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1、China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023China Shopper Report 2023, Vol. 1 Copyright 2023 Bain & Company, Inc. All rights reserved.This work is based on secondary market research, analysis of financial information available or provided to Bain & Company, and a

2、range of interviews with industry participants. Bain & Company has not independently verified any such information provided or available to Bain and makes no representation or warranty, express or implied, that such information is accurate or complete. Projected market and financial information, ana

3、lyses, and conclusions contained herein are based on the information described above and on Bain & Companys judgment, and should not be construed as definitive forecasts or guarantees of future performance or results. The information and analysis herein do not constitute advice of any kind and are n

4、ot intended to be used for investment purposes. Neither Bain & Company nor any of its subsidiaries or their respective officers, directors, shareholders, employees, or agents accept any responsibility or liability with respect to the use of or reliance on any information or analysis contained in thi

5、s document. This work is copyright Bain & Company and Kantar Worldpanel and may not be published, transmitted, broadcast, copied, reproduced, or reprinted in whole or in part without the explicit written permission of Bain & Company and Kantar Worldpanel.Authors and acknowledgmentsBruno Lannes is a

6、senior partner with Bain & Companys Consumer Products and Retail practices and is based in Shanghai. You can contact him by email at .Derek Deng is a partner who leads Bain & Companys Consumer Products practice in Greater China and is based in Shanghai. You can contact him by email at .Jason Yu is t

7、he managing director at Kantar Worldpanel Greater China. You can contact him by email at .This report is a joint effort between Bain & Company and Kantar Worldpanel. The authors extend gratitude to all who contributed to it, especially Miya Wang, Chloe Wang, and Gigi Li from Bain; and Tina Qin, Jenn

8、ifer Ge, Eva He, and Sallian He from Kantar Worldpanel.China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 20231Kantar Worldpanel | Bain & Company, Inc.ContentsExecutive summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9、 . . .2The full report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10A look back at 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10The first quarter of 2023 provides insi

10、ght into the road ahead . . . . . . . . . . . . . . . . . 16Whats nextand implications for brands and retailers . . . . . . . . . . . . . . . . . . . . . . 30China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 20232Executive summaryThis is the 12th consecutive year that we ha

11、ve tracked the shopping behaviors of Chinese consumers. Our continuing research has given us a valuable long-term view across 106 fast-moving consumer goods (FMCG) categories purchased for home consumption in China.1 As in each of the past 11 years, we analyzed the 26 key categories that span the fo

12、ur largest consumer goods sectors: packaged food, beverages, personal care, and home care.2 This report updates the findings from our China Shopper Report 2022, Vol. 2, Still Volatilebut with Signs of Hope, and includes Kantar Worldpanel shopper behavior data for 2022 and the first four months of 20

13、23.This report recaps FMCG performance in 2022, during which consumer behavior remained heavily influenced by the Covid-19 pandemic. We also explore consumer trends from the first four months of 2023, after dynamic Zero-Covid policies were lifted. The report includes implications for consumer goods

14、companies and retailers.Kantar Worldpanel | Bain & Company, Inc.3China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023A look back at 2022Two major waves of Covid-19-related restrictionscity-wide lockdowns in the first two quarters and a resurgence of mass infections in the

15、 fourth quartertriggered consumption slowdown in 2022. Despite growth of 2.8% in the first half of the year and reaching 6.3% in the fall, an infection spike at the end of 2022 caused value drop of 3.9% in the fourth quarter. As a result, the FMCG market landed at a weak annual growth rate in 2022 (

16、1.5%), with hyper volatile quarterly performance. Despite overall volume growth in the first three quarters, FMCG volume dropped 1.2% in the fourth quarterthe first drop since the first quarter of 2020. The FMCG average selling price (ASP) deflationary trend that emerged in 2020 continued throughout

17、 2022 and was even amplified, dropping 2.5% vs. the previous years 1%. The consumer price index (CPI) increased 2% in 2022, and brands continued to experience rising input costs. However, consumers showed a lower willingness to pay for FMCG products given the mounting economic pressures.Category upd

