China’s consumer goods market total sales rebounded for the first time in six years
Recently, Bain and the Kaidu Consumer Index jointly released the 2018 China Shopper Report Series, “Shopper Shopping Upgrades, Market Growth Rebound”. The report shows that the growth rate of total sales of China’s consumer goods market in 2017 increased from 3.6% in 2016 to 4.3%. This is the first time since the series of reports began tracking Chinese shopper behavior in 2012, sales growth exceeded the previous year.
According to the report, among the 50 categories watched by Bain, the five categories with the fastest sales growth in the past two years were mouthwash, kitchen paper, pet food, cosmetics and soy milk.
The Bain and Kaddu Consumer Index further divided the FMCG into several categories for analysis. Among them, in the food and beverage sector, the sales of packaged food products increased faster than beverages. The annual growth rate of packaged foods increased from 1.3% in 2016 to 3% in 2017. In contrast, the growth rate of beverages only increased from 2.3% to 2.6%.
Similar polarizations have emerged in personal care and home care. Among them, the personal care category grew strongly in 2017, reaching 9.5%, mainly because the average selling price rose by 7.9%. However, in the home care category, sales growth was flat and the price increase was lower, resulting in a decrease in sales growth, from 3.5% in 2016 to 2.1%.
Yan Jian, general manager of the Greater China Region of the Kaddu Consumer Index, pointed out that the biggest theme of this report may be consumers’ pursuit of a healthier and more comfortable life. Chinese consumers are spending more on high-end products. Yan Jian believes that this can be attributed to the improvement of health or lifestyle. At the same time, consumers’ spending power is also increasing, and the per capita disposable household income has grown at a compound annual growth rate of 8.2% over the past six years.
Bruno, the global partner of Bain’s global partner and consumer goods and retail business in Greater China, summarized the key trends affecting China’s fast-moving consumer goods market into six areas:
First, e-commerce sales continue to maintain strong momentum, with a growth rate of more than 28% last year. Today, about 10% of the total market sales have doubled from two years ago.
Second, the e-commerce channel penetration growth engine is shifting from a high-level to a low-level city. In the first-tier cities, the e-commerce channel penetration rate is 73%, still ranking first. However, low-level cities are also catching up: the penetration rate of e-commerce channels in third- and fourth-tier cities has reached 18% and 17%, respectively, while the penetration rate of e-commerce channels in fifth-tier cities has even reached 21%.
Third, China’s O2O market continues to grow, with a growth rate of around 30% in 2017, with O2O home delivery services (such as food delivery and distribution services) growing at a rate of 76%.
Fourth, the convenience store and grocery store channels continue to shift to external consumption, contributing about 85% of sales to the top 10 fast-moving consumer goods categories. Out-of-pocket consumption in convenience store channels increased by 6.8%, while home consumption increased by only 1.9%.
Fifth, the hypermarkets continue to lose passenger flow, and the sales of channels in 2017 decreased by 2.5%.
Sixth, local brands achieved a 7.7% sales growth in 2017, contributing 98% of China’s fast-moving consumer goods market. In contrast, foreign brand sales increased by only 0.4%. On the whole, foreign brands have once again given market share to local brands in 2017.
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