Kao sets $1.38bn sales target for hair care by 2027 on the back of hair colour, premium offerings

The Japanese beauty and personal care company revealed its plans during its Hair Care Business Strategy Briefing held on September 19.

It is expecting the total hair care business to achieve double-digit growth annually.

Additionally, it is expecting its hair colour and premium products segments to have a higher growth rate than the overall market with a compound annual growth rate (CAGR) of at 7% and 13% respectively.

“Kao is focused on accelerating the growth speed,” said Mayumi Moriya, president, hair care business, colour and styling, Kao Corporation.    

“Kao is focused on the hair colour market and the premium care market as this is where the consumers are seriously demanding high value-added products.”

Colour: Low satisfaction category

Kao sees major opportunity in the hair colour category, where consumers generally have low satisfaction.

Moriya elaborated that hair colouring often causes stress on the consumers, as it takes a lot of time and effort.

Additionally, the results may not match expectations, and the process can cause hair damage due to the advanced technology and know-how needed for better results.

Furthermore, the entry barriers to this category are high and the number of players is limited.

Goldwell and Liese are the key strategic brands for Kao’s hair colour ambitions. The former is a professional salon brand while the latter is a home use brand.

“We want to continue to grow the hair salon brand Goldwell by implementing organisational reforms due to the changes in the channel structure, along with effectively attracting the next generation of stylists. For the hair colour brand Liese, which targets home use in Asian countries, we want to maximise our technical capabilities to bolster product rollouts which suit the consumer's needs in Asia,” said Moriya.

In addition to two widely recognised brands, Kao is also backed up by the hair colouring technology it has developed over the years.

For instance, its hair colour foam, which can be found in its Liese Creamy Bubble Colour. The product has been number one in sales for six consecutive years from 2018 to 2023.

The premium opportunity

In the premium segment, Kao will focuse on three brands: Oribe, John Frieda, and Melt.

“Oribe is growing in Europe and on e-commerce, and we want to accelerate that growth even further. In Japan, we are polishing and improving our emotional value and entering into premium market in Japan by launching new brands. Finally, John Frieda is promoting further premiumisation,” said Moriya.

The firm’s strategy to grow these brands is to focus on products that meet consumers’ emotional need.

“The common key to growth is that we bolster our brand philosophy and message so that it appeals to the consumer's emotions. At Kao, we are very proud of our top-class research and product capabilities. However, in order to gain share in the premium market, the art factor is necessary to appeal to people's emotions and capture their hearts,” said Moriya.

She elaborated that this approach was inspired by Oribe.

“Oribe has achieved amazing results in the premium market. At their core, they listen closely to what their customers want, and their philosophy is to meet those needs by paying attention to details and not compromising. When it comes to product design and development, we share the same thinking, and we call this the Kao Way. Oribe’s strength is that they also use the idea of art as part of the brand. Just like Oribe, we have started an initiative in Japan which uses this idea of art.”

This year, the company launched Melt, its new premium hair care brand for the Japanese market. The brand launched with innovative products such as a carbonated shampoo.

“The premium market in Japan is rapidly growing. However, until last year, we had very little sales in Japan from premium-priced products. However, after careful preparation, in Spring 2024, we achieved a full-scale entry into this market with the launch of our new brand called Melt,” said Moriya.

The company considers the launch of Melt to have been a success.

“Six months after the launch, the brand has been highly praised from the purchasers, and what's most important is that many people said they want to continue to purchase the brand. It was also well-received from the buyers as well, with them saying that even compared to competitors' new brands, the Melt brand had strong sales,” said Moriya.

Kao is set to launch a new premium brand this fall and next year.

“We want to quickly launch the second brand and third brand, which will be unique and compelling brands in addition to Melt,” said Moriya.