Rapport

China Shopper Report 2017

Many Chinese consumer products companies are aiming to expand in high-speed markets while managing for costs in low-speed markets.

Par Bruno Lannes, Jason Ding, Marcy Kou and Jason Yu

First published on juillet 31, 2017
min


This is the sixth consecutive year that we’ve tracked the shopping behavior of Chinese consumers. Our continuing research has given us a valuable long-term view across 106 fast-moving consumer goods (FMCG) categories purchased for home consumption in China. As in each of the past six years, we conducted a deep analysis of the key 26 categories that span the four largest consumer goods sectors: packaged food, beverages, personal care and home care. Combined, these sectors represent 80% of China’s FMCG purchases. As in previous years, we based our research on a panel of 40,000 urban households equipped with scanners to track their FMCG purchases for at-home consumption. For the first time this year, we also studied the FMCG market with a new lens: the out-of-home (OOH) consumption of food and beverages. Working with Kantar Worldpanel, we enlisted 4,000 Chinese individual consumers in Tier-1 and Tier-2 cities to track their food and beverage purchases for consumption outside of their homes using smartphones. In combination with additional data sources, we conducted an in-depth analysis of the overall eating and drinking channel dynamics. This year we found the two-speed growth continuing, while annual growth in FMCG value for home consumption maintained its slowdown in 2016 across all sectors we studied, hitting a five-year low. This is due to a combination of almost flat volume growth and a deceleration of price growth, which dragged down overall FMCG value growth. Let’s look at product categories first. Value growth of FMCG sales for home consumption totaled 3.0% in 2016; however, the growth rates for food and beverage categories are dramatically different than for home and personal care. It’s to the point where food has grown by 0.5% and beverages by 2.0%, while personal care and home care increased by 10.5% and 3.5% respectively, representing an improvement over 2015. This year we saw a continuing geographic trend. China’s southwestern and central provinces have maintained their status as the major growth engines for FMCG sales. This is a result of an increase in number of households, fueled in part by the urbanization of inland provinces as many industries shift from coastal regions. Two-speed growth by geography Southwestern and central provinces continue to serve as the growth engine for brands in China (see Figure 10). Six of those provinces experienced FMCG growth in excess of 7% in 2016: Sichuan, Shaanxi, Shanxi, Guangxi, Hunan and Hubei. This resulted from an increase in number of households, fueled in part by higher economic growth. FMCG consumption growth is boosted by the urbanization of inland provinces as many industries shift from coastal regions. Blue-collar workers continue to be a massive force in China’s FMCG market. Two-speed growth in retail channels Our sixth annual study of Chinese shopper behavior for home consumption shows the continuing shifts in retailing. Online and convenience store channels maintain strong momentum, while big-box retailers lose steam (see Figure 11). Unsurprisingly, e-commerce led the pack, growing by more than 52.0%. Online now represents 7.0% of total FMCG sales. Convenience stores, steadily serving the needs of busy urban consumers, grew by 7.4%, adding such new incentives as in-store pickup of products bought online from other retailers. The hypermarkets that once defined robust growth declined by 2.0%, and the once-flourishing super or mini format grew by 2.0%, about the same rate as inflation. While their share is slowly shrinking, those two formats still account for more than half of the FMCG market. Click here to download the study.

This is the sixth consecutive year that we’ve tracked the shopping behavior of Chinese consumers. Our continuing research has given us a valuable long-term view across 106 fast-moving consumer goods (FMCG) categories purchased for home consumption in China. As in each of the past six years, we conducted a deep analysis of the key 26 categories that span the four largest consumer goods sectors: packaged food, beverages, personal care and home care. Combined, these sectors represent 80% of China’s FMCG purchases.

As in previous years, we based our research on a panel of 40,000 urban households equipped with scanners to track their FMCG purchases for at-home consumption.

For the first time this year, we also studied the FMCG market with a new lens: the out-of-home (OOH) consumption of food and beverages.

Working with Kantar Worldpanel, we enlisted 4,000 Chinese individual consumers in Tier-1 and Tier-2 cities to track their food and beverage purchases for consumption outside of their homes using smartphones.
In combination with additional data sources, we conducted an in-depth analysis of the overall eating and drinking channel dynamics.

This year we found the two-speed growth continuing, while annual growth in FMCG value for home consumption maintained its slowdown in 2016 across all sectors we studied, hitting a five-year low. This is due to a combination of almost flat volume growth and a deceleration of price growth, which dragged down overall FMCG value growth.

Let’s look at product categories first. Value growth of FMCG sales for home consumption totaled 3.0% in 2016; however, the growth rates for food and beverage categories are dramatically different than for home and personal care. It’s to the point where food has grown by 0.5% and beverages by 2.0%, while personal care and home care increased by 10.5% and 3.5% respectively, representing an improvement over 2015.

This year we saw a continuing geographic trend. China’s southwestern and central provinces have maintained their status as the major growth engines for FMCG sales. This is a result of an increase in number of households, fueled in part by the urbanization of inland provinces as many industries shift from coastal regions.

Two-speed growth by geography

Southwestern and central provinces continue to serve as the growth engine for brands in China (see Figure 10). Six of those provinces experienced FMCG growth in excess of 7% in 2016: Sichuan, Shaanxi, Shanxi, Guangxi, Hunan and Hubei. This resulted from an increase in number of households, fueled in part by higher economic growth. FMCG consumption growth is boosted by the urbanization of inland provinces as many industries shift from coastal regions. Blue-collar workers continue to be a massive force in China’s FMCG market.

Two-speed growth in retail channels

Our sixth annual study of Chinese shopper behavior for home consumption shows the continuing shifts in retailing. Online and convenience store channels maintain strong momentum, while big-box retailers lose steam (see Figure 11). Unsurprisingly, e-commerce led the pack, growing by more than 52.0%. Online now represents 7.0% of total FMCG sales. Convenience stores, steadily serving the needs of busy urban consumers, grew by 7.4%, adding such new incentives as in-store pickup of products bought online from other retailers. The hypermarkets that once defined robust growth declined by 2.0%, and the once-flourishing super or mini format grew by 2.0%, about the same rate as inflation. While their share is slowly shrinking, those two formats still account for more than half of the FMCG market.

Click here to download the study.