Lion President Masayuki Takemori ays 2024 Will Be a Year for Clarifying Strategy

Syukan Syogyo Publishing January 1, 2024, page 38

January 12, 2024 11:20

Syukan Syogyo Publishing Toiletries manufacturers/Toiletries manufacturers Interviews

In short

Priority will be given to aligning management strategy in the right direction
A difficult year in terms of business performance due to negative impacts beyond expectations
Oral care sales grew in both value and volume, while eye drops performed well in the pharmaceuticals business due to value-added products.
Further expansion of China business with new R&D center in Shanghai
Pivoting and tuning are the turning point for success in new businesses

Lion President Masayuki Takemori ays 2024 Will Be a Year for Clarifying Strategy

Lion is on track to build a foundation for business growth in the Corona disaster, having made numerous changes (relocation of the new head office, operation of a new core system, operation of a new plant in Sakaide, and entry into new countries), and has rejuvenated itself with a change of top management for the first time in 4 years and 3 months. As of March 30, 2011, Mr. Masayuki Takemori was promoted to the position of President and Chief Operating Officer (COO).

　We interviewed President Takemori, who said he has been working to create an environment to strongly promote the growth strategy in 2023, about the trends in 2023 and the outlook for 2024.

Negative impact beyond our expectations

A challenging year in terms of business performance

　--Please look back on fiscal year 2023.

　 Takemori: When I took over the baton from former President Masazumi Sukumigawa, he directly told me that he had appointed me as the next president with the expectation that I would "boldly promote reform of the profit structure" and "link prior investments to growth at a fast pace," and since assuming office I have been managing the company with these two things in mind.

　Specifically, in addition to responding to various changes in the market, raising product prices, and redesigning and reviewing the Group's portfolio as a whole, we have put into action a variety of initiatives to generate profits to improve profitability.

　Although some of the activities themselves made good progress, the impact of market deterioration and raw material price hikes was greater than expected, and the negative impact of foreign exchange rates came into effect in the latter half of the period, resulting in a difficult situation both in Japan and overseas in terms of business performance.

　Looking overseas, we were also affected to no small extent by the price competition among global companies from the U.S. and Europe in Southeast and South Asia.

　The fact that new fabric products did not progress as planned was also a factor in the difficult situation and is something to reflect on.

　In other words, although we made good progress on the various things we had originally planned, there were negative impacts from the market, raw material prices, and exchange rates that were enough to cancel them out, and in the end it was honestly a difficult year.

　--Please tell us what you have been working on since assuming the position of president.

　 Takemori: In order to properly guide the portfolio and link it to growth in 2024 and beyond, I spent about six months visiting all divisions to understand what is happening on the frontlines, and through these activities I was able to identify several issues.

　One example was a case in which things were not moving forward due to a lack of good cooperation between departments. However, by creating an environment that facilitates interdepartmental cooperation, we have seen more and more cases where things are steadily moving forward.

　The relocation of the head office brought together a total of more than 2,000 employees from four locations in Tokyo. To take full advantage of this, we created an abundance of shared space. This has also brought us closer together physically, which has increased opportunities for members of different departments to get together, and we feel that horizontal cooperation is steadily building.

　The second is to improve work efficiency. We have worked to eliminate as much as possible inefficient work that was bound by past practices and taken for granted.

　Although we were successful in gathering feedback from the front lines and creating a positive work environment, I recognize that we still have issues to address in terms of contribution to business performance to offset the negative impact of the nine-month period.

　Looking back with a cool head, I can say that it was a year in which we were able to face the fact that the world is not so naive that everything we invest in upfront will turn out well.

　Therefore, we were able to clearly see what we must do in 2024.

Oral care sales grew in terms of both value and volume,

In pharmaceuticals, eye drops performed well due to value-added products.

　--What is the status of your domestic business?

　 Takemori: In the domestic business, the most significant event was that we took on a major challenge in Fabric Care, but we have not yet reached our goal, and I regret this because it was a challenge that I took on myself. However, as for the challenges faced by the on-site members who faced them, I see them as having done well. I hope that they will continue to take on challenges positively, without ever looking down.

　Looking at the 35 major toiletries markets that we are in (SRI survey, January-November 2023), there is a trend of growth in value and decline in volume for many items. Volume in the 35 markets as a whole is 96%, Beauty Care is 98%, Fabric Care is 92%, and Living Care is 95%, with many items falling below the previous year's level, but only Oral Care is performing well at 101%. Oral care products are growing in terms of both volume and value, with the value of oral care products at 103% of the previous year's level.

