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1、Charting a resilient path:Navigating uncertainty and building momentumChina Shopper Report 2023,Vol.2 Copyright 2023 Bain&Company,Inc.All rights reserved.This work is based on secondary market research,analysis of financial information available or provided to Bain&Company,and a range of interviews
2、with industry participants.Bain&Company has not independently verified any such information provided or available to Bain and makes no representation or warranty,express or implied,that such information is accurate or complete.Projected market and financial information,analyses,and conclusions conta
3、ined herein are based on the information described above and on Bain&Companys judgment,and should not be construed as definitive forecasts or guarantees of future performance or results.The information and analysis herein do not constitute advice of any kind and are not intended to be used for inves
4、tment purposes.Neither Bain&Company nor any of its subsidiaries or their respective officers,directors,shareholders,employees,or agents accept any responsibility or liability with respect to the use of or reliance on any information or analysis contained in this document.This work is copyright Bain&
5、Company and Kantar Worldpanel and may not be published,transmitted,broadcast,copied,reproduced,or reprinted in whole or in part without the explicit written permission of Bain&Company and Kantar Worldpanel.Authors and acknowledgmentsBruno Lannes is a senior partner with Bain&Companys Consumer Produc
6、ts and Retail practices and is based in Shanghai.You can contact him by email at .Derek Deng is a partner who leads Bain&Companys Consumer Products practice in Greater China and is based in Shanghai.You can contact him by email at .Jason Yu is the managing director at Kantar Worldpanel Greater China
7、.You can contact him by email at .This report is a joint effort between Bain&Company and Kantar Worldpanel.The authors extend gratitude to all who contributed to it,especially Nancy Ning,Yuchen Zhu,Daryl Chan,and Shawn Chen from Bain;and Tina Qin,Sallian He and Rita Yang from Kantar Worldpanel.Chart
8、ing a resilient path:Navigating uncertainty and building momentum1Kantar Worldpanel|Bain&Company,Inc.ContentsExecutive summary.2The full report .8A look back at 2023s first three quarters.8Decoding price dynamics.21Whats nextand implications for brands and retailers.26Charting a resilient path:Navig
9、ating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.2Executive summaryThis is the twelfth consecutive year that we have tracked the shopping behaviors of Chinese consum-ers.Our continuing research has given us a valuable long-term view across 106 fast-moving consum-er goods(FMC
10、G)categories purchased for home consumption in China.As in each of the past 11 years,we analyzed the 26 key categories that span the four largest consumer goods sectors:pack-aged food,beverages,personal care,and home care.This report updates the findings from our China Shopper Report 2023,Vol.1,Slow
11、ly Rebounding from Turbulence with Optimism for the Rest of 2023,and includes Kantar Worldpanel shopper behav-ior data for the first three quarters of 2023.During the period consumer behavior showed steady recovery from the COVID-19 pandemic.We also explore consumer trends from the first three quart
12、ers of 2023,after dynamic Zero-COVID poli-cies were lifted.The report also includes implications for consumer goods companies and retailers.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.3A look back at 2023s first three quartersUnlike last y
13、ear,when it was largely affected by the COVID-19 pandemic,the FMCG market wit-nessed a soft recovery during the first three quarters of 2023,which was primarily volume-driven.This indicates a shift towards more judicious consumption patterns.The recovery gained further momentum as optimism revived,a
14、nd consumer spending intent returned to levels reminiscent of the pre-pandemic era.While the FMCG sectors growth appears moderate,this doesnt necessarily signify a decrease in overall consumer spending.Instead,there is a reallocation of expenditure towards sectors like dining out and travel,reflecti
15、ng a post-pandemic shift in consumer priorities.For instance,data from the National Bureau of Statistics of China show that national retail sales in service sectorsincluding transportation,dining,and lodgingexperienced a significant 18.9%increase in the first three quarters of 2023.The overall growt
16、h of Chinas FMCG industry was modest at 1%,predominantly propelled by a 1.2%increase in volume.The FMCG market exhibited diverse performance in the third quarter of 2023 compared to the previous year,primarily due to the 2022 baseline.In the third quarter of 2022,China saw a notable recovery with a
17、6%growth rate after the easing of COVID-19 lockdowns.This set a high benchmark for 2023,resulting in a challenging comparison and a slight decrease of 0.9%in the same quarter this year.Moreover,a noteworthy increase of 5.3%materialized in the first 4 weeks post Q3,aided by a resur-gence in consumer
18、demand,specifically centered around heightened holiday spending.The in-creased expenditure during this period was not counted in our report but it also suggests that the overall recovery of the FMCG market is continuing.Category update:Home care surges as other categories stabilize at pre-crisis lev
19、elDuring the first three quarters in 2023,the Chinese FMCG market exhibited a nuanced picture across the four major sectors.The home care group sustained its growth momentum,driven by robust consumer stockpiling be-havior and continued health and hygiene concerns,particularly for essentials like toi
20、let paper and tissues.Facial tissues exhibited an impressive 16.9%growth,while wet tissues saw a notable 14.9%increase due to persisting practice of stocking up and focus on health.The growth trajectory in the packaged foods sector showed a deceleration,aligning with stabilized demand for staples at
21、 pre-crisis levels post-pandemic.The once-thriving home dining sector,which experienced a robust 6.2%growth rate in 2022,encountered a slowdown in 2023s first three quar-ters.Products that were in high demand during the peak of the COVID-19 period,such as instant noodles,witnessed a 3.1%decline in v
22、alue.Similarly,formerly popular items like cheese and bis-cuits also experienced a downturn.This shift in consumer behavior was further emphasized by the Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.4diminishing demand for packaged food,as
23、more individuals resumed dining out following the eas-ing of pandemic restrictions.In the beverages segment,the landscape remained predominantly stable in 2023s first three quar-ters,characterized by higher volumes and a focus on affordability.Consumers exhibited a clear pref-erence for value-driven
24、 choices,prompting a shift towards more economical products.While the annual growth in this segment was fueled by a 1.6%increase in volume,it was offset by a 1.5%de-cline in average selling price(ASP).Notably,functional drinks,ready-to-drink tea,and foreign spir-its spearheaded the growth.Within the
25、 personal care segment,growth was moderated by lower average selling prices,reflecting the consumer trend of seeking greater value for money.The standout performer in this category was the makeup segment,which experienced a 3.2%growth as social occasions increased after the pan-demic.Conversely,pers
26、onal washes,once a key performer during the pandemic period,observed a 2.1%decline in 2023s first three quarters.During the first three quarters in 2023,a discernible surge was noted in the high-speed category of products,with health-oriented items leading the way.Functional drinks and nutrient supp
27、lements registered substantial growth rates of 24%and 19%,respectively,reiterating a sustained consumer focus on health even after the pandemic.On the flip side,products that thrived on increased at-home consumption during the pandemic,such as cheese and ice cream,experienced downturns with declines
28、 of 18%and 6%,respectively.Channel update:FMCG market evolves as smaller formats thrive,e-commerce competitive dy-namics shift,and O2O continues to soarWith the soft recovery of Chinas FMCG market in the first three quarters of 2023,one notable trend during this period was the shift towards smaller
