TL;DR: With global interest in Japanese fashion rising, BEAMS is well positioned to take the global stage—a 'middle-tier' that has all the attributes of a contemporary brand powerhouse.
Last week’s news of LVMH backed private equity firm El Cattican secretly investing in cult Japanese menswear brand Kapital sparked a frenzy amongst fans of the brand. Founded in March 1985 by Toshikiyo Hirata in Japan’s Kojima denim district, Kapital has built a devoted community of brand evangelists who admire its innovative approach to hand-reworked fabric—a quality they fear could jeopardise the brand if compromised by a big corporation like LVMH.
Whether that’s true is yet to be seen. What is, is that private equity is paying close attention to Japanese brands.
While brands in Europe and China experience a slump in sales, the Japanese market is comparatively thriving. Fuelled by international tourists cashing in on a weak yen and resilient domestic spending, Japan's luxury fashion market, valued at $20–25 billion at the end of 2023, grew by 25–30% in the first half of 2024 (BOF) and is projected to grow by another 8–12% this year.
Why does it matter
A booming Japanese market means L Catterton's interest in Kapital makes sense. We think BEAMS could be next.
Established in 1976 in Tokyo by Etsuzo Shitara with the mission of being ‘synonymous with the most exquisite quality that Japan has to offer,’ investing in the company makes sense for several reasons:
1. Strong middle-tier positioning
As we wrote about recently, middle-tier brands compete with luxury when it comes to product innovation and design but without the same price tag. BEAMS appeals to customers looking for aspirational and elevated Japanese design without breaking the bank.
2. Obsessive focus on quality
BEAMS makes their clothes exclusively in Japan and have a reputation for their superior and lasting original fabrics. By focusing intently on their product, the brand has established trust and respect from an international community.
3. Loyal fan base
BEAMS has built a global fanbase of customers who love their product. ‘We focus more on relationship building rather than target profiling,’ explains CD Nakamura Tatsuya. Their next step? The brand is trialing personalised experiences, connecting staff with customers who have similar interests ‘as a sort of gateway’ into the brand.
4. Organic growth and expansion
Over almost 50 years, BEAMS has built 167 stores in Japan, created over 30 distinct labels and reached annual revenue in the region of $300M, all without external investors and by maintaining family ownership.
Following a successful ‘Limited Store’ takeover in Los Angeles in November, the brand now has its eyes on expansion in North America and Europe.
5. Exquisite Japanese aesthetics
BEAMS has a uniquely Japanese aesthetic that separates it from other middle-tier brands, like those from Scandinavia.
By drawing on Japanese heritage and its essence of culture, artisanship, and meticulous craftsmanship, BEAMS magic is in its ability to infuse unique cultural aspects into quality-sensitive products.
What next?
While Kapital might be in the headlines, several factors mean Japanese brands are an attractive investment opportunity right now. From BEAMS to Visvim, The Real McCoy's, United Arrows, Tomorrowland and Undercover, these brand’s loyal fanbases and obsession with craft make them interesting targets.
Whether that’ll actually happen is unclear. Many Japanese brands deliberately remain private, with Rei Kawakubo of Comme des Garçons remaining ‘totally independent: owner, president and designer,’ even today. With Kapital bucking that trend, might others follow?
