Sunday, July 14, 2024

Stable recovery as China’s FMCG spending up 2% in Q1

Must read

Fast moving consumer goods sales in China maintained stable recovery in the first quarter this year, with packaged food and drinks standing out thanks to out-of-home consumption recovery, a latest industry study showed.

FMCG spending in China’s urban market advanced 2 percent in the first quarter, with a 3.5 percent increase in volume, suggesting strong desire for consumption, according to the China Shopper Report jointly released by Bain & Company and Kantar Worldpanel on Thursday.

In the first three months of 2024, packaged food and beverages witnessed stable value growth of 2.7 percent and 4.3 percent, respectively, while growth in home care decelerated and sales of personal care items continued to decline.

As of mid-May, the overall urban FMCG market size gained 1.9 percent, partly due to shoppers’ delayed buying ahead of the mid-year shopping promotion season from late May to mid-June, based on Kantar Worldpanel data.

Amid gradual recovery in consumer sentiment, shoppers still seem to care a lot about value-for-money options and brands need to carefully manage their operation costs to maximize investment returns, the report suggested.

“Most leading multinational FMCG players have already acknowledged the importance of the Chinese market and are paying greater attention towards localized supply chain in order to stay close to market trends,” said Derek Deng, senior partner at Bain & Company’s Shanghai office and head of consumer products practice in China.

With shoppers already getting used to online shopping festivals, consumer goods players need to think about long-term strategies and beef up brand-building efforts, commented Kantar Worldpanel China Managing Director Jason Yu.

Offline channels regained momentum in the first quarter, rising at a faster pace of 2.4 percent with physical store foot traffic continuing to recover, even as e-commerce saw a moderate 2 percent growth.

Stable recovery as China's FMCG spending up 2% in Q1


Amid gradual recovery in consumer sentiment, shoppers still seem to care a lot about value-for-money options.

Small supermarkets and convenience stores maintained strong momentum, while in the online sector, more frequent purchase has driven up the penetration rate and emerging sites like Douyin, the Chinese version of TikTok, have caught up quickly with established players such as JD and Alibaba’s Taotian Group.

In terms of market share, Douyin and Pinduoduo are the leaders with an 18 percent and 15 percent share, respectively, of the e-commerce sector as of the first quarter.

Latest article