29、store formats,such as super/mini and grocery stores.These smaller formats gained traction and became increasingly popular among consumers.On the other hand,hypermarkets experienced a decline in market share as some players made the decision to close their underperforming stores across the country.In
30、 the e-commerce sector,overall growth was observed,outperforming the overall market with a 4%year-on-year increase when comparing year-to-date figures from Q3 2023 to Q3 2022.The year 2023 marks a return to pre-pandemic levels of online penetration,with e-commerce adjusting from the significant impa
31、cts of the pandemic,such as supply chain disruptions.A continued notable highlight in the e-commerce market was the emergence of interest EC plat-forms,including Kuaishou and Douyin.These platforms captured more than 6%of the market share compared to 2022s first three quarters.Douyin,in particular,e
32、xperienced an impressive 1.5x in-crease in its market size,mainly at the expense of Taobao/Tmall,which faced negative growth during the same period.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.5Online-to-offline(O2O)shopping continued its g
33、rowth post-pandemic.A 15.8%increase in frequency was the key growth driver for the O2O channel.At home shopping still popular,while OOH is changingDespite the easing of pandemic restrictions,the trend of at-home food and beverage spending has remained consistent with our previous years finding,where
34、 at-home dining accounted for 56%of overall spending by the end of the third quarter.This trend aligns with pre-pandemic habits,indi-cating that people still have a strong inclination towards dining at home.In terms of specific categories,milk and beer emerged as the dominant categories in both at-h
35、ome and out-of-home consumption.Milk accounted for a 29%share of at-home consumption,while beer took a 34%share in the out-of-home consumption segment.These categories continue to be popular choices for consumers,whether they are enjoying their meals at home or dining out.When it comes to out-of-hom
36、e consumption,although people are going out more frequently,there is a tendency to spend less per outing,with cost-efficient travel trends gaining popularity(特种兵旅游).The OOH sector is rebounding,yet the increase in value is not as pronounced,indicating a mar-ket driven by occasions rather than impuls
37、e.While FMCG ASP remains negative,premiumization drives growth in some categoriesWhile ASP across most categories has seen a decline,certain categorizes that have undergone pre-miumization in recent years,such as chocolate,facial tissue,and hair conditioner,have witnessed growth.This indicates that
38、consumers are increasingly willing to pay a premium for products in these categories,essentially for better quality and experiences.Conversely,value-focused products saw a decline in market share,as consumers started moving to-wards premium products.Additionally,the percentage of market value sold o
39、n promotion has de-clined,with beverage and personal care categories experiencing a more substantial drop.The de-cline in promotion levels may be partially attributed to the adoption of Every Day Low Pricing(EDLP)strategies,as evidenced by consistently low prices on platforms like PDD and Douyin.Onl
40、ine channels continue to exhibit higher promotion participation,driven by the impulsive nature of online consumers and the aggressive promotion strategies employed by e-commerce platforms.The promotion trends within each category continue to be predominantly influenced by the online penetration rate
41、.The convenience and accessibility of online shopping make it easier for consumers to engage with promotions and make quick purchasing decisions.However,there has been no increase in overall promotion participation(in fact a 0.8%decline)in 2023s first three quarters.Categories that were heavily reli
42、ant on offline channels,such as tradition-al brick-and-mortar stores,saw lower participation in promotions.This shift in consumer behavior suggests that the online promotion landscape remains dynamic and the promotion rules are evolving in response to changing consumer preferences.Charting a resilie
43、nt path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.6Whats nextand implications for brands and retailersAs the Chinese market gradually recovers from the COVID-19 pandemic,its a critical time for brands and retailers to reshape strategies and strengthen market adap
44、tability.Implications for brandsBrands must keenly identify and adapt to more“value sensitive”and“experience sensitive”con-sumer behavior,a characteristic magnified by the pandemics.Focusing on brand building is crucial,as consumer emphasis on brand value intensifies.Gaining quick traffic and becomi
45、ng an internet sensation is easy,but achieving enduring popularity is hard.Only businesses that consistently in-vest in their brand can weather the cycles.(流量打法网红容易,长红难;坚持品牌投入的企业才能穿越周期)Adapting to changing channel dynamics is key,necessitating an integrated and carefully planned approach to effectiv
46、ely reach customers via online,offline and O2O channels.As a result,brands should concentrate on formulating cohesive marketing strategies for each channel,ensuring they are harmoniously integrated to enhance the brands appeal without compromising its core values.This also requires a specific execut
47、ion plan by channel,determining the most suitable products and packaging sizes for each sales channel to optimize reach and conversion of target audience.Finally,considering the evolving consumer needs in the post-COVID era,its crucial for brands to stay attuned to and swiftly respond to recent cons
48、umer trends,channel trends and new consumer occasions such as city walk.Implications for retailersFor retailers,the focus should be on enhancing customer loyalty and offering differentiated shop-ping experiences.This includes strengthening the integration of online and offline channels,partic-ularly
49、 in an environment where the O2O trend is becoming more pronounced.The emergence of discounters offering a limited but highly differentiated range of SKUs creates a balance between online and offline offerings,ensuring that physical stores serve more than just as showrooms.Retailers need to leverage
50、 data and technology to better understand consumer behavior,thus opti-mizing their product mix and promotional strategies.Additionally,with the markets growing de-mand for high-quality and high-value products,retailers need to balance maintaining competitive pricing while focusing on product quality
51、,product innovation,supply chain,and sourcing.Overall,brands and retailers must remain agile in adapting to the ever-changing market environ-ment to maintain competitiveness and market share.This involves continuous monitoring of con-sumer trends,flexible adjustment of channel strategies,and sustain
52、ed investment in marketing and product innovation.Despite the challenges,the FMCG market has consistently demonstrated long-Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.7term resilience and potentials for growth.As the Chinese market progre
53、ssively recovers from the pandemic,it presents not only new opportunities and challenges but also a platform for remarkable innovation and growth.Brands and retailers must continuously adapt and innovate to meet the evolving needs and expectations of consumers,positioning themselves to grow along wi
54、th the FMCG sector.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.8The full reportIn our report,we recap the fast-moving consumer goods(FMCG)performance in the first three quar-ters of 2023,a period during which consumer behavior continued to
55、 recover from the negative ef-fects of the COVID-19 pandemic.This is our twelfth consecutive year of tracking the shopping behaviors of Chinese consumers.Our continuing research has given us a valuable long-term view across 106 fast-moving consumer goods(FMCG)categories purchased for home consumptio
56、n in China.As in each of the past 11 years,we an-alyzed the 26 key categories that span the four largest consumer goods sectors:packaged food,bev-erages,personal care,and home care.This report updates the findings from our China Shopper Report 2023,Vol.1,“Slowly Rebounding from Turbulence with Optim
