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1、China FMCG Settles into New Reality,with Moderate Growth and Continuous Price Pressures China Shopper Report 2024,Vol.1Authors and acknowledgmentsBruno Lannes is a senior partner with Bain&Companys Consumer Products and Retail practices and is based in Shanghai.You can contact him by email at .Derek

2、 Deng is a senior 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.You can contact him by email at .This report is a joint effort between Bain&Com

3、pany and Kantar Worldpanel.The authors extend gratitude to all who contributed to it,especially Minghui Jia,Steven Wang,Xuyang Zhai,Anzhi Fu,Jocelyn Chen,Rose Zhou,Yuewen Wang,and Daryl Chan from Bain;and Tina Qin,Sallian He,and Rita Yang from Kantar Worldpanel.Copyright 2024 Bain&Company,Inc.and Ka

4、ntar Worldpanel.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 with industry participants.Bain&Company has not independently verified any such information provided or available to B

5、ain and makes no representation or warranty,express or implied,that such information is accurate or complete.Projected market and financial information,analyses,and conclusions contained herein are based on the information described above and on Bain&Companys judgment,and should not be construed as

6、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 investment purposes.Neither Bain&Company nor any of its subsidiar-ies or their respective officers,directors,shareholders,e

7、mployees,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information or analysis contained in this document.This work is copyright Bain&Company and Kantar Worldpanel and may not be published,transmitted,broadcast,copied,reproduced,or reprinted in whole

8、or in part without the explicit written permission of Bain&Company and Kantar Worldpanel.1Kantar Worldpanel|Bain&Company,Inc.ContentsExecutive summary .2The full report .14Reflection on 2023 .14Gaining perspective from the first quarter of 2024 .27Insurgents:Competitive strengths that navigated thro

9、ugh cycles .36Whats next:Implications for brands and retailers .432Kantar Worldpanel|Bain&Company,Inc.Executive summaryThis is the 13th consecutive year we have tracked the shopping behaviors of Chinese consumers.Our continuing research has given us a valuable,long-term view across 106 fast-moving c

10、onsumer goods(FMCG)categories purchased for home consumption in China.1 As in each of the past 12 years,we analyzed the 26 key categories spanning the four largest consumer goods sectors:packaged food,beverage,personal care,and home care.2 This year,we updated our tracking to include nutrient supple

11、ments,coffee,and sanitary pads and eliminated toothbrushes and fabric softener,bringing our tracked categories total to 27,to align more closely with evolving market dynamics.3 This report updates the findings from our China Shopper Report 2023,Vol.2,Charting a resilient path:Navigat-ing uncertainty

12、 and building momentum,and includes Kantar Worldpanel shopper behavior data for 2023 and the first quarter of 2024.This report recaps FMCG performance in 2023,a period when consumption regained momentum following the lifting of remaining Covid-19 restrictions.We also explore consumer trends shaping

13、the FMCG market during the first quarter of 2024.Building on the analyses presented in China Shopper Report 2018,Vol.2,and China Shopper Report 2021,Vol.2,we review the performance of insurgent brands from the Class of 2018 and Class of 2021 and select representative brands to feature in the Class o

14、f 2024.The report includes implications for consumer goods companies and retailers.3Kantar Worldpanel|Bain&Company,Inc.Reflection on 2023In 2023,Chinas fast-moving consumer goods(FMCG)market experienced its first full year of operations following the lifting of Covid-19 restrictions in December 2022

15、.Despite a promising start,the year fell short of consumer confidence and consumption expectations.The FMCG market witnessed a moderate recovery in the first three quarters of 2023 and a notable surge of 6.5%in Q4,resulting in 2.4%annual growth.The strong recovery in Q4 can be partially attributed t

16、o the low baseline in the same period of the previous year(Q4 2022).However,the FMCG markets lagging growth compared to GDP growth(5.2%)and total retail market growth(7.2%,excluding catering)can be partially attributed to increasing out-of-home consumption post-Covid.Volume continued to be the main

17、driver of growth,posting an increase of+2.4%for the year.Average selling prices(ASPs)remained relatively stable throughout the year,landing at 0.0%,indicating that price changes had a minimal impact on the markets overall performance.This pricing trend is positive compared to 2022,which recorded a-2

18、.5%decline in ASP.Nevertheless,we observed divergent pricing trends across categories due to supply and demand dynamics.Categories such as juice,facial tissue,and toothpaste experienced notable innovation and capitalized on a“trade up”trend,meeting consumers increasing demand for health,wellness,and

19、 affordability.On the other hand,some categories saw innovation and consumers are moving to better products.However,there is severe price competition,and partial consumers are moving to lower-ASP segments,leading to a“K-shape”trend in these categories,such as fabric detergent.Meanwhile,categories su

20、ch as skincare and makeup,with limited innovation and intense competi-tion,saw consumers selecting more value-for-money options,representing a“trade down”trend.Geographically,growth was led by Tier 2 cities across all city tiers,in terms of volume and ASPs.4 These cities have become destinations for

21、 population migration and test fields for FMCG brands.Tier 2 cities have received a population influx of 8 million or more in the past four years.For example,Changsha has seen a population increase of 1.2 million(+13%),outgrowing other cities in Hunan.These cities have become the launchpads for the

22、transformation pilots and initiatives of multina-tional corporations and the birthplace of insurgent FMCG brands.Category update:Home care led FMCG growth,followed by packaged food and beverageWithin the four major sectors,home care led FMCG market growth(+8.3%),followed by packaged food(+3.4%)and b

23、everage(+3.2%),while personal care saw a narrowed decline(-2.1%,compared to-4.8%in 2022).Home care delivered healthy market growth of+8.3%,driven by a strong volume rebound of+7.4%and stable ASP at+0.9%,though ASP decelerated in Q1Q3 and showed deflation in Q4.The rising demand for health and hygien

24、e needs supported this volume growth.Fabric detergent experienced a growth of+5.5%,primarily due to increased engagement in out-of-home activities.Additionally,facial tissue saw significant growth,with volume increasing by+17.2%and ASP by+4.2%,driven by occasion-specific consumption such as baby fac

25、ial tissue and face towels.Kitchen cleaner also saw a substantial volume growth of+6.6%,driven by specific uses,such as oil remover and dishwasher detergent.4Kantar Worldpanel|Bain&Company,Inc.Packaged food delivered robust market growth of+3.4%.Volume dropped(-1.5%),partially due to increasing on-p

26、remises consumption post-Covid-19,while the premiumization trend accelerated(+5.0%ASP vs.+3.2%in 2022).Nutrient supplements,a new addition to our tracked categories,led growth with a notable+20.5%increase.This expansion was primarily driven by a strong volume increase of 29.6%,reflecting rising cons

27、umer demand for health-related products,though this was offset by a 7%decline in ASP due to the influx of local brands entering the segment.Infant formula was negatively impacted by demographic changes,posting a-15.3%value decline.Other categories generally saw a decline in volume,attributed to incr

28、eased out-of-home consumption.However,a trend toward premiumization was evident across these categories.Consumers were willing to pay more for healthier and higher-quality food options,such as low-sugar chocolate and candy containing ingredients with beauty benefits.Beverage experienced+3.2%market g

29、rowth,driven by strong volume growth(+3.3%)and stable ASP(-0.1%).This sector saw stable consumption in Q1Q3.However,Q4 witnessed a strong rebound,primarily due to a relatively low base in Q4 2022.The latest trend in beverage is near-water drinks (近水化),with consumers moving from high-sugar drinks(e.g

30、.,normal carbonated soft drinks CSD)to low-/no-sugar options(e.g.,zero-sugar tea).As a result,juice(+24.1%),packaged water(+8.9%),and ready-to-drink(RTD)tea(+14.1%)led market growth.As consumers beverage demand shifted toward healthier options,CSD saw a significant decline(-7.3%).Beer prices trended

31、 upward(ASP+4.2%)as most leading brands continued their focus on premium product lines.Yogurt,meanwhile,reported a declining value of-8.5%.This year we added coffee to our tracked categories,in recognition of its strong growth and increasing consumer impact over the past 10 years.Coffee saw a value

32、growth of+5.6%,driven by both volume and ASP.The decline of personal care narrowed(-2.1%vs.-4.8%in 2022).However,we observed recovering volume demand(+1.3%),despite ASP deflation(-3.4%)throughout the year.Some categories experi-enced growth due to increasing out-of-home activities.For example,makeup

33、(+6.4%),shampoo(+3.2%),and hair conditioner(+4.6%)all showed strong volume rebounds.However,this sector faces significant challenges from domestic brands and a lack of product differentiation,leading to an ASP decline in most categories.For some categories,such as skincare(-3.1%)and personal wash(-2

34、.2%),declining ASP drove overall value down despite stable volume demand.Sanitary pads,a new addition to our tracked categories,experienced a slight decline of-2.3%,primarily driven by a decrease in volume(-4.0%)as consumers shifted toward competing products such as tampons and menstrual cups.The tw

35、o-speed phenomenonsplit between high-speed and low-speed categoriescontinued in 2023.The fastest-growing categories were mainly driven by health and emotional needs.Within these high-speed categories,there was an increased demand for health-related and hygiene products such as functional drinks(+23%

36、)and air fresheners(+22%).Consumers also illustrated a willingness to pay a premium for entertainment and emotion-driven products such as foreign spirits(+29%).5Kantar Worldpanel|Bain&Company,Inc.On the other hand,low-speed categories were primarily concentrated in packaged food and bever-age sector

37、s,such as cheese(-17%)and yogurt(-8%).These categories were negatively impacted by changing consumption habits,with a marked decrease in at-home consumption and an increase in out-of-home dining.In contrast,consumers were increasingly willing to trade up in categories related to health and personal

38、hygiene.For instance,the juice sector saw a+9%increase in ASP in 2023,driven by the popularity of healthier options,such as 100%not-from-concentrate(NFC)juice and fresh juice.Channel update:Offline consumption regained momentum,yet performance diverged across formatsOffline channels:Due to recoverin

39、g offline consumption post-Covid-19,most offline formats re-gained momentum.Small-format and near-home stores,including grocery(+6%)and convenience stores(+7%),continued to lead this growth.Many large key accounts have closed hypermarkets while opening super/mini stores,leading to growing super/mini

40、(+4%)and declining hypermarket(-6%)sectors.Within hypermarkets,club warehouses continued to experience substantial growth(42%)due to their unique value propositions.5 The growth of specialist stores(+4%)was driven by discount stores,such as snack discount shops.O2O(Online-to-Offline):6 O2O growth de

41、celerated to+3%in 2023,compared to+16%in 2022.Food and beverage decelerated significantly(+1%,compared to+21%in 2022)due to increased out-of-home catering.However,this does not mean that O2O purchasing behavior is disappearing,as evidenced by accelerating growth in personal care and home care(+7%,co

42、mpared to+5%in 2022).Overall,O2O channel behavior was also shaped by major platforms growth strategies.The largest community group-buying platforms,Duoduo Maicai(多多买菜)and Meituan Youxuan(美团优选),have slowed their expansion plans and shifted their focus toward seeking profitable growth.This slowdown is

43、 offset by accelerating growth in offline retailers,as large key accounts continue to direct purchases to proprietary platforms,such as self-run apps.Online channels:Gradual shifts toward online channels continued,with a slight uptick in 2023(+4%compared to+2%in 2022).Interest e-commerce,and discoun

44、t e-commerce platforms continued to gain share from traditional e-commerce.Platforms such as Douyin,Kuaishou,and Pinduoduo saw their market share increase to 34%,a 12-point increase from 2022.Total e-commerce penetration increased significantly between 2019 and 2021 due to Covid-19,but it has remain

45、ed stable since 2021.Food and beverage saw declines in online penetration due to the recovering catering market,while the online penetration of personal care and home care increased slightly.6Kantar Worldpanel|Bain&Company,Inc.Brand update:Large brands and foreign brands lost steamLarge brands vs.sm

46、all brands:Brand competition remained dynamic.In recent years,the Top 5 brands have lost market share,with the exception of 2022,when large brands were boosted by resiliency in their supply chains and finances.In 2023,the trend of the Top 5 brands losing share returned,observed in 16 out of 27 track

47、ed categories.After a challenging 2022,mid-to-small brands started reinvesting on the back of the positive outlook for Chinese consumption.This trend was particularly noticeable in the home care and beverage categories,where smaller brands introduced innovative product offerings targeting niche segm

48、ents and occasions.For example,in the juice category,if (宜芙)invested in the coconut water segment and achieved rapid growth.Foreign brands vs.domestic brands:In 2023,domestic brands continued to gain share(+1 point)from foreign brands in aggregated results across the 27 tracked categories.This is co

49、nsistent with our observations over the past 12 years.Internally,some foreign players strategically reduced investment in certain categories due to a pessimistic category outlook.Moreover,foreign brands encountered heightened competition from domestic brands breakthrough product innovations and inte

50、nsified pricing strategies.7Kantar Worldpanel|Bain&Company,Inc.Gaining perspective from the first quarter of 2024Following a moderate macroeconomic outlook,the China FMCG sector recovered in Q1 2024 with value growth of approximately 2.0%,a half point higher than the 1.5%growth observed in Q1 2023.T

51、his indicates a positive sign for the rest of 2024.The Q1 economic recovery was even more evident from GDP growth(+5.3%)and retail sales value growth(+4.9%,excluding auto sales).Social activity indicators also showed positive signs of growth.Subway traffic in 29 major cities reached an average of 2.