18、ate: Packaged food and home care dominated growthWithin the four major sectors, packaged food led the growth with a 6.3% increase, its highest in four years. This growth was driven by both volume (3%) and ASP (3.2%). Covid-19 restrictions fueled a shift toward at-home dining, stockpiling behaviors,

19、and an increase in health consciousness. Among the packaged food categories, instant noodle led the sector growth with an 20% value jump, which peaked in the fourth quarter. Seasoning products like soy sauce and nutrition supplements also saw surges in demand. Home care experienced healthy growth in

20、 2022 (5.6%), driven both by volume (4.4%) and ASP (1.1%). Heightened attention to hygiene fueled demand for categories such as facial tissue (11.8%) and toilet tissue (7.1%). ASP growth was driven by price increases of raw materials and manufacturer-led premiumization.Beverage was especially vulner

21、able to Covid-19 disruption, resulting in weak annual growth of 1.1%. After a strong 10.4% recovery in the third quarter, beverage experienced a value drop of 6.8% in the fourth quarter. The annual value growth was largely driven by volume increases (5.1%), while ASP continued to decline throughout

22、the year (-3.8%). Juice, ready-to-drink tea, and functional drinks led the sectors growtha healthy payoff for manufacturers innovations in health-related concepts. Wine/foreign spirit, and Chinese spirit categories reported significant ASP decline due to lower consumption and consumers reduced willi

23、ngness to pay during the pandemic.Kantar Worldpanel | Bain & Company, Inc.China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 20234Personal care continued its declining trend throughout the year. After a significant drop of 10.9% in the fourth quarter, it ended the year with

24、a total value decline of 4.8%. The steep decline was caused by a severe reduction in outdoor occasions and social activities, especially during virus outbreaks. The ASP decline (-4.9%) drove the sectors drop in value in 2022, even though volume growth was flat. Makeup continued its decline (-18.1%)

25、in both volume (-14.2%) and ASP (-4.6%). Makeup demand dropped significantly when social occasions were halted and mask-wearing mandates were in effect. Meanwhile, skin care and toothbrush values declined 3.8% and 7.8%, respectively. Those were mainly driven by ASP decline, caused by fierce competit

26、ion and consumers lower willingness to pay. Personal hygiene-related categories like personal wash and toothpaste performed relatively well in 2022, achieving value growth of 2.5% and 1.2%, respectively.The two-speed growth phenomenon we first identified in 2016 is still happening. High-speed catego

27、ries were largely concentrated in food, beverage, and personal hygiene, while many nonessen-tial and replaceable categories experienced negative growth.In 2022, we observed that some categories that were highly sensitive to Covid-19, like instant noodle (20%) and hand wash (11%), changed from low-sp

28、eed categories in 2021 to high speed in 2022, due to increased demand during Covid-19 outbreaks. In contrast, fragrance reversed its performance (-11%) in 2022. Meanwhile, some categories saw consistent high-speed growth over the past few years, such as ice cream (CAGR 201922 at 20%) and carbonated

29、soft drinks (CAGR 201922 at 15%). Their growth was driven by an “indulgence mentality” among consumers, as well as fast innovations introduced by domestic players. Another example is facial tissue (CAGR 201922 at 10%), which benefited from heightened consciousness around health and hygiene. On the o

30、ther hand, yogurt has been a low-speed category for three years, with CAGR 201922 down 10%, as it lost its competitive value proposition against substitute products such as milk and juice. Channel update: E-commerce growth slowed, while O2O soaredIn 2022, overall e-commerce growth slowed in 2022, en

31、ding the year with only 2% growth. The channel was challenged by logistics disruptions during lockdowns and nationwide infections, as well as heightened regulatory scrutiny of key opinion leaders and the livestreaming industry. Smaller for-mats picked up momentum. Convenience stores grew 7%, and gro

32、cery grew 8%, thanks to the pre-dictability, convenience, and safety of shopping at nearby locations during the pandemic. Online- to-offline (O2O) boomed during Covid-19 resurgence periods,3 as consumers wanted to stock up and fulfill instant needs while avoiding traffic and exposure in physical sto

