Through various lifestyle and cosmetic products, the Japanese firm Erina is making a difference in the lives of its customers while utilizing natural and sustainable ingredients.
J-beauty brands have historically faced competition from Western companies that have strong marketing, a strong reputation, and a very long history. In recent years, new competitors, including K-beauty from Korea via the export of K-pop and Korean culture, have also been a disruptive force within the sector. Yet, what’s interesting is that a lot of the formulas and technologies sold by Korean brands were originally developed in Japan. We also see the popularity of Japan’s “less is more” philosophy, with more active ingredients in simpler products. What are the advantages of J-beauty brands today and how do they compare to these regional competitors? What would you say is the unique selling proposition that J-beauty has to offer?
First of all, compared to European or American cosmetic companies, a strong point of the Japanese market is the Japanese consumer, who is very demanding, needs very high quality, and doesn’t tolerate low-quality products. That applies not only to ingredients but also to the packaging. If there are some scratches or imperfections on the package, it cannot be sold. This demand for high quality has existed for many years. Also, the skin of Japanese consumers is more sensitive, I think, compared to consumers in other markets, so the quality of our cosmetics, especially for skin care, is very sensitive to these skin types and requires a lot of consideration during product development. When European people use Japanese cosmetics, they are surprised by the quality and how gentle they are for the skin. When I compare it to Korean cosmetics, the way of marketing is different. They sometimes use trendy, attractive, and rare ingredients. For example, they might use ingredients made from snails or snake venom. Their marketing shows very eccentric products, but this attracts the younger generation who are eager to try new things. At the same time, Korea has a number of high-quality raw materials, including medicinal herbs that have been used for over many years. We have a Korean partner who supplies us with top-grade Korean Ginseng. I think that Korean skin care products are popular among the younger generation in Japan whereas older customers prefer Japanese cosmetics.
I’d like to talk a bit about the global cosmetics sector. As you mentioned, younger consumers are eager to try these new formulas. Experts believe that the global cosmetic industry will grow by approximately 5% by the end of the decade, which is fast for such a mature sector. Within that, we see some key trends. For example, the use of social media and e-commerce platforms to target younger generations and consumers that are a lot more aware of the environmental friendliness of products. What do you see as the main growth drivers for the cosmetic fields over the next five years?
I think there’s going to be more need for quick effectiveness and safe ingredients derived from natural sources.
Japan is the oldest society in the world today, and it also has a declining population. This creates a series of challenges for manufacturers, such as a labor shortage and a domestic market that is getting smaller. It also creates opportunities to develop products for an older population. If you consider Germany is aging, the US is also starting to age, China is not far behind, and Korea is nearly at the same level, Japan may have a first-mover advantage. What have you identified as the challenges and opportunities of operating within Japan’s changing demography?
The average age of an Erina member is high and we know a lot about the needs of higher-aged people, and what we are offering tries to match skincare to the age. Of course, our products can also match the younger generation. However, customers over 40 or 50 care more about wrinkles, spots, or blemishes. They also want firmer skin, and when they use our products, they can feel an improvement so we have good confidence in those older customers, but next, we have to consider the younger generations, in their 20s and 30s. That’s our issue.
What’s quite interesting today, with the advance of technology, is that the consumption patterns, the way people purchase products, are divided between generations. Seniors are still big consumers of traditional media, such as television, for example. Millennials are more Internet savvy, but a bit in the middle, and are happy to purchase on e-commerce platforms, for example, but still value the in-store shopping experience. The younger generation, like Gen Z, is all about social media platforms like TikTok and Instagram. Since you target both the younger and older generations, how do you adapt your marketing to tap into those different consumer segments?
That’s not an easy question. Regarding the utilization of social media platforms, because we are a company that uses a membership system, we do not have any policy in place where we’re going to use those services to advertise to the general public or society. We believe that the strongest way to promote ourselves is to have the consumers really feel how good our products are, so nationwide we have around 1,000 sales stores. Supporting those stores, we have members who have the qualification to sell our products. We believe that the way to go forward is for these personal, direct communications to go on between people so people can really feel how beneficial our products are. This is the strongest way to advertise, but also in terms of cost, it is the most advantageous way, so that’s how we want to go forward.
In contrast to this idea, a lot of social media platform advertisements tell how good a product is, but each person has different skin types, lifestyles, and food consumption patterns, so we believe that the most important thing is to have a customized approach to different kinds of people and to have products that are a good fit for every person. We believe that our way of doing business matches that idea. To give an example, let’s say a 60-year-old person is recommending a certain product to a 30-year-old person. It’s really effective because the 30-year-old can actually see that person has maintained her beauty with the products. So that’s another effective way of showing the evidence for the products.
I’d like to dig deeper into Erina, a company founded in 1970. Today, you develop both beauty and healthcare products with a strong focus on natural ingredients. Since your founding, one of your mottos has been “care over cure.” The idea, of course, is to focus on daily care rather than treatment. Could you explain to us what that philosophy means and how that translates into your product development?
This came from the history of our founder, who is a Canadian who worked for Britannica. When he came to Japan, he had a very serious surgery, and the doctor told him he had only two years to live, so his health condition was very bad. The founder asked the doctor what he should do during those two years and the doctor told him to read books. Therefore, the founder read many books and researched so much information, and finally, he concluded that food nutrition and caring for the body are the most important things. He communicated with a doctor who was an authority on nutrition and they developed the nutritional ABC, and found that daily care is the strongest medicine. At that time in Japan, the nutritional balance for most people was not so good because it was after World War II and many people got lifestyle diseases, and the cause was a nutritional imbalance. Therefore, he considered daily maintenance a scare, and the cure was, for example, going to the hospital if you became ill. As many people were dying because of poor lifestyles, he considered that the mind and philosophy had to be changed and he insisted that the way forward was “care over cure”.