57、ism for the Rest of 2023”,and includes Kantar Worldpanel shopper be-havior data for the first three quarters of 2023.A look back at 2023s first three quartersIn a year marked by resilience and adaptation,the FMCG sector has adeptly navigated the complexi-ties of post-pandemic re-calibration and evol
58、ving consumer trends.Against a backdrop of gradual economic stabilization and lingering geopolitical uncertainties,brands have transitioned from a cautious approach to one of strategic advancement.While the FMCG sectors growth appears moderate,it does not necessarily indicate a decrease in overall c
59、onsumer spending.Instead,there is a reallocation of expenditure towards sectors such as dining out and travel,showcasing a post-pandemic shift in consumer priorities.For instance,data from the National Bureau of Statistics of China show that national retail sales in service sectorsin-cluding transpo
60、rtation,dining,and lodgingexperienced a significant 18.9%increase in the first three quarters of 2023.In the first half of the year,Chinas FMCG market displayed encouraging signs of recovery,with both Q1 and Q2 witnessing a growth of 1.8%as the market gradually bounced back from the impacts of the p
61、andemic.However,this upward trajectory was slightly dampened by a 0.9%decrease in Q3,re-sulting in a modest year-to-date expansion of 1%(see Figure 1).It is worth noting that this growth was primarily driven by a 1.2%increase in volume,while average selling price(ASP)remained rela-tively stable comp
62、ared to the previous year,with a decrease of 0.2%(see Figure 2).Despite this sta-bility,the movement in ASPs within the FMCG market has not kept pace with mild inflation rate.This discrepancy has presented a significant challenge for FMCG companies,as they now grapple with the dual objectives of sus
63、taining profitability and meeting consumer demands amid rising op-erational costs.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.9The FMCG market exhibited diverse performance in the third quarter of 2023 compared to the pre-vious year,primar
64、ily due to the 2022 baseline.In the third quarter of 2022,China saw a notable re-covery with a 6%growth rate after the easing of COVID-19 lockdowns.This set a high benchmark for 2023,resulting in a challenging comparison and a slight decrease of 0.9%in the same quarter this year.Furthermore,there wa
65、s a remarkable 5.3%increase observed in the first 4 weeks post Q3,fueled by a resurgence in consumer demand,particularly centered around heightened holiday spending.Al-though this increased expenditure is not reflected in our report,it suggests that the overall recovery of the FMCG market is persist
66、ing.Figure 1:Chinas FMCG market still needs time for full recovery,landing at 1%YTD growth compared with 2022Note:1)Skin Care/Make-up covers age 1564 in Tier 15,and Infant Formula covers 036 months in Tier 15;2)All ASP are calculated based on RMB per kg/L except Skin Care and Makeup is per pack,and
67、Facial Tissue is per 100 sheets/rolls;3)CPI data is as of YTD 23Q3 from National Bureau of Statistics and include all consumer goods;All changes may lead to some inconsistencies with previous years data Source:Kantar Worldpanel;National Bureau of Statistics;Bain analysisYear-over-year change in urba
68、n shoppers total spending on fast-moving consumer goodsTotal FMCGFood and beveragePersonal and home careQ20202120222023Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q320%10-100A notable growth of 5.3%from Sep.9 to Oct.6 compared to the same period in 2022 was observedCharting a resilient path
69、:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.10Home care continues to grow During the first three quarters in 2023,a nuanced landscape emerged across the four major sectors during the period under review.Notably,the home care sector sustained its growth momentum in
70、 the post-pandemic era,with a remarkable 8.8%increase in value(see Figure 3).This growth in value was driven by a combination of a 7.1%surge in volume and a 1.5%uptick in ASP(see Figure 4).In the wake of the pandemic,consumers have displayed an increased focus on health-consciousness and a discernin
71、g approach to their choices.This shift in consumer preferences has spurred a de-mand for products that contribute to a healthier and higher-quality lifestyle,particularly within the home care category.As a result,there has been a surge in innovation,leading to the development of products tailored to
72、 specific consumer segments and designed to address specific use cases.Note:1)Skin Care/Make-up covers age 1564 in Tier 15,and Infant Formula covers 036 months in Tier 15;2)All ASP are calculated based on RMB per kg/L except Skin Care and Makeup is per pack,and Facial Tissue is per 100 sheets/rolls;
73、3)CPI data is as of YTD 23Q3 from National Bureau of Statistics and include all consumer goods;All changes may lead to some inconsistencies with previous years data Source:Kantar Worldpanel;National Bureau of Statistics;Bain analysisUrban FMCG market value growth(%,2018YTD 23Q3)10%50-5Value5.63.11.5
74、1.00.512122YTD22Q323Q310%50-5Volume2.01.54.14.11.2Annual growth of urban FMCG market volume(%,2018YTD 23Q3)12122YTD22Q323Q310%50-5CPIAverage selling price3.5-1.0-0.9-2.5-0.2Annual growth of urban FMCG(%,2018YTD 23Q3)12122YTD22Q323Q3Figure 2:Volume growth drove overal
75、l FMCG value growth in 23Q1-3 as prices deflatedCharting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.11Note:1)Skin Care/Make-up covers age 1564 in Tier 15,and Infant Formula covers 036 months in Tier 15;2)All ASP are calculated based on RMB per kg/
76、L except Skin Care and Makeup is per pack,and Facial Tissue/Toilet Tissue is per 100 sheets/rolls;All changes may lead to some inconsistencies with previous years dataSource:Kantar Worldpanel;Bain analysis Urban FMCG market value growth(%,2023Q1Q3 vs.2022Q1Q3)15%5100-5Total FMCG1.81.81.0%-0.923Q123Q
77、323Q2Food&Beverage3.21.40.61.00.8-1.8Urban FMCG market value growth(%,2023Q1Q3 vs.2022Q1Q3)Packaged foodBeverage15%5100-51.8%0.1%Personal&Home care-2.90.712.78.45.5-4.2Urban FMCG market value growth(%,2023Q1Q3 vs.2022Q1Q3)Personal careHome care15%5100-5-2.1%8.8%23Q123Q223Q3Growth rate(YTD 23Q3 vs.LY
78、)Note:1)Skin Care/Make-up covers age 1564 in Tier 15,and Infant Formula covers 036 months in Tier 15;2)All ASP are calculated based on RMB per kg/L except Skin Care and Makeup is per pack,and Facial Tissue/Toilet Tissue is per 100 sheets/rolls;All changes may lead to some inconsistencies with previo
79、us years dataSource:Kantar Worldpanel;Bain analysis Annual growth of urban FMCG market value(%,2018YTD 23Q3)Annual growth of urban FMCG market value(%,2018YTD 23Q3)Value11.81.14.29.47.78.76.08.84.22.64.20.12.56.86.111.74.87.17.3-1.50.0-4.9-4.52.51.51.11.5-2.7-4.8-2.1VolumeAverage selling priceAnnual
80、 growth of urban FMCG market ASP(%,2018YTD 23Q3)92021YTD 22Q323Q3Personal careHome care15%5100-5Personal careHome care15%5100-5Personal careHome care15%5100-5Figure 3:Home care led the growth in Q1-3,while beverage and personal care sufferedFigure 4:Personal care value dropped due to fall
81、ing ASP,while home care continued the growth mainly driven by volumeCharting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.12In the first three quarters of 2023,peoples immune systems have been compromised,resulting in a higher number of individuals
82、suffering from colds compared to the previous year.This has led to a surge in the use of facial tissues.In response,several brands have introduced facial tissues infused with skincare-grade lotion ingredients,targeting consumers with sensitive noses and effectively al-leviating the redness caused by
83、 frequent nose wiping.Consumers have shown a willingness to pay a premium for these innovative products,driving a noticeable trend towards premiumization within the home care segment.Furthermore,the habit of stockpiling,which was adopted during the pandemic,appears to be per-sisting.Facial tissues e
84、xperienced an impressive growth rate of 16.9%,while wet tissues saw a nota-ble increase of 14.9%as the practice of stocking up continued(see Figure 6).As the market continues to evolve,it will be essential for brands to stay attuned to consumer preferences and continue to de-velop products that cate