52、8 million daily passengers per city,a historic high.Meanwhile,social mobility during the 2024 Chinese New Year travel period reached 8.4 billion,a 70%increase from the 2023 Chinese New Year.Despite these positive trends,Chinas consumer confidence index,housing price index,and unem-ployment rate have

53、 not yet recovered to pre-Covid-19 levels.The markets 2.0%value growth in Q1 2024 has been propelled by a 3.5%increase in volume,an up-tick from the 2.3%volume growth observed in Q1 2023.This volume increase illustrates a continued,strong desire for consumption among consumers.However,the market exp

54、erienced a deflation of-1.5%in the ASP,marking a more pronounced deflation trend compared to the stable pricing trend observed in 2023.Category update:Packaged food and beverage continue to lead growth in Q1 2024;home care largely decelerated;personal care continues to declineAmong the four main sec

55、tors,packaged food and beverage witnessed stable growth,demonstrating consumers strong consumption desire.Packaged food continued its growth trend(+2.7%),driven by volume growth(+2.9%)and a quasi-stable ASP(-0.2%).Beverage showed faster growth(+4.3%),driven by both volume(+2.4%)and ASP(+1.8%).Howeve

56、r,personal care declined by-2.8%,while home cares growth decelerated to+2.2%.Despite robust volume demand for personal care(+5.1%)and home care(+8.5%),both sectors faced severe“trading down”issues,illustrated by their ASPs declining by-7.5%and-5.8%,respectively.Packaged food:The sector grew by+2.7%i

57、n value,driven by a+2.9%increase in volume,despite a slight-0.2%decrease in ASP.Most categories within packaged food experienced volume growth due to recovering social mobility and activities.For instance,Chinese New Year saw a notable surge in gifting demand.However,the ASP declined slightly by-0.2

58、%,contrasting with the premiumization trend observed throughout 2023.This decline is attributed to consumers choosing different price bands for diverse occasions,such as opting for larger packs with lower ASP for gifting.Beverage:The sectors value grew by+4.3%,driven by increases in both volume(+2.4

59、%)and ASP(+1.8%).The near-water categories maintained their high growth,with notable increases in juice(+20.8%),RTD tea(+8.6%),and packaged water(+5.6%),while CSD declined by-5.9%.Milk and coffee reversed their growth trends,declining by-2.9%and-5.9%,respectively,likely due to increased out-of-home

60、activities and consumption compared to Q1 2023,when most people stayed home due to Covid-19.Beer experienced growth of 8.4%,driven by more at-home gatherings.Yogurt continued to decline(-8.4%).8Kantar Worldpanel|Bain&Company,Inc.Home care:The volume grew by+8.5%,but the ASP dropped by-5.8%.Most home

61、 care categories saw strong volume demand driven by leading players efforts to promote diverse use occasions,increased social activities,and established focus on hygiene and health post-Covid-19.Consequently,fabric detergent(+5.7%),facial tissue(+7.5%),and kitchen cleaner(+6.0%)saw robust growth dri

62、ven by volume.However,in contrast with the premiumization of 2023,tracked categories displayed a price deflation in Q1 2024,driven by brands price cuts and promotion of larger,bulk-sized products.Personal care:The sector experienced a volume rebound of+5.1%,offset by a significant drop in ASP(-7.5%)

63、.Most categories showed strong volume growth,driven by increased social activities.For example,makeup(volume+13.8%)and toothpaste(volume+6.4%)saw notable increases.However,consumers remained cost-conscious,and most personal care categories faced competition from domestic brands offering more value-f

64、or-money products,resulting in a decrease in ASP,particularly in skincare(ASP-8.8%),makeup(ASP-13.2%),and hair conditioner(ASP-6.8%).The diaper category continued its decline due to a decrease in newborns.Pricing update:FMCG ASP deflated in Q1 2024,a downturn from 2023s stable pricing trend Inflatio

65、n in China has largely moderated following its reopening,with a slight rise of 0.1%in Q1 2024 consumer price index(CPI),maintaining the trend observed since Q2 2023.Unlike the stable pricing trend observed in 2023,FMCG ASP saw a decrease of-1.5%in Q1 2024.Of our 27 tracked categories,18 categories w

66、itnessed deflation in Q1 2024.This trend was especially pronounced in personal care and home care sectors.Overall,we observed three pricing trend clusters:Cluster 1:Continuous premiumizationThis cluster primarily includes packaged food and beverage categories,such as coffee(Q1 2024+6.4%,2023+2.0%),j

67、uice(Q1 2024+3.2%,2023+8.9%),candy(Q1 2024+1.9%,2023+6.2%),and biscuits(Q1 2024+1.9%,2023+3.0%).These categories benefited from consumers preference for healthier products such as fresh juice and low-sugar biscuits,due to their increasing focus on wellness.Addi-tionally,brand innovation has enabled

68、consumers to“trade up”to higher quality products,such as coffee capsules and soft candies with beauty benefits.Cluster 2:Continuous deflationMost personal care categories fall into this bracket.In a highly competitive market,insurgent brands continue to challenge incumbents by offering lower-priced

69、products,while large incumbents reduce prices during campaigns.This trend is particularly evident in skincare(Q1 2024-8.8%,2023-3.0%)and makeup(Q1 2024-13.2%,2023-5.4%).Some categories saw brands promoting larger pack sizes,leading to continuous ASP declines,e.g.,packaged water(Q1 2024-3.4%,2023-0.8

70、%).Diapers(Q1 2024-7.0%,2023-4.7%)and infant formula(Q1 2024-2.6%,2023-3.3%)are also in this cluster due to increased competition caused by demographic changes.9Kantar Worldpanel|Bain&Company,Inc.Cluster 3:Premiumization reversed to deflationThis cluster consists mainly of home care categories,inclu

71、ding fabric detergent(Q1 2024-3.0%,2023+0.9%),kitchen cleaner(Q1 2024-1.0%,2023+0.8%),and facial tissue(Q1 2024-0.6%,2023+4.2%).It is noteworthy that this deflation does not necessarily indicate a consumer preference for cheaper products.Consumers are still trading up to better products,such as liqu

72、id detergent from bar or powder formats.This deflation is primarily supply driven,as brands have proactively promoted larger pack sizes and lowered prices due to lower material costs.Channel update:Overall trend in line with 2023,with further divergence in offline channel performanceOffline channels

73、:Offline channels grew by+2.4%,slightly higher than the overall FMCG and e-commerce channels,due to recovering offline traffic.Within offline channels,grocery and super/mini formats continued to gain share,growing at+11%and+7%,respectively,in Q1 2024,while hypermarket segments continued to shrink,wi

74、th a decrease of-6%.However,within the hypermarket sector,club warehouses saw notable growth of+22%,representing 9%share of the total hypermarket channel.Meanwhile,specialist stores declined by-4%(compared to+4%growth in 2023).O2O(Online-to-Offline):O2O saw a decline of-8%in Q1 2024 due to the full

75、recovery of offline activities.However,there is still growth momentum compared to Q1 2022,indicating that consumers have developed O2O shopping habits.As discussed in the 2023 full-year trend,O2O in non-food and beverage categories continued to grow.Online channels:E-commerce growth maintained a low

76、 single-digit rate of around+2%.Notably,Douyin surpassed JD to become the second-largest e-commerce platform,delivering substantial growth of+46%and achieving an 18%market share in Q1 2024,6 points higher than Q1 2023.Pinduoduo saw increased traffic driven by its value-for-money proposition,resultin

77、g in+6%growth and a 15%market share,1 point higher than Q1 2023.JD experienced+5%growth as a result of its low-price strategy,reversing from a-1%decline last year.Taobao/Tmall continued to decline at-7%,with their market share landing at 32%(3 points lower than Q1 2023),yet they remain the largest e

78、-commerce platform.10Kantar Worldpanel|Bain&Company,Inc.China FMCG Settles into New Reality,with Moderate Growth and Continuous Price PressuresInsurgents:Competitive strengths that navigated through cyclesThe Chinese FMCG market has recently witnessed an influx of numerous insurgent brands.By lever-

79、aging venture capital and online traffic,these insurgent brands rapidly grabbed market share from incumbents.However,in recent years,as traffic has peaked and costs have risen,their“cash-burning”operational model has become unsustainable.Investors have become more cautious and rational,forcing brand

80、s to optimize efficiency.When the facade of traffic fades away,a brands true strength or false prosperity becomes evident.In our previous reports,China Shopper Report 2018,Vol.2,Local Insurgents Shake Up Chinas“Two-Speed”Market,and China Shopper Report 2021,Vol.2,A Sudden Slowdown in 2021s FMCG Reco

81、very and the Mixed Fate of Chinas Insurgent Brands,we selected representative insurgent brands with“disruptor potential.”We have been tracking the performance of these brands over the years to synthesize key factors behind their degree of success to date.Class of 2018 brand performance reflectionIn

82、2018,we selected 46 representative insurgent brands based on brand characteristics,scale,and growth performance.In 2021,we reviewed their performance from 2018 to 2020 and categorized them into three groups:“Stand-out”(17 brands,40%),“Hold-out”(9 brands,20%),and“Fade-out”(20 brands,40%).Revisiting t

83、heir performance in 2024,we found a similar category distribution:Stand-out(18 brands,40%),Hold-out(9 brands,20%),and Fade-out(19 brands,40%).By analyzing the development trajectories of these brands,we identified four key success factors for insurgent brands in 2021:brand power,product ecosystem,ch

84、annel capability,and organizational agility.When revisiting these brands performance from 2021 to 2023,we found that these success factors still held.Stand-out:The strong get strongerMany Stand-out brands in 2021 continue to excel.For example,YankershopFood(盐津铺子)strength-ened its competitive edge in

85、 product innovation and omnichannel operations,achieving a 34%CAGR in retail sales from 2021 to 2023.Meanwhile,some brands categorized as Hold-out or Fade-out in 2021 achieved breakthroughs and became Stand-out by investing in one or more of the four previously identified drivers of success.For inst

86、ance,Ganten(百岁山)achieved a 34%CAGR in retail sales from 2021 to 2023 and revitalized its brand image through premium brand positioning,focusing deeply on offline channels.Hold-out and Fade-out:Continued strugglesMost Hold-out and Fade-out brands continue to face growth challenges in a competitive en