33、res. As a result, FMCG O2O saw 18% value growth in 2022 overall, and channel share increased from 5.7% to 6.7% of total FMCG.Kantar Worldpanel | Bain & Company, Inc.China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 20235Brand update: Large brands and domestic brands pulled

34、aheadIn 2022, brand competition remained dynamic. Among the 26 categories we tracked, the top five brands regained share in a few categories that long-tail/insurgent brands had won over in the previous two years. The change is similar to what we observed in the first quarter of 2020. During turbulen

35、t times, larger brands tend to be more trusted by consumers and have more resilient supply chains, distribution networks, and financial resources. The categories where the top five brands regained share included facial tissue, instant noodle, and ready-to-drink tea, etc.Similar to previous years, on

36、 aggregate, local brands further gained share from foreign brands in these 26 categories, mainly through volume gains, while ASP decreased for both local and foreign brands. Interestingly, in 2022, foreign brands had significant ASP decreases in a few categories with clear trade-down trends, such as

37、 skin care and toothbrush.The first quarter of 2023 provides insight into future trendsThe first quarter of 2023 revealed promising signs of a mild economic reboundand an indication of what brands should expect from consumers for the rest of the year. Chinas GDP growth in the first quarter (4.5%) an

38、d overall retail sales growth (10.5% in March, excluding auto) both exceeded expectations. Domestic traffic and catering sales also bounced back quickly in the first quarter of 2023. However, full recovery takes time, and certain concerns persist. The Consumer Confidence Index showed a steady upward

39、 trend, but has yet to return to pre-pandemic levels. Additionally, the unemployment rate remained around 5.5%, with youth unemployment (1624-year-olds) at a high level.Overall, the FMCG industry rebounded from the fourth quarter of 2022 and reported value growth of 1.9% in the first quarter of 2023

40、, driven by modest volume growth (2.7%), despite a decline in ASP (-0.8%). Although the FMCG growth rate in the first quarter was moderate, it was very different on a month-by-month basis. For example, January was severely affected by a Covid-19 outbreak. The trajectory, however, drives optimism for

41、 consumption in the coming months. In April, the FMCG market achieved an exciting growth at 5.1%, in line with pre-Covid-19 levels. Overall retail sales, excluding auto, also saw impressive growth in April at 16.5%. Category update: Packaged food and home care continued to grow, while personal care

42、and beverage showed signs of recoveryAcross all four major sectors, home care continued to lead growth at 13% in the first quarter and achieved the highest quarterly growth since the third quarter of 2020, thanks to sustained health awareness. The substantial growth was driven by both volume (9.5%)

43、and ASP (3.2%). Nearly all key categories grew due to sustained and heightened attention to hygiene and health needs. Packaged food continued to grow at 3.2%. Growth was mainly driven by an ASP increase (5.2%), but volume dropped 2%. Categories such as biscuits, chocolate, and candy experienced valu

44、e drops in the first quarter due to less stockpiling behaviors. Seasoning and nutrition supplements maintained their growth trajectories due to ongoing pandemic-era cooking habits and health needs. Moreover, April data showed that home care and packaged food sustained growth of 12.2% and 3.8%, respe

45、ctively.Kantar Worldpanel | Bain & Company, Inc.China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 20236Beverage and personal care showed signs of recovery as social gatherings increased. Beverage value grew 1% in the first quarter of 2023, driven by volume growth of 3.4%, w

46、hile ASP declined 2.4%. Juice, ready-to-drink tea, milk, and packaged water continued to lead the sectors growth. In April, the sector experienced further growth of 3.3%, displaying its rebound trajectory.In personal care, the trend of declining value slowed in the first quarter of 2023 (-2.6%), wit

47、h an increase in volume (4.1%) thanks to increased social occasions. Most categories, such as hair conditioner and personal wash, showed clear volume growth compared with the first quarter of 2022. In April, the sector achieved an exciting growth of 5.9%, providing confidence for the upcoming months