85、r to their evolving needs.Packaged food shows a deceleration The growth trajectory in the packaged foods sector has experienced a noticeable deceleration,align-ing with the stabilization of demand for staple products at pre-crisis levels in the post-pandemic pe-riod.The once-thriving home dining sec
86、tor,which had witnessed a robust growth rate of 6.2%in 2022,encountered a notable slowdown in 2023s first three quarters(see Figure 5).The volume de-creased by 2.9%while the ASP increased by 4.9%.Products that were in high demand during the peak of the COVID-19 period,such as instant noo-dles,faced
87、a decline in value by 3.1%.Similarly,previously popular items like cheese and biscuits also experienced a downturn in demand.This shift in consumer behavior has been further empha-sized by the decreasing interest in packaged food,as more individuals have opted for dining out fol-lowing the relaxatio
88、n of pandemic restrictions.The slowdown in the packaged foods sector can be attributed to the evolving consumer preferences and the resumption of normalcy.As restrictions eased,people have shown a renewed inclination to explore dining options outside their homes,seeking the convenience and experienc
89、e of restaurant meals.This change has resulted in a decrease in demand for packaged food items that were once fa-vored during the pandemic.It is important for brands in the packaged foods sector to adapt to this shifting landscape and ex-plore innovative strategies to regain consumer interest.This m
90、ay include introducing new and en-ticing product offerings,focusing on quality and convenience,and actively engaging with consum-ers through targeted marketing campaigns.By staying attuned to consumer preferences and responding effectively,brands can navigate the evolving market dynamics and regain
91、growth mo-mentum in the packaged foods sector.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.13Note:1)Skin Care/Make-up covers age 1564 in Tier 15,and Infant Formula covers 036 months in Tier 15;2)All ASP are calculated based on RMB per kg/L
92、except Skin Care and Makeup is per pack,and Facial Tissue/Toilet Tissue is per 100 sheets/rolls;All changes may lead to some inconsistencies with previous years dataSource:Kantar Worldpanel;Bain analysisAnnual growth of urban FMCG market value(%,2018YTD 23Q3)Annual growth of urban FMCG market value(
93、%,2018YTD 23Q3)Value2.32.86.21.83.05.11.95.7-3.6-2.92.90.8-1.86.10.40.54.92.1-2.4-1.03.2-1.5-3.8-2.85.11.61.10.1-4.1-3.0Packaged foodBeveragePackaged foodBeveragePackaged foodBeverageVolumeAverage selling priceAnnual growth of urban FMCG market ASP(%,2018YTD 23Q3)12122YTD 22Q323Q38%462-2-
94、40-68%462-2-40-68%462-2-40-6Percentage point change in value CAGR(YTD 22Q3 vs.YTD 23Q3)High speed30%20010-10-20Low speed242220515-18-16-13-10-9-9-7-7-6-6Source:Kantar Worldpanel;Bain analysisFunctionaldrinkRTDteaForeignspiritNutrientsupplementMintcandyFacialtissuesJuiceWettissuesAirrefres
95、herPuddingIcecreamCerealsHHcleaning toolsHandwashMouthwashSausageYogurtHairremovalSoybeanmilkCheeseFigure 5:Spend on packaged food and beverage both increased,while value increase slowed downFigure 6:Post-pandemic phenomenon is evident,with health-focused products leading the growthCharting a resili
96、ent path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.14Beverages remain stable In the beverages segment,the landscape remained predominantly stable throughout 2023s first three quarters,characterized by higher volumes and a focus on affordability.The annual growth
97、in this segment was primarily driven by a 1.6%increase in volume,albeit offset by a slight 1.5%decline in ASP(see Figure 4).As health and wellness have taken center stage in post-pandemic consumer choices,a noticeable shift in beverage preferences has become increasingly evident.Functional drinks,ju
98、ices,and ready-to-drink(RTD)tea emerged as front-runners in driving growth within the market.The growth of functional drinks,which initially gained traction in late 2022,con-tinued to surge in 2023.This category benefited from a significant increase in consumer awareness surrounding“electrolyte wate
99、r”towards the end of 2022.Furthermore,heightened health con-sciousness and the complete resumption of outdoor activities and sports since the beginning of 2023 further fueled the consumption of functional drinks.Personal care experiences a downturn Within the personal care segment,growth has moderat
100、ed,with a 2.5%growth in volume offset by a 4.5%reduction in ASP in the first three quarters in 2023,showcasing the prevailing consumer trend of seeking greater value for money(see Figure 4).However,amid this backdrop,the standout per-former in this category has been the makeup segment,which experien
101、ced a notable 3.2%growth as social occasions returned post-pandemic.On the other hand,personal washes,once a key performer during the pandemic period,observed a decline of 2.1%in 2023s first three quarters.The trend of premiumization,once spearheaded by prominent international brands,has witnessed a
102、 shift in ASP due to changes in consumer attitudes.The traditional narrative of luxury is being challenged by domestic substitutions,and external economic factors are making consumers more rational and cautious when it comes to their spending habits.Consumers are now meticulously evaluating the valu
103、e of products,comparing mechanisms and price differences across various plat-forms,and carefully considering their expenditure on each category.While the concept of“value for money”remains a priority,consumers are still willing to invest in premium products.Two-speed growth pattern still evident Dur
104、ing the first three quarters in 2023,a discernible surge was observed in the“high-speed”catego-ry of products,with health-oriented items taking the lead.Functional drinks and nutrient supple-ment recorded impressive growth rates of 24%and 19%(see Figure 6),respectively,highlighting the ongoing consu
105、mer focus on health even after the pandemic subsided.Health is not just about F&B,it also covers categories such as wet and facial tissues and air refresher,which have all enjoyed high speed as well.There is also a trend towards gathering,indicated by the strong performance of for-eign spirits.Howev
106、er,there were contrasting fortunes for products that thrived on increased at-home consump-tion during the pandemic,such as cheese and ice cream,as they experienced downturns with de-clines of 18%and 6%(see Figure 6),respectively.Charting a resilient path:Navigating uncertainty and building momentumK
107、antar Worldpanel|Bain&Company,Inc.15Smaller formats thrive and e-commerce competitive dynamics shift One continuous trend that emerged during 2023s first three quarters was the notable shift towards smaller store formats,including super/mini and grocery stores,which gained traction and became increa
108、singly popular among consumers.In contrast,hypermarkets continued to experience a de-cline in market share as some players made the decision to close their underperforming stores across the country,reflecting changing consumer preferences and shopping habits.However,within hyper-markets,as we observ
109、ed in Vol.1,club warehouses continued to achieve remarkable growth of 58%in 2023 YTD.This trend underscores the consumer demand for quality products at reasonable pric-es.Club warehouses stand out due to their distinctive business model,which allows them to provide greatest value for money without s
110、acrificing quality.They achieve this by capitalizing on bulk buy-ing and membership fees.Additionally,these stores enhance their appeal through a strong brand value proposition,assuring consumers of the quality of their private label products,thereby boost-ing price competitiveness.The membership mo
111、del also adds an element of exclusivity,appealing emotionally to middle-class families seeking both value and quality.In the e-commerce sector,overall growth was observed,outperforming the overall market with a 4%year-on-year increase when comparing year-to-date figures from Q3 2023 to Q3 2022(see F
112、igure 7).The year 2023 marks a return to pre-pandemic levels of online penetration,with e-commerce adjust-ing from the significant impacts of the pandemic,such as supply chain disruptions.However,the market share in the e-commerce sector was lower compared to the first three quarters in 2022.This ca