87、vironment.These struggles can be attributed to the loss of established advantages,failure to adapt to channel changes,or lagging product innovation.For example,One Leaf(一叶子)consistently underperformed due to heavy reliance on cosmetics specialty store channels,outdated product upgrades,and failed re

88、branding efforts.11Kantar Worldpanel|Bain&Company,Inc.Class of 2021 brand performance reflectionIn 2021,we applied similar criteria to identify 69 insurgent brands.Recently,we conducted a review of their performance between 2021 and 2023.Our analysis revealed a distribution of players akin to the cl

89、ass of 2018,with three main categories:Stand-out(28 brands,40%),Hold-out(12 brands,20%),and Fade-out(29 brands,40%).In addition,the four-lever model mentioned above continues to explain the differences in brand trajectories.Stand-out:These brands have established remarkable competitive advantages ac

90、ross at least two levers,with no evident shortcomings.For instance,despite declining demographics in the maternal and infant market,Babycare has emerged as a Stand-out in recent years,leveraging full-category strategy and embracing omnichannel acceleration.This approach has led to a retail sales CAG

91、R of 27%from 2021 to 2023.Hold-out:These brands exhibit notable strengths in one or two dimensions but suffer from identifi-able weaknesses.For example,the emergence of the“single economy”phenomenon has spurred the proliferation of packaged food brands.Bibigo(必品阁)was able to capitalize on this trend

92、 during the Covid-19 era,with its unique Korean cuisine products and frozen dumplings,but now faces challenges in maintaining market position as normalcy returns.Fade-out:These brands have erected“false barriers”in certain dimensions,which are swiftly over-come by competitors.For instance,Ramen Talk

93、(拉面说),a quintessential example of an emerging brand adopting fast growth through online traffic,has experienced a precipitous decline following its initial popularity.Their heavy reliance on online traffic and failure to expand their offline presence resulted in a more than 50%drop in retail sales f

94、rom 2021 to 2023.In the class of 2021 brands,approximately 20 brands(30%)are affiliated with large corporate parent groups.Backed by such entities,these brands possess a higher likelihood of sustaining their business operations.Leveraging the resources of the parent company enables these brands to s

95、trengthen their positions and achieve rapid breakthroughs.However,if they are not prioritized within the parent companys brand matrix,their performance may still falter despite the inherent advantages of corporate support.Class of 2024 brandsBased on our research experience on Chinas emerging brands

96、 over many years,we have selected 61 insurgent brands to form the Class of 2024.Most of these brands were born between 2019 and 2021,during the peak period of Chinas new consumer brand investment.When we conducted the 2021 selection,they were not yet large enough to enter the list.However,in the pas

97、t few years,they grew despite adverse market conditions.12Kantar Worldpanel|Bain&Company,Inc.We found that the four-lever model,comprising brand power,product ecosystem,channel capability,and organizational agility,continued to be crucial for the success stories of our selected 2024 insur-gent brand

98、s.However,we also observed evolving requirements on these four levers to successfully adapt to the latest market dynamics.In channel capability,particularly,theres an increasing need for insurgent brands to capture emerging channels and develop“Connected Commerce”capabilities instead of being stuck

99、in a siloed channel approach.For example,Yongpu(永璞)transitioned from being an“online influencer brand”to establishing an omnichannel presence by expanding its offline distribution networks.Passional Lover(恋火)achieved accelerated growth on Douyin with a tailored product portfolio,content creation,and

100、 operational excellence.13Kantar Worldpanel|Bain&Company,Inc.Implications for brands and retailersIn this new environment in which consumer confidence remains subdued,brands should focus on four main priorities:Follow consumers true needs,as they have evolved significantly since the reopening in Q1

101、2023.Manage costs to remain competitive in this deflationary environment.Build integrated routes to market strategies,as shopper journeys involve both online and offline touchpoints indistinctly.Rejuvenate out-of-home opportunities in food and beverage categories as out-of-home consump-tion remains

102、on the rise.Retailers facing intensified competition and evolving channel dynamics should also focus on three priorities:Sharpen shopper value propositions in core shopper segments and establish defensible moats.Sweat the assets through revisiting investment plans to align more closely with evolving

103、 shopperbehavior and unlocking productivity for optimized investments.Refocus capability-building with technology and talent,and revitalize organization around anauthentic purpose and mission.14Kantar Worldpanel|Bain&Company,Inc.The full reportThis is the 13th consecutive year that we have tracked t

104、he 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 consumption in China.1 As in each of the past 12 years,we analyzed the 26 key categories spanning the four largest consum

105、er goods sectors:packaged food,beverage,personal care,and home care.2 This year,we updated our tracking to include nutrient supplements,coffee,and sanitary pads and eliminated toothbrushes and fabric softener,bringing our tracked categories total to 27,to align more closely with evolving market dyna

106、mics.3 This report updates the findings from our China Shopper Report 2023,Vol.2,Charting a resilient path:Navigat-ing uncertainty and building momentum,and includes Kantar Worldpanel shopper behavior data for 2023 and the first three months of 2024.This report recaps FMCG performance in 2023,a peri

107、od when consumption regained momentum following the lifting of remaining Covid-19 restrictions.We also explore consumer trends from the first quarter of 2024.Building on the analyses presented in China Shopper Report 2018,Vol.2,and China Shopper Report 2021,Vol.2,we review the performance of insurge

108、nt brands from the Class of 2018 and Class of 2021 and select representative brands to feature in the Class of 2024.The report includes implications for consumer goods companies and retailers.Reflection on 2023In 2023,Chinas FMCG market experienced its first operational year following the lifting of

109、 Covid-19 restrictions in December 2022.Despite a promising start,the year fell short of consumer confidence and consumption expectations.The China FMCG market netted 2.4%annual growth(see Figure 1),following a moderate recovery in the first three quarters of 2023 and a notable surge of 6.5%in Q4.Th

110、e strong recovery in Q4 can be attributed partially to the low baseline in the same period of the previous year(Q4 2022).Volume continued to be the main driver of growth,along with stable average selling prices(ASP)throughout the year(see Figure 2).Q1 recorded a robust volume growth of 2.3%,which th

111、en slowed to 0.4%in Q2.The volume slightly contracted in Q3 by 0.3%,but like the value growth,it surged significantly in Q4 with a 6.6%increase,leading to an overall volume growth of 2.4%for the year.The ASP of FMCG products saw modest changes throughout the year.Q1 experienced a slight decrease of

112、0.8%,which was followed by a positive growth of 1.2%in Q2.The subsequent quarters saw minor fluctuations,with a decrease of-1.0%in Q3 and stabilization at 0.0%in Q4.Overall,the ASP growth rate for the year was neutral,indicating that price changes had a minimal impact on the markets overall performa

113、nce.This pricing trend is positive compared to 2022,which recorded a-2.5%decline in ASP.15Kantar Worldpanel|Bain&Company,Inc.Notes:FMCG=fast-moving consumer goods;ASP=average selling price;Kantar updated the consumer universe in 2022 and 2023,leading to someinconsistencies with previous years dataSo

114、urces:Kantar Worldpanel;Bain analysisUrban FMCG market value growth(percentage,Q1Q4 2023 vs.Q1Q4 2022)Urban FMCG market volume growth(percentage,Q1Q4 2023 vs.Q1Q4 2022)Urban FMCG market ASP growth(percentage,Q1Q4 2023 vs.Q1Q4 2022)ValueVolumeAverage selling priceGrowth rate(percentage,2023 vs.2022)Q

115、1 2023Q2 2023Q3 2023-1.32.32.4%0.0%2.4%0.4-0.3-0.81.2-1.00.06.61.51.66.5Q4 2023Q1 2023Q2 2023Q3 2023Q4 2023Q1 2023Q2 2023Q3 2023Q4 2023Figure 2:Growth was primarily volume-driven,accompanied by a relatively stable ASP trend throughout the yearNotes:FMCG=fast-moving consumer goods;Kantar updated the

116、consumer universe in 2022 and 2023,leading to some inconsistencies with previous years dataSources:Kantar Worldpanel;Bain analysisYear-over-year change in urban shoppers total spending on fast-moving consumer goodsYear-over-yearannual value growth20%100-10Covid-191st break-outQ120195.6%20200.1%20213

117、.1%20221.5%20232.4%Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q2Q3Q1Q4Q1Q2Q3Q4Covid-19restrictionliftedTotal FMCGFood and beveragePersonal and home carePartially due to lowbaseline(strongCovid-19 hit inQ4 2022)Figure 1:The FMCG market witnessed a moderate recovery in the first three quarters and a notable surge of 6.5%i

118、n Q4,resulting in 2.4%annual growth16Kantar Worldpanel|Bain&Company,Inc.Despite a stable ASP trend,Chinese consumers are still willing to“trade up”in certain categories.This is evident in the divergent pricing trends across categories,which are attributable to supply and demand dynamics.On the deman

119、d side,categories that align with rising demands for affordable health and well-being products encourage consumers to trade up.On the supply side,categories offering meaningful innovation without aggressive price competition also contribute to consumer trade-ups.We observed three distinctive cluster

120、s of pricing behavior:Trade-up:These are categories with notable innovations that match rising demand for health and wellness and affordability,such as juice,facial tissue,and toothpaste.For instance,juice categories saw consumer demand for higher quality and rich flavors,such as 100%not-from-concen

121、trate(NFC)juice,blueberry juice,and coconut water.These products are typically affordable,and both incum-bents and insurgents to the juice market are investing in their manufacturing capabilities to offer these and other diverse choices.As a result,juice saw an 8.9%ASP growth,driven by a 40%value gr

122、owth in the premium price band.K-shape:These are categories with innovations that match consumer needs but face intense price competition,leading to a split in consumer behavior.For example,in fabric detergent,consumers have been trading up from powders and bars to liquid formats,especially“3 in 1”l

123、aundry pods that instantly dissolve.However,as raw material costs decreased,some players aggressively promoted lower ASP products,driving some consumers to choose value-for-money options.Fabric detergent experienced a relatively flat ASP growth of 0.9%,with the premium price band growing by 6%,mid-r

124、ange growing by 0%,and the mass price band growing by 10%.Trade-down:These categories lack breakthrough innovation and face intense competition due to an influx of new entrants and are likely to experience ASP drop,evidenced by the pricing behavior in skincare and makeup.Despite a strong volume rebo

125、und,makeup saw an ASP decline of-5.4%,with the mass price band growing by 13%,outpacing other price bands due to intense competition,especially from domestic brands.Geographically,Tier 2 cities have emerged as the primary drivers of growth in the FMCG market.In those cities,value growth was up+5.0%,

126、driven by both volume(+3.7%)and a notable rise in ASP(+1.2%)(see Figure 3).In contrast,Tier 1 cities showed moderate growth(+1.5%),with slight declines in ASP(-1.2%).Lower-tier cities faced more challenges in ASP management,though they maintained some growth in value and volume.This strong,urban-bas

127、ed consumer demand recovery post-Covid-19,particularly in Tier 2 cities,is likely the result of increased consumer spending and broader urbanization trends.The evolving city tier landscape has turned Tier 2 cities(i.e.,cities with a population influx of 8 million or more in the past four years)into

128、destinations for population migration and test fields for FMCG brands.These cities have also become the launchpads for the transformation pilots and initiatives of multinational corporations and the birthplace of insurgent FMCG brands.For example,Changshawhere the population has increased by 1.2 mil

129、lion(+13%,20182023),outgrowing other cities in Hunanis now the home of new consumer brands Sexy Tea(茶颜悦色)and Saturnbird(三顿半).17Kantar Worldpanel|Bain&Company,Inc.-4-2026%2.4%0.41.71.45.01.5Urban FMCG market value by city tier(percentage,2023 vs.2022)Urban FMCG market volume by city tier(percentage,2

