Chinese consumers increase spending on diapers and Colgate despite economic strain

Diaper-Dental Surge: Chinese consumers are allocating more of their spending towards diapers and certain Colgate toothpaste products despite concerns over the country's economic challenges.

The aftermath of the pandemic has had a significant impact on sales for consumer packaged goods companies in China, a market they once considered a major growth opportunity.

Investors and analysts are closely monitoring signs of economic recovery, anticipating a potential boost for consumer goods manufacturers.

China spending up

Procter & Gamble, Reckitt, and PepsiCo have all reported some positive indicators of increased spending in China.

Noel Wallace, CEO of Procter & Gamble, expressed optimism about the company's performance in China, highlighting robust sales of premium products like whitening toothpaste. However, he noted that overall sales volumes for Colgate in China remain soft, particularly due to reduced spending amongst rural consumers.

Reckitt has found success with livestream shopping for Durex condoms in China. During a recent conference call with investors, Reckitt's CEO mentioned the strong performance of Durex condoms in China, attributing it to product enhancements and new materials.

On the other hand, L'Oreal and P&G have encountered challenges in selling beauty products and cosmetics in China.

During an earnings call, L'Oreal's CEO expressed caution regarding the Chinese market, anticipating a less-than-optimal performance.

Beauty bounce back

Despite challenges in beauty product sales, P&G's CFO, Andre Schulten, noted improving consumer sentiment in China, particularly for its high-end Japanese skincare brand. "We reached the bottom of the trend and see sentiment improving," Schulten said.

"I am planning for a China that is not doing fantastic," said L'Oreal's CEO during an earnings call, expressing caution about the Chinese market.

Schulten further elaborated on P&G's performance, stating that despite a 30 per cent decrease in SK-II sales, other sectors like diapers and appliances experienced growth in China. "We have pockets of strength," Schulten added.

Ramon Laguarta, CEO of PepsiCo, observed cautious consumer behaviour in China, with a tendency towards saving.

(With Reuters Inputs)