　Although Oral Care has the advantage of being a leading company, the overall business as a whole has contributed significantly to the growth in volume and value of the market as a whole by raising prices of existing products and general-purpose price ranges for toothpaste and covering the decline in volume with the high value-added product Clinica PRO, which also increased in total volume. In the oral care business, the Company successfully balanced the portfolio.

　In Oral Care, we were able to successfully balance our portfolio, which was a major achievement, and our new products, LION Electric Assist Brush and Clinica PRO Toothbrush Rubber Head, performed well.

　In Beauty Care (35 markets = 102% by value, 98% by volume), both volume and value of the mainstay KireiKirei hand soap were down from the previous year due to a decline in demand from the special Corona demand. Although growth has been better than before Corona, the reactionary decline from Corona has continued. In body soap, the "hadakara" foam type continues to show double-digit growth, outpacing foam-type body soap in the market. It is said that the foam type will reverse the trend of the liquid type in the next few years, and we intend to achieve growth by expanding the foam type.

　In the fabric care business, we launched two major new products, Soflan Airis and NANOX one, but they have yet to reach our target line, so we will work to turn them around.

　In the Living Care business, while kitchen detergents are on an expansionary trend when looking at the overall market, CHARMY Magica is underperforming compared to the previous year. Look Plus Bathtub Cleansing" and "Look Plus Ofuro no Anti-Mold Fumigant" also struggled slightly due to the introduction of competing products.

　In pharmaceuticals, the high-function, high-value-added eye drop series such as "Smile 40 EX" and "Smile 40 Premium" performed well and exceeded the previous year's sales.

　By further deepening our marketing knowledge in Japan, we will apply the successful pattern in Japan to overseas markets. Specifically, in Asian countries as well as Japan, we intend to establish the positive habit of using eye care products not only to treat eye diseases or to relieve eye fatigue and itchiness, but also to refresh the eyes.

Our business in China is further expanding,

Establishing a new R&D base in Shanghai

　--What is the status of your overseas business by country?

　 Takemori: While various Japanese companies are making decisions such as withdrawing from the Chinese market or curtailing investment, we believe that there are still opportunities in the Chinese market, and we are working to grow our business while hedging our risks. We are a relative latecomer to the market, so there is still room for market development, and although the market has reached a plateau, China boasts a population more than 10 times that of Japan. We believe that gaining a 1% share of the Chinese market is equivalent to gaining more than a 10% share in Japan, and we will further expand our business in China by deepening cooperation with new distributors and developing new channels, with a focus on oral care, which is our forte.

　In May last year, we established a new R&D center in Shanghai, China, to strengthen our oral care business in China. By quickly introducing products that meet the needs of local consumers, we intend to expand sales and improve profitability.

　In Vietnam, we are making a clear distinction from the conventional business model of increasing market share by spending money on advertising and sales promotion, and are teaming up with a local company (Merap) that has leading brands and a distribution network that covers the whole country. The new business model enables the company to earn a reasonable profit based on OTC drugs while differentiating itself from global companies from the start.

　By utilizing this new business model, we intend to expand it to oral care products and functional skin care, and grow it into a large business.

　In the future, by expanding this new business model to other countries in Southeast and South Asia, we will promote our unique business development in Southeast and South Asian countries, which will both increase sales and improve profitability.

　Bangladesh is a future country with high per capita GDP and economic growth potential, and we will initially focus on laundry detergent and kitchen detergent. Since the expansion of general-purpose products is expected to continue over the long term, and individual stores and supermarkets will be the main sales channels, we will aim for quantitative growth.

　We will move forward with the construction of a new plant for local production. At present, we are not considering exports, but will first establish a complete supply system for the country's 170 million consumers, and work to penetrate the Lion brand by developing products that match local customs.

　--We are promoting "typified marketing" based on a glocalization strategy. What are the aims of this strategy?

　 Takemori: Under "categorized marketing," we have divided our marketing into three types: Type I, which pursues quantitative growth, as in Bangladesh; Type II, which pursues both quantitative and qualitative growth, as in China and Vietnam; and Type III, which pursues qualitative growth, as in South Korea and Singapore. We will evolve to a marketing approach based not on country axis but on regional axis and commonalities among consumers.