113、n be attributed to the impact of the Double 11 shopping festival in Q4 of 2022,which significantly boosted overall e-commerce performance during that period.One significant trend observed was the expansion of discount channels.Notably,within the O2O sector,community group buying platforms like Duodu
114、o Maicai(多多买菜)and Meituan Youxuan(美团优选)have continued to play a pivotal role.Additionally,the rise of specialized discount stores is gaining traction,reflecting a more rational approach by consumers towards daily expenditure.Meanwhile,Freshippos value-focused brand,Freshippo Outlets,is undergoing ex
115、pansion across China.Freshippo is actively optimizing its product assortment by strategically distributing products among various store types.This strategy not only caters to a variety of shopping preferences but also demonstrates Freshippos dedication to making price reductions in its existing stor
116、es.Such adapta-tions underscore a commitment to providing an inclusive and cost-effective shopping experience for all customer segments.Another continuous highlight in the e-commerce market was the growth of interest EC platforms,including Kuaishou and Douyin,which captured an incremental 6%of the m
117、arket share compared to 2022s first three quarters(see Figure 8).Douyin,in particular,experienced an impressive 1.5x in-crease in its market size,mainly at the expense of Taobao/Tmall,which faced negative growth during the same period.Platforms like Douyin continued to expand their user base,particu
118、larly in lower-tier cities,as mid to low-income families showed a preference for purchasing products on Douyin rather than on Tmall/Taobao,further fueling the platforms user growth.This trend of emerging platforms gaining ground is expected to persist as more consumers veer away from tradi-tional pr
119、omotions like Double 11 and 618.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.16Note:1)Hypermarket refers to stores with more than 6,000 square meters;hypermarket channel includes top named KA hypermarket retailers,representing 83%(based on
120、2018 revenues);super/mini refers to stores with 1006000 square meters,CVS category includes chain and individual convenience stores(operating hours16 hours);grocery refers to stores with less than 100 square meters;other includes department stores,free market,wholesales,work unit,direct sales,overse
121、as shopping,family shopping,drugstore,beauty salon,milk store and new retail(starting to report in 2018);2)Skin Care/Make-up covers age 1564 in Tier 15,and Infant Formula/Baby Diaper covers 036 months in Tier 15;3)All ASP are calculated based on RMB per kg/L except Skin Care and Makeup is per pack,a
122、nd Facial Tissue/Toilet Tissue is per 100 sheets/rolls;All changes may lead to some inconsistencies with previous years data Source:Kantar Worldpanel;Bain analysisValue share in urban FMCG retail market by channel(B RMB)100%806040200OtherE-commerceGroceryCVSSpecialist storeHypermarketCAGR1%3%4%6%2%-
123、1%-11%3%CAGR(2022)2%3%8%-2%4%-1%-4%1%CAGR(1720)4%-4%32%-8%0%-1%-5%-1%Super/mini(YTD22Q323Q3)20022YTD22Q3YTD23Q3201820171,2441,3091,3821,3891,4331,4471,0211,03115%15%17%4%14%5%3%5%22%36%3%5%20%35%12%32%30%13%4%4%15%31%28%18%13%31%4%13%32%12%31%3%3%3%3%5%16%31%13%28%3%3%5%17%32%3%3%3%3%14%2
124、2%4%5%19%34%3%Figure 7:Small store format(super/mini,grocery)gained more share after pandemic while hyper-market continued to decline21%16%13%9%4%36%24%17%9%8%3%38%26%17%10%2%2%44%Note:1)Others incl.Red,VIP,Suning,Yunji,Kaola and other longtail platforms;Kuaishou and Douyin includes GMV of transacti
125、ons redirected and completed on 3rd party platformsSource:Kantar Worldpanel;Annual reports,Bain analysis China FMCG EC market share by platform GMV(%)100%5%-6%52%3%148%4%-4%60802040YTD 22Q3YTD 23Q3OtherKuaishouPDDDouyinJDTaobao/TmallYTD 21Q30CAGR(YTD 21Q323Q3)Figure 8:Interest EC platforms(Douyin&Ku
126、aishou)continues to gain share from traditional EC platforms(Taobao/Tmall)Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.17Online penetration returns to pre-pandemic level In first three quarters in 2023,Chinese internet penetration experienc
127、ed another 1%increase,follow-ing the substantial impact of COVID-19 and a decline in penetration rates in 2022.Notably,catego-ries that already had a strong online presence,categorized as cluster 2(see Figure 9),witnessed fur-ther expansion in online engagement.However,within this cluster,several pr
128、oducts,including makeup,facial tissue,and toilet tissue,saw a reduction in online market penetration in 2022,indi-cating a return to more traditional levels of digital engagement in 2023 YTD.In contrast,categories with low penetration rates,categorized as cluster 1 and 3,displayed greater variabilit
129、y in the percentage changes in their online presence.Cluster 1 primarily consists of catego-ries with low but growing online penetration,mostly from the food and beverage sector.Products such as juices,packaged water,and candy continued to gain momentum in online sales as consum-ers became more accu
130、stomed to purchasing these items through online channels.On the other hand,cluster 3,comprising categories with low but declining online penetration,main-tained a similar trend as the previous year.Products in this cluster are often impulse purchases from offline stores,including chewing gum,biscuit
131、s or categories heavy to transport relative to their price such as carbonated soft drinks(CSD)and beer.Online relative penetration change(%,YTD 22Q3YTD 23Q3)2022 Q3 YTD avg.penetration rate:32%2023 Q3 YTD avg.penetration rate:33%3%210-1-2-3554045505560657075%Packaged food&BeverageOnline r
132、elative penetration rate(%,YTD 23Q3)Chewing GumChocolateCSDYogurtFabricSoftenerBiscuitHair ConditionerSkin CareFacial TissueShampooToothpasteToothbrushPackaged WaterCluster 1Low but growingonline penetrationCluster 3Low and decliningonline penetrationCluster 2High and growingonline penetrationJuiceK
133、itchen CleanerRTD TeaCandyInstant NoodleFabric DetergentInfant FormulaMakeupToilet TissuePersonal WashMilkBeerPersonal care&Home careNote:1)Online relative penetration is defined as the total number of online purchasers divided by the number of purchasers of the category;2)Skin Care/Make-up covers a
134、ge 1564 in Tier 15,and Infant Formula covers 036 months in Tier 15;All changes may lead to some inconsistencies with previous years dataSource:Kantar Worldpanel;Bain analysis Figure 9:Overall online penetration grew slightly by 1%,with traditionally high online penetration(non-food)categories leadin
135、g the growth Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.18O2O continues to thrive in the retail market The O2O(online-to-offline)model,which connects consumers with offline stores through online platforms,has continued to thrive in the re
136、tail market,playing a significant role in shaping consumer behavior and the overall retail landscape.For some grocery retailers,O2O can represent approxi-mately half of their business.This highlights the significance of O2O in the retail market and its ability to bridge the gap between online and of
137、fline shopping experiences.Post-pandemic,O2O shopping has witnessed continued growth,with a key driver being a remark-able 15.8%increase in frequency.O2O experienced an impressive 11%year-to-date growth rate com-pared to the first three quarters of 2022,outpacing both offline-only and online-only ch
138、annels(see Figure 10).The integration of the online-to-offline(O2O)model with traditional offline channels enables busi-nesses to effectively capture diverse consumer demands,including immediate,emergency,and new consumption occasions.By providing seamless connectivity between online platforms and o
139、ffline businesses,O2O empowers retailers to offer a comprehensive and convenient shopping experience to consumers.Source:Kantar Worldpanel;Bain analysisFMCG O2O value index(YTD 22Q3=100)FMCG O2O growth driverbreakdownO2O increased its sales contributionfor total FMCG marketFewer buyersTotal FMCG val
140、ue%Growthrate3%1%11%100YTD 2022 Q3 YTD 2023 Q3YTD 22Q3 YTD 23Q3111Higher frequency-4.8%+15.8%Smaller basket size-2.1%100%8060402006%28%66%Offlineonly 65%Onlineonly 28%O2O 7%Figure 10:Online-to-offline shopping continues to boom,due to an increase in frequency;Traditional offline retailers increasing
