Procter & Gamble doubles down on China’s TikTok to reverse sales slump

By Jessica DiNapoli

NEW YORK, Nov 22 (Reuters) - Procter & Gamble PG.N has been revamping its marketing and line-up of influencers on fast-growing Chinese shopping app Douyin in recent months, helping its Pantene shampoo lead growth in hair care on the platform, executives said Thursday at an investor day.

The Cincinnati-based company's investments in better packaging for Pantene in China, and improved marketing on how much to use, has led to share growth online, the company's head of beauty, Alex Keith, said at the event.

"We've grown online share for more than a year now and our portfolio is leading category growth on Douyin, the fastest growing online retailer in China," Keith said. P&G's beauty business globally made up about 18% of its $84 billion in net sales in its fiscal year ended in June.

Influencers on Douyin like Ni Bi Yi, a young mom, and Chou Dan, known for her jokes, tout Pantene's jasmine fragrance and ability to repair their hair, according to posts on the China-based sister app of TikTok.

P&G is looking for ways to stoke sales in China's sputtering economy, where its revenue was down 15% in the quarter ended September 30, dragging on the entire company. Even as P&G sees positive trends in haircare on Douyin, the higher-end categories the company competes in overall in China are down due to low consumer confidence, Keith said Thursday.

To rebuild sales, the company is offering more of its haircare and beauty brands on Douyin, and other fast-growing e-commerce platforms, P&G executives told Asian investors in August, according to a research note from the bank.

It is also building brand houses on Douyin, like its page for skincare brand Olay, and putting influencers on its payroll, according to the JP Morgan note.

Those moves are aimed at giving P&G more control over brand messaging as it faces competitors such as Unilever's ULVR.L Dove and local brands.

SHOPPING VIA LIVESTREAM

Chinese consumers are more frequently shopping on the app, which offers livestreamed videos, and are abandoning the brick-and-mortar stores where P&G built up its presence over decades, seeking to become essential in China's growing middle class.

Influencers on Douyin entice shoppers with deep discounts, and consumers in China believe they will get the cheapest price on livestreams. P&G executives have said they try to balance this approach with the company's long-term strategy of marketing products worth higher prices.

On Olay's flagship Douyin store this week, influencers hosting livestream videos offer 19.3% off a 260g-size body lotion, according to a Reuters review of Douyin. A whitening set, which lightens skin tone, is nearly 30% off.

The consumer goods maker is now introducing a Head & Shoulders upgrade in China like Pantene's, Keith said. Similar improvements are in the works on Rejoice, another haircare brand, she said.

P&G is also selling Olay on Chinese lifestyle app Xiaohongshu, which is popular with young women and often compared to Meta's META.O Instagram, where product reviews can lead to purchases. Pantene, Head & Shoulders and Rejoice also have Xiaohongshu accounts, Reuters confirmed.

P&G is overhauling its marketing in China after it lost its footing in the country in recent years, first during the COVID-19 pandemic when shopping quickly moved online. Then, Chinese consumers soured on Japanese brands including P&G's premium SK-II serum, which sells for $100.

SK-II is not on Douyin, but P&G management is open to offering the brand on new platforms, according to the JP Morgan research note.

P&G had spent decades building a presence in China in the hopes of recruiting the country's billions to buy its daily use products like Safeguard hand soap, Tide detergent and Pampers diapers, particularly as growth in developed markets like the United States and Europe slowed.

In its fiscal year ending June 2024, sales from China made up 7% of P&G's net sales, down from 10% of $80.2 billion in net sales in 2022.

Douyin is increasingly taking market share from top e-commerce players like Alibaba 9988.HK, which also has a popular livestreaming tool, and JD.Com 9618.HK.

P&G is holding off on putting its fabric care brands like Tide on Douyin, according to the JP Morgan note.

(Reporting by Jessica DiNapoli in New York; additional reporting by Casey Hall in ShanghaiEditing by Nick Zieminski)

((Jessica.DiNapoli@thomsonreuters.com; 845-591-4428; Reuters Messaging: Twitter: @jessicadinapoli))