I think this is apparent in your product portfolio. Your company started with the beauty care division, which is more for outer beauty, and then you expanded into the healthcare division with functional foods, which is more for inner beauty. You also have a household division that sells water purifiers and other types of devices. Can you tell us, looking at these different divisions, which ones you think have the highest growth potential? Also, can you explain the rationale for moving from outside beauty to inner beauty?
Currently, sales revenue for our nutrition division is a little higher than for our cosmetics division and this will continue because our members need and purchase both, so we expect the revenue ratio to be the same. As for your second question, it’s very simple. Your skin is made from your food. Every day, your skin’s cells are changing and the source of these cells is food and drink. Water is also very important, so we offer water purifiers. This is quite simple, but most cosmetics companies only focus on the outside. Recently, Shiseido, the biggest cosmetics company in Japan, has been trying to sell some inner beauty products. However, they only have some specialized products, like collagen drinks, whereas we offer very good, balanced, and essential nutrition. Therefore, our philosophy is different. From the beginning, the founder considered both at the same time. He started with a scrub cream but he understood both the outside and inside are important, so only two or three years after founding, ABC was developed because he understood the importance of the development of such nutrients.
ABC products
The facial scrub cream is celebrating 40 years this year, and it’s sold over 30 million units to date. For a product that is sold to a membership-based system, this is a phenomenal amount of sales. You’re not just selling to people that you convince in the street. These people have tried the product and tested it. Can you give us some insight into why it’s been so successful over this 40-year period and what developments you have put into it, or how it has evolved during that period?
The first factor is that the quality is so good. Our business members use a hand wash demonstration. They first make good, soft lather, and then wash the hands of the prospective customer, who then will understand that it is different and will want to buy it because of that experience. Members organize experience meetings by inviting prospects and then doing the wash demonstration. Also, when some people are impressed with Erina products, they realize they would like to sell them to others and become a business member, and therefore sales naturally expand from experience to experience, from person to person.
As for improving or changing the ingredient formulation, that hasn’t really changed because before he finished product development, the founder tested many times and tried so many ingredients and finally confirmed that the product was perfect. Other companies’ priority is to launch and sell quickly and then improve to continue to make some profit. However, the founder’s philosophy was to only sell a product that he could strongly recommend to his family.
It was very interesting to hear that your scrub cream has gone 40 years without many changes in formulation.
Almost no change has occurred over 40 years.
I’d like to ask you about your international operations. In 2014, you expanded to Taiwan, and some of your products are manufactured or sold in other markets, including Hong Kong and the US. Can you tell us about your international strategy and what you’ve identified as the key markets for expansion?
At present, we don’t plan to expand to other countries. Of course, we have Taiwan and it is also in Asia. However, the reputation or evaluation of Erina is a little different from Japan. The information we get from there is important to help us think outside of the Japanese market, but our plan is to concentrate on the Japanese market and we are not planning to expand to Korea, Malaysia, or other countries. Of course, if another country wants to buy from us, we are very flexible and maybe we can export to them, but we are focused on the manpower and everything that is needed to concentrate on the Japanese market because every year competition becomes more severe.
When you say that making physical moves overseas isn’t the plan but that you would be interested in exporting, does that mean that you’re currently looking for distribution partners to tackle those markets?
We do not plan to research such options, but if somebody contacts us, we will investigate to see if it is a realistic option or not.
One of the big challenges for Asian beauty companies when expanding to the West, besides differences in consumer preferences, is differences in skin types. Asian skin, for example, has a very thick dermis and a thinner stratum corneum, which means that it scars more easily, but it also looks younger for longer compared to Caucasian European, or American skin. It’s often difficult for companies to adjust their marketing, as consumer preferences are different, but also their product composition. What works on Asian skin might not work as well on other skin types. Do your products match those different skin types? Is there research that ensures they can meet those different preferences?
For the scrub cream that we were just talking about, when we developed that, it was tailored to meet the skin types of Japanese people. There was a lot of consideration in research and testing that went into that, but the final ingredients were tailored to Japanese people. And as of now, we don’t have any R&D investigating other types of skin.
The background is that the founder of our company came to Japan, lived in Japan, and then launched Erina based on his mindset of wanting more Japanese women to shine. So that was the foundational philosophy, and that’s why we are trying to concentrate on Japan.
I have one last question. Your business was founded in 1970. If we were to return to interview you again in 2030, on the 60th anniversary, what would you like to have achieved by then? What goals or ambitions do you have in terms of sales business development or even personal?
The goal is always the same. It’s our mission statement. When I was appointed president, I asked the chairman what was expected of me. And he said, just to follow this mission. That’s all. He did not say anything about increasing sales, hiring, or any business details. He said he simply expects me to understand and to expand this mission. So, on the 60th anniversary, I will say that I or the next president continued to follow and work based on this mission.
As a final note, I joined Erina five years ago. This year, I am 62 years old, and if I compare my skin condition now with five years ago, I look younger now. And when my blood is analyzed, the various readings are better, too. So, I have become healthier.
For more information, visit their website at: https://www.erina.co.jp/
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