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Sat, Mar 27, 2004 - Page 12 News List

Proctor & Gamble to release pricey face cream in US

AP , CINCINNATI

A higher-priced skincare line popular in Asia and Britain is now selling in a small number of upscale US stores, Procter & Gamble Co said.

The SK-II line of moisturizers -- built around a US$130 jar of facial cream -- is a departure for the consumer products giant known for less expensive drugstore beauty products.

The US rollout in recent weeks of SK-II, which began 25 years ago in Japan, will allow P&G officials to see if American customers like the products as much as counterparts in Asia and Britain, where sales totaled US$500 million last year.

For now, P&G is limiting sales to 11 Saks Fifth Avenue stores across the country.

The line is a change from the company's effort to reduce prices to compete in mass-merchandising stores. In the beauty care category, its most expensive Olay face creams can sell for US$20 in US stores.

Analysts say the SK-II experiment shows P&G's willingness to be flexible in its marketing and its continuing interest in the beauty care business, which is increasingly lucrative as baby boomers look for products that mask aging.

"It'll be up to the consumer to decide whether SK-II is worth the price," said William Steele, an analyst with Banc of America Securities in Ashland, Oregon. "But if overseas sales are any indication, it will be a popular product."

SK-II has done particularly well in Asia and is a step in P&G's bid to expand its beauty care sales, said Joseph Altobello, an analyst with CIBC World Markets Corp in New York.

"It's not going to make a huge difference, but every little bit helps," Altobello said.

Sales in P&G's beauty care business -- led by Olay and the Pantene, Head & Shoulders and Herbal Essences hair care brands -- increased 50 percent during the last quarter to US$4.49 billion, contributing to the company's total quarterly profit of US$1.8 billion.

SK-II made its appearance in February at sales counters in 11 of the 62 Saks Fifth Avenue stores, P&G spokeswoman Maria Burquest said Thursday.

The company would not discuss the next step for the line.

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