P&G Responds to SK-II Facial Treatment Essence Production Site Suspected of Nuclear Pollution

SK-II Facial Treatment Essence production site suspected of nuclear pollution

Procter & Gamble responded that all SK-II products are safe to use. In addition, the company stated that "we have voluntarily conducted targeted radiation-related testing on SK-II products imported into China, and these products have successfully passed radiation-related testing."

ECHEMI contacted SK-II officials, and the reply given by SK-II was that they were unaware of this matter.

On June 13th, it was reported that a region on the banks of the Yagawa River and Lake Biwa in Japan was piled up with a large amount of wood chips containing radioactive cesium, which was part of the radiation-affected trees from the Fukushima nuclear power plant accident.

It is worth noting that the factory and production line of SK-II's star product, Facial Treatment Essence, are located on the shores of Japan's largest lake, Lake Biwa, which is also the brand's only source of water quality, with no other production channels worldwide.

According to Beijing Business Daily, on June 14th, in response to the issue of SK-II's production site being suspected of nuclear pollution, Procter & Gamble responded that all SK-II products are produced in strict accordance with internal quality standards and external standards, and comply with market supervision requirements.

Procter & Gamble stated that we confirm that SK-II products produced in Japan or exported to other countries can be used safely. In order to ensure the safety of SK-II products, SK-II products imported into China have voluntarily undergone radiation-related targeted testing. At the same time, all SK-II products launched in China undergo strict product safety testing in relevant laboratories designated by the Chinese government to ensure that they comply with relevant Chinese regulations and are filed/registered in accordance with Chinese regulations.

It is reported that the issue of suspected nuclear radiation originated from the illegal dumping on the banks of the Yagawa and Lake Biwa in 2014. Procter & Gamble stated that the local government completed the cleanup work as soon as possible, and conducted radiation concentration and other factor testing. In March 2015, it issued a statement stating that the local area was not affected by nuclear radiation.

SK-II's sales have been declining

According to a report by China Business News, on April 21st, Procter & Gamble CFO Andre Schulten stated in a conference call with analysts that in the first quarter of 2023, Procter & Gamble's organic sales in China (excluding exchange rate fluctuations) increased by 2% year-on-year, but the lack of large numbers of tourists had a significant negative impact on SK-II: the absence of a large number of consumers returning to the tourism industry has had a significant negative impact on our SK-II business. Therefore, SK-II's sales in the tourism retail channel in the first quarter of 2023 have declined.

SK-II, as Procter & Gamble's "ace", has always had a sales decline, and this year Procter & Gamble has launched a "super price increase strategy", but it seems that this move has not saved SK-II's sales decline.

Relying on star products such as SK-II Facial Treatment Essence, SK-II's sales have grown rapidly for a long time. Before 2019, SK-II grew for 18 consecutive quarters, and its sales increased by 30% in 2018 alone.

However, in 2019, SK-II began to decline. Therefore, Procter & Gamble announced several price increases:

In 2018, SK-II Facial Treatment Essence 230ml was priced at 1,370 yuan, and it was raised twice in the following year to 1,540 yuan, with an average increase of 6%. In October 2022, it was further increased to 1,590 yuan, with an increase of 3%.

In February of this year, SK-II's Tmall flagship store announced another price increase, with the price of the small light bulb 50ml rising from 1,590 yuan to 1,790 yuan, an increase of 12.5%, the highest in nearly five years.

Media analysis believes that, unlike the previous single-digit price increases, this year's double-digit price increases indicate that Procter & Gamble is indeed anxious.

However, SK-II has long had a problem of "sky-high prices" in its distribution channels, with huge price differences in e-commerce channels, department store channels, duty-free shops, and tourism channels.

Price increases have already made some consumers hesitate, and the chaotic pricing system will make consumers confused about the brand and question whether they are buying too expensive, so it is likely that this price increase will become an "ineffective price increase" again.

From the perspective of Procter & Gamble as a whole, under the impact of price increases, although sales are still maintaining positive growth, sales have begun to decline.