China FMCG recovered well with a growth of 10.5% in Q1
According to Kantar Worldpanel*, sales in China's fast-moving consumer goods (FMCG) market in the first quarter of 2021 increased by 10.5% year-on-year, which is a 3.1% increase compared with the same period in 2019 (before the COVID-19 outbreak). The market growth mainly came from the southern regionand online channels. Additionally, The National Bureau of Statistics released the year-on-year GDP growth of 18.3% for the first quarter of 2021. It can be concluded that with the pandemic under effective control and the overall economic recovery, China's FMCG market has been recovering very well.
The out of home FMCG market* rapidly grew by 38.9% year-on-year in the first quarter, with an increase of 0.4% compared to the same period of 2019. This indicates that China's out of home consumption market has also seen a strong recovery. As a result of the increase in people's outdoor activities, skin care and facial cosmetics categories quickly resumed their growth at a double-digit rate. Meanwhile, consumers are now choosing to cook less at home, which has led to a decline in some food categories like instant noodles and frozen products.
Modern trade (including hypermarkets, supermarkets, and convenience stores) has recovered and slightly increased by 1.4% compared to last year, but still decreased by 2.6% compared with the same period in 2019. Among them, the sales from small supermarkets and convenience stores increased steadily by 6.5% and 8.7% respectively. The value sales of hypermarkets saw a similar performance to last year with a slight increase of 0.3%, while that of large supermarkets kept falling by 1.3% year-on-year. This implies that many consumers are still used to buy fast-moving consumer goods near their homes and communities.
Among the top players, Sun Art Group maintained its first place with a market share of 9.2% which increased by 0.9pt compared to last year, driven by both an increase in the number of consumers and the expansion of shopping baskets. In order to meet consumers' digital and near-field shopping needs, Sun Art Group is investing heavily in setting up its small and medium-sized stores and O2O channels as they continue to build their omni-channel presence. It is noted that Wu-Mart Group has entered the top 5 ranking of retailers in China for the first time, with its strong performance in the northern and western regions. The market share of Wu-Mart Group reached 3.2%, growing by 0.2pt year-on-year, which is likely attributed to its highly developed digital retail system, Dmall. The “Wu-Mart + Dmall” model has realized the integrated development of online and offline retailing, attracting more consumers who have strong purchasing power and pursuit of convenience. For local retailers, both Better Life Group and SPAR Group performed well, achieving double-digit growth of their sales value compared to the same quarter last year. The growth of Better Life Group is mainly driven by the expansion of consumer shopping baskets with the help of its digital transformation. The growth of SPAR Group mainly comes from the outstanding performance of its corporate member Jiajiayue. In addition to cultivating the market in Shandong, Jiajiayue began a national expansion, accelerating the expansion of North and East China, and further improving the layout of the surrounding areas.
Online shopping channels maintained a strong growth, with an increase of 33.4% over the first quarter of 2020. It can be seen that online shopping is still favoured by consumers even in the post-Covid era, as it represents 22.8% of total FMCG value sales in China. The latest data reveals that e-commerce continues to attract new customers (especially in lower-tier cities3 with 10.7pt of the penetration growth, year on year), and is seeing people increasing their number of shopping trips, both of which drove the growth of online sales.
Among the top e-commerce platforms, Alibaba Group holds its leading position with over 40% of the total online market value. Nearly half of Chinese urban households have purchased FMCG on Alibaba’s platforms during this quarter. JD Group’s market share dropped slightly compared to last year, while Pinduoduo continues to see phenomenal growth, increasing its market share by 5.7pt and almost reaching 10% of the total share. In addition, there are more than a quarter of urban families (25.3%) who made at least one FMCG purchase on Pinduoduo in this quarter. It is worth noting that this number increased fivefold in the last two years, surpassing JD Group and directly driving its strong growth. We can see that Pinduoduo is growing particularly fast in lower-tier cities, as its consumers have tripled there compared to the same period last year. The annual report of Pinduoduo shows that its number of active buyers has reached 778.4 million by the end of 2020. Pinduoduo is aiming to build a logistics infrastructure platform focusing on agriculture, where consumers can get fresher and healthier fresh food at lower prices.
*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).
*Kantar Out-of-Home Panel tracks 8,000 individuals covering Key & A cities.
*Lower city tiers include prefecture level cities and county-level cities & counties.
*Suning Group includes Carrefour and Suning CVS; Wumart Group includes Metro, Wumart, and New Century; Better Life Group includes BBG Department Stores, Nancheng Department Stores, and Jiarunduo.