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Who is winning more Chinese consumers in 2019?

Jason Yu

Greater China General Manager

Shoppers 22.11.2019 / 15:00

Male Shopper Full

P&G continue to lead the 100 million consumer club.

The latest data from Kantar Worldpanel shows that there were 22 Fast Moving Consumer Goods (FMCG) companies reaching over 100 million urban Chinese households during the 52 weeks ending October 4, 2019, with P&G, Yili and Mengniu each attracting more than 160 million families. Products from these three companies were bought by more than 90% of Chinese families over the past year. In terms of growth rate, YST Group, Haday and The Coca Cola Company are top three performers, posting the fastest gains in consumer base.

FMCG Companies Ranking by Consumer Base (million households)

Companies

Buyers

(Million Households)

YOY Growth %

Penetration

(%)

52 w/e 2018/10/05

52 w/e 2019/10/04

52 w/e 2019/10/04

P&G

162

166

2.1%

92.5

Yili

160

164

3.0%

91.7

Mengniu

157

162

2.7%

90.1

Master Kong

142

146

2.3%

81.3

Nestle

140

141

0.7%

78.9

Unilever

138

141

2.1%

78.6

Coca Cola

132

137

3.8%

76.5

Heng An

134

137

1.7%

76.3

Haday

129

136

5.5%

75.7

Liby

130

130

0.4%

72.7

YST Group

122

130

7.0%

72.6

 -Nongfu Spring

120

129

7.2%

71.8

Nice

124

124

0.4%

69.3

Mars

122

123

1.4%

68.8

Mondelez

120

122

1.6%

68.2

PepsiCo

118

121

3.2%

67.7

Want Want

116

117

0.9%

65.4

Colgate

117

115

-2.5%

63.9

Dali

111

114

2.2%

63.6

Wilmar

106

110

3.4%

61.2

Shuanghui

106

109

2.5%

60.7

China Resource

102

105

2.7%

58.6

Uni-President

101

103

2.4%

57.5

Amid economic uncertainty, we continue to see big FMCG companies launch new products to win consumers who are more in favour of brands that promise to improve their health and lifestyle. While penetration may be reaching its limit in some categories, there is room to grow shoppers in adjacent categories or through acquisitions. Our data also suggests that companies can win new shoppers through premiumization.

In 2019, out of the 22 companies reaching 100 million consumers, 13 of them are Chinese companies. With the acquisition of Jiangzhong in 2018, China Resources entered the ranking for the first time, on the back of its strong brands Snow and C’estbon. 

Offer innovative and premium products to attract consumers

Chinese consumers are getting more sophisticated with a vast array of brands to choose from, making innovation more difficult than ever. With the highest mobile Internet usage in the world (99.1% according to CNNIC report in June 2019) and 27.9 hours of Internet usage per week, it is becoming more and more challenging to keep consumers’ attention, even with marketing campaigns that are highly engaging. Successful leading players either chose to launch more premium products to attract young middle-class shoppers or grow through expanding into new territories.

  • Go Premium

P&G brands were bought by 92.5% of the Chinese families in the latest year.

As the only personal care player in the top league, it managed to grow its shopper base year on year, propelled by its superior innovation and improved speed to market. On the back of Olay and SKII’s success in 2018, P&G extended the proven product concepts to the personal cleansing category. In additional, P&G introduced premium lifestyle products such as Downy and Tampax, aiming to attract the new generation of shoppers who are willing to pay for premium quality. Home care, personal cleansing, and female hygiene products contributed to P&G’s buyer expansion increasing by 6%, 11% and 90% respectively. 

  • Break the Boundary

Launching products in new categories always presents both opportunities and risks to established players. YST, the leading beverage and nutrition player in China, has set a great track record of managing a wider portfolio of innovations across categories. Beyond its strong grow in bottled water business through focusing on different drinking occasions, its functional drink brands Scream and Victory Vitamin water continue to grow the buyer base by 14%. In 2018, YST also launched “Yoseido” mask and facial moisturizer, aiming to capitalize on opportunities in the booming beauty sector. In 2019, YST grew its shopper by an impressive 7%, far ahead of any other players in the rank.

Unlocking growth opportunities in lower tier cities

Lower tier cities in China remain an important source of growth for FMCG players with the population here having increased disposable income, more leisure time and improved access to digital media and eCommerce shopping. Those cities also saw a faster rise in population due to movement from rural areas as well as people migrating from first tier cities. The success of Pingduoduo, now a key online player, proves that the underlying demand for consumption in those smaller cities can be awakened through effective marketing strategies.  

Coca Cola, which enjoys over 80% penetration in top cities, is now advancing to lower cities to catch the wave of booming consumption. Overall the company expanded its shopper from 73% to 74.4%, adding 3.7 million new consumers. Its penetration grew the fastest in county level cities by 2.8 points, driven by its carbonated soft drink products.

Haday, a Chinese seasoning giant, saw steady expansion of its buyer base in lower tier cities, supported by its massive distribution network and affordable price. It gained 5.3 million households from lower tier cities in the latest year.

Convergence of online and offline brought new shoppers

The retail landscape in China has fast evolved in the last few years, featuring the rapid convergence of online and offline channels. Consumers are now able to access products of their choice by utilizing both O2O platform such as (JD Daojia, Taoxianda, Dmall) as well as direct delivery from online platforms like Tmall and JD.com. Improved shopper experience through further integration of online and offline channels also brought new shoppers to brands.

Kantar Worldpanel reveals that despite the strong growth of the online channel, leading players can sustain growth only through omnichannel strategy. For example, YST Group attracted 3.6 million new households through e-commerce, while 8.0 million through offline channels. In total, YST Group increased its consumer base by 8.5 million. It proves that shopper growth in brick and mortar stores is far from reaching its limit yet. Both Haday and Coca Cola also attracted more shoppers through offline.

Market leaders such as P&G, Yili and Mengniu are all enjoying strong shopper growth through online channels, as they try to make their products more accessible to Chinese consumers. Yet all of them enjoyed incremental shopper gains, indicating that manufacturers will have to build a holistic omni-retail strategy to avoid a zero-sum game.

 

 

 

 

Source: Kantar Worldpanel

Editor's notes

Notes to editor:

1.    Kantar Worldpanel China continuously measures household purchases over 100 product categories including cosmetics, food and beverages and the toiletry/household sector. Its national urban panel covers 20 provinces and four municipality cities (Beijing, Tianjin, Shanghai and Chongqing).

2.    Mengniu includes Yashili, Biyou from Danone                                  

3.    Nestle includes Yinlu, Hsu Fu Ch and Totole                             

4.    Mars includes Mars and Wrigley                                 

5.    Colgate includes Colgate and Darlie

6.    Lower city tiers include prefecture level cities and county-level cities & counties.

7.    China Resources exclude Vanguard and Pacific Coffee.

8.    YST Group includes Nongfu Spring.

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