China Shopper Report 2025, Vol. 1
For the fourth year running, price deflation continues to plague China’s fast moving consumer goods (FMCG) sector, resulting in slower value growth overall, according to the 29th China Shopper Report 2025 Vol. 1 released today by Worldpanel and Bain & Company.
Despite challenging macroeconomic conditions in 2024, the sector saw a 0.8% annual value growth, which was supported by strong volume growth of 4.4%, but dragged down by a 3.4% decline in average selling prices (ASP).
Looking at the respective quarters in 2024, China’s FMCG grew at 1.5% in Q1, 1.8% in Q2, -0.6% in Q3, and a small rebound to 0.4% in Q4. The first quarter of 2025 continued the growth momentum as value grew 2.7% compared to the previous corresponding quarter, as some macroeconomic indicators improved, and the government announced policies to support domestic consumption. Additionally, the quarter was supported by strong spending during the Chinese New Year season.
“The price deflationary trend was notable in 2024; it dropped 3.4%—the biggest ASP drop over the past four years,” said Derek Deng, head of Bain & Company’s Greater China Consumer Products practice. “Another interesting trend we saw last year, was how aging population and resident outflows from higher-tiered cities, drove material value growth in Tier 3 and 4 cities, which significantly outperformed the higher-tiered cities. This is in contrast with 2020-2023 trends, where Tier 2 cities led FMCG growth.”
Home care continues to lead growth
In 2024, home care continued to lead FMCG growth, expanding by 2.4% annually after a robust performance in 2023, driven by health and hygiene needs. Packaged food and beverage followed, with annual growth at 2.0% and 1.5%, respectively.
Personal care continued a downward trend, dropping 2.3%. Medical cosmetology has become an increasingly competitive alternative over the past few years, affecting skincare and makeup consumption, while lower birth rate caused declining diaper sales. Toothpaste was the only category that bucked the trend as consumers saw premium options that met their needs.
In Q1 2025, the home care, personal care, and packaged food categories increased value, while beverage growth stagnated. Interestingly, personal care reversed its downward trend with a significant year-on-year value growth of 4.0% due to significant volume increase. Home care maintained the top position in value growth (+6.1%), packaged food also saw robust value rise (+3.2%), while beverage grew a slight 0.5%.
E-commerce and super/mini channel mix continued to dominate
In 2024, the overall online and offline channel mix for China’s FMCG market remained stable. However, many changes took place within the offline and online channels respectively. Within offline channels, the grocery and super/mini (which includes fast growing discount store) formats outperformed the market primarily in Tier 3 and Tier 4 cities, where urbanization increased demand. In higher-tiered cities, club warehouses continued their growth trajectory.
Online, Douyin maintained rapid growth and share gain, while other players were relatively stagnant. 2024 saw a clear polarization between two major categories: non-food and food. Online penetration continued to grow in non-food categories while food products, which are more prone to safety issues, were mostly purchased offline. Online channels also featured more small brands and cheaper prices, especially in the personal care and home care categories, which may explain the larger ASP declines in these categories vs. food and beverage categories.
Online-to-offline (O2O) growth slowed significantly in 2023 and continued a clear downward trend in 2024, dropping 10.0% across all FMCG categories. Across platforms, community group buying, and horizontal marketplaces declined drastically, while vertical e-commerce platforms experienced faster growth. Community group buying has been driven by price advantages but is now facing intense competition from discount stores and other formats. Vertical grocery e-commerce was a standout performer, growing 26.0% in 2024.
“Post-Covid, consumers have embraced online grocers with reliable, on-time delivery. Leading platforms expanded while optimizing profitability through initiatives like category diversification and private-label offerings,” said Rachel Lee, General Manager of Worldpanel in China.
“On average, Chinese consumers purchase from more than seven different channel types in a year. Virtually, all Chinese consumers can be considered omnichannel consumers. Both online and offline channels are continuously evolving into new formats to meet consumers' core needs. Value and convenience are the key drivers behind each channel choice.”
Both insurgent and domestic brands outperformed the market in 2024
Brand competition was still intense in 2024, with the top five brands losing share in more than half of FMCG categories.
In emerging categories such as juice, instant coffee, facial tissue, nutrition supplements, and ready-to-drink tea, growth was mainly driven by insurgent brands focused on healthy attributes and innovations that won market shares away from traditional brands.
Domestic brands gained share from foreign brands on an aggregate basis in nearly half of the 27 categories tracked. Since 2012 (when the report started to track this trend), domestic brands have demonstrated a strong and steady ability to gain share from foreign brands on an aggregate basis—claiming 76% of the market in 2024.
The biggest driver affecting total household spending in 2024 and in Q1 2025 was product choice as consumers were able to increase volume by seeking more affordable alternatives to products they used to purchase. Downtrading was consistent across all four major categories.
In four sub-categories - juice, instant coffee, toothpaste, and sanitary pads - the premium segment outgrew the market overall, driven by innovations and product upgrades. Juice witnessed both volume and ASP growth because of increased demand for healthy and nutritious beverages. The instant coffee category also experienced substantial growth in ASP, matching consumers’ increasing demand for more sophisticated, high-quality instant coffee. Toothpaste also had a relatively high ASP growth rate from 2023 to 2024 due to growth in the whitening segment, which has a higher ASP. Sanitary pads also saw growth in the premium segment, as brands are investing in product upgrades as young women become more educated about menstrual health.
The premium segment declined in value for facial tissue, packaged water, personal wash, makeup, shampoo, skincare, yogurt, and hair conditioner, as consumers primarily shifted to white-label and private-label brands as credible alternatives.
“The 2025 pricing environment continues to be challenging. Brands will face a strategic choice: specialize in the premium segment, even if it is declining relative to the overall market, or determine how to compete in the mass/mainstream segments, or compete in both,” said Bruno Lannes, a senior partner at Bain & Company’s Consumer Products and Retail practices.
To succeed in the current trading down environment, the report suggests using Bain’s Elements of Value® framework which measures consumers’ perceptions of 31 attributes across four categories: functional, emotional, life-changing, and global impact. Brands should assess which value they are delivering to consumers and the price segments they should compete in.