　Further expansion of customer contact points is indispensable to make a leap forward in overseas business. Increasing the number of target customers and the number of countries in which we operate will strengthen our overall portfolio. In particular, increasing the portfolio of countries in which we operate will contribute to diversifying the concentration of our business, and as a result, will lead to the construction of a strong portfolio that is resilient to country risk.

　--What are the key points to achieve both sales growth and profitability improvement in your overseas business?

　 Takemori: First of all, we will maximize sales and profits by promoting initiatives tailored to the actual conditions in each country of operation based on "typified marketing," which is divided into three categories.

　To improve profitability, it is also important to increase the composition ratio of personal care and oral care products.

　Globalization of R&D is also essential for improving profitability. In addition to our R&D base in Shanghai, we have R&D bases of partner companies in Southeast and South Asia. By moving away from the country-by-country approach of the past and coordinating research from a global perspective, we can expect further improvement in profitability through overall optimization of seed exploration and raw material procurement.

Pivoting and tuning are the turning points for success in new businesses.

Tuning is the turning point for success

　--We are actively creating new businesses, and we are beginning to see successful examples. Are there any common trends among successful businesses?

　 Takemori: In new businesses, there will naturally be some that do well and some that do not, but it is difficult to give a clear explanation of the trends of businesses that do well. That is why I feel it is important to tackle new businesses with the idea that "new businesses are the ones that don't work out.

　The corporate health management support service "Okuchi Plus You," which has begun to take off in the oral health field, did not start out well. The turning point for success is to keep pivoting (changing direction) and tuning (fine-tuning) when things don't work out, based on the assumption that they won't. In fact, pivoting and fine-tuning are the norm. In fact, I feel that new businesses undertaken by teams that can pivot and tune as a matter of course are more likely to find a path to success without major failure.

　Basically, we are working on new businesses within the four value areas we offer (Oral Health, Infection Control, Smart Housework, and Wellbeing) to realize our management vision "to become a leading company in next-generation healthcare". However, in cases where it is easier to solve social issues and increase the probability of success by going outside the framework, I tell the members that as long as the goal we are aiming for remains the same, we will not question the path or means to get there.

　--What are your management policies and aspirations for fiscal 2024?

　 Takemori: I mentioned earlier that we have a clear picture of what we need to do in 2024, and since 2024 is the final year of the first stage (2022-2024) of the "Vision 2030" medium-term management plan, it will be a year to further clarify our strategy toward 2025, when the next stage (25-27 years) begins. The year 2030 will be the final year of STAGE (2022-2024).

　First, we will thoroughly recover prior investments in "new fabric care products," "new Sakaide plant," and "new backbone system. Third, we will create an environment and culture that facilitates the generation of successful experiences, while eliminating as much of the negative aspects as possible, so that talented and motivated members can maximize their potential.

　If we were to express our management policy for 2024 in one Chinese character, it would be "Sei" (head priest (of a Zen temple)), and we will give top priority to aligning the Lion Group's management strategy and the various activities of our employees in the right direction in the second stage, which will begin in 2025.

　Under this policy, we will take shape over the next year to "thoroughly recover prior investments," "build a portfolio with a high probability of success," and "revitalize human resources and improve labor productivity through enhanced job satisfaction and engagement.

　In Japan, where the birthrate is declining and the population is aging, we will aim for qualitative growth. We believe it will be difficult to achieve this goal with the same organizational structure as before, and by expanding the scope of our portfolio, we will facilitate more efficient differential allocation of resources. Specifically, the Beauty Care Division and the Pharmaceutical Division will be merged into the HBC Division, and the Fabric Care Division and the Living Care Division will be merged into the Home Care Division. Through this functional reorganization, we expect to transform ourselves into an organizational body that can think from a variety of perspectives by broadening our domain, thereby enhancing the quality of the products we launch.

　The Lion Group hopes to be reborn as a company that makes new habits its livelihood, and in its mainstay oral care business, the Lion Group will take on the challenge of creating new revenue opportunities by providing new services and educating people about new tooth brushing habits.

　To take advantage of the commercialization of the "Okuchi Plus You" oral care service and accelerate the commercialization of other development projects, we will establish a new "Oral Health Development Department" by integrating the new business domain of the Oral Care Business Department and the oral care-related business of the Management Support Department.

　Under this new organizational structure, we will launch new marketing activities to ensure that needs for oral health, a concept that combines oral care and health care, will increase with the keywords "new habits" and "quality.

Related Keywords

This article appeared in Syukan Syogyo Publishing January 1, 2024, page 38.

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