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Chinese spend more on diapers and Colgate despite economic woes
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Chinese spend more on diapers and Colgate despite economic woes
Apr 29, 2024 3:37 AM

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.

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