China Insights
English
English

FMCG sales growth in China accelerates in Q2

Jason Yu

Greater China General Manager

Retail 02.08.2018 / 18:27

Piggy bank 2 col

Growth rate of the fast-moving consumer goods hits 4.7% in the second quarter of 2018, faster than 2.3% in Q2. E-commerce remains a key growth engine.

The growth rate of the fast-moving consumer goods (FMCG) accelerated during Q2 2018, with annual value growth hitting 4.7%, higher than 2.3% recorded in Q1 and also higher than 4.3% for the whole year of 2017, according to Kantar Worldpanel.

In the 12 weeks ending June 15, growth for modern trade channels (including hypermarkets, supermarkets, and convenience stores) was flat. Supermarket channel was performing the best among this cluster by growing by 2.7% in these 12 weeks. Hypermarkets continued to lose shoppers, with its penetration declining by 1.3 percentage points in this quarter.

E-commerce remains a key engine for growth in the FMCG market, growing by 36% and now represents 10.1% of total FMCG sales. Of all the regions, the West region outgrew all others by expanding at a value growth rate of 6.8%.

Kantar Worldpanel China continuously measures household purchases over 100 product categories including cosmetics, food and beverages and the toiletry/household sector through its 40,000 sample families. Its national urban panel covers 20 provinces and four municipality cities (Beijing, Tianjin, Shanghai and Chongqing). The channels within its monitoring scope modern trade (supermarket, hypermarket, convenient stores), traditional trade (grocery, free market, whole sale), e-commerce, overseas shopping, direct sale, work unit/gifting etc. The goods under monitoring are those obtained for in-home consumptions.

Leading Grocery Share of Modern Trade - National Urban China (%)

 

52 w/e 2017/06/16

52 w/e 2018/06/15

17Q2

18Q2

SUN ART GROUP

8.2

8.4

8.3

8.2

  AUCHAN

1.4

1.3

1.4

1.3

  RT-MART

6.8

7.1

6.9

6.9

VANGUARD GROUP

6.5

6.7

6.4

6.5

  TESCO

0.8

0.7

0.8

0.6

WAL-MART GROUP

5.2

5.4

5.1

5.7

YONGHUI GROUP

3.1

3.6

3.2

3.7

CARREFOUR

3.3

3.1

3.4

3.1

BAILIAN GROUP

2.8

2.7

2.8

2.6

WU-MART GROUP

1.9

1.9

2.0

1.8

WSL GROUP

1.8

1.9

1.7

2.0

SPAR GROUP

1.4

1.5

1.4

1.6

BUBUGAO GROUP

(Incl. NANCHENG)

1.1

1.4

1.1

1.4

Walmart rebounded while Yonghui maintains momentum

Among the top five retailers, Sun Art and Vanguard Group maintained their leading positions. Walmart and Yonghui both had significant market share boost in Q2. After undertaking a series of transformation efforts, Walmart improved its market share within modern trade by 0.6 percentage point over the last year. It edged closer to Vanguard despite closing 10 non-performing hypermarkets since the beginning of this year. Walmart has furthered its collaboration with JD.com by increasing its online presence on the JD platform as well as introducing JD.com “one hour” last-mile delivery service into Walmart hypermarket outlets.  Walmart also unveiled its first small format supermarket sub-brand Huixuan, featuring fresh goods, free home delivery, and Internet technology to enhance shopping experience. The latest Kantar Worldpanel data confirmed that Walmart Group has improved penetration across all regions in the first half of 2018. 

Yonghui kept its pace of shopper expansion through implementation of its aggressive store opening plan and digitalization strategies, though its growth rate has started to slow down slightly. In the second quarter of 2018, Yonghui continued to open more YH Super Species shops, which cater to middle-class shoppers in high tier cities, and YH Life WeChat mini-programme, which directly serves neighbourhood needs and offers fast delivery. Yonghui is expected to face more challenges from Hema (part of Alibaba Group) and 7 Fresh (part of JD.com) if it cannot sustain its competitive advantage in fresh foods categories and dominance in certain geographical regions.

JD.com shows strong growth before ‘618’

Every year, June is the month of birthday month for JD.com and June 18 is its “shop birthday”. Since JD.com launched “618” in 2010, the e-commerce sales in this “festival” has kept growing and now it is among one of the two biggest e-commerce sales events in China, next only to “Singles Day” invented by Alibaba Group.

Now “618” is a very important sales mid-year sales window for FMCG brands. This year, both JD.com and Alibaba extended the sales period to begin with promotions at the beginning of June. Even though this reporting period ends on June 15, we could already see 39% of Chinese urban household bought FMCG online. This number was 4.6 percentage points higher than the same period in 2017.

JD.com naturally leaded growth in this period with a significant uplift on new buyers. Its penetration reached 7.0% in the period, up by 0.8 percentage points versus the previous 12-week period ending May 2018. Tmall saw slower annual penetration growth compared to JD.com, but it might be because Alibaba has been more focused on “New Retail” integration between its online stores and offline space, such as RT-mart and other Alibaba-empowered offline stores. 

Source: Kantar Worldpanel

Editor's notes

* Key cities: Beijing, Shanghai, Guangzhou, Chengdu; Tier 2 cities: Provincial capitals; Tier 3, 4 cities: prefecture-level and county-level cities as well as counties. International retailers refer to retailers originated outside China’s Mainland, Taiwan, Macau, and Hong Kong.

EAST: Shanghai, Jiangsu, Zhejiang , Anhui, Henan

SOUTH: Guangdong, Fujian, Hubei, Hunan, Jiangxi

WEST: Chongqing, Shaanxi, Sichuan, Guangxi, Guizhou, Yunnan

NORTH: Heilongjiang, Jilin, Liaoning , Beijing, Tianjin, Hebei, Shandong, Shanxi

* To reach the author, or to know more information, data and analysis of China's FMCG market, please contact us.

* Please subscribe to our newsletter to receive news alerts.

Latest Stories

Connected Intelligence, AI and Voice will transform media in the new year, says Kantar.

Meet the fast-rising brands to understand how they broke into the landscape, and learn how can incumbents ward off their challenge.

What have Chinese consumers bought during the world’s largest e-commerce shopping event? Which categories are big winners? How much have they spent? Do people regret spending too much?

P&G and Yili lead the race, reaching over 160 million families. Nongfu Spring, Haday and Dali are fastest growers.

Xiaomi Mi 8 was the most popular handset model in these three months. The next three models on the best-seller ranking were all from iPhone.

Related Content
Social Network