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China FMCG market reports moderate growth of 2.4% in Q1

Jason Yu

Greater China General Manager

Retail 30.04.2019 / 18:00

Woman in supermarket full

Non-food, especially personal care categories, maintain robust growth while the food and beverage sector show weaker performance of -0.1%.

The total spending of the fast-moving consumer goods (FMCG) recorded a moderate value growth of 2.4% in the 12 weeks ending March 22, 2019, compared to the same period in 2018, according to Kantar Worldpanel China. Non-food, especially personal care categories, maintained a robust growth while the food and beverage sector showed a weaker performance of -0.1%.

Modern trade (including hypermarkets, supermarkets, and convenience stores) reported flat growth of 0.4%, among which supermarkets outperformed the rest of the sector with 3.9% growth rate. E-commerce maintained a stellar performance with a growth rate of 34.5%, now representing 14% of total FMCG spend.

Lower tiers city especially county level cities continued to show strong potential for premiumisation with sales growth of 4.5%.

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 2018/03/23

52 w/e 2019/03/22

17Q1

18Q1

SUN ART GROUP

8.4

8.3

8.7

8.3

  AUCHAN

1.3

1.3

1.3

1.2

  RT-MART

7.1

7.0

7.5

7.2

VANGUARD GROUP

6.7

6.7

7.1

7.0

WAL-MART GROUP

5.3

5.3

5.4

5.1

YONGHUI GROUP

3.4

4.0

3.8

4.2

CARREFOUR

3.2

2.9

3.1

2.8

BAILIAN GROUP

2.7

2.5

2.5

2.4

WSL GROUP

1.8

2.1

2.0

2.3

WU-MART GROUP

1.9

1.9

1.8

1.9

SPAR GROUP

1.4

1.5

1.4

1.5

BUBUGAO GROUP

(Incl. NANCHENG)

1.3

1.4

1.5

1.4

Leading players under more pressure

Sun Art, Vanguard Group and Walmart maintained their leading positions, collectively representing 20.4% of FMCG value share of modern trade in latest 12 weeks, but their share has weakened over the last year. Despite all three continuing to expand their retail footprints, they are also making an effort to optimize their business portfolio and geographic spread. For example, Vanguard has actively divested hypermarket stores in the North region while at the same time have opened many small format stores and premium stores. Walmart is looking to launch 40 of its high-end membership Sam’s Club stores in China by 2020 as well as managing ongoing integration of its online and offline businesses through their partnership with JD.com and its WeChat Mini Programme now available to more than 30 million users.

Yonghui remained the best performer in terms of market share growth in the first quarter, though its growth was slower than previous years. While Yonghui continued to acquire stakes in regional leaders, the retail group also started to implement their new retail strategy and launch Yonghui Mini alongside Yonghui Life to grab more market share from the emerging neighbourhood store sector. 

Alibaba accelerates development in lower tiers

Kantar Worldpanel reported 34.5% growth in FMCG spend through e-commerce platforms in the first quarter of 2019. The Alibaba camp (Taobao+Tmall) reached more than 30% shoppers in China in the 12 weeks. As e-commerce experienced challenges to drive more traffic in the high tier cities, lower tier cities are the new battleground. Pinduoduo posted impressive performance through the platform’s attractively priced products and leverage of social networks to recruit and engage buyers. In February, Ali also launched an independent Taobao livestream App aiming to attract young consumers form lower tiers and drive traffic to the Taobao shopping website. Taobao is also looking to improve their logistic efficiency through increased investment in STO express. With integration of Taobao and Tmall in 2019, Alibaba expects to double its Gross Merchandise Volume (GMV) in three years and become an essential platform for brand building and launching innovations. The latest Kantar Worldpanel report confirmed improved penetration and stronger growth of Alibaba in lower tiers over the last 3 months.  



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Source: Kantar Worldpanel

Editor's notes

* Kantar Worldpanel began to remove all sales value of tobacco products in its FMCG statistics in Q1, 2017. Year-on-year growth calculations had also excluded tobacco sales value from previous year since Q1, 2017;

* 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.

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