130、023 vs.2022)Urban FMCG market ASP by city tier(percentage,2023 vs.2022)ValueVolumeAverage selling price-4-2026%2.4%0.33.11.73.72.8-4-2026%0.0%0.1-1.4-0.31.2-1.2Tier 1Notes:Tier 1 cities:Beijing,Shanghai,Guangzhou,Chengdu;Tier 2 cities:Provincial capital cities excluding Guangzhou and Chengdu,plus Ti

131、anjin,Chongqing,Shenzhen,Dalian,Qingdao;Tier 3 cities:Prefecture-level cities,excluding Dalian and Qingdao;Tier 4 cities:county-level cities;Tier 5 cities:the residence of thecounty government;FMCG=fast-moving consumer goods;ASP=average selling priceSources:Kantar Worldpanel;Bain analysisTier 1Tier

132、2Tier 3Tier 4Tier 5Tier 2Tier 3Tier 4Tier 5Tier 1Tier 2Tier 3Tier 4Tier 5444Growth rate(percentage,2023 vs.2022)Figure 3:T2 cities led growth and exhibited strong rebound in both volume and ASPHome care led value growth,followed by packaged food and beverageWithin the four major sectors,home care le

133、d value growth(+8.3%),followed by packaged food(+3.4%)and beverage(+3.2%),while personal care saw a narrowed decline(-2.1%,compared to-4.8%in 2022)(see Figure 4).Home care delivered healthy value growth of+8.3%,driven by volume growth of+7.4%.Overall,ASP increased by+0.9%,despite a deflation trend i

134、n Q4.Rising demand for personal hygiene and brands efforts to encourage consumer trade-ups to diversified,occasion-based usage supported the sectors growth.Fabric detergent saw value growth of+5.5%,primarily driven by a+4.5%increase in volume due to increased out-of-home activities.Facial tissue exp

135、erienced significant volume growth(+12.5%)and ASP growth(+4.2%),with major brands continuing to educate consumers on diverse,use-specific products,such as baby facial tissue and face towels.Kitchen cleaner grew by+6.6%,with substantial volume growth of+5.8%,due to diversified products,including oil

136、remover and dishwasher detergent.Toilet tissue sales grew by+2.7%,primarily driven by a+1.9%increase in ASP and a+0.8%increase in volume.18Kantar Worldpanel|Bain&Company,Inc.Note:FMCG=fast-moving consumer goodsSources:Kantar Worldpanel;Bain analysis Urban FMCG market value growth(percentage,201923)U

137、rban FMCG market value growth(percentage,201923)Total FMCGFMCG Breakdown2002122202223Packaged foodBeveragePersonal careHome care2002122202223FoodNon-food051015%0510%-5-52.41.53.10.11.0-1.16.33.45.51.13.21.14.2-4.8-2.110.45.25.68.3-4.5Figure 4:Home care led the growth,followed b

138、y packaged food and beverage,while personal care saw narrowed declinePackaged food exhibited robust value growth of+3.4%.Volume slightly dropped by-1.5%,attributed in part to increasing on-premises consumption post-Covid-19.This trend was accompanied by an accelerated premiumization trend,with a not

139、able increase in ASP(+5.0%vs.+3.2%last year).Nutrient supplements experienced substantial value growth(+20.5%)mainly driven by volume(+29.6%),suggesting a strong consumer demand for health-related products post-Covid-19.However,the decline in ASP(-7.0%)indicates competitive pricing or increased prom

140、otions.Infant formula continued to decline(-15.3%)due to demographic changes.Between 2021 and 2023,29.3 million newborns were born in China,nearly a 30%decrease from the 41.9 million born between 2018 and 2020,leading to a significant decrease in infant formula volume(-12.4%).ASP(-3.3%)also decrease

141、d,due to increased competition.Other categories faced overall volume declines due to increased out-of-home consumption.Despite volume declines,many categories saw positive ASP growth,indicating a trend of trading up.This trend is particularly evident in candy and chocolate.Chocolate showed a signifi

142、cant ASP increase(+10.6%)as incumbents and insurgent brands encouraged consumers to choose healthier options including low-sugar SKUs.However,these ASP gains were offset by a volume drop(-8.9%),resulting in overall chocolate value growth of just+0.8%.Candy showed resilience,growing+5.7%in value,due

143、to at-home occasions and innovations including new product lines with organic or other health-focused ingredients.19Kantar Worldpanel|Bain&Company,Inc.Beverage was sluggish in Q1Q3 due to increasing on-premises consumption.However,Q4 witnessed a strong rebound,primarily due to a relatively low base

144、in Q4 2022.Consumers are increasingly moving from high-sugar drinks(e.g.,normal carbonated soft drinks CSD)to near-water drinks (近水化)and low-/no-sugar options,including zero-sugar ready-to-drink(RTD)tea.As a result,the sector was characterized by significant growth in juice(+24.1%),packaged water(+8

145、.9%),and RTD tea(+14.1%),primarily driven by volume increases.Conversely,CSD faced a decline of-7.3%,in both volume(-5.7%)and ASP(-1.7%).Reduced consumer interest in CSDs can be attributed to shifts in perceived healthier beverage options and increased on-premises consumption.Milk displayed moderate

146、 growth in value(+2.0%),mainly driven by volume(+1.7%),due to increased demand during the Covid-19 period.Yogurt continued to decline in both value(-8.5%)and volume(-8.0%),reflecting competition from milk,which Chinese consumers perceive as offering better nutrition,and from on-premises consumption

147、options,such as milk tea,which challenge yogurts consumption occa-sions.Beer continued to premiumize,with most leading brands focusing on premium product lines,leading to value growth(+4.6%)driven primarily by higher ASP(+4.2%).Personal cares decline narrowed,recording a-2.1%value growth compared to

148、-4.8%last year.This was driven by a+1.3%increase in volume,despite ASP deflation of-3.4%throughout the year.Increased out-of-home activities led to notable growth in certain categories driven by volume,including makeup(value+6.4%,volume+12.5%)and shampoo(value+3.2%,volume+4.1%).Some categories such

149、as skincare(value-3.1%,ASP-3.0%)and personal wash(value-2.2%,ASP-1.9%)declined due to declining ASP,despite stable volume demand.Although most categories experienced deflation due to intense insurgent brand competition,some categories saw premiumization.Both toothpaste and hair conditioner experienc

150、ed+3.8%ASP growth,leading to value growth of+4.4%and+4.6%,respectively.Major brands in these categories are innovating and successfully getting consumers to trade up to efficacy-driven products,such as whitening and gum protection toothpastes.Sanitary pads,newly added to our tracked categories,poste

151、d a-2.3%decline,mainly driven by a-4.0%decline in volume as consumers shifted toward competing products such as tampons and menstrual cups.Diapers displayed a similar trend to infant formula,declining by-16.2%due to a decrease in the number of babies being born.The two-speed growth phenomenon we fir

152、st identified in China Shopper Report 2016,Vol.1,Dealing with two-speed China,was still evident(see Figure 5).Consistent with our findings in previous volumes,high-speed growth was largely concentrated in categories benefiting from increased awareness of health,hygiene,and emotional needs,while many

153、 nonessential or replaceable categories experienced negative growth.High-speed categories experienced both volume and ASP growth,while most low-speed categories primarily saw volume decline.20Kantar Worldpanel|Bain&Company,Inc.Percentage point change in value CAGR(percentage,2023 vs.2022)High speedL

154、ow speedNotes:Two-speed growth is calculated based on the categories applicable to all households;baby categories(e.g.,infant formula and diapers)are not includedSources:Kantar Worldpanel;Bain analysisCategory grew 3 consecutive yearsCategory declined 3 consecutive yearsForeignspiritsFunction drinks

155、Nutrient supplementsAdult milkpowderDisinfectantsInstantnoodlesMouthwashPlastic wrapSausageSoybeanmilkJuiceAir freshenersFacial tissueNutrientsolid drinksChinese spirits/sakiCarbonated soft drinksCleaning toolsIce creamYogurtCheese40%301020-100-20-30292423222-5-5-6-7-7-7-8-8-13-17Figure 5

156、:Two-speed growth continued in 2023.Fastest-growing categories are mainly driven by health and emotional needsHigh-speed categories:Within the high-speed categories,there was an increasing demand for health-related and hygiene products,such as functional drinks(+23%)and air fresheners(+22%),and a wi

157、llingness to pay a premium for entertainment and emotion-driven products such as foreign spirits(+29%).Juice(CAGR+24%from 20222023)enjoyed positive value growth for three consecutive years,driven by healthier options,such as 100%NFC and fresh juice.Low-speed categories:On the other hand,low-speed ca

158、tegories are mainly concentrated in packaged food and beverage sectors,such as cheese(-17%)and yogurt(-8%).These categories are negatively impacted by changing consumption habits,with a marked decrease in at-home consumption and an increase in out-of-home dining.Some categories,such as soybean milk

159、and yogurt,demonstrated a consistent low-speed trend.Chinese consumers taste for soybean milk and yogurt has not been fully cultivated,leading to a perception that both are less nutritious than milk when opting for nutrition drinks,and less tasty compared to CSD or milk tea,if catering to taste.As a

160、 result,these categories are easily substituted by others.21Kantar Worldpanel|Bain&Company,Inc.Notes:FMCG=fast-moving consumer goods;Kantar updated the consumer universe in 2022 and 2023,leading to some inconsistencies with previous years data;In Kantar Worldpanel,online-to-offline(O2O)sales value i

161、s attributed to the channel of actual transaction of goods;gift channel value is allocated into each channelby its respective weightSources:Kantar Worldpanel;Bain analysisOtherCAGR(202122)1.5%5%CAGR(201921)1.6%-6%Super/mini1%-2%4%2.4%5%E-commerce4%24%4%GroceryConvenience storeSpecialist storeHyperma

162、rket8%5%-2%-4%-12%0%-5%-4%6%7%4%-6%CAGR(202223)100%8060402002020202%23%4%3%5%19%32%12%34%4%15%29%3%3%12%33%3%3%4%16%29%202312%34%4%14%29%3%3%12%30%3%5%17%30%3%Value share in urban FMCG retail market by channelFigure 6:E-commerce growth showed a slight uptick,while offline channels regaine

163、d momentumConsumers are increasingly willing to trade up in categories related to health and personal hygiene.For instance,the juice sector saw a 9%increase in ASP in 2023,driven by the popularity of healthier options,such as 100%NFC juice;enhanced taste profiles,such as juice soda;and diversified f

164、lavors,including blueberry prunes.Similarly,the chocolate category experienced an 11%rise in ASP as both incumbents and insurgents invest in imported ingredients(e.g.,pure cacao butter),healthier options(e.g.,black chocolate),hand-made concepts,and occasion-driven gift sets in an attempt to get cons

165、umers to trade up to higher-priced products.These trends highlight a growing consumer pref-erence for premium products in these sectors.Offline consumption regained momentum,yet performance diverged across formatsConsistent with our findings in China Shopper Report 2023,Vol.2,gradual shifts toward o

166、nline channels continued,with a slight uptick in 2023(see Figure 6).The value CAGR was 4%in 2023,rel-ative to 2%in 2022 and 23%from 2019 to 2021.The relative stagnation of e-commerce was attributed to recovering offline consumption.In contrast,most offline formats regained traction and achieved abov

167、e-average growth.Though hypermarket is the only offline channel that saw decline,club ware-houses within this sector enjoyed rapid growth due to their unique value propositions.22Kantar Worldpanel|Bain&Company,Inc.Offline channels:Due to recovering offline consumption post-Covid-19,certain offline f

168、ormats regained momentum,especially in near-home stores.Small-format stores,including grocery(+6%)and convenience stores(+7%),continued to lead this growth.Large key accounts have closed hypermarkets while opening super/mini stores,leading to growing super/mini(+4%)and declining hypermarket(-6%)sect

169、ors.Within hypermarkets,club warehouses saw substantial growth of 42%,growing their share of the total hypermarket sector from 5.4%in 2022 to 8.5%in 2023.This growth is led by the continuous expansion of leading players Sams Club and Metro.The growth of specialist stores(+4%)was driven by snack disc

