Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

<ul>
<li>The big merger between Welcia and Tsuruha is part of a wider concentration of market share in the drugstore sector as the leaders take on supermarkets and even convenience stores.</li>
<li>Japan's drugstores have morphed into multiple sub-formats, selling food and other FMCG products in ever higher ratios, creating massive pressure for other sectors. </li>
<li>The net effect is the emergence of a powerful new retail sector that is impacting all other FMCG retail formats and even lifestyle categories like cosmetics.</li>
</ul>


The big merger between Welcia and Tsuruha is part of a wider concentration of market share in the drugstore sector as the leaders take on supermarkets and even convenience stores.
Japan's drugstores have morphed into multiple sub-formats, selling food and other FMCG products in ever higher ratios, creating massive pressure for other sectors. 
The net effect is the emergence of a powerful new retail sector that is impacting all other FMCG retail formats and even lifestyle categories like cosmetics.


Japan Drugstores: More M&A as Sector Attacks Supermarkets and Conbini

<ul>
<li>Major food-drugstores like Kusuri no Aoki and Genky Drugstores continue to pressure local supermarket competition. </li>
<li>The model of funding discount foods and FMCG via high profit pharmaceutical and cosmetics ranges is one that traditional food chains cannot match.</li>
<li>Now the largest players are creating brands and expanding into new regions. Many analysts have predicted saturation in the sector in the last decade. They continue to be wrong.</li>
</ul>


Major food-drugstores like Kusuri no Aoki and Genky Drugstores continue to pressure local supermarket competition. 
The model of funding discount foods and FMCG via high profit pharmaceutical and cosmetics ranges is one that traditional food chains cannot match.
Now the largest players are creating brands and expanding into new regions. Many analysts have predicted saturation in the sector in the last decade. They continue to be wrong.


Japan's Drugstores Taking on – and Beating – Supermarkets

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

Equity Bottom-Up

<ul>
<li>Cosmos Pharmaceutical Corp (a drug store chain operator that sells mostly food) is scaling faster than peers, opening stores organically while maintaining unusually stable per-store operating profit.</li>
<li>Its food-led discount model creates high traffic, purchasing leverage, and a long runway in Japan’s fragmented packaged-food market.</li>
<li>Slow, secular decline in RoE is inevitable, but the market is discounting an unrealistically fast pace of decay. Cosmos still has a very long growth runway.</li>
</ul>


Cosmos Pharmaceutical Corp (a drug store chain operator that sells mostly food) is scaling faster than peers, opening stores organically while maintaining unusually stable per-store operating profit.
Its food-led discount model creates high traffic, purchasing leverage, and a long runway in Japan’s fragmented packaged-food market.
Slow, secular decline in RoE is inevitable, but the market is discounting an unrealistically fast pace of decay. Cosmos still has a very long growth runway.


Cosmos (3349): Still Miles of Growth Runway

<ul>
<li>Drugstores were already the fastest growing format before Covid and the health scare only improved their performance further.</li>
<li>Several of the largest chains are now powerful players in food, using their non-food base to shake up the supermarket sector in ways that Japan has never seen before.</li>
<li>Being price-led, inflation is only helping them along, with a much greater capacity to hold down prices than mainstream supermarkets.</li>
</ul>


Drugstores were already the fastest growing format before Covid and the health scare only improved their performance further.
Several of the largest chains are now powerful players in food, using their non-food base to shake up the supermarket sector in ways that Japan has never seen before.
Being price-led, inflation is only helping them along, with a much greater capacity to hold down prices than mainstream supermarkets.


Discount Drugstores Challenging Japanese Supermarkets

<ul>
<li>Shoppers are facing a further round of price increases this month, with leading companies raising prices on more than 4,000 items. </li>
<li>Price inflation on FMCG is now at its highest level since the 1980s and there is growing caution among shoppers: 85.3% feel burdened by price hikes according to a Nomura survey.</li>
<li>With incomes falling again, many households are now holding back on all but essential spending, seeking out bargains and avoiding supermarkets that are seen as too expensive.</li>
</ul>


Shoppers are facing a further round of price increases this month, with leading companies raising prices on more than 4,000 items. 
Price inflation on FMCG is now at its highest level since the 1980s and there is growing caution among shoppers: 85.3% feel burdened by price hikes according to a Nomura survey.
With incomes falling again, many households are now holding back on all but essential spending, seeking out bargains and avoiding supermarkets that are seen as too expensive.


More Price Increases Bring Further Challenges for Japan's Retailers

Japan

Genky DrugStores Co., Ltd. operates drug stores. The Company sells prescription drugs and medications. Genky DrugStores provides its services in Japan.

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Genky DrugStores Co Ltd (9267 JP)

Japan Drugstores: More M&A as Sector Attacks Supermarkets and Conbini

The merger of Welcia and Tsuruha reflects market consolidation in Japan's drugstore sector, with major attacks on supermarkets and even conbinis....

Michael Causton

Japan's Drugstores Taking on – and Beating – Supermarkets

Major food-drugstores dominate local supermarkets, leveraging high-profit pharmaceutical and cosmetics to discount foods. These players are...

Michael Causton

Cosmos (3349): Still Miles of Growth Runway

The market is discounting a rapid decay, but we still see another decade of above average growth and profitability. Margins are far more...

Michael Allen

Discount Drugstores Challenging Japanese Supermarkets

Japan's supermarkets are facing unprecedented challenges from new competition in e-commerce but especially drugstores. We highlight the winners in...

Michael Causton

More Price Increases Bring Further Challenges for Japan's Retailers

Price increases on FMCG products are hitting consumer sentiment in Japan with wide ranging implications for retailers. The gap is widening and will...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan Drugstores: More M&A as Sector Attacks Supermarkets and Conbini

​The merger of Welcia and Tsuruha reflects market consolidation in Japan's drugstore sector, with major attacks on supermarkets and even conbinis....

Michael Causton

Japan's Drugstores Taking on – and Beating – Supermarkets

​Major food-drugstores dominate local supermarkets, leveraging high-profit pharmaceutical and cosmetics to discount foods. These players are...

Michael Causton

Cosmos (3349): Still Miles of Growth Runway

The market is discounting a rapid decay, but we still see another decade of above average growth and profitability. Margins are far more...

Michael Allen

Discount Drugstores Challenging Japanese Supermarkets

Japan's supermarkets are facing unprecedented challenges from new competition in e-commerce but especially drugstores. We highlight the winners in...

Michael Causton

More Price Increases Bring Further Challenges for Japan's Retailers

Price increases on FMCG products are hitting consumer sentiment in Japan with wide ranging implications for retailers. The gap is widening and will...

Michael Causton

The merger of Welcia and Tsuruha reflects market consolidation in Japan's drugstore sector, with major attacks on supermarkets and even conbinis....

Major food-drugstores dominate local supermarkets, leveraging high-profit pharmaceutical and cosmetics to discount foods. These players are...