141、ly transition businesses towards O2OCharting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.19In-person and at-home shopping still popular,OOH spending is changing Despite the easing of pandemic restrictions,the trend of at-home food and beverage spen
142、ding has remained consistent with the previous year,particularly in Tier 1 and 2 cities.This analysis is based on 11 categories present in both at-home and out-of-home channels in Tier 1 and 2 cities.In these ar-eas,at-home dining accounted for 56%of overall spending by the end of the third quarter,
143、echoing pre-pandemic habits and signaling a continued preference for home dining.Two categories that stood out in both at-home and out-of-home consumption were milk and beer,with milk constituting a 29%share of at-home and beer 34%share of OOH in their respective seg-ments.These categories continue
144、to be favored choices,showcasing the versatility in consumer pref-erences whether dining in or out.In YTD Q3 2023,convenience stores(CVS)and grocery stores reported sales distribution of 13%for at-home(AH)consumption and 87%for out-of-home(OOH)consumption.This underlines the criti-cal importance for
145、 brands in these 11 categories to cater to consumers On the Go occasions with ap-propriate packaging and products in these channels.For out-of-home consumption,convenience stores(32%)and traditional grocery outlets(25%)con-tinue to be top choices,catering to on-the-go consumer needs with quick and a
146、ccessible options(see Figure 11).However,a notable shift has been observed with a slowdown in e-commerce for out-of-home consumption,as more people return to restaurant dining,reflecting pre-pandemic dining pat-terns.The out-of-home(OOH)category presents a mixed bag in terms of performance.While peo
147、ple are gradually returning to outdoor activities and spending more time outside their homes,there is a ten-dency to spend less per occasion.This shift in consumer behavior can be attributed to the rising popularity of cost-efficient travel trends,where individuals seek ways to optimize their spendi
148、ng and make more economical choices.The OOH sector is rebounding,indicating an increase in activity and consumer engagement.How-ever,the growth in value within this sector is not as pronounced,suggesting that the market is driven more by occasions and experiences rather than impulse.Consumers are be
149、coming more selective in their spending and are actively seeking value-driven options when engaging in out-of-home activities.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.20Note:F&B consumption covers categories overlapped by AH and OOH,inc
150、l.Beer,Chewing Gum,Chocolate,Yogurt,Milk,Candy,Biscuit,Packaged Water,RTD Tea,Juice,and CSDSource:Kantar Worldpanel;Bain analysisAt-home consumption was same level as YTD 22Q3Consumers channel preference differs a lot between at-home&out-of-home consumptionMilk and beer is the biggest category for a
151、t-home and out-of-home consumptionChinas Tier1&2 cities F&B spending by at-home vs.out-of-home(2016YTD 23Q3)Chinas Tier1&2 cities F&B at-home and out-of-home spending by channel(YTD 23Q3)Chinas Tier1&2 cities F&B at-home and out-of-home spending by category(YTD 23Q3)YTD22Q3202120202016YTD23Q3100%608
152、020400100%608020400100%608020400Hypermarket/Super16%Super/Mini24%Beer34%Chocolate 6%Yogurt 9%Milk 10%Biscuit 6%Hypermarket22%CVS 32%47%53%53%47%51%49%56%44%Athome56%At homeOut of home 44%Out of homeGained share vs.LYMaintained shareLost shareGrocery 25%E-commerce 4%Restaurant12%Others 8%Others 36%Be
153、er 9%Chocolate 6%Yogurt 18%Milk 29%Biscuit 11%Others 26%CVS 4%Grocery 3%E-commerce21%Others 25%At homeOut of homeFigure 11:At-home consumption remained high post pandemic,with different channel and category dynamics than out-of-home consumptionCharting a resilient path:Navigating uncertainty and bui
154、lding momentumKantar Worldpanel|Bain&Company,Inc.21Decoding price dynamics The trend of ASP deflation has continued through the first three quarters in 2023,but with a silver lining.The rate of decline has noticeably slowed down,narrowing the gap from the Consumer Price Index(CPI)to 0.6%(see Figure
155、2).Categories that experienced significant growth during the pan-demic,such as instant noodles and biscuits,have shown a marked slowdown(see Figure 12).Howev-er,several categories have maintained their growth trajectory,signaling a shift towards genuine pre-miumization.Examples of such categories in
156、clude juices,facial tissue,and fabric softener.These products have effectively communicated their value to consumers,leading to a willingness among consumers to pay a premium for these offerings.Product innovation has played a crucial role in driving the premiumization of the juices category post-pa
157、ndemic.Brands have introduced options with distinct“regions of origin”,niche flavors,and innovative“mixed flavors”,positioning them as“meal replacements”.These developments strategi-cally cater to the evolving preferences of health-conscious consumers,providing them with a wider range of choices tha
158、t align with their wellness goals.In the realm of oral care,consumers are increasingly embracing the holistic health concept and rec-ognizing the importance of oral hygiene.This trend has resulted in a willingness to invest more in toothpaste that offers high value added and advanced benefits.Produc
159、ts featuring enamel protec-tion,stain removal,and combined anti-sensitivity plus whitening benefits are gaining prominence among consumers seeking multifaceted oral health solutions.Note:1)Skin Care/Make-up covers age 1564 in Tier 15,and Infant Formula covers 036 months in Tier 15;2)All ASP are calc
160、ulated based on RMB per kg/L except Skin Care and Makeup is per pack,and Facial Tissue is per 100 sheets/rolls;All changes may lead to some inconsistencies with previous years dataSource:Kantar Worldpanel;National Bureau of Statistics;Bain analysis Growth difference in average selling prices(YTD 22Q
161、3YTD 23Q3 vs.YTD 21Q3YTD 22Q3)ASP Growth Difference(%,YTD 22Q323Q3 vs.YTD 21Q322Q3)10%50-5-10-5051012%ASP CAGR(%,YTD 22Q323Q3)ToothpasteSkin CareInfant FormulaDiaperCSDPersonal WashToilet TissueChewing GumInstant NoodleCandyFabric SoftenerJuiceChocolateHair ConditionerFacial TissueBeerToothpasteBisc
162、uitsRTD TeaYogurtPackaged WaterT3:ASP decline slowing downT4:ASP decline magnifiedT1:ASP growth magnifiedT2:ASP growth slowing down MakeupPackaged foodBeveragePersonal careHome careFabricDetergentMilkShampooKitchen CleanerYTD23Q3 CPI:0.4%Figure 12:While most categories saw a real-term decline in ave
163、rage selling price,select food and beverage and home care categories continued to premiumizeCharting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.22Note:1)The promotion data is collected by letting consumers record if they participated in promotiona
164、l event when they purchased the products;2)Skin Care/Make-up covers age 1564 in Tier 15,and Infant Formula/Baby Diaper covers 036 months in Tier 15;All changes may lead to some inconsistencies withprevious years dataSource:Kantar Worldpanel;Bain analysisPercentage point of market value sold on promo
165、tion%of market value sold on promotion(%,YTD 20Q3YTD 23Q3)OverallPackage foodBeveragePersonal careHome care401020300YTD 20Q3YTD 21Q3YTD 22Q3YTD 23Q323.324.723.923.119.420.919.919.920.220.819.618.629.831.932.630.929.230.028.427.6Figure 13:Consumers overall participation in promotions slightly decline
166、d vs.last yearPromotion The percentage of market value sold on promotion has declined,with beverage(18.6%)and personal care(30.9%)categories experiencing a more substantial drop(see Figure 13).The slight decline in pro-motion levels may be partially attributed to the adoption of Every Day Low Pricin
167、g(EDLP)strategies,particularly evident on platforms like PDD and Douyin.These platforms consistent approach to low pricing has reduced the reliance on short-term promotional campaigns,thereby changing consumer engagement with traditional promotions.Furthermore,the markets oversaturation with promoti
168、onal offers may have led to consumer fatigue.Over time,an incessant stream of discounts and promotions can lead to their diminished impact,making it harder for brands to capture consumer attention and drive participation.This overexpo-sure risks devaluing the promotions in the eyes of the consumer,p