170、ount stores and other discount-focused players.O2O(Online-to-Offline):We identified in China Shopper Report 2023,Vol.1,that O2O was booming in 2022.However,O2O growth slowed to approximately+2.8%in 2023,mainly due to slowdowns in the packaged food and beverage categories(1%in 2023 compared to 21%in

171、2022).This was driven by changes in customer behavior,such as increased offline catering sales(+20%in 2023)and a shift toward offline food markets.However,this does not mean that O2O purchasing behavior is disap-pearing,as evidenced by accelerating growth in personal care and home care(+7%,compared

172、to+5%in 2022).The O2O channel trend is also shaped by major platforms operational strategies.The largest commu-nity group-buying platforms,Duoduo Maicai(多多买菜)and Meituan Youxuan(美团优选),have slowed their expansion plans and shifted to a profitable growth strategy.Duoduo,for instance,concentrated its o

173、perations on 78 self-operation units to minimize operational loss and promote profitability.Meanwhile,these two players continue to expand the category and increase purchase frequency.The inclusion of new categories,such as cosmetics,personal care,home care,and clothing,has driven a 20%increase in p

174、urchase frequency.As a result,in 2023,these two platforms demon-strated stable penetration,a notable volume growth,and a decline in ASP due to category mix change.Within online channels,interest e-commerce and discount e-commerce platforms continued to gain share from traditional e-commerce.Platform

175、s such as Douyin,Kuaishou,and Pinduoduo collectively saw their market share increase to 34%,a 12-point increase from 2022.Notably,Douyin maintained a high growth of+65%,followed by Kuaishou(+22%).Pinduoduo delivered+11%growth,driven by its value-for-money propositions.Average online penetration of o

176、ur 27 tracked categories grew from 25%to 38%between 2019 and 2021.However,that growth has slowed since 2021.The analysis of online penetration by category reveals distinct clusters(see Figure 7):23Kantar Worldpanel|Bain&Company,Inc.Note:Online relative penetration is defined as the total number of o

177、nline purchasers divided by the number of purchasers of the categorySource:Kantar Worldpanel;Bain analysisOnline relative penetration change(percentage,2023 vs.2022)Online relative penetration rate(percentage,2023)5%341-12-200%55203550702545556580Nutrient supplementsPackaged waterJuiceRea

178、dy-to-drink teaKitchen cleanerBeerCandyYogurtMilkPersonal washCoffeeToilet tissueToothpaste2022 averagepenetration rate:38.3%2023 averagepenetration rate:38.9%Cluster 1:Low but growingonline penetrationCluster 2:Low but decliningonline penetrationCluster 3:Well-developed with highonline penetrationS

179、hampooSkincareMakeupDiaperFacial tissueInfant formulaFabric detergentBiscuitsInstant noodlesChocolateChewing gumCarbonated soft drinksPackaged food and beveragePersonal care and home careSanitary padsHair conditionerFigure 7:Online penetration has been stable since 2021,with a slight increase in per

180、sonal care and home care categoriesCluster 1:Well-developed with high online penetrationThis cluster mainly consists of personal care and home care categories.These categories have higher online penetrationabove 40%with some(e.g.,makeup,skincare)reaching approximately 65%.This growth is driven by co

181、ntinuous online investments from top players and the faster growth of insurgent brands in online channels.Other categories,such as hair conditioner,toothpaste,and shampoo,have lower online penetration rates of 40%50%,due to larger distributor networks of incumbent players and the heavier nature of t

182、hese goods.We expect online penetration of these categories to grow at a slight pace of 02 points yearly.Cluster 2:Low but declining online penetrationThis cluster primarily consists of packaged food and beverage categories.Food and beverage catego-ries have online penetration rates between 10%and 4

183、0%.These categories are often associated with on-trade purchases and higher impulse consumption.As offline consumption recovered,online penetration saw a slight decrease of-1%to 0%in 2023.Cluster 3:Low but growing online penetrationNotably,packaged water and juice saw online penetration increases of

184、 3.1%and 2.2%,respectively,attributed to decreasing logistics costs for heavy goods.24Kantar Worldpanel|Bain&Company,Inc.Major categories showed minor changes in online penetration,typically ranging from-1%to 1%,consistent with historical trends over the past three years.The online FMCG market in Ch

185、ina has demonstrated moderate growth in online penetration rates,with particular strength in non-food and beverage categories such as personal care and home care.The market has reached a mature stage for these categories,while certain packaged food and beverage categories continue to grow in online

186、adoption.This continued trend in online penetration across categories underscores consumers preference for convenience and variety.Large brands and foreign brands lost steamBrand competition remains dynamic,with new brands continuously challenging incumbents and gaining market share.While the Top 5

187、brands regained share in a few categories during the turbulence of 2022,mid-and long-tail brands regained share in 2023,in patterns more consistent with 2019 to 2021 trends.Large brands vs.small brandsIn China Shopper Report 2023,Vol.1,we observed that the Top 5 brands gained share in 16 out of the

188、26 tracked categories in 2022.We attributed this change to the fact that larger brands tend to be more trusted by consumers and have more resilient supply chains,distribution networks,and financial strength during turbulent times.In contrast,in 2023,smaller brands regained momentum,while the Top 5 b

189、rands lost share in 16 out of 27 tracked categories.Following the disruptions of 2022,mid-to-small brands are actively reinvesting and exploring new growth opportunities.Conversely,top brands have shown hesitation in future investments despite their resilient supply chains and financial stability du

190、ring the Covid-19 years.Notably,the Top 5 players have increased their market share in categories such as infant formula,diapers,and chewing gum.The shrinking nature of these markets benefits large brands with strong word-of-mouth reputations and fewer new entrants.In categories with constant innova

191、tion,mid-to-small brands have gained market share with novel product offerings.In CSD,local brands like Dayao(大窑)are emerging and gaining share while more established brands are losing momentum.Similarly,local electric toothbrush brands are taking share from incumbents,while in the juice market,bran

192、ds offering flavored and healthy options are out-performing larger brands.25Kantar Worldpanel|Bain&Company,Inc.Foreign brands vs.domestic brandsIn 2023,domestic brands grabbed 1 point of market share from foreign brands,when considering aggregate outcomes across all 27 tracked categories(see Figure

193、8).This result is in line with our observations over the past 12 years.Foreign brands have lost market share in most categories due to internal and external factors.Internally,some foreign players have strategically slowed investments or exited the market.Externally,foreign brands have faced increas

194、ed competition from insurgent brands offering innovative products and competitive pricing.For instance,in diapers,domestic brands such as Babycare and Yiying(宜婴)are gaining market share due to their strong product offerings and effective channel strategies.In contrast,foreign brands,particularly Jap

195、anese and Korean brands like Kao(花王)and Goon(大王),are losing share due to channel stagnation and reduced investment in China.Meanwhile,local players,including Feihe(飞鹤)and Yili(伊利),are growing their market share with customized products,competitive pricing,and extensive offline distribution networks(

196、e.g.,mother and baby shops),even in shrinking markets like infant formula.Domestic insurgent brands also pose significant challenges to foreign brands.These local competitors often leverage their deep understanding of the local market,agility in responding to consumer demand,and comparative cost adv

197、antages to capture market share.For example,Baixiang(白象)has achieved substantial growth in the instant noodle market over the past few years.It has expanded its offline presence in eastern China and captured online growth opportunities,especially on Tmall and Douyin.This is backed by consumer-centri

198、c innovation,as Baixiang continues to reimagine its product lines and introduce new flavors,such as its Tang Hao He(汤好喝)series.Similarly in tooth-paste,domestic brands such as Oralshark(口腔鲨鱼)are growing significantly through platforms like Douyin.Nevertheless,there are still categories where foreign

199、 brands have gained share on an aggregated basis.Examples include beer and CSD,largely due to foreign brands continuous branding investments and strong offline distribution networks.26Kantar Worldpanel|Bain&Company,Inc.Share gain/loss of domestic brands(percentage,2023 vs.2022)Note:1)Foreign brands

200、scanned based on Kantars“top performing brands”in all 27 categories;brands categorized as“foreign”and“Chinese”according to the largest shareholder;in case of M&A,thebrand changes grouping three years after the deal is completed;2)Kantar Worldpanel excluded cigarettes from total FMCG data in 2017 and

201、 updated the consumer universe in 2022;skincare andmakeup covers ages 1564;infant formula and baby diapers covers Tier 1 to Tier 5;all changes may lead to some inconsistencies with previous years data;all average selling prices are calculated basedon RMB per Kg/L except diapers and toothbrushes per

202、piece,skin care,and makeup per pack,and toilet and facial tissue per 100 sheets/rolls Source:Kantar Worldpanel;Bain analysisDomestic brands gaining shareDomesticbrandslosing shareClose competition between domestic and foreign-2-1123%0Ready-to-drink teaCarbonated soft drinksFacial tissueChewing gumSa

203、nitary padsNutrient supplementsPersonal washInfant formulaToilet tissueKitchen cleanerHair conditionerDiapersJuiceCandy2.1%2.0%1.6%1.4%1.4%0.9%0.9%0.8%0.7%0.5%0.5%0.5%0.5%0.4%0.4%0.3%0.3%0.3%0.0%0.0%0.0%-0.2%-0.5%-0.8%-1.2%-1.6%1.5%BeerInstant noodlesYogurtBiscuitMilkShampooSkincareMakeupPackaged wa

204、terChocolateFabric detergentCoffeeToothpasteFigure 8:In most categories,domestic brands continue to gain share or have close competition with foreign brands27Kantar Worldpanel|Bain&Company,Inc.Gaining perspective from the first quarter of 2024In Q1 2024,the Chinese economy maintained its recovery tr

205、ajectory,displaying encouraging signs of growth.GDP expanded by 5.3%,and retail sales witnessed a 4.9%increase.Domestic consumer traffic rebounded to pre-pandemic levels,reaching a new high in March.Despite these positive indicators,challenges persist.The Consumer Confidence Index has remained low s

206、ince March 2023,indicating a cautious outlook among consumers.In the FMCG sector,there was a slow but noticeable recovery in Q1 2024,with a growth rate of+2.0%.This growth was primarily driven by increased volume(+3.5%),although a reemergence of price deflation(-1.5%)posed a challenge to brands(see

207、Figure 9).Figure 9:FMCG saw moderate recovery,delivering 2.0%growth in Q1 2024,higher than 1.5%in Q1 2023Notes:FMCG=fast-moving consumer goods;Kantar updated the consumer universe in 2022 and 2023,leading to some inconsistencies with previous years dataSources:Kantar Worldpanel;Bain analysis Year-ov

208、er-year change in urban shoppers total spending on fast-moving consumer goodsYear-over-yearvalue growth20%100-10Q120195.6%20200.1%20213.1%20232.4%Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q2Q3Q1Q4Q1Q2Q3Q1Q420221.5%Q1 20242.0%Total FMCGFood and beveragePersonal and home careSince 2022,food andbeverage growth hassurpasse

209、d personaland home care28Kantar Worldpanel|Bain&Company,Inc.Packaged food and beverage continue to lead the growth in Q1 2024;home care largely decelerated;personal care continues to declineAmong the four main sectors,packaged food and beverage witnessed stable growth.Packaged food continued its gro

210、wth trend(+2.7%),driven by volume growth(+2.9%),which was partially offset by a small drop in ASP(-0.2%).Beverage showed faster growth(+4.3%),driven by both volume(+2.4%)and ASP(+1.8%).In contrast,personal care declined(-2.8%),while home cares growth decelerated to+2.2%,despite robust volume demand

211、in both sectors(personal care,+5.1%;home care,+8.5%).This lackluster per-formance can be attributed to severe trading-down issues,with ASP declining in personal care and home care by-7.5%and-5.8%,respectively(see Figure 10).Figure 10:Food and beverage continue to lead growth in Q1 2024,home care lar

212、gely decelerated;growth slowdown;personal care continues to decline3.82.92.04.32.71.3-0.1-2.512.64.3Note:FMCG=fast-moving consumer goodsSources:Kantar Worldpanel;Bain analysis Total FMCGFMCG BreakdownQ12023Q22023Q32023Q42023Q12024Packaged foodBeveragePersonal careHome careQ1 2023Q2 2023Q3 2023Q4 202

213、3Q1 2024Urban FMCG market value growth(percentage,Q1 2023Q1 2024 vs.Q1 2022Q1 2023)Urban FMCG market value growth(percentage,Q1 2023Q1 2024 vs.Q1 2022Q1 2023)051015%051015%-5-56.52.0-1.31.61.5-4.8-0.5-6.11.6-2.811.27.84.79.32.229Kantar Worldpanel|Bain&Company,Inc.Packaged food:This sector grew by+2.

