China's FMCG Market

Market pressures, consumer behaviors carve out a ‘new normal’ for china’s fast moving consumer goods brands

For the fourth consecutive year, Bain & Company partnered with Kantar Worldpanel to study the shopping behaviors of 40,000 Chinese households. The findings, published in a new report, Winning Over Shoppers in China's ‘New Normal', show a continued deceleration in overall market growth for fast-moving consumer goods (FMCG) categories – from nearly 12 percent in 2011-2012 to 4.4 percent during the first quarter of 2015. However, this deceleration was not uniform across the entire spectrum of FMCG categories; skin care, for example, rebounded in the last part of 2014 and early this year.

"Consumers' shifting shopping habits, the expansion of online channels and pricing dynamics have put the brakes on FMCG company growth in China once again," said Jason Yu, China General Manager of Kantar Worldpanel. "These trends are forcing brands to quickly understand the changes in the market and successfully adapt to the ‘new normal' they face."

...The research shows that the deceleration in China's FMCG market varies across sales channels. Hypermarkets' growth rate slowed by half, from 7.9 percent in 2013 to 3.7 percent in 2014 due to declining traffic. Traffic for smaller format supermarkets, mini-marts and convenience stories remained relatively stable. However, e-commerce continues to reign supreme in China, which is the largest digital retail market in the world. Online sales now represent 3.3 percent of all FMCG goods sold with sales growing by 34 percent last year. Chinese consumers are also rapidly making the leap to mobile retail. The research found that 80 percent of Chinese consumers who bought online in 2013 made at least one purchase from a smartphone.