24 FMCG companies reached over 100 million households
The latest data from Kantar Worldpanel (A CTR service in China) shows that there were 24 Fast Moving Consumer Goods (FMCG) companies reaching over 100 million urban Chinese households over 52 weeks ending October 7th 2022. Thanks to the growing demand of home cooking, Wilmar rose into the ranks of the top 10 players for the first time. Compared to the same period of last year, these top 24 companies in China added 65 million more consumers in total, equivalent to a 3.5% growth of Chinese households. Among them, COFCO, Haday, Wilmar, Uni-president, Nongfu Spring, Vinda and Hengan grew faster than average. Those companies are mainly in the categories of cooking oil, seasoning, beverage and paper, reflecting the steady consumer demand during the phase of dynamic COVID control in China.
FMCG Companies Ranking by Consumer Base (million households)*
Source: Kantar Worldpanel China
“Despite the pressure from sporadic Covid outbreaks and demand and supply disruptions, the China market continued to demonstrate enormous resilience and impetus for growth. In such a competitive context the top players keep innovating by uncovering new occasions as well as accelerating deployment in new channels and new markets, strengthening their leading positions and riding through the cycles” commented Jason Yu, Managing Director of Kantar Worldpanel Greater China. “With consumers getting more rationale and divided in their needs, market leaders will have to develop more holistic insights in new occasions, develop a clear strategy to win in digital commerce channels as well as penetrate deeper in tier 3-5 cities to unlock consistent growth!”
New occasions under “the next normal”
Under the new era of zero-COVID control, home-based consumption thrives. Cooking and sharing culinary skills has become a social activity among young consumers. Apart from safeguarding daily food supplies to the country, Wilmar and COFCO keep expanding their product portfolios across different categories, and launching new products with healthy concepts, like 0-trans fatty acid and products containing natural ingredients to enhance the quality of life of consumers.
With Covid-19 lingering, consumers are looking for indulgence and relief. Beverage manufacturers, like Nongfu Spring, Coca Cola, PepsiCo, attract more Chinese households in the recent year by communicating the comfort and joy that they can bring. Aside from driving the business of its ready to drink brand Oriental Leaf, a sugar free tea-based beverage, Nongfu Spring also launched fusion products such as Sparkling Tea, with its positioning of “real tea leaves, abundant bubbles and low sugar recipe”, offering sensory joy on top of the Chinese tea drinking culture and expanding the boundary of tea and carbonated soft drink”.
On the non-food side, more at-home occasions also boosted demand for paper product. Leading players, Vinda and Hengan make an effort to extend paper usage occasion at home. For instance, Vinda launched washable kitchen paper, which helps consumers to both clean and prepare food, demonstrating higher value to consumers with multiple usage functions. In addition, consumers also kept stocking up personal care and home care products to stay clean and healthy. Liby, Nice, PG and Unilever constantly tapped into this trend.
O2O – An effective way to attract incremental consumers
As sales of traditional ecommerce platforms saturated, their shopper penetration growth slowed down. During the 52 weeks ending October 7th 2022, pure online penetration was 87.3%, a slight dip from 88.7% from same period last year. Meanwhile, the O2O model (ordering online and receiving delivery from offline stores / warehouses) effectively satisfied consumers’ all-category and multi-occasion need by connecting a vast user base of internet platforms and physical retail stores through digital techniques and logistics infrastructure. The latest data from Kantar Worldpanel shows that, during the 40 weeks ending October 7th 2022, O2O sales value grew by 13.5% versus the same period last year.
For many brands O2O has also become a channel to reach more consumers and uncover new consumption occasions to attract new buyers. For those leading players generating more incremental shoppers from O2O, most were food companies. Among them, COFCO leverages O2O to meet consumers’ real-time and convenience needs by delivering daily food supplies to consumers’ homes, leading to additional 4.3 million new households. Paper manufacturers, like Vinda and Hengan, helped consumer to fulfill the delivery needs by moving bulky tissues directly to consumers. Colgate tailored their product offers by different platforms, for example premium products in O2O marketplace platforms and mass products for the community group buy platforms, which has enable them to gain more new buyers.
O2O incremental households Top 10 manufacutres
(000’ households, 52 weeks ending October 7th 2022)
Source: Kantar Worldpanel China
Winning new shoppers in the lower tier
With the lift of brand awareness and lifestyles, China’s vast lower tier cities remain a critical growth engine for most FMCG companies. According to Kantar Worldpanel, tier 3-5 cities contributed 61% of urban China’s FMCG growth during 52 weeks ending October 7th 2022. As the government introduced more supporting policies and gradual improvement of logistics and other infrastructures, the lifestyles and buying behaviors of those in the lower tier cities are increasingly similar to those in the high tier cities. The emergence of Pinduoduo and Kuaishou as well as the successful lower tier city growth of Tmall and JD.com are firm proof of the incremental growth. In past 12 months, the total incremental buyers from lower tier cities for those 24 companies accounted for 72% of their total buyer growth.
Buyer expansion top 5 risers in 3-5 tier cities
(Million households, 52 weeks ending October 7th 2022 vs. same period last year)
Source: Kantar Worldpanel China
Haday attracted 4.5 million new families in lower tier cities with its successful strategy to penetrate into small-format stores whilst driving more availability through eCommerce. Nongfu Spring recruited more families in 3-5 tier cities by catering to their needs on health and enjoyment, and pushed for more distribution of its RTD tea in supermarket and mini-mart. Vinda attracted additional 4.1 million more families in lower city tier, by capturing their trading up needs on facial tissue and wet tissues and emerging online shopping habits.
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). From 2022 on, Kantar Worldpanel – household panel covers more categories. All changes may lead to some inconsistencies with previous years‘ data. 2022 newly covered categories are: yellow rice wine, vinegar, Chinese sauce, flour, seaweed, noodles, sachima, nuts, rice, dry fruit/vegetables, laundry sheet, filter cartridge
2. 1-2 tier cities / Upper tier cities: include Beijing/Shanghai/Guangzhou/Chengdu and provincial level cities.
3.3-5 tier cities / Lower tier cities: include prefecture level cities and county-level cities & counties.
4. Mengniu group includes Yashili
5. Nestle includes Nestlé, Hsu Fu Chi, Wyethnutrition, Totole and Haoji
6. Mars includes Mars and Wrigley
7. Colgate-Palmolive includes Colgate and Darlie
8. China Resources includes Jiangzhong group, and excludes Vanguard and Pacific Coffee
9. Ecommerce / pure online includes: 1) traditional platforms like Taobao, Tmall, JD.com, 2) Social ecommerce platform like Little red book, Weibo, WeChat store, WeChat moments 3) Short Video platforms like Douyin, Kuaishou
10.O2O includes 4 types: Offline retailer self-run, Horizontal marketplaces, Community group buy and Frontline warehouse ecommerce