48、.Categories reflected predictable rebound patternsWe revisited four distinct category rebound trajectories that were identified in 2020, to better anticipate trends in the coming months: Continuous booming categories benefited during Covid-19 outbreaks in December 2022 and January 2023 and achieved

49、stable growth afterward. Boom and stabilize categories grew during outbreaks but did not sustain their growth post-Covid-19. V-shape and stabilize categories were hit hard by the pandemic but rebounded afterward. L-shape categories declined during and after the outbreak and took longer to recover.In

50、 this study, the four distinct patterns continued into the first quarter of 2023, though the level of divergence was less pronounced and convergence came more quickly. This was because consumers stockpiling behaviors decreased as Covid-19-related restrictions relaxed. In addition, a significant incr

51、ease in outdoor activities drove a sharper rebound of certain relevant categories like shampoo and fabric detergent.Zooming into the continuously tracked categories, the majority rebounded similarly to 2020, but some responded differently, affected by four factors.First, Zero-Covid policies were lif

52、ted quickly in 2023, which increased social occasions and enabled makeup and wine/foreign spirits to shift from an L-shape pattern to a V-shape. Second, a decline in birth rates since 2020 shifted baby-related categories (e.g., infant formula and diaper) from V-shape and boom and stabilize patterns

53、in 2020 to L-shape in 2023. Third, category education and consumer lifestyle changes drove sustainable growth in categories such as juice, ready-to-drink tea, and pet food. Finally, the long epidemic outbreak in the first quarter drove hygiene and health-related categories such as toilet and facial

54、tissue toward the continuous booming pattern.Kantar Worldpanel | Bain & Company, Inc.China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 20237Pricing update: Pricing trends across categories further divergedIn the first quarter of 2023, the FMCG market continued its deflation

55、ary trend that started in the beginning of 2020. However, the deflation was not uniform across all categories, channels, or brands. Facing continuously rising input costs, FMCG brands continued to push for price increases to manage their margins. However, overall ASP continued to decline. Aligned wi

56、th our findings in 2022 Vol. 2, generally the overall ASP decline in the first quarter of 2023 continued to be driven by trade downs (i.e., consumers choosing a lower-priced product) and shifts to online (i.e., consumers choosing a lower-priced channel). Promotion rates abated a bit compared with pr

57、evious years for both online and offline channels.Brands across all sectors increased like-for-like pricing in the first quarter of 2023, but consumers reacted differently to the price increases across sectors. In the packaged food sector, consumers significantly decreased purchase volume as stock-u

58、p needs eased after Covid-19 , but chose more ex-pensive products thanks to rising health awareness. In the beverage sector, consumers opted for more value-for-money products. Consumers continued to increase purchase volume in home care due to their cultivated health and hygiene needs, while opting

59、for cheaper products. Although de-mand for personal care products increased post-Covid-19, consumers switched to discounted on-line channels to cope with rising product prices and opted for more value-for-money alternatives (i.e., trading down), or simplified their daily routine.Looking at the 26 tr

60、acked categories, pricing trends became more divergent. Some categories continuously premiumized with an ASP increase, while others sustained an ASP decline.Continuous premiumization: Categories in this pattern succeeded with strong innovations, typically by addressing consumers rising health and hy

61、giene needs. For instance, juice continued to premiumize in the first quarter. The premium juice segment achieved 25% volume growth, and ASP increased 7%, thanks to successful premium innovations such as new processing methods (e.g., NFC) and new flavors (e.g., Chinese medicine-based products). Inst

62、ant noodle also innovated with healthy products that were enabled by new technologies (e.g., freeze-drying). The premium segment of instant noodle experienced 27% volume growth, while the midrange and mass segment saw volume declines of 9% and 27%, respectively. Continuous ASP decline: Categories in

63、 this pattern often face trade-down behaviors or lower demand. The toothbrush category is representative of this. In recent years, an increasing number of local insurgent brands entered the market and offered more affordable electronic products. The intensified competition pushed premium brands to l

64、aunch more economic product lines. As a result, across all price tiers, the mass segment of toothbrushes had the highest volume growth at 4%, with a 9% ASP decrease in the first quarter. The other example is infant formula, which experienced a sharp decline in value due to lower birth rates in the l

