Packaging / Advertising & Office

A few days ago, Bain & Company and Kantar Worldpanel jointly released the "China Shopper Report" for the tenth consecutive year. According to the "2021 Chinese Shopper Report (Series 1)", in the first half of 2020, the epidemic had a serious impact on the overall sales growth of FMCG, but it stabilized and recovered in the second half of the year, with annual sales growth of 0.5%, basically returning to the epidemic Before the level.

Since the beginning of this year, China's fast-moving consumer goods market has begun to recover, but the growth is still weak. In the first quarter of 2021, the sales growth rate of China's FMCG market reached 1.6% year-on-year, which was lower than the 3% growth rate in the same period in 2019.

It is worth noting that before the outbreak of the epidemic, FMCG was in a steady high-end process for 5 consecutive years. The rising average selling price is a big driver of sales growth for many categories and different channels. However, consumers who stay at home are more restrained in their consumption due to the uncertainty of the future and purchase lower-priced products. This has caused the price of fast-moving consumer goods to fall for the first time in five years. By the end of 2020, the average selling price will drop by 1.1%. Under the circumstances, sales growth has become the most important driving factor for overall sales growth in China, and the increase in shopping frequency has played a role in promoting sales growth.

Packaged food sales grow against the trend

The research scope of this report mainly covers four major consumer product areas, including packaged food, beverages, personal care and home care. In order to fully understand the current situation and changes of China's fast-moving consumer goods market, this report adds research on 17 categories based on the previous 26 categories.

The report shows that in 2020, the prices of packaged foods and beverages have both fallen, but the sales of packaged foods have grown against the trend, driven by consumer demand for hoarding. Consumers purchased large quantities of relatively cheap instant noodles, instant soups and other relatively cheap instant foods during the epidemic quarantine period, which promoted a 5.7% increase in food category sales, offsetting the negative impact of the 3% price drop and driving sales growth of 2.7%. Beverage category sales fell 4% due to the 2.3% and 1.8% drop in prices and sales volume respectively. The main reason for the decline is that social gatherings and gift-giving scenes have greatly reduced, especially in the first half of 2020.

As the public's health awareness continues to increase, consumers' demand for and purchases of nursing products continue to rise, and the sales of personal and home care have increased. Among them, the performance of home care is particularly outstanding, with an annual growth rate of 7.7% in 2020, which is the only category with rising prices in the four major consumer goods sectors. Consumers hoarded sanitary products such as household cleaning products and paper towels during the epidemic, driving a 6.1% increase in home care sales. Home care prices rose slightly by 1.5%, which was the only category whose prices rose, but the increase was still lower than the inflation rate. Home care products such as disinfection supplies and wet wipes have experienced a period of shortage caused by a surge in demand and tight supply, which has caused overall prices to rise.

The increase in hygiene awareness also promoted a 3% increase in the sales of personal care products such as personal cleaning products, but the price of personal care fell by 2%, offsetting the two, the sales growth rate plummeted from 11.8% in 2019 to 1.1%. In 2020, under the influence of home isolation and telecommuting, the demand for personal care products such as cosmetics and skin care products has fallen sharply.

E-commerce is the only fast-growing channel

In terms of channels, the epidemic has accelerated many existing channel trends in China, such as the strong online trend of fast-moving consumer goods and the steady growth of O2O channels. In 2020, e-commerce sales will increase by 31%, which is the only channel with rapid growth. Among them, live broadcast e-commerce has more than doubled, and apparel, skin care products and packaged foods are in the forefront.

At the same time, as more and more consumers spend at home, O2O channels have been sought after, and sales have surged by more than 50%. In addition, the epidemic has also given birth to community group buying, that is, the Internet platform uses the pre-sale + self-pickup model to acquire and maintain consumers with the help of the "community leader". In the first quarter of this year, the penetration rate of this new retail model reached 27%.

However, it is worth noting that with the decentralization of e-commerce platforms, the pattern of e-commerce channels is also changing. The share of Alibaba and JD.com has dropped from 87% in 2016 to 73% in 2020. This is evident in the diversification trend. As the channel structure changes, brands also need to think more about the combination of e-commerce channels and platforms from a strategic perspective, and more accurately target shoppers and shopping scenes.

Offline, convenience stores are the only channel that remains stable. Grocery stores and hypermarkets have lost the most shares, with sales falling by 14% and 11%, respectively. In 2020, many shoppers will either stay at home or be afraid to shop in stores. Convenience store spending on fast-moving consumer goods fell by only 1% in 2020, mainly due to the strong rebound brought about by the lifting of home isolation in the second half of the year. In the second half of this year, as one of the largest convenience store chains in China, Lawson’s average daily sales of fast-moving consumer goods in Shanghai and other major cities have returned to their pre-epidemic levels.

Looking forward to 2021, driven by the new consumer behavior brought about by the epidemic and the return to the basic situation before the epidemic, fast-moving consumer goods are expected to continue to increase. For example, Chinese consumers paid attention to health and hygiene before the outbreak, and the epidemic has accelerated this trend, which may become the new normal in the future. Categories such as ice cream, milk, and bottled water benefited from higher average selling prices and got rid of the price crunch that plagued many other fast-moving consumer goods categories. In the post-epidemic era, low-tier cities will continue to be powerful growth engines for fast-moving consumer goods, showing the same strong consumption power as during the epidemic period.

Deng Min, Global Partner of Bain & Company and Chairman of Consumer Products Business in Greater China, said: “Looking forward, the epidemic will continue to have a profound impact on the Chinese consumer product market. In order to maintain a leading position, we recommend that brand owners take action in three aspects. First of all. , According to the market environment and consumer needs in the post-epidemic era, carry out product restructuring and brand reshaping. Secondly, to better meet the different needs of high-end consumers and cost-effective pursuers, and to properly handle the increase in raw materials by adjusting the overall cost structure The contradiction between the pressure and the new growth environment where prices are falling and sales are king. Finally, to further increase penetration by acquiring new customers, especially low-tier cities, should become the next focus of brand owners."