Consumer-product firms scramble in a market of mixed trends
Novel coronavirus has pushed the fast-forward button for multinational companies seeking to introduce new consumer hygiene products into the China market and, perhaps, recapture market share lost to domestic rivals.
US-based Johnson & Johnson's Band-Aid brand introduced an alcohol-based hand sanitizer in China earlier this year through a fast-track process.
It took only two months for Band-Aid to register the new product and complete its launch in the domestic market. The product, made in China, was previously for export only before the pandemic.
"It was record speed. We saw booming demand for hand-cleaning products,” said Deng Xu, managing director of Johnson & Johnson Consumer Health China.
“The Band-Aid line is intended for first-aid purposes, and we want to strengthen that category by offering more know-how on personal hygiene and proper treatment of cuts and wounds."
The hand sanitizer is only a starting point. The company wants to introduce a whole range of products related to sanitizing and wound applications, expanding from its adhesive bandages.
Johnson & Johnson’s Listerine mouthwash brand, which it acquired from Pfizer in 2006, is also undergoing changes tuned exclusively to the Chinese market. The mouthwash now comes in new flavors like sakura and peach, and coconut and lime.
Online sales account for about half of all J&J's consumer-health products, with prompt delivery services to people who sustain cuts and need first-aid supplies.
British-Dutch multinational Unilever shortened the launch time for its disinfectant home-cleaning products marketed under the Botanical Hygiene label in China.
The new product range, exclusively designed for China, underwent accelerated registration and production. It hit the shelves in February, a month earlier than scheduled, to cater to consumer demand in the early stages of the coronavirus outbreak.
The products boast highly effective cleaning qualities, using natural ingredients instead of standard chemical synthetics.
The large domestic consumer market in China has long been the focus of multinationals.
Consumer spending last year contributed 57.8 percent to growth in gross domestic product, and a key plank in central government policymaking is to encourage more consumer spending.
In the first half, that market lost 44 billion yuan (US$6.28 billion) of sales, but growth rebounded 6.6 percent in June.
New elements introduced
According to a report from Kantar Worldpanel and Bain, foreign consumer brands are making a comeback after suffering from fierce competition with domestic rivals in recent years.
Annual growth in sales of overseas brands in 2019 surpassed those of domestic labels for the first time, with a 9.5 percent increase versus a 7 percent gain.
Consumer goods companies aren’t relying solely on premium products to drive sales increases. They are introducing new elements, such as fancy flavors, to attract buyers.
Shoppers are returning to basics when it comes to washing powders, with price increases slowing in the past six months as consumers cut household budgets for daily necessities.
For non-necessities like chewing gum, discounts offered in both online and offline sales channels have contributed to growing revenue but driven down average prices.
In the second quarter, non-food spending jumped 6.5 percent, compared with a 1.8 percent increase for food items.
Consumers do seem more willing to pay for small treats and little household gadgets from time to time, partly due to longer periods spent indoors and digital platforms that hawk launches of new products.
The online storefront of US-based retailer M&M World on Alibaba's flagship shopping site Tmall has added tailor-made functions for different chocolate coatings and inscriptions on the candies, and package styling.
Last month, it also launched a playful gadget that dispenses M&M chocolates of different color coatings randomly, sold exclusively through Tmall.
The gadget is aimed at enticing younger people and consumers cutting back on sweet snacks because of increasing health awareness.
"I bought a chocolate dispenser from a livestreaming site, and I like the playfulness although I have strictly limited myself on the number of chocolates I eat every day,” said an online shopper with the ID "Rainy Su."
Another chocolate brand, Mars Wrigley Dove, has combined its chocolate hazelnut snack with the design of donuts, and another boxset also took the shape of some eyeshadows to let makeup lovers to try out new sweet taste in the shape of eye colors.
Other tricks to peddle chocolate to a wider customer base include tie-ups with popular milk bubble teas or even traditional mooncakes.
For bottled water, shampoo and laundry detergents, high-end products are growing at a much slower pace than those in the medium price range.
In other areas, like flavored tea drinks, multinational companies have been relatively slow to introduce more healthy alternatives, with less sugar and fewer additives. At most supermarkets, local brands have dominated the iced beverage segment during the peak summer season.
Independent food industry analyst Zhu Danpeng predicts that drinks with less sugar and fewer additives will come to dominate the market in the next two years.
"Latecomers to this market need to differentiate themselves with new flavors and fresh tastes," he noted.