Last year, Canadian retailer Couche-Tard bid for 7&I Holdings, one of Japan’s preeminent retail chains. The move was rebuffed, even though Couche-Tard increased their bid. Meanwhile, 7&I has accelerated the divestment of non-core assets like its supermarket business and sought to take the company private.
This latter move involved a cohort of banks and several trading houses, specifically Itochu. Itochu, an apple in Warren Buffet’s eye, touts its canny management skills. However, last week, Itochu pulled the plug on investing in 7&I.
While Couche-Tard has faced mostly negative publicity in Japan, many have overlooked the fact that 7-Eleven’s CVS business has lost momentum against rivals Lawson and FamilyMart.
Implications for Japan’s Consumer Business Stalwarts
In 2024, private equity and investment fund capital in Japan increased by 40% on 2023. Ten years ago, it seemed impossible for foreign capital to make serious inroads into Japanese corporates. Today, both Shiseido and Kao, formidable giants in the personal care and cosmetics industry, have active foreign capital investors (Independent Franchise Partners and Oasis Capital, respectively).
Shiseido’s stock price has declined by over 50% in the last five years, largely due to overexposure in China, its second-biggest market. K-beauty is resounding, and there are aggressive new plays from China and other Asian markets – Cathy Doll from Thailand – is one example..
Kao reaps over 80% of its revenue from Japan. It has struggled to advance internationally in a meaningful way and has been unable to capitalise on its acquisitions of Jo Malone and Molton Brown. Kao’s stock is down 17% in the last five years. Oasis has made several approaches to Kao, which have so far fallen on deaf ears.
Not everything in Japan’s consumer industry is weak. The stock value of Ajinomoto, Nishin Foods, and Nichirei has grown significantly. However, times are definitely changing.