Unicharm Corporation

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Unicharm Corporation

3-25-23 Takanawa
Minato-ku
Tokyo,
Japan
Telephone: (81 03) 3447 5111
Fax: (81 03) 3449 7600
Web site: http://www.unicharm.co.jp

Public Company
Incorporated: 1961
Employees: 6,030
Sales: ¥257 billion ($2.1 billion) (2006)
Stock Exchanges: Tokyo
Ticker Symbol: 8113
NAIC: 322291 Sanitary Paper Product Manufacturing; 311111 Dog and Cat Food Manufacturing

Unicharm Corporation is Japan's leading producer of sanitary products and one of the world's largest, trailing only Procter & Gamble. The Tokyo-based company produces feminine care products, baby care products, including disposable diapers, and related products, such as wet wipes, adult diapers and incontinence products, cosmetic supplies, including puffs, and the like. Unicharm also produces a line of pet foods and pet care items, and is also involved in the production of food packaging products. The declining birthrate in Japan has led the company to develop a two-prong approach. On the one hand, the group has been one of the country's pioneers in developing products for the adult and senior incontinence segment; on the other hand, the company has expanded its operations into much of the Southeast region. As part of this effort, the company has established subsidiaries in Thailand, Hong Kong, China, Taiwan, and South Korea. Among Unicharm's popular brands are its Moony Man child care line, the premium Mamy Poko line, the Sofy feminine care products range, and the Lifree brand of adult care products. The company's Lifestyle Products division accounts for 84.5 percent of group sales, which topped ¥257 billion ($2 billion) in 2006. Unicharm's Pet Care Products division added nearly 11 percent to sales. The company expects its expanding focus on the Southeast region will raise its sales past $3.5 billion by the end of the first decade of the 2000s. Unicharm Corporation is listed on the Tokyo Stock Exchange. The company is led by president and CEO Takahisa Takahara, son of the company's founder, Keiichiro Takahara, who remains Unicharm's chairman.

FROM CONSTRUCTION MATERIALS TO HYGIENE PRODUCTS IN 1963

Unicharm was founded in 1961 by Keiichiro Takahara as Taisei Chemicals Co. The company initially launched production of construction materials, such as wallboard. In 1963, however, the company expanded its focus, adding production of sanitary napkins. While the company continued to produce construction materials, its focus turned more and more towards sanitary care products. A pioneer in this category in Japan, the company quickly captured the lead in the market, a position it would retain into the next century. In support of its production, the company founded a sales subsidiary, Charm Corporation in 1965. The Charm name soon became the company's first major brand, with the launch of the panty liner Charm Nap Sawayaka in 1968.

Takahara restructured the company in 1974, reorganizing the construction materials operation as a subsidiary of the main sanitary care company, which then changed its name to Unicharm Corporation. In that year the company also expanded its product range, adding tampons and cosmetic puffs. Two years later, following the launch of a new generation panty liner, the Charm Nap Mini, the company listed its shares on the Tokyo Stock Exchange's secondary market.

Into the 1980s, Unicharm continued to build its product line, adding the Silcot brand of high-quality cosmetic puffs, and the new Charm Soft Tampon. The company then expanded into the baby care market, adding its first line of disposable diapers under the Moony Man label in 1981. The company launched another long-lasting brand the following year, introducing the Sofy line of sanitary napkins. In 1983, Unicharm debuted its Mamy Poko brand of premium quality disposable diapers, as well. The boost in the company's product lineup led it to exit the construction materials business in 1983, spinning off those operations as a separate company, Uni-Taisei Corp.

Unicharm made its first moves into the international markets in 1984, launching a subsidiary in Taiwan to take advantage of the fast-rising economy there. The following year, Unicharm moved its listing to the Tokyo main board.

Unicharm had also increasingly begun to shift its central focus from a core of feminine care products to become a broader lifestyle care products company. Part of this effort was evident in the creation of a new pet food and pet care products subsidiary, Unicharm Pet Care, established in 1986. That subsidiary's first product was its Fresky Aiken Genki dog food line. By the following year, the company had added production of wet dog food and dry cat food. The company also introduced innovative products such as a deodorant wipe for dogs.

In 1987, Unicharm became a pioneer in a new market segment: incontinence products for adults, sold under the Lifree brand. The rate of adult incontinence in Japan had been on the rise, in part because women had begun giving birth at older ages, leading to incontinence complications. At the same time, the country's population had begun to age, as the proportion of senior citizens among the country's overall population began to grow rapidly toward the end of the century. Unicharm's early entry into the product category enabled it to gain an immediate lead of the segment. At the same time, the company's marketing campaigns helped to de-stigmatize incontinence, leading to a greater acceptance of the product. The company further expanded its range through the launch of its Lifree Urine Absorbing Pads in 1988.

INTERNATIONAL MOVEMENT IN THE NINETIES

Nonetheless, the graying of the Japanese population promised the inevitable shrinking of Unicharm's core market. In order to protect its future growth, Unicharm turned toward international markets in the late 1980s and especially into the 1990s. In 1987, for example, the company entered Thailand, launching a joint venture manufacturing operation there. The company also began exporting its own production technologies. As such, Brazil became an important export market for the company, particularly through the company's partnership with Kenko do Brasil. In 1993, Unicharm added a joint venture partnership in the Netherlands, and also formed a technical partnership with Gulf Hygienic Industries in Saudi Arabia, supplying its pull-up diaper technology. Gulf Hygienic began producing Moony and Sofy branded products, quickly growing into the region's second largest producer of sanitary products.

