Cosmo Oil to Diversify Into Selling Bald Cure in Aging Japan

Nov 2008

Cosmo Oil Co., a Japanese crude oil refiner partly owned by the government of Abu Dhabi, said it will branch out into selling a baldness remedy to profit from the country’s aging population as demand for fuel sags.

The company has teamed up with Osaka-based Milbon Co., a hair-treatment maker and marketer, on joint production and sales of the tonic, the Tokyo-based refiner said in a statement on its Web site. The two companies will seek approval from the health ministry to sell the product, Cosmo Oil spokesman Tatsuya Yano said by telephone from Tokyo.

The move is part of Cosmo Oil’s efforts to diversify as Japan’s demand for gasoline and other refined oil products declines, in part because people drive less as the population ages, Yano said.

By contrast, the demographic trend has spurred sales of hair-growth tonics, which total about 40 billion yen ($414 million) a year and are forecast to rise, he said.

The product combines iron and the chemical 5-aminolevulinic acid and stimulates hair growth when applied to the scalp, according to Cosmo Oil.

Manufacturing will start as soon as the companies win approval from the government, Yano said.

Cosmo Oil won’t decide on a sales or profit target until it gets the go-ahead to start production.

The refiner on Nov. 5 forecast 19 billion yen net income in the year ending March, compared with 24 billion yen for the previous financial year.

Consumption of gasoline, one of the main contributors to Japanese refiners’ revenue, declined for a fifth month in September, dropping 8.8 percent, according to the trade ministry’s latest data.

Demand for gasoil, the fuel for pick-up trucks and farm machines, fell for a fourth month, declining 4.9 percent.

Milbon sells hair products to about 35,000 hair salons across Japan, spokesman Noboru Muneshige said from Osaka.

Milbon’s shares have gained 19.5 percent in the last six months, compared with the 38.1 percent decline in the benchmark TOPIX index. They dropped 3.2 percent to close at 2,420 yen in Tokyo trading today. Cosmo shares have declined 46.6 percent in six months, and closed down 3.1 percent to 218 yen.