214、7%in value,driven by a+2.9%increase in volume.However,ASP slightly dropped by-0.2%in Q1 2024contrasting the premiumization evident throughout 2023.Major categories within packaged food saw volume growth due to the recovery of Chinese New Year gathering and gifting in Q1 2024,evidenced by strong soci

215、al mobility during the holiday.The sector was negatively impacted by recovering offline catering,which delivered a+11%growth in sales in Q1 2024 compared to Q1 2023.The reversed pricing trend in this sector can be attributed to some price elasticity.Consumers opt for diverse price bands based on occ

216、asion.Taking chocolate as an example,in 2023,we observed a trend of consumers trading up for premium brands such as Godiva(ASP 420),particularly for gifting occasions such as birthdays and Valentines Day.In Q1 2024,this trade-up trend persisted.The recovery of celebratory occasions such as Chinese N

217、ew Year led to a significant increase in gifting opportunities,but brands promotion of bulk products resulted in a lower ASP.Brands like Snickers(士力架,ASP 90)gained market share.Overall,the price of chocolate remained stable compared to Q1 2023.Beverage:This sectors value grew by 4.3%,driven by incre

218、ases in both volume(2.4%)and ASP(1.8%).The near-water trend continued.Juice(+20.8%),packaged water(+5.6%),and RTD tea(+8.6%)maintained high growth,consistent with the trend observed in 2023.Milk and coffee experienced a reversal in their growth trends,declining by-2.9%and-5.9%,respectively.This shif

219、t can be attributed to increased out-of-home activities and consumption compared to Q1 of the previous year when most people stayed at home due to Covid-19.Beer experienced growth of 8.4%,driven by more at-home gatherings.Yogurt continued to decline by 8.4%.Outside of our tracked categories,wine and

220、 spirits also drove up the sectors ASP,largely as a result of Chinese New Year gifting.Personal care:This sector saw a robust volume rebound(+5.1%),countered by a significant drop in ASP(-7.5%),resulting in an overall value decline of-2.8%.Most categories experienced strong volume growth,driven by i

221、ncreased social activities.For instance,makeup(volume+13.8%)and toothpaste(volume+6.4%)witnessed notable increases.However,consumers remained cost-conscious,leading to a decline in ASP across most personal care categories,especially in skincare(ASP-8.8%),makeup(ASP-13.2%),and hair conditioner(ASP-6.

222、8%).This trend can be attributed to intensified competi-tion between domestic and foreign brands,as well as channel shifts.In makeup,for instance,domestic brands known for offering value-for-money alternatives increased their share from 32%in 2023 to 45%in online channels in Q1 2024.Meanwhile,foreig

223、n brands resorted to heavy promotions to defend their market share.For example,Este Lauders flagship product,Advanced Night Repair Eye Cream,experienced a-15%ASP decrease during this years Womens Day campaign compared to 2023.This pricing dynamic can also be partially attributed to channel shifts.Do

224、uyin,known for gener-ally offering lower ASP products compared to traditional e-commerce platforms,surpassed Taobao/Tmall in the makeup and fragrance sector in Q1 2024 in terms of gross merchandise volume(GMV).30Kantar Worldpanel|Bain&Company,Inc.Notes:FMCG=fast-moving consumer goods;ASP=average sel

225、ling priceSources:National Bureau of Statistics;Kantar Worldpanel;Bain analysis FMCG ASP growth by quarter(percentage,Q1 2021Q1 2024)5%3-3-520224Q1Q2Q3Q4Q1Q2Q3Q4Q1Q1Q2Q3Q43.40.5-3.2-3.6-1.3-3.0-2.1-2.8-0.8-1.51.2-1.00.0-0.04%-2.5%-0.8%0Annual growth rateFigure 11:FMCG ASP deflationary tre

226、nd emerged again in Q1 2024,worse than the stable pricing trend in 2023Home care:Volume in this sector experienced significant growth of+8.5%,while the ASP dropped by-5.8%,resulting in a value growth of+2.2%.Much like our observations in the personal care sector,most home care categories witnessed s

227、trong volume demand due to enhanced customer awareness regarding diverse use occasions,increased social activities,and a heightened focus on hygiene and health post-Covid-19.Fabric detergent experienced+5.7%value growth driven by volume(+8.9%),primarily attributed to customers shifting from powder a

228、nd bar products to premium options containing natural ingredients and fragrances.However,the ASP for these products has declined by-3%,driven by the availability of more affordable,larger-package options and the success of domestic brands that align with current trends.Toilet tissue saw a volume dec

229、rease of-3.8%as customers had already stocked up during the previous Double 11 shopping festival.The ASP for toilet tissue also dropped by-5.4%due to a decline in the price of paper material and customers transition to cheaper alternatives,such as hanging tissue.FMCG ASP deflationary trend reemerged

230、 in Q1 2024,a downturn from 2023s stable pricing trendDespite a slight rise of 0.1%in Q1 2024 consumer price index,inflation in China has largely abated,maintaining a trend observed since Q2 2023.In contrast,FMCG ASP saw a decrease of-1.5%,a decline from the stable pricing trends of 2023(see Figure

231、11).Among the 27 tracked categories,18 categories experienced ASP deflation in Q1 2024.This trend was especially evident in personal care and home care.In our data,three clear pricing trend clusters emerged(see Figure 12):31Kantar Worldpanel|Bain&Company,Inc.Note:ASP=average selling priceSources:Kan

232、tar Worldpanel;Bain analysis ASP year-over-year growth(percentage,Q1 2024 vs.Q1 2023)ASP year-over-year growth(%,2023 vs.2022)-1515%5-5-15515%-5Q1 2024CPI:0.1%2023 CPI:0.2%ASP decline reversedContinuous ASP declineContinuous premiumizationASP growth reversedPackaged waterJuiceReady-to-drink teaKitch

233、en cleanerBeerCandyYogurtMilkCoffeeToilet tissueToothpasteShampooSkincareMakeupDiaperFacial tissueInfant formulaFabric detergentBiscuitsInstant noodlesChocolateChewing gumCarbonated soft drinksNutrient supplementsSanitary padsHair conditionerPersonal washCluster 1:Continuous premiumizationCluster 2:

234、Continuous deflationCluster 3:Premiumization reversed to deflationPackaged foodPersonal careBeverageHome careFigure 12:18 out of 27 tracking categories experienced an ASP drop in Q1 2024Cluster 1:Continuous premiumizationThis cluster primarily includes packaged food and beverage categories,such as c

235、offee(Q1 2024+6.4%,2023+2.0%),juice(Q1 2024+3.2%,2023+8.9%),candy(Q1 2024+1.9%,2023+6.2%),and biscuits(Q1 2024+1.9%,2023+3.0%).These categories benefit from consumers increasing preference for health-conscious products.For example,in juice,consumers continue to trade up to 100%NFC and fresh juice op

236、tions.Additionally,these brands also led premiumization,with better quality and innovative products,such as craft beer and coffee capsules.32Kantar Worldpanel|Bain&Company,Inc.Cluster 2:Continuous deflationMost personal care categories fall into this bracket.In a highly competitive market,insurgent

237、brands continue to challenge incumbents by offering lower-priced products,while large incumbents reduce prices during campaigns.This trend is particularly evident in skincare(Q1 2024-8.8%,2023-3.0%)and makeup(Q1 2024-13.2%,2023-5.4%).In skincare,domestic brands such as KANS(韩束),Proya(珀莱雅),and Grain

238、Rain(谷雨)are gaining market share from other brands by capturing efficacytrends and offering products priced below 300 RMB.In response to these lower-priced products,larger brands lower prices for their bundled products during sales events like the Womens Day cam-paign.The effort to cut prices can be

239、 partially attributed to the price decrease in raw materials,suchas urea(-20%)and silicone(-10%),which created favorable conditions for price competition.Someproducts saw brands promoting larger pack sizes,which also led to ASP declines in categories suchas packaged water(Q1 2024-3.4%,2023-0.8%).Dia

240、pers(Q1 2024-7.0%,2023-4.7%)and infant formula(Q1 2024-2.6%,2023-3.3%)are also in this cluster due to increased competition resulting fromdemographic changes.Cluster 3:Premiumization reversed to deflationThis cluster consists mainly of home care categories,including fabric detergent(Q1 2024-3.0%,202

241、3+0.9%),kitchen cleaner(Q1 2024-1.0%,2023+0.8%),and facial tissue(Q1 2024-0.6%,2023+4.2%).Thedeflation evident in this cluster does not necessarily indicate a consumer preference for cheaperproducts.Consumers are still trading up for better products in this sector,such as liquid detergentsover bar o

242、r powder formats.This deflation is primarily supply driven,as brands have proactivelypromoted larger pack sizes and lowered prices due to lower raw material costs.Overall channel trend is in line with 2023,though performance in offline channels continues to divergeChannel dynamics in the market have

243、 continued to evolve and remain dynamic,consistent with our overall findings in 2023(see Figure 13).33Kantar Worldpanel|Bain&Company,Inc.Notes:FMCG=fast-moving consumer goods;Kantar updated the consumer universe in 2022 and 2023,leading to some inconsistencies with previous years data;in Kantar Worl

244、dpanel,online-to-offline(O2O)sales value is attributed to the channel of actual transaction of goods;gift channel value is allocated into each channel by its respective weightSources:Kantar Worldpanel;Bain analysisOffline channels:In Q1 2024,offline channels experienced a moderate growth of+2.4%over

245、all.Grocery and super/mini formats emerged as the standout performers,achieving growth rates of+11%and+7%,respectively.These channels capitalized on increasing frequency and penetration,benefiting from the recovery of offline traffic.Retailers within these formats continued to refine their store off

246、erings,providing differentiated value propositions such as discounts,enhanced services,and private-label products.Some regional key accounts and local key accounts,such as Jiajiayue(家家悦)and Hongqi Chain(红旗连锁),emerged as top growth contributors in the super/mini channel.In contrast,the hypermarket se

247、ctor continued to shrink,with a CAGR of-6%.This decline can be attributed to both a decrease in volume and purchase frequency,with around a-5%decrease observed in each.Major retailers such as Carrefour closed stores,further contributing to this trend.However,the club warehouse component of the hyper

248、market sector performed well,experiencing a growth of+22%and capturing a 9%share within the overall hypermarket segment.Specialist stores faced a decline of-4%in Q1 2024,in contrast to the+4%growth observed in 2023.Despite a+15%increase in overall volume,the ASP declined by-17%due to intense competi

249、tion from discount stores,which saw increased penetration,reaching 5.9%in Q1 2024.For example,snack discount retailers LingshiHen Mang(零食很忙)and Zhaoyiming(赵一鸣零食)merged and expanded,collectively operating 7,500 stores.Other(Q1 2023Q1 2024)CAGR(202223)2.4%5%CAGR(202122)1.5%5%CAGR(202021)3.1%1%Super/mi