65、ast few years. To remain competitive, brands adopted lower pricing strategies through increased promotional activities. In the first quarter of 2023, nearly 50% of the market value was sold on promotion.Kantar Worldpanel | Bain & Company, Inc.China FMCG: Slowly Rebounding from Turbulence with Optimi

66、sm for the Rest of 20238Channel update: E-commerce reaccelerated, club warehouses soared, and O2O sustained growthThe lift of Covid-19 policies further shaped the channel dynamics in the FMCG industry. In the first quarter, some historical trends continued, for example the rise of smaller formats (e

67、.g., convenience stores and grocery), the club warehouse format, and O2O. On the other hand, we observed changes compared with previous years. For example, e-commerce went from idle growth in 2022 to accelerated growth in the first quarter of 2023, and an amplified decline of hypermarket.In the firs

68、t quarter of 2023, consumers accelerated their shift toward online channels, reaching a growth rate of 9%up from 2% in 2022, thanks to Covid-19 infections subsiding and the resumption of logistics. All 26 categories showed positive online penetration growth in the first quarter of 2023 vs. the first

69、 quarter of 2022, whereas more than half of the categories experienced online penetration declines in 2022. Among the e-commerce platforms, interest e-commerce platforms like Douyin（抖音）and Kuaishou（快手） led the growth. Douyin gained significant traction in sales value and over-took Pinduoduo, becomin

70、g the third-largest e-commerce platform by sales value in FMCG in the first quarter of 2023. Hypermarkets experienced an accelerated downward trend in the first quarter, with a 12% decrease in sales value. The dip was a combined result of a reduction in the number of stores, lower traffic due to the

71、 pandemic, and operational challenges faced by some key retailers. However, the club warehouse format (a hypermarket subtype in Kantar Worldpanels classification) enjoyed strong growth (38%) due to a growing number of shoppers and increased shopping frequency.O2O shopping habits have been growing ov

72、er the past few years and continued to thrive, even after Covid-19-related policies were relaxed. FMCG O2O witnessed remarkable value growth in the first quarter (16%). The growth was mainly driven by increased purchase intensity (e.g., higher shopping frequency or higher value per trip) and gains f

73、rom non-O2O channels, particularly offline hyper-markets, supermarkets, and mini markets.Across different sectors, O2O is more important in the food category (packaged food and beverage) than nonfood (personal care and home care). However, nonfood showed more exciting growth (30%). Nonfood growth wa

74、s driven by a few fast-growing categories (e.g., facial and toilet tissue) and an increase in cross-purchasing behaviors. Compared with traditional online platforms, O2O has advantages in necessity categories with instant needs such as frozen food, facial tissue, and toilet tissue, thanks to fast de

75、livery. Meanwhile, unlike traditional e-commerce, where food and beverage significantly lag in penetration, categories such as soy sauce and milk have surpassed some personal care and home care categories in O2O penetration.Among the four types of O2O platforms weve tracked closely since 2020, offli

76、ne retailers and community group buys drove growth through aggressive expansion led by the leading players. The horizontal marketplace and vertical grocery EC showed more stable growth and even declined.Kantar Worldpanel | Bain & Company, Inc.China FMCG: Slowly Rebounding from Turbulence with Optimi

77、sm for the Rest of 20239Out-of-home consumption reboundedThe release of pandemic-related restrictions ushered in a resurgence of outdoor activities. As a result, domestic traffic and catering sales swiftly rebounded from the start of 2023. For the 11 tracked key food and beverage categories in Tier

78、1 and 2 cities4, out-of-home (OOH) consumption steadily recovered, obtaining 4.6% growth in April. Restaurant enjoyed the highest growth (36%) among all channels, thanks to an increase in OOH catering occasions. As a result, on-premises drinks such as beer, juice, and ready-to-drink tea saw outstand

79、ing growth rates of 11.0%, 20.7%, and 19.0%, respectively.Whats nextand implications for brands and retailersChinas recovery from its year-end Covid-19 outbreak and subsequent release of Zero-Covid policies has produced the expected bounce back in economic activities, as evidenced by first quarter G