169、otentially leading them to question the authenticity or quality of products offered at discounted prices.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.23Online platforms have witnessed higher participation in promotions compared to their off
170、line coun-terparts,largely due to the impulsive mindset of online consumers and the aggressive promotion strategies employed by e-commerce platforms(see Figure 14).The convenience and accessibility of online shopping make it easier for consumers to engage with promotions and make quick purchas-ing d
171、ecisions.The promotion trends within each category continue to be predominantly influenced by the online penetration rate.Healthy,value-for-money and differentiated products dominate consumer purchases The post-pandemic recovery in 2023 has brought about significant changes to the overall market dy-
172、namics,leading to a polarization in price tiers and shifting consumer habits.This polarization in price tiers can be attributed to changing consumer preferences and an increased focus on quality,uniqueness,and personalized experiences.As consumers become more selective in their purchasing decisions,
173、they are willing to pay a premium for products and services that meet their specific needs and preferences.Over the past few years,there has been a noticeable shift in consumer preferences towards products that are healthy,value-for-money,and exclusive across various categories.This change in consum
174、er behavior has had a significant impact on the FMCG market,particularly in segments such as skin-care,CSD,and facial tissue(see Figure 15).Note:1)The promotion data is collected by letting consumers record if they participated in promotional event when they purchased the products;2)Online relative
175、penetration is defined as the total number of online purchasers divided by the number of purchasers of the category;3)Skin Care/Make-up covers age 1564 in Tier 15,and Infant Formula/Baby Diaper covers 036 months in Tier 15;All changes may lead to some inconsistencies with previous years dataSource:K
176、antar Worldpanel;Bain analysis%of market value sold on promotion (%,YTD 20Q3YTD 23Q3)%of market value sold on promotion(%,YTD 23Q3)90%4143 434203020Chewing GumBeerCandyRTD TeaJuiceCSDPackaged WaterKitchen CleanerFabric SoftenerToothbrushMake UpFacial TissueSkin CareToilet Tissu
177、eInfant FormulaDiaperChocolateBiscuitsYogurtMilkHair ConditionerShampooPersonal WashFabricDetergentToothpasteInstant Noodle010OnlineOffline305060%Online relative penetration rate(%,YTD 23Q3)R-Square:80%p-value 0.05Online has higher promotionparticipation than offlinePromotion trends in each category
178、 is mainly driven byonline penetration ratYTD 20Q3YTD 21Q3YTD 22Q3YTD 23Q3Figure 14:Category-level promotion trends can largely be explained by online penetration level;those relying more on offline showed lower participationCharting a resilient path:Navigating uncertainty and building momentumKanta
179、r Worldpanel|Bain&Company,Inc.24Let us look at 3 distinct category examples.Facial tissue:Consumers willing to invest in premium brands.The value of the facial tissue premi-um segment saw a 22%increase compared to first three quarters in 2022(see Figure 15),largely at-tributable to a growing consume
180、r appetite for high-quality products.Within this premium segment,specific categories demonstrated impressive growth:embossed tissues grew by 39%,and lotion-in-fused tissues rose by 60%.Vindas premium range experienced approximately 30%growth based on their latest annual report in 2023,reflecting the
181、ir significant investment in premium product inno-vation.Vinda specifically addresses niche markets and occasions,with offerings like lotion tissues for babies and sensitive noses.Furthermore,Vinda has strategically focused on interest-based e-commerce platforms like Douyin,boasting approximately 5
182、million followers.Through its official Douyin flagship store,Vinda has hosted over 200 livestreaming events in the first half of 2023,effec-tively engaging with its audience.Skincare:Increased competition on value.The premium skin care market observed a marginal de-cline of 4%,potentially influenced
183、 by unofficial channels such as Daigou and the travel retail sector(see Figure 15).Amid this trend,skincare consumers are exhibiting more rational spending habits,which has led to a 4%uptick in the mass skincare segment.Theres an increasing demand for robust scientific evidence to substantiate skinc
184、are product claims,underscoring the value and effectiveness that consumers expect.The enhancement of e-commerce strategies for comprehensive brand devel-opment is becoming increasingly evident.Brands are now strategically deploying a mix of e-com-merce platformsencompassing traditional,interest-base
185、d,and private domainsto broaden their Source:Kantar Worldpanel;Bain analysisValue growth by price tier by category(%,YTD 22Q323Q3)30%432-6-3020100-10-20-30FabricDetergent1.8%3.6%3.5%5.4%-0.7%-3.4%-0.2%-2.6%-1.8%-3.8%-0.7%-2.1%YTD 22Q323Q3 ASP growthBeerToothpastePremiumizationRedefine val
186、ueDecliningFacialTissuePackagedWaterMakeupShampooSkin CareCSDInfantFormulaYogurtPersonalWash5246426-4-4-11-11-20-11-12-7-4-20-20-340PremiumMid-rangeMassCategory growthFigure 15:Post-pandemic market reveals growing polarization in price tiersCharting a resilient path:Navigating uncertainty and buildi
187、ng momentumKantar Worldpanel|Bain&Company,Inc.25reach and effectively engage a diverse consumer base.A case in point is Mistine,which has adeptly spotlighted its star product,Mistine Aqua Sunscreen.The efficacy of this product is scientifically verified and further endorsed by a Nobel Prize winner i
188、n Chemistry,bolstering the brands position-ing.In alignment with the prevailing clean beauty movement,the formula has been upgraded to be ocean-friendly.From an EC standpoint,Mistine boasts a robust online presence,spanning both tra-ditional and interest-based platforms,contributing to its commendab
189、le market performance.Beverage-Carbonated Soft Drinks:Shifting towards adjacent healthy options.The CSD market wit-nessed a 1.8%decline in prices over the first three quarters of 2023 compared to the same period in 2022,largely due to an 11%decrease in its premium segment(see Figure 15).Conversely,c
190、ategories like juice have seen an increase in ASP by 9%,primarily driven by a 37.3%growth in its premium seg-ment.This aligns with the ongoing popularity of super fruits,as highlighted in our 2022 Report,Vol.2,suggesting a consumer shift towards premium,health-focused beverage options.Moreover,funct
191、ional drinks and ready-to-drink(RTD)tea have experienced significant growth,registering in-creases of approximately 24%and 22%respectively,with their average ASP being 90%and 31%high-er than the CSD category.In the post-pandemic era,consumers are discerningly opting for beverages that offer health b
192、enefits,such as metabolism enhancement,digestive improvement,and zero sugar content.The shift towards a healthier lifestyle,incorporating more physical activities,is influencing the beverage market,underscoring the need for products that align with the growing health and wellness trend.Other categor
193、ies:Health,value,and premiumization.The consumer trend towards opting for prod-ucts that are healthy,value-for-money,and premium is not limited to the skincare,carbonated soft drinks,and facial tissue categories.It permeates across other FMCG segments as well.In the food and beverage sector,for exam
194、ple,consumers are increasingly gravitating towards health-ier options such as organic,natural,and functional foods.They are looking for products that offer nutritional benefits,clean labeling,and sustainable sourcing.Additionally,value-for-money op-tions,such as private label brands and discount pro
195、motions,have gained popularity as consumers seek to make the most of their purchasing power.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.26Whats nextand implications for brands and retailersAs the Chinese market gradually recovers from the
196、COVID-19 pandemic,its a pivotal time for brands and retailers to reshape strategies and strengthen market adaptability.How can brands best position themselves for success?Focus on brand building:Focusing on brand building is more crucial than ever as consumer empha-sis on brand value intensifies.Gai