Into the start of the new decade, the company added a number of new products, such as pipe cleaning fluid in 1989, and household cleaning wipes the following year. Unicharm's research and development effort resulted in the launch of the new Sofy Sara line of sanitary napkins, boasting a new absorbent material, in 1988. The company also expanded its range of baby care products with its Trepanman disposable training pants, followed by the Oyasumi Man line of nighttime pull-ups. These were followed by the group's award-winning Moony Man pull-on diapers in 1992.

COMPANY PERSPECTIVES

Unicharm Group shall devote itself to contributing to a richer life for all by constantly creating and offering a wide array of first-class products and services to the domestic and overseas market.

Unicharm continued developing its international presence into the mid-1990s. In 1995, the company entered South Korea, creating a production and marketing joint venture to market its products under a local brand. The following year, Unicharm's pet care subsidiary turned to the United States, acquiring a pet food factory in Seattle, Washington. That facility was renamed as Uni-Charm Seattle Inc. Into the late 1990s, however, Unicharm's pet care operation began to restructure itself as an increasingly independent organization. After acquiring the pet food business from Ajinomoto General Foods, the pet care subsidiary took over all of the company's pet foods and pet care operations, including Uni-Charm Seattle. The company then changed its name to Uni-Heartous Corporation in 1999, before settling on Unicharm Pet Care Corporation in 2002. By 2004, Unicharm Pet Care had been spun off as an independent, publicly listed company. Unicharm Corporation's holding was by then reduced to below 30 percent.

In the meantime, Unicharm had maintained its own growth course. The company entered Indonesia in 1997, forming a joint venture manufacturing operation there. The company also entered Singapore, establishing its own subsidiary for that market. In 1999, Unicharm boosted its presence in the ASEAN (Association of Southeast Asian Nations) market region, building new central manufacturing facilities in Thailand. In that year Unicharm also restructured its South Korean joint venture agreement, and began marketing its own brands in that country.

INTO THE 21ST CENTURY

Unicharm next targeted the region's largest single market, establishing its first manufacturing subsidiary in mainland China in 2001. In 2002, the company added a sales and marketing subsidiary for the Chinese mainland and entered the Philippines, establishing a dedicated subsidiary for that market. By then, the company had come under new leadership as Takahara's son Takahisa Takahara, born in 1961 just after the company's founding, was named company president and CEO in 2001.

The company also continued to develop new and innovative products. In 2003, for example, the company debuted its highly successful line of Chourittai face masks, marketed not only as an antipollution device, but also as a means for blocking pollen for allergy sufferers. In 2005, the company extended its technology to include the food packaging market, launching a new film said to keep vegetables fresher for longer periods. The company also continued to develop new and improved sanitary care products for its three core market segments.

Despite its success in adapting to the demographic changes in Japan, Unicare remained faced with a steadily shrinking domestic market. Into the mid-first decade of the 2000s, therefore, Unicharm focused on boosting its share of the Asian and international sanitary care markets. As part of that effort, the company began taking greater control of its overseas operations. In 2005, for example, the company bought up 51 percent of Gulf Hygienic Industries. In February 2006, the company, which had failed to make a big impact in the South Korean market, formed a new joint venture with Korea's LG Household & Health Care Ltd., giving the Japanese company access to LG's extensive distribution and marketing network.

KEY DATES

1961:: Keiichiro Takahara founds Taisei Chemicals Company to focus on construction materials manufacturing.
1963:: Taisei launches the production of sanitary napkins.
1965:: Taisei founds the Charm Corporation as a sales subsidiary for the sanitary napkin division.
1974:: The company becomes the Unicharm Corporation.
1976:: Unicharm lists its stock on the Tokyo Stock Exchange's secondary market.
1981:: The Moony Man disposable diaper is introduced.
1983:: The company exits the construction materials market.
1986:: The company enters pet food and pet care products manufacturing.
1993:: The company founds a technical partnership with Gulf Hygienic Industries of Saudi Arabia.
1999:: A central manufacturing facility for the southeast Asia region is established in Thailand.
2001:: Unicharm enters mainland China; Takahisa Takahara becomes company CEO and president.
2005:: The company acquires 51 percent of Gulf Hygienic Industries as part of its effort to boost foreign presence.

Back at home, the company bought the sanitary goods operations of Shiseido, the leading cosmetics company in Japan, in July 2006. The purchase further boosted Unicharm's domestic share by 5 percent. Meanwhile, Unicharm had launched a restructuring of its operations, designed especially to streamline its penetration of the international market. As part of that restructuring, the company reorganized all of its sanitary care operations into a single, Lifestyle Products division. In this way, the company hoped to boost its foreign presence, with the goal of boosting its market share to 30 percent by 2010.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Cosmotec Corporation; Japan Unicharm Product Co., Ltd.; Kokko Paper Mfg. Co., Ltd.; PT Uni-Charm Indonesia; Shanghai Uni-Charm Co., Ltd. (PRC); Thailand Uni-Charm Co., Ltd.; Uni-Charm Co., Ltd. (South Korea); Uni-Charm Consumer Product Co., Ltd. (China); Unicharm Material Co., Ltd.; Uni-Charm Mölnlycke B.V. (Netherlands); Unicharm PetCare Corporation; United Charm Co., Ltd. (Taiwan).

PRINCIPAL COMPETITORS

Procter & Gamble Co.; Kimberly-Clark Corp.; Svenska Cellulosa AB; Oji Paper Company Ltd.; La Papelera del Plata S.A.; Scott Paper Co.; Rexam plc; Nampak Tissue (Proprietary) Ltd.; Paul Hartmann AG; S.C.A. Hygiene Products Zeist B.V.