80、DP growth and retail sales. Economists expect the recovery to accelerate in the second half, particularly on the back of a low base of comparison in the same period in 2022. Consumption will remain the key fac-tor of economic growth, with consumer confidence showing a steady uptick trend. Furthermor

81、e, the government has already implemented stimulus policies to boost consumption and is expected to announce more.Following the economic recovery, the FMCG industry continues to demonstrate resilience, as consumers, brands, and retailers are adapting to ever-changing circumstances. The FMCG recovery

82、 trend is likely to continue over the coming months, repeating a few trends from the first quarter of the year.Implications for brandsIn an evolving market with volatile shifts in consumer needs and preferences, its vital that brands closely monitor shifts in consumer needs, as well as competitors m

83、oves, so they can optimize portfolio and pricing strategies to maximize brand value. Increasing price sensitivity by consumers should lead FMCG brands to adjust their cost position and reinvest savings in marketing and price/promotion. Changing and proliferating channel dynamics require brands to in

84、tegrate channel strategies and break silos between online and offline channels in planning. Moreover, given the resurgence of OOH consumption, brands should strategically reinvest in food service-related opportunities.Implications for retailers With fierce competition, retailers should focus on clea

85、rly defined core shopper segments. They can enhance shopper loyalty through differentiated value propositions that are embedded in merchandising, pricing and promotions, and shopper engagements. Category trends related to demand and pricing are still evolving, so retailers are encouraged to refine c

86、ategory roles and assess product economics down to SKU-level granularity. Lastly, the O2O trend is growing and irreversible. Retailers need to fully capture the opportunity by amplifying their self-built O2O services or seeking partnerships with the leading O2O partners.Kantar Worldpanel | Bain & Co

87、mpany, Inc.China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 202310The full reportIn our report, we recap fast-moving consumer goods (FMCG) performance in 2022, during which consumer behavior remained heavily influenced by the Covid-19 pandemic. We also explore consumer tre

88、nds from the first four months of 2023, after dynamic Zero-Covid policies were lifted. The report includes implications for consumer goods companies and retailers.This is the 12th consecutive year that we have tracked the shopping behaviors of Chinese consumers. Our continuing research has given us

89、a valuable long-term view across 106 FMCG categories purchased for home consumption in China. As in each of the past 11 years, we analyzed the 26 key categories that span the four largest consumer goods sectors:2 packaged food, beverages, personal care, and home care. This report updates the finding

90、s from our China Shopper Report 2022, Vol. 2, Still Volatilebut with Signs of Hope, and includes Kantar Worldpanel shopper behavior data for 2022 and the first four months of 2023.A look back at 2022In 2022, China continued to be severely affected by Covid-19. Two major waves of Covid-19-related dis

91、ruptioncity-wide lockdowns in the first two quarters and resurgence of mass infections in the fourth quartertriggered consumption slowdown, eroded consumers income and buying power, and also disrupted supply chains and logistics. As a result, the FMCG market landed at a weak annual growth rate in 20

92、22 (1.5%), with hyper volatile quarterly performance. Despite resilient growth in the first two quarters (2.8%) and strong recovery in the third quarter (6.3%), infections in December disrupted the FMCG market, resulting in a 3.9% value decline in the fourth quarter (see Figure 1).Despite overall vo

93、lume growth in the first three quarters, FMCG volume dropped 1.2% in the fourth quarterthe first drop since the initial outbreak period in the first quarter of 2020. This drop can be explained by a reduction in stockpiling activities as Covid-19-related restrictions relaxed, and consumers using stoc

94、ked products they had purchased in previous quarters. Infections also eroded purchase intent.The average selling price (ASP) deflationary trend, which was first observed in 2020, continued throughout the year. In fact, it dropped precipitously. It fell 2.5% in 2022 vs. 1% the prior year (see Figure

