SK-II is dragging Procter&Gamble China's back again
白云追月素
发表于 2024-1-24 20:13:22
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On the evening of January 23, Procter&Gamble released its second quarter report for the fiscal year 2024 as of December 31, 2023. Among them, SK-II's sales in Greater China decreased by 34%, which Procter&Gamble attributed to the single digit culprit that dragged down the entire beauty business decline.
This is not the first time Procter&Gamble has mentioned the decline of SK-II in its financial report.
Since the outbreak of the pandemic in 2020, the SK-II brand has shown a downward trend. Recently, rumors of SK-II origin being suspected of Japanese nuclear pollution have also raised consumer doubts, causing the brand to be deeply affected in the Chinese market.
Not only SK-II, but also Japanese brands such as Shiseido and Hideki Uchimura have recently faced sales difficulties in the Chinese market. Shiseido's net sales in the third quarter of fiscal year 2023 decreased by 15% year-on-year. Among them, the main brand Shiseido's sales fell by more than 20%, Nars recorded high single digit growth, and high-end skincare brand CPB recorded low double digit growth of over 10%.
In a conference call after the release of the second quarter report, Procter&Gamble stated that China is the second largest market for Procter&Gamble's sales and profits, with the beauty business accounting for a considerable proportion.
Due to the continued failure of SK-II, organic sales in Greater China decreased by 15% year-on-year in the second quarter, ranking alongside Eastern Europe, the Middle East, and Africa as the regional markets still affected by Procter&Gamble's sales.
Procter&Gamble CFO Andre Schulten stated that although the potential market growth rate in Greater China has dropped to the median to high single digits due to further weakening consumer confidence, the company remains optimistic about the medium to long-term development potential of the Chinese market, mainly considering opportunities such as the potential market size in China, the potential development of the middle class, and the development space of Procter&Gamble's product penetration rate.
Procter&Gamble still has high hopes for SK-II.
John T. Chevalier, Senior Vice President of Procter&Gamble IR, stated that SK-II, as a Japanese brand, is not facing emotional resistance in the Chinese market for the first time, but every time it reaches a market trough, SK-II can achieve good results again. Moreover, recent consumer research by Procter&Gamble has shown that the SK-II brand's market response in China is improving, with continuous improvement expected in the second half of the year.
It is worth noting that on Double 11, 2023, the sales rankings of Japanese beauty brands have all declined. According to the Tmall Double 11 Beauty Sales Ranking, Japanese beauty brands ranked 11th in sales, SK-II, followed by Shiseido in 14th place and CPB in 21st place. In 2022, SK-II ranked 8th and Shiseido ranked 10th.
Procter&Gamble's second quarter report also covers sales during the Double 11 period. The usual e-commerce promotion festivals such as Double 11 were peak sales for Procter&Gamble in the Chinese market, but now there has clearly been a decline. Procter&Gamble stated in a conference call that they believe this is a good thing because reducing the proportion of discounted sales will help reshape its brand value, and focusing on daily brand value will help Procter&Gamble return to mid single digit growth in China.
It is worth noting that Shiseido has previously mentioned the need to break free from its heavy reliance on extreme promotions at e-commerce promotion nodes.
The influence of Double 11 on the consumer end has passed its peak, and the entire beauty market is unlikely to fully recover in 2023. More than one beauty brand has told Interface Fashion that 618 and Double 11 are no longer the focus of brand marketing investment, they will focus their energy evenly on daily operations beyond promotions.
There are both proactive strategies to avoid centralized competition and passive choices of helplessness, and the production ratio during the major promotion period is no longer guaranteed to be profitable.
Even international brands have already passed the good days of "lying down and winning", and increasingly mature Chinese consumers and emerging local brands are forcing international brands to strengthen their localization operations.
However, SK-II and Olay, as important brands under Procter&Gamble China, have been trying to tell new stories with outdated classic products and marketing strategies, lacking innovation.
During 2023, P&G also closed the flagship stores of First Aid Beauty, a skin care brand, Tmall and Tiktok. The failure of FAB in the Chinese market to some extent also indicates Procter&Gamble's strategic misjudgment in the beauty market. FAB has put a lot of effort into writing articles on the edge of the clich é d topic of repairing skin problems, but the brand has not left its name in the most needed "sensitive skin" field in China. Instead, it has been preempted by domestic brands such as Vinona.
The dream of continuing to grow and strengthen in the Chinese market is beautiful, but Procter&Gamble, which is already on the decline, needs greater courage to make substantial changes, at least not relying solely on price increases to maintain sales volume.
Procter&Gamble's net sales in the second quarter increased by 3% year-on-year, with sales remaining stable, a 1% decline in exchange rate impact, and an average price increase of 4%.
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声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
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