250、ni4%1%0%7%2.0%-3%E-commerce4%4%17%2%GroceryConvenience storeSpecialist storeHypermarket6%7%4%-6%8%5%-2%-4%-10%1%0%-2%11%0%-4%-6%CAGR100%8060402002020202220222023Q1 2023Q1 2024Value share in urban FMCG retail market by channel12%34%4%15%29%3%3%12%33%3%3%4%16%29%32%12%32%4%3%14%13%32%5%15%3%3%30%12%34

251、%4%14%29%3%3%12%30%3%5%17%30%3%3%Figure 13:E-commerce continues to grow at a moderate rate,while offline channels saw further divergence across formats34Kantar Worldpanel|Bain&Company,Inc.O2O(Online-to-Offline):Q1 2024 O2O saw a value decline of-8%compared to Q1 2023 due to the full recovery of offl

252、ine activities.However,there is still growth of+5.5%compared to Q1 2022,indicating that consumers have developed O2O shopping habits.As discussed in the 2023 full-year trend,con-sumers continue to use O2O in non-food and beverage categories.Community group buying has decreased by-15%in Q1 2024,mainl

253、y due to key players Duoduo Maicai(多多买菜)and Meituan Youx-uan(美团优选)focusing on profitability improvement instead of GMV since last year.Horizontal marketplaces saw a drop of-9%,as these channels were negatively impacted by recovering offline consumption.Offline retailers demonstrated a slight growth

254、of+1%,driven by offline key accounts efforts to direct offline traffic to online.Online channels:The e-commerce landscape in Chinas FMCG market is evolving,with moderate overall growth of+2%in Q1 2024 and significant shifts in platform dynamics(see Figure 14).Notably,Douyin surpassed JD to become th

255、e second-largest e-commerce platform,delivering substantial growth of+46%and achieving an 18%market share in Q1 2024,up 6 points from Q1 2023.Brands are increasingly prioritizing Douyin for their operations and investments,thereby positioning Douyin to capture market share from traditional e-commerc

256、e platforms.The platforms unique combination of short videos and live streaming has proven effective in driving impulse purchases,particularly in categories with a short customer journey and less emphasis on brand loyalty.Pinduoduos success(+6%growth and a 15%market share,up from 14%in Q1 2023)highl

257、ights the continued importance of value-for-money propositions in attracting and retaining consumers.JD experienced+5%growth,leveraging its low-price strategy to reverse its-1%decline from 2023.Taobao/Tmall remains Chinas largest e-commerce platform,but they continued to decline at-7%,with their mar

258、ket share landing at 32%(3 points lower than Q1 2023).35Kantar Worldpanel|Bain&Company,Inc.Notes:FMCG=fast-moving consumer goods;JD=Jingdong;PDD=Pinduoduo;Kantar updated the consumer universe in 2022 and 2023,leading to someinconsistencies with previous years data;Platform sales value data of Douyin

259、 and Kuaishou is tracked since 2021;Others include WeChat,Red,VIP.com,Suning,Yunji,Kaola,and other long-tail platforms;Kuaishou and Douyin include sales value of transactions redirected and completed on third-party platformsSources:Kantar Worldpanel;Bain analysis China urban FMCG e-commerce market s

260、hare by platform sales value(percentage)CAGR202223Q1 2023Q1 20244%22%11%-1%65%-4%CAGR2021222%63%-4%5%181%-9%CAGR20202114%n.a.90%16%n.a.8%2%-11%-15%-4%-9%-10%6%5%46%-7%CAGR100%8060402002020202220222023Q1 2023Q1 2024Kuaishou(2%)PDD(10%)Douyin(3%)Others(25%)JD(16%)Taobao/Tmall(44%)Kuaishou(3%)PDD(9%)Do

261、uyin(8%)Others(24%)JD(16%)Taobao/Tmall(39%)Kuaishou(5%)PDD(14%)Douyin(15%)Others(16%)JD(15%)Taobao/Tmall(36%)Kuaishou(4%)PDD(14%)Douyin(12%)Others(17%)JD(16%)Taobao/Tmall(35%)Kuaishou(4%)PDD(15%)Douyin(18%)Others(15%)JD(17%)Taobao/Tmall(32%)PDD(6%)Others(32%)JD(16%)Taobao/Tmall(47%)Figure 14:Douyin

262、surpassed JD as the second largest FMCG e-commerce platform for the first time36Kantar Worldpanel|Bain&Company,Inc.Insurgents:Competitive strengths that navigated through cyclesThe Chinese FMCG market has recently experienced an influx of numerous insurgent brands.These insurgent brands rapidly grab

263、bed market share from incumbents by leveraging venture capital and investing in online traffic.However,in recent years,as traffic has peaked and costs have risen,their“cash-burning”operational model has become unsustainable.Investors have become more cautious and rational,forcing brands to optimize

264、efficiency.When the facade of traffic fades away,a brands true strength or false prosperity becomes evident.In our previous reports,China Shopper Report 2018,Vol.2,Local Insurgents Shake Up Chinas“Two-Speed”Market,and China Shopper Report 2021,Vol.2,A Sudden Slowdown in 2021s FMCG Recovery and the M

265、ixed Fate of Chinas Insurgent Brands,we selected representative insurgent brands with“disruptor potential.”We have been tracking these brands performance over the years to synthesize key factors behind their degree of success to date.Class of 2018 brand performance reflectionIn 2018,we selected 46 r

266、epresentative insurgent brands based on brand characteristics,scale,and growth performance.In 2021,we reviewed their performance from 2018 to 2020 and categorized them into three groups:“Stand-out”(17 brands,40%),“Hold-out”(9 brands,20%),and“Fade-out”(20 brands,40%).Revisiting their performance in 2

267、024,we found a similar category distribution:Stand-out(18 brands,40%),Hold-out(9 brands,20%),and Fade-out(19 brands,40%).By analyzing these brands development trajectories,we identified four key success factors driving insurgent brand growth in 2021:brand power,product ecosystem,channel capability,a

268、nd organiza-tional agility(see Figure 15).When revisiting these brands performance from 2020 to 2023,we found that these success factors still held.37Kantar Worldpanel|Bain&Company,Inc.Stand-out:The strong get strongerMany Stand-out brands in 2021 continue to excel.For example,YankershopFood(盐津铺子)in

269、novated its products to closely follow trends,launching healthy meal replacement snacks in vegetarian,tripe,and quail egg flavor varieties.Meanwhile,it deeply integrated with snack chain stores such as Lingshi Hen Mang(零食很忙)and Hao Xiang Lai(好想来)to provide sufficient profit space for its channels,en

270、abling high-speed growth of 34%CAGR from 2021 to 2023.Additionally,some brands previously categorized as Hold-out or Fade-out in 2021 achieved break-throughs and became Stand-outs in 2024 by investing in key areas.For instance,Ganten(百岁山)regained growth and become one of the top players in the packa

271、ged water market through brand revitalization.By rebranding itself as“Noble in Water,”Ganten successfully attracted consumers at a price point between 3-5 RMB/L,40%to 55%higher than mass brands.The company also went deeper into offline channels,leveraging a well-developed distributor network along w

272、ith various offline marketing initiatives.These moves further consolidated Gantens channel dominance and grew the companys penetration and frequency.Consequently,Ganten achieved a sales CAGR of 34%between 2021 and 2023.DefinitionBrandpowerProductecosystemOrganizationcapabilityChannelcapabilityDoes b

273、rand have distinctive assets andsuccessfully win the share of mind oftarget consumers?Does the brand have sustainable innovationsto drive incremental penetration?Does the brand adopt iterative(A/B test)andAgile approaches in its business developmentand model transformation？Does the brand have qualit

274、y presence anddevelop omnichannel coverage empoweredby digital tools?Awareness:Advocacy:Hero SKU:Innovation:Brand top-of-mind awareness percentage Volume of brand buzz Brand NPS Brand word association Number of sizeable hero SKUs NPD sales contribution percentage Success rate percentage of NPDDegree

275、 of applying Agile in brand and productdevelopment,channel expansion,and businessmodel upgrade WTD(weighted distribution)SPPD(sales per point of distribution)Stability of pricing systemMetricsFigure 15:By studying the development trajectories of insurgent brands,we distilled four main attributes for

276、 insurgent brand success in 2021,which are still relevant through today38Kantar Worldpanel|Bain&Company,Inc.Hold-out and Fade-out:Continued strugglesMost Hold-out and Fade-out brands continued to face growth challenges in a competitive environ-ment.These struggles can be attributed to the loss of es

277、tablished advantages,failure to adapt to channel shift,or lagging product innovation.For example,One Leaf(一叶子)consistently underper-formed due to heavy reliance on cosmetics specialty store channels,outdated product upgrades,and failed rebranding efforts.In the past,One Leaf had successfully relied

278、on the cosmetics specialty store as a key sales funnel,but the recent,rapid growth of online channels and the fading of cosmetics specialty store dividends stifled the companys growth.Whats more,One Leaf heavily relied on face mask products with a single point of hydration,while competitors turned t

279、o upgrades like advanced ingredients and efficacy-driven benefits.As the parent company reprioritized marketing investment amongst its brand portfolio,One Leaf was no longer able to sustain its brand power as a“clean beauty”hero.Class of 2021 brand performance reflectionIn 2021,we applied similar cr

280、iteria to identify 69 insurgent brands,and we reviewed their operational performance between 2021 and 2023.Our analysis revealed a distribution of players akin to the Class of 2018,with three main categories:Stand-out(28 brands,40%),Hold-out(12 brands,20%),and Fade-out(29 brands,40%).Key differences

281、 among the Class of 2021s brand trajectory can still be adeptly explained by the four-lever model of insurgent brand success used in earlier analyses and described in Figure 15.Stand-out:These brands have established remarkable competitive advantages across at least two levers,with no evident shortc

282、omings.For instance,despite the declining demographic dividend in the maternal and infant market,Babycare has emerged in recent years,leveraging a full-category strategy and embracing omnichannel acceleration.This approach has led to a sales CAGR of 27%from 2021 to 2023.Babycare offers more than 5,0

283、00 SKUs to create a one-stop shopping experience for consumers.They use big data to gain insights into consumer needs and to innovate in mainstream categories,such as“Flower Pants”and airpro diapers.These innovations are supported by a large product insights and development team,with 600+designers i

284、ntegrated into the companys original design manufacturer(ODM)supply chain.Meanwhile,Babycare continues to establish an omni-channel presence.In the early years,Babycare gained sales on Tmall by occupying the whitespace price bands and leveraging traffic tools.It has ranked as the top brand in Tmalls

285、 maternal and baby sector for four consecutive years.Starting in 2021,as Tmalls traffic peaked,Babycare doubled down on investments in JD and Douyin,recognizing the importance of an omnichannel strategy for future success.Today,the contribution from Tmall has decreased from over 90%to less than half

286、.Addi-tionally,Babycare actively expanded offline channels,with over 100 directly operated stores and tens of thousands of distribution outlets,increasing the offline sales contribution to 30%.39Kantar Worldpanel|Bain&Company,Inc.Hold-out:These brands exhibit notable strengths in one or two dimensio

287、ns but also suffer from identifiable weaknesses.For instance,the rise of the“single economy”phenomenon has led to a surge in the number of packaged food brands.Bibigo(必品阁)leveraged its distinctive Korean cuisine offerings,particularly frozen dumplings,to initially thrive during the Covid-19 era.Howe

288、ver,as out-of-home dining recovered,Bibigo encountered challenges in maintaining its market position.Their heavy reliance on traditional e-commerce platforms such as Tmall and JD,coupled with delayed response to emerging interest e-commerce(Douyin)and O2O opportunities,has caused Bibigo to lag behin

289、d its competitors.Fade-out:Typically,these brands have not been able to sustain their growth against new market and competitive trends.For instance,Ramen Talk(拉面说),a quintessential example of an emergent brand that found early growth through online traffic,experienced steep decline following its ini

