SHANGHAI — The overall market growth for fast-moving consumer goods, or FMCG, in China is slowing, but there are a few sales channels that are strongly bucking the trend and seeing swift sales of those products: convenience stores and online retailers.
That is the conclusion of a newly released report from Bain & Co. Across the board, China’s FMCG market saw annual growth slow to a five-year low last year, with an average growth in per household FMCG spending of only 0.8 percent, according to Bain.
China’s FMCG market last year saw a continuing deceleration of supermarket sales, as well as declining sales for hypermarkets, Bain said. Meanwhile, convenience stores proved a bright spot for brick-and-mortar retailing, growing by 13.2 percent across the country.
But the real growth is coming from the digital realm. China’s e-commerce sector, which is already the world’s largest, has seen its sales growth rate for FMCG exceed 35 percent over the past four years. According to Bain & Co. data, the sector generated almost four trillion renminbi, or $598 billion at current exchange, in revenue last year.
Product categories with established digital penetration, such as skin care, continue to outperform the FMCG market as a whole, according to the report.
Another shift can be seen in the report’s data on consumer preferences for local brands, which have traditionally been less desired than their foreign counterparts on the whole.
Chinese companies gained market share over their foreign competitors on an aggregate basis in most of the 26 categories examined in the report, with sales of local brand products growing 7.8 percent across the board, and sales for products from foreign brands shrinking 1.4 percent in 2015.
The report highlighted skin care as one segment in which local brands had made particularly impressive strides, pointing to local beauty brand Shanghai Jahwa as a company that is translating its knowledge of traditional Chinese herbal therapies into increased market share.
On a regional basis, China’s southwest region boasted the fastest FMCG sales growth, while the northeast and southeast — areas with a strong manufacturing base that might have been harder hit by China’s economic slowdown — saw glower rates of growth.