By CHEN Qirui
Procter & Gamble (P&G) has released its financial report for Q1. Sales increased by 4 percent year-on-year to US$20 billion (130 billion yuan). Net profit was up by 2 percent to US$3.4 billion.
Compared to the poor performance in Q4, the new quarter’s performance is better, but still not good.
Demand declining across the industry
Sales of beauty products increased by 3 percent to .5 billion. Poor performance by the SK-II brand weighed on growth. This is not a new occurrence. P&G has blamed SK-II for declining performance in its 2021 and 2022 reports.
Pre-pandemic, Chinese tourists traveling to Japan made SK-II the leader among Japanese high-end beauty brands. But Chinese consumers' love for SK-II has faded. In 2022, sales on e-commerce platforms decreased by 1.3 percent, while the group's mass brand OLAY increased by 10 percent.
Demand for high-end beauty brands is declining across the entire industry. The collective silence of high-end brands during this year’s Women's Day promotion reflects significantly reduced demand for high-end products.
Sinking high-end
In Q1. L'Oreal Group sales increased by 14.6 percent to 10.4 billion euros (US$11.5 billion, 80 billion yuan) but the North Asia market, including China, only increased 1.1 percent. L’Oreal’s high-end cosmetics sector increased by 7.7 percent. The financial report specifically pointed out that sales in other regions except North Asia have grown strongly.
Beauty industry media "Jumeili" reports that sales of high-end skincare products on Tmall have collectively declined since last year’s Women’s Day promotion. Among them, La Mer and Shiseido's sales compared to 2022 have decreased by about half. Brands such as Estée Lauder, Lancôme, and Helena Rubinstein also performed poorly.
Live streaming led by Austin Li Jiaqi, once China's biggest live streamer, has lost its charm. After the pre-sale, no sales data appeared. According to reports by China Newsweek, most brands' performance during the Women’s Day promotion was worse than expected.
Hopes rest overseas
For three years, high-end brands were a panacea for poor brand performance. Shiseido even sold off its low-priced brands to focus on the high-end. Yatsen Group, the parent company of Perfect Diary, is placing its hopes on newly-acquired overseas high-end brands.
With the recovery of the retail environment and the return of outbound travel, many high-end brands expect better growth in the Chinese market in the second half of the year.
