On January 24th, a Beijing Business Daily reporter learned that Procter&Gamble disclosed its latest financial report to the public. The cumulative revenue for the first six months of the 2024 fiscal year was $43.312 billion, compared to $41.385 billion in the same period last year, a year-on-year increase of 4.66%. The cumulative net profit for the first six months of fiscal year 2024 was 8.049 billion US dollars, a year-on-year increase of 1.6%.
Among them, Procter&Gamble's revenue in the second quarter increased by 3% from $20.733 billion in the same period last year to $21.44 billion, lower than FactSet's expected $21.476 billion; The net profit was 3.468 billion US dollars, compared to 3.933 billion US dollars in the same period last year, showing a decline. It is worth mentioning that in the second quarter, sales of Procter&Gamble's high-end skincare brand SK-II in Greater China decreased by 34%.
Regarding the significant decline in SK-II, a reporter from Beijing Business Daily interviewed him, but as of the time of publication, no response has been received. However, Procter&Gamble mentioned in its financial report that the significant decline in SK-II sales was mainly affected by the nuclear wastewater incident.
In fact, SK-II was previously embroiled in a public opinion vortex due to a nuclear contamination incident in its production area. During June 2023, SK-II was questioned by consumers about the safety of its products due to the accumulation of a large amount of sawdust containing radioactive cesium in its production area.
Although the official response from Procter&Gamble at the time was: "All SK-II products are produced strictly in accordance with internal and external quality standards, and comply with market regulatory requirements. SK-II products produced in Japan or shipped abroad can be safely used." However, consumers did not buy it, and there were constant voices of SK-II not selling well in the Chinese market.
In the view of Wu Daiqi, CEO of Shenzhen Siqisheng Company, SK-II cannot sell well, and the impact of nuclear wastewater pollution is only one of them. The problem of SK-II under Procter&Gamble has always existed. Over the years of development, the problems of excessive marketing and brand aging of SK-II have not been resolved. Apart from the marketing of "Shenxian Shui", the SK-II brand does not have any new stories to continuously attract consumers, so the decline in SK-II sales is expected.
According to public information, since entering China in 1998, SK-II has quickly become a leader in the high-end skincare field and also a growth engine for Procter&Gamble, thanks to its use of the main ingredient in the fermentation product of galactose yeast like bacteria and the promotion and marketing of the product "Shenxian Shui". Public data shows that in 2012, SK-II became the first brand under Procter&Gamble to achieve an annual sales revenue of $1 billion, becoming the "leading lady". Meanwhile, SK-II has enabled Procter&Gamble's beauty business to achieve continuous sales growth for over 20 quarters.
However, over the years of development, SK-II has never launched a new product that can replace popular items such as "Shenxian Shui", "Small Light Bulb", and "Big Red Bottle". As consumer demand continues to change, the unchanged Shenxian Shui has gradually taken its place. It can be said that before 2020, SK-II was a contributor to Procter&Gamble's performance growth. But since the 2021 fiscal year, Procter&Gamble has repeatedly mentioned a decline in SK-II performance in its financial reports. In 2022, SK-II's retail sales in online channels including Tmall, JD, Tiktok, Kwai and other platforms will decline 1.3% year on year.
This also makes the previously rumored "Immortal Water Cannot Sell" a fact, however, at a time when the brand's attractiveness is insufficient, it seems that SK-II can only do it by raising prices. According to incomplete statistics, SK-II has experienced four price increases since 2018. During February 2023, SK-II issued a price increase notice, with a 12% increase, the highest in nearly five years.
Although continuously increasing prices can increase profits to a certain extent, many consumers are also turning to alternative products. Many consumers roast that SK-II official annual promotion festival offers poor discounts and is not cost-effective. "Not only is there no discount, but the price increases year by year, which is not as good as Estee Lauder Fragrance." Consumer Xiaoli roast.
According to Jiang Han, a senior researcher at Pangu Think Tank, in addition to the problems existing in SK-II itself, in the past two years, the continuous layout of competitors such as L'Oreal and Est é e Lauder has had a certain impact on SK-II's market share. At the same time, the rapid rise of China-Chic cosmetics consumption in recent years has gradually increased its market share, which has also had some impact on SK-II sales to some extent.