290、tial,rapid rise in popularity.During the Covid-19 pandemic,Ramen Talk achieved fast growth by adopting a“heavy traffic buy”approach and capitalizing on consumption trade-up trends and the growing demand for dining at home.By heavily investing in Douyin,Ramen Talk even surpassed the entire ramen cate

291、gory in online search visibility.However,Ramen Talk faced challenges in transitioning offline.Despite successful cooperation with Carrefour,it encountered setbacks expanding to other key accounts due to an unclear single-store model.As a result,Ramen Talk saw a CAGR of approxi-mately-30%in retail sa

292、les from 2021 to 2023.In the class of 2021 brands,approximately 20 brands(30%)are affiliated with large corporate parent groups.7 Supported by these entities,these brands have a greater likelihood of enhancing their busi-ness operations.By leveraging the resources of the parent company,these brands

293、can strengthen their positions and achieve rapid breakthroughs.However,if they are not prioritized within the parent companys brand matrix,their performance may still suffer despite the inherent advantages of corporate support.SuperX(勇闯天涯),a sub-brand of Snow Beer(雪花啤酒),experienced a sales CAGR of 1

294、5%from 2021 to 2023,leveraging the resources of its parent company,China Resources(华润集团).Snow Beer strate-gically positioned SuperX to capture market share among the younger generation by signing top celebrities such as Wang Yibo as brand ambassadors and conducting multiple marketing campaigns on so

295、cial media platforms.SuperX also gained traction across various channels by leveraging the robust distribution capabilities of Snow Beer.In contrast,Perfect Diary(完美日记),a makeup brand owned by Yatsen Global(逸仙电商),saw a CAGR of approximately-46%from 2021 to 2023.Perfect Diary initially heavily invest

296、ed in traffic acquisition and rapidly gained market share.However,Yatsen Global shifted its focus to skin care as its growth engine in recent years,acquiring skin care brands such as Galnic and Dr.Wu.Consequently,the resources allocated to Perfect Diary declined significantly.40Kantar Worldpanel|Bai

297、n&Company,Inc.Class of 2024 brandsBased on our research experience on Chinas insurgent brands over many years,we once again conducted extensive research on representative insurgent brands in more than 40 categories this year.This year we have selected 61 insurgent brands to form the Class of 2024(se

298、e Figure 16).Most of these brands were born between 2019 and 2021,during the peak period of Chinas new consumer brand investment.When we conducted the 2021 selection,they were not yet large enough to enter the list.However,in the past few years,many of them grew despite adverse market conditions dur

299、ing the Covid-19 years.When looking into the 2024 insurgent brands,we found that the four-lever model comprised of brand power,product ecosystem,channel capability,and organizational agility continued to be crucial for their success story.However,we also observed evolving requirements on these four

300、levers based on the latest market dynamics(see Figure 17).Brand power:From“Pure traffic buy”to“Branding-performance re-balance”Product ecosystem:From“Undifferentiated substitution”to“WOW experience”Channel capability:From“Single-channel dominance”to“Connected commerce”Organization capability:From“Sp

301、eed and agility”to“Agility,capability,and efficiency”Figure 16:This year,we recognized 61 high-growth brands as Class of 2024 insurgent brands in ChinaNotes:*For some fast-growing categories like underwear,art,toy,etc.,many promising insurgent brands exist,like Ubras,Pop Mart,etc.,but considering th

302、ey arenot typical FMCG categories,they are not included in this selection;*For brands backed up with Kantar data,the brand retail value is based on domestic household consumption retail value;For brands backed up with online transaction data,the retail value is based on online domestic retail value

303、Sources:Kantar Worldpanel;TSJ;Bain analysisSelection criteria 2024Independent brands or brandsunder conglomerates but withdistinct business efforts?AmosOncurPRAMYBailiPaulanerBEBAPERSIAN CATBUBANDIC KA BEAUTYChenshuChoubaoDaisy SkyCuishengshengDr.WuCHANTECLAIRBig DropDNLNXIRDayaoDeeyeoFunny ElvesTOO

304、CABEARRipe FruitFlower KnowsHERDSHuangjiaxiaohuSKYNFUTUREGiant babyJoocyeeKATOKaisarkingCoRouOralsharkLANLibangPassional LoverOSITREEManhuaMalujiMIGNON MAIMAIThelandPatchiLuckin coffeeKimtrueCERAVESuk GardenSipiaoSizhimaoSaigonIntoYouYamiyougeYOSEIDORELLETYongpuUodoYusenYuexianhuoHapsodeZhenmuMinaie

305、r?ZHIBEN?MancodesIn alphabetical order by Chinese:202223 brand retail sales valueCAGR 10%and outpacingcategory*growth2023 annual brand retail salesvalue*100M1B RMBMeaningful sales(10M RMB)onmore than two platforms/channels Key change:Excluding brandsthat rely highly on a singlechannel,i.e.,white lab

306、el brands41Kantar Worldpanel|Bain&Company,Inc.BrandpowerProductecosystemChannelprioritizationOrganizationcapabilityFromPuretraffic buyUndifferentiatedsubstitutionSingle-channeldominanceSpeedand agilityToBranding-performancerebalance“WOW”experienceConnectedcommerceAgility,capability,and efficiencyFig

307、ure 17:Recent market dynamics have created evolving requirements to the four-lever modelIn channel prioritization,notably,theres an increasing need for insurgent brands to capture emerging channels and develop“Connected Commerce”capabilities instead of being siloed in a specific channel.For example,

308、Yongpu(永璞)is transitioning from being an“online influencer brand”to establishing an omnichannel presence by expanding its offline distribution networks.It has established a com-prehensive portfolio strategy,promoting key products with large package sizes on Tmall,launching new products on Douyin,and

309、 offering small-to-medium-sized packages offline.Internally,Yongpu has focused on talent development and optimized its supply chain to support product innovation.Additionally,it has invested in digital capabilities for proprietary customer relationship management(CRM)programs.These efforts have prop

310、elled its outstanding growth in the coffee segment,where it achieved a sales CAGR of approximately 50%from 2021 to 2023.Passional Lover(恋火)has fully leveraged Douyin to realize its accelerated growth through a tailored product portfolio,customized content creation,and operational excellence.In terms

311、 of product strategy,it focuses on foundational products within the masstige price band of 150-300 RMB,aligning with the trade-down trend in makeup and appealing to customers seeking value-for-money options.Key selling points such as“invisible”and“long-lasting”are emphasized in marketing efforts,and

312、 effectively communicated to customers.The brand excels in eye-catching content creation on Douyin with posts that skillfully capture product selling points and react swiftly to trends.Passional Lovers operational excellence is further evident in its refined online platform operations,including a co

313、m-prehensive live-streaming matrix and network of influencers featuring top KOLs,which trigger a halo effect and drive sales conversion efficiently.42Kantar Worldpanel|Bain&Company,Inc.In the end,what truly matters to consumers are brands that can deliver against these four key levers,whether they b

314、e insurgents or incumbents.Both types of companies will continue to co-exist in Chinas FMCG market and contribute in their unique ways.The most successful companies will learn from each other and thrive in symbiosis.This cross-fertilization between incumbents and insurgents will drive the flourishin

315、g of the China FMCG market,bringing forth a multitude of possibilities and excitement for Chinese consumers.43Kantar Worldpanel|Bain&Company,Inc.Whats next:Implications for brands and retailersChinas recovery from its reopening has indeed led to the anticipated rebound in economic activities,evident

316、 in yearly GDP growth and retail sales.However,macroeconomic challenges persist,including high youth unemployment,a mixed recovery in the property sector,and overcapacity in industry.Consumption remains pivotal to economic growth,supported by a gradual recovery in consumer confidence.Stimulus polici

317、es aimed at boosting consumption have been implemented by the government,with more anticipated.Nonetheless,consumers exhibit continued price sensitivity,contributing to a persistent deflationary environment in the FMCG sector.Despite these challenges,the FMCG industry exhibits resilience,with consum

318、ers,brands,and retailers adapting to evolving circumstances.The FMCG recovery is expected to continue in the coming months,reflecting trends observed in the first quarter of the year.To position themselves for success in 2024 and beyond,brands should focus on several key strategies:Follow consumers

319、true needs:Post-pandemic,consumer needs and preferences have shifted significantly.Brands must closely monitor these evolving demands and seize growth opportunities in new segments,geographies,occasions,channels,and touchpoints.Understanding consumer behavior and competitor moves is crucial for unlo

320、cking potential growth opportunities.Manage costs:Persistent deflationary trends in the FMCG sector necessitate cost management.Brands should prioritize investments in areas that truly matter to consumers,such as product formu-lation,raw materials,and packaging.Savings achieved in these areas can be

321、 reinvested in marketing and pricing strategies to address ongoing price sensitivity.Build integrated route-to-market strategies:The distinction between online and offline channels is increasingly blurred,as shopper journeys involve both online and offline touchpoints.Brands must break strategic pla

322、nning silos and develop integrated strategies that follow multiple consumer touchpoints in the era of connected commerce.This includes collaboration models that effectively leverage both online and offline channels.Rejuvenate out-of-home opportunities:With the resurgence of out-of-home consumption,p

323、articularly in social settings and food service-related channels,food and beverage brands should strategically reinvest in out-of-home opportunities.Given the fragmentation of the out-of-home channels,brands need to be selective in the channels they target and develop unique value propositions to wi

324、n in these targeted channels.Retailers facing intensified competition and evolving channel dynamics should also focus on:Sharpen shopper value propositions:In a landscape of diverse retail formats,retailers should focus on clearly defined core shopper segments and tailor value propositions according

325、ly.Re-orienting to shopper lifetime value,retailers should establish defendable moats through differentiated merchan-dising,pricing,promotion,and shopper engagements.44Kantar Worldpanel|Bain&Company,Inc.Sweat the assets:Retailers need to undertake a future-back reset of physical infrastructure requi

326、rements and revisit inflight investments plans to align more closely with evolving consumer touchpoints,journey,and behavior.This allows retailers to unlock productivity and manage ammunition for investments.Refocus capability-building with technology and talent:Retailers should leverage data,automa

327、tion,and leapfrog technologies like generative AI to unlock productivity gains in assortment,availability,pricing,promotions,and digital marketing.This requires upskilling existing workforce and revitalizing the organization around an authentic purpose and mission.45Kantar Worldpanel|Bain&Company,In

328、c.Notes1.The scope of the FMCG market in this report doesnt include 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

329、adjusted the online channel weight factor upper threshold for paper products to better reflect market realities in 2020.Skincare and makeup data are collected from the Kantar World-panel beauty panel,covering consumers ages 1564 in Tier 15 cities;infant formula and diaper data are collected from the

330、 Kantar Worldpanel baby panel,covering households with babies 036 months old in Tier 15 cities.All average selling prices are calculated based on RMB per Kg/L,except for diapers and toothbrushes,which are calculated based on RMB per piece;skincare and makeup,which are calculated based on RMB per pac

331、k;and toilet and facial tissue,which are calculated based on RMB per 100 sheets/rolls.2.The 26 categories were(a)packaged food:biscuits,chocolate,instant noodles,candy,chewing gum,and infant formula;(b)beverage:milk,yogurt,juice,beer,ready-to-drink tea,carbonated soft drinks,and packaged water;(c)pe

332、rsonal care:skincare,shampoo,personal wash,toothpaste,makeup,hair conditioner,diapers,and toothbrushes;and(d)home care:toilet tissue,fabric detergent,facial tissue,kitchen cleaner,and fabric softener.3.Three categories were added:nutrient supplements(packaged food),coffee(beverage),sanitary pads(per

333、sonal care);two categories were eliminated:toothbrush(personal care),fabric softener(home care).4.The definition of city tiers is based on Kantars classification.Tier 1 cities include Beijing,Shang-hai,Guangzhou,Chengdu;Tier 2 cities include provincial capital cities excluding Guangzhou and Chengdu,and Tianjin,Chongqing,Shenzhen,Dalian,and Qingdao;Tier 3 cities include prefecture-level cities,excl