Super-luxury brand cosmetic products, some priced higher than 100,000 yen (S$1,570), are appearing on the market one after another.
Shiseido Co. and Kose Corp. are enjoying brisk sales of such products, and Kanebo Cosmetics Inc. also will begin competing in the category in November.
Due to Japan's deflationary trends, the most popular products tend to be either very cheap or very expensive, and cosmetic firms' competition to attract wealthy customers will likely intensify.
Kanebo will release a super-luxury medicinal cream priced at 126,000 yen per 40-gram pack. The company said the product was four years in development and contains various substances, such as a skin-whitening agent.
Kanebo also plans to release a face lotion priced at 21,000 yen and a skin milk priced at 31,500 yen.
The trend began in September 2008, when Shiseido released a beauty cream priced the same as super-luxury products from Kanebo and other brands.
Shiseido's sales of such products in the first month after its release exceeded targets by more than 50 per cent.
Kose followed suit in November 2009, and the two companies have maintained brisk sales in the super-luxury category.
Because wealthy people are willing to spend significant amounts for beauty products, a Kose official said, "They have a strong tendency to use the same brands for long time (regardless of price)."
The three makers target such wealthy customers. They sell such products not only in Japan but also in China, where the economy is rapidly growing, and in other Asian countries, mainly through department stores.
According to data from the economy, trade and industry ministry about shipments of cosmetic products, the number of products sold in 2009 increased 0.8 per cent from the previous year, but overall sales decreased 7.8 per cent.
Because of the nation's economic slump and deflation, a wider gulf has appeared between expensive products and cheap ones. At the same time, sales of mid-range products priced from 3,000 yen ($35) to 5,000 yen ($58) which had been mainstream goods for the makers, have been sluggish.
To offset the falling sales, cosmetic products makers have enthusiastically promoted their super-luxury products, which bring high profit margins.
However, as the size of the domestic market is limited, the makers' competition in emerging countries will likely intensify.