197、ning quick traffic and becoming an internet sensation is easy,but achieving enduring popularity is hard.Only businesses that consistently invest in their brand can weather the cycles.This means investing not just in marketing,but also in product quality,custom-er service,and sustainable practices.Em
198、brace omnichannel and connected commerce:Adapting to changing channel dynamics is key,necessitating an integrated and carefully planned approach to effectively reach customers via on-line,offline,and O2O channels.Brands should also focus on developing cohesive online and offline marketing strategies
199、.These strategies must be seamlessly integrated,enhancing the brand proposi-tion without compromising its core values.A multi-channel approach,encompassing interest EC,e-commerce,and traditional retail,is essential for reaching a wider customer base.This entails a strategic distribution plan,determi
200、ning the most suitable products and packaging sizes for each sales channel to optimize reach and conversion of target audience.Align portfolio to consumer trends:Brands must strategically adapt their product offerings to align with current consumer trends,notably those intensified by the pandemic.Ke
201、y trends include the emerging of new demographics,the increased interest in occasion experiences,for example,pic-nicking,camping,fishing and city walks,as well as the growing popularity of discount channels.Understanding these evolving preferences and adapting product development,pricing and market-
202、ing strategies accordingly is crucial.For example,the rise of occasion-driven consumers drives de-mand for innovative product offerings that provide an immersive lifestyle experience.Demographic shifts,such as the growing segment of single families,highlight the need for products that cater to their
203、 specific habits and lifestyle preferences.These consumers are often willing to invest more in brands that meet these specific needs.Therefore,its imperative for brands to reevaluate and refine their product lines and pricing strategies to effectively serve these new consumer demographics.What strat
204、egies can retailers employ to successfully position themselves?Enhance customer loyalty and experiences:Retailers should focus on boosting customer loyalty and providing unique shopping experiences.This involves integrating online and offline channels effectively,especially in the growing O2O market
205、,to offer seamless and immersive shopping experi-ences that combine the convenience of online with the tangibility of in-store shopping.Balance online and offline offerings:With the rise of discounters providing a diverse range of SKUs,retailers need to ensure their physical stores offer more than j
206、ust showroom experiences.This re-quires curating unique in-store experiences that complement their online presence,striking a bal-ance between both platforms.Retailers are encouraged to refine their pricing strategies,placing a Charting a resilient path:Navigating uncertainty and building momentumKa
207、ntar Worldpanel|Bain&Company,Inc.27stronger emphasis on bolstering their brand equity and reinforcing supply chain robustness.This approach is essential enablers to achieve competitive pricing and to sustainably meet consumer de-mands.Utilize data and technology for optimization:Retailers should lev
208、erage data and technology to gain insights into consumer behavior,allowing them to optimize their product mix and promotional strategies.As demand for high-quality and high-value products grows,maintaining competitive pricing while focusing on product quality,product innovation,supply chain,and sour
209、cing is crucial.Collaboration with brands for exclusive products and data-driven merchandising strategies will be the key.ConclusionOverall,brands and retailers must remain agile in adapting to the ever-changing market environ-ment to maintain competitiveness and market share.This involves continuou
210、s monitoring of con-sumer trends,flexible adjustment of channel strategies,and sustained investment in brand building and product innovation.Despite the challenges,the FMCG market has consistently demonstrated long-term resilience and potentials for growth.As the Chinese market progressively recover
211、s from the pandemic,it presents not only new opportunities and challenges but also a platform for remark-able innovation and growth.Charting a resilient path:Navigating uncertainty and building momentumKantar Worldpanel|Bain&Company,Inc.28Notes1.The scope of the FMCG market in this report doesnt inc
212、lude 12 new categories tracked by Kantar Worldpanel since 2022,therefore there might be some data discrepancies between this report and other Kantar publications.Kantar Worldpanel has excluded cigarettes from total FMCG data in 2017 and adjusted the online channel weight factor upper threshold for p
213、aper products to better reflect market realities in 2020.Skin care and makeup data are collected from the Kantar Worldpanel beauty panel,covering consumers aged from 1564 in Tier 15 cities;infant formula and diaper data are collected from the Kantar Worldpanel baby panel,covering households with bab
214、ies 0 36 months old in Tier 1-5 cities.All average selling prices are calculated based on RMB per Kg/L,except for diapers and toothbrushes,which are calcu-lated based on RMB per piece;skin care and makeup,which are calculated based on RMB per pack;and toilet and facial tissue,which are calculated ba
215、sed on RMB per 100 sheets/rolls.2.The 26 categories are(a)packaged food:biscuits,chocolate,instant noodle,candy,chewing gum,and infant formula;(b)beverage:milk,yogurt,juice,beer,ready-to-drink tea,carbonated soft drinks,and packaged water;(c)personal care:skin care,shampoo,personal wash,tooth-paste,
216、makeup,hair conditioner,diaper,and toothbrushes;and(d)home care:toilet tissue,fab-ric detergent,facial tissue,kitchen cleaner,and fabric softener.3.In Kantar Worldpanel,online-to-offline(O2O)sales value is categorized in channels where the transactions happen:sales of O2O vertical grocery EC and com
217、munity group buy are accounted for in e-commerce;O2O offline retailers sales are categorized according to the retailers main formats(e.g.,Walmart O2O sales are categorized in hyper);O2O horizontal marketplaces sales are calculated based on the end shopping entities(e.g.,if consumer orders from 7-Ele
218、ven through Meituan/Ele,the value will be calculated in convenience store).4.The 11 tracked key food and beverage categories are beer,chewing gum,candy,chocolate,milk,yogurt,biscuits,packaged water,ready-to-drink tea,juice and carbonated soft drinks.Bold ideas.Bold teams.Extraordinary results.Bain&C
219、ompany is a global consultancy that helps the worlds most ambitious change makers define the future.Across 65 cities in 40 countries,we work alongside our clients as one team with a shared ambition to achieve extraordinary results,outperform the competition,and redefine industries.We complement our
220、tailored,integrated expertise with a vibrant ecosystem of digital innovators to deliver better,faster,and more enduring outcomes.Our 10-year commitment to invest more than$1 billion in pro bono services brings our talent,expertise,and insight to organizations tackling todays urgent challenges in edu
221、cation,racial equity,social justice,economic development,and the environment.Since our founding in 1973,we have measured our success by the success of our clients,and we proudly maintain the highest level of client advocacy in the industry.KantarShape your brand future As part of Kantar,the worlds l
222、eading marketing data and analytics company,Worldpanel provides brands and retailers with a unique,360-degree understanding of consumer behaviour across the globe.We are shopper-centric,continuously monitoring the purchase and usage behaviour through the largest omnipanel in the world to shape the b
223、rands of tomorrow by better understanding people everywhere.With unparalleled datasets,pioneering technology and expert analysts,we partner with brands and retailers of all sizes,empowering them to reimagine whats possible,and change the landscape to create a better,healthier,more sustainable and inclusive world.In China market,the Worldpanel division is one of the services in CTR,covering over 100 FMCG categories,50,000+brands and 100+retailers,among many more information,visit