiseido group's development teams in Japan and the U.S., which have been mainly responsible for skin care products and makeup products, respectively, will also support the European headquarters.

Prices for key D&G brand products are expected to range from 6,000 yen to 30,000 yen ($55.21 to $276). Those under the LM brand will be priced between 3,000 yen and 5,000 yen.

Both D&G and LM will be positioned as new flagship brands along with Shiseido's own brand. 

Upmarket push

Shiseido enjoys a high market share in skin care products. In the U.S. and Europe, the major markets for luxury cosmetics, perfumes and makeup items are the predominant sellers. 

The company thus will speed up the global launch of products under the two brands.

Uotani said Shiseido's future depends on its ability to compete in upscale global markets. 

Compared to the U.S. and Europe, D&G is increasing its market penetration in Asia at a slower pace.

By taking advantage of Shiseido's broad sales network in China, the company will expand sales locations to department stores in addition to duty-free shops at airports and other sites that have been its main focus. 

Shiseido will "more than double" its investment in D&G marketing activities compared to the amount invested by P&G.

Shiseido is forecast to post 940 billion yen in sales for the year ending December 2017, up 10.5% on the year. However, half the projected sales increase amount, or 47.5 billion yen, is earmarked for securing the D&G license and LM brand.

Under a midterm management plan, Shiseido is currently working to increase sales to more than 1 trillion yen by fiscal 2020. 

(Nikkei)

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