NEW YORK, April 29 (Reuters) - Chinese shoppers are
spending a little more on diapers and some Colgate
toothpastes, according to executives at the makers of these
products, even as consumers fret about the country's property
crisis and faltering economy.
China's economic slump after the pandemic has weighed on
sales at consumer packaged goods companies, who had targeted the
world's second-biggest economy as a major source of growth.
Investors and analysts are keeping close tabs on when the
economy starts to significantly improve, which should be a boost
for makers of consumer goods.
Some consumer companies like Tide detergent maker Procter &
Gamble ( PG ), Reckitt, which manufactures Dettol
cleaning solutions, and food producer PepsiCo ( PEP ) are
reporting some small signs of stronger spending in China.
"The Colgate business had a terrific quarter in China," said
CEO Noel Wallace, adding that sales of the company's premium
products like whitening toothpaste are "robust." About 14% of
the company's total sales came from its Asia Pacific region,
which includes China, last year.
But Colgate's overall sales volumes in China are still soft,
mostly due to rural consumers cutting back, Wallace said.
"Clearly that consumer is a bit more challenged in China
right now," he said.
Wallace said the company's Darlie brand toothpaste is
well-positioned in the longer term to gain market share with
rural Chinese shoppers.
Reckitt has begun testing livestream shopping, or live video
shopping, of Durex condoms in China. On Wednesday, in its
conference call with investors, its CEO said Durex condoms in
China are "really working very well for us," thanks to new
materials and other enhancements.
But both L'Oreal and P&G flagged problems selling
beauty products and cosmetics in China.
L'Oreal on April 18 gave a cautious outlook about China, the
world's No. 2 beauty market, with its CEO noting that he is
planning for a "China that is not doing fantastic."
P&G Chief Financial Officer Andre Schulten said in a call
with media on April 19 that Chinese consumer sentiment is
improving around the company's high-end Japanese skincare brand,
SK-II, although sales of it were down 30% in the last quarter.
China is P&G's second-biggest market after the United States.
"We reached the bottom of the trend and see sentiment
improving," he said, adding the company would focus its
marketing on SK-II's anti-aging claims. The company has said
that Chinese consumers shunned the brand over fears about the
release of wastewater from the Fukushima nuclear plant in Japan
last August, weighing on P&G's overall financial results.
Even excluding sales of SK-II, however, P&G sales in China
were down 3% in the quarter that ended March 31, Schulten said.
"We have pockets of strength," Schulten said, adding that P&G's
diaper and appliance business grew in the country.
At PepsiCo ( PEP ), which is in the process of opening factories in
China and Vietnam, CEO Ramon Laguarta noted that Chinese
consumers are being "very cautious" and saving a lot.