95、2). The consumer price index (CPI) increased by 2% in 2022, and brands continued to experience rising input costs. However, consumers showed a lower willingness to pay for FMCG products given the mounting economic pressures.Packaged food and home care dominated growth Among the four sectors, package

96、d food experienced robust growth in 2022, with an increase of 6.3%the highest increase in the past four years (see Figure 3). Growth was driven by both volume (3%) and ASP (3.2%). As the Covid-19 pandemic unfolded in 2022, lockdowns and restrictions on dining out compelled people to explore at-home

97、dining solutions and fueled stockpiling behaviors. Kantar Worldpanel | Bain & Company, Inc.11China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.Figure 1: After a resilient H1 and robust Q3, FMCG market experienced -3.9% growth in Q

98、4 due to the Covid-19 outbreak, weakening annual growth to 1.5%Note: Kantar updated the 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

99、goods20%100-10Q1Q2Q320185.2%Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4NationwideCovid-19infectionsCity-widelock-downsCovid-191stbreak-outYear-over-yearannual value growth20195.6%20200.1%20213.1%20221.5%Total FMCGFood and beveragePersonal and home careUrban FMCG market value growth (%, Q1Q4 2022 vs. Q1Q4 202

100、1)10%50-5ValueGrowth rate (%, 2022 vs. 2021)10%50-510%50-5VolumeAverage selling price3.32.36.3-3.95.58.6-1.2-2.5%1.5%4.1%4.6Last volume drop happened in Q1 2020(i.e., the initial Covid-19 outbreak)-1.3-3.0-2.1-2.8Urban FMCG market volume growth (%, Q1Q4 2022 vs. Q1Q4 2021)Urban FMCG market ASP growt

101、h (%, Q1Q4 2022 vs. Q1Q4 2021)Q1 22Q2 22Q3 22Q4 22Q2 22Q3 22Q4 22Q1 22Q2 22Q3 22Q4 22Q1 22Note: Kantar updated the consumer universe in 2022 and 2023, leading to some inconsistencies with previous years dataSources: Kantar Worldpanel; Bain analysisFigure 2: Price deflation occurred throughout the ye

102、ar; in Q4, volume dropped for the first time since Q1 2020, leading to value decreaseChina FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 202312Within the sector, instant noodle emerged as a leading force, enjoying an extraordinary fourth quarter and 20% value growth for the y

103、ear. Similarly, seasoning products like soy sauce also saw surges in demand from in-home cooking. Likewise, nutrition supplements picked up growth due to an increase in health consciousness. The sectors healthy ASP increase (3.2%) was partially driven by premium product innovations. With more attent

104、ion on health, consumers showed a willingness to pay for healthy concepts in the packaged food sector.Besides packaged food, home care also enjoyed healthy growth in 2022 (5.6%), driven by both volume (4.4%) and ASP (1.1%). Unsurprisingly, heightened hygiene awareness from the Covid-19 outbreaks fue

105、led demand for some hygiene-related categories, such as facial and toilet tissue. In 2022, facial and toilet tissue achieved value growth of 11.8% and 7.1%, respectively. The sectors ASP growth (1.1%) was driven by both price increases of raw materials and manufacturer-led product premiumization. Be

106、verage faced significant challenges during Covid-19 lockdowns and nationwide infections, resulting in a weak full-year value growth of only 1.1%. It enjoyed a strong recovery of 10.4% during the post-lockdown periods in the third quarter. Unfortunately, the sector experienced a value decline in the

107、fourth quarter (-6.8%) due to significantly reduced consumption, especially in alcohol-related categories, because of the infections and persistent health concerns. The overall sector value growth was largely driven by volume increase (5.1%) while ASP declined (-3.8%). Within the sector, juice, read

108、y-to-drink tea, and functional drinks led the growth thanks to health-focused concepts and innovations pushed by manufacturers. In terms of ASP, juice showed a significant increase as a result of premium innovations like not-from-concentrate (NFC) juice and zero-sugar options. However, wine/foreign

109、spirit, and Chinese spirit categories showed substantial ASP decline in 2022 from reduced consumption and willingness to pay.Consumers avoidance of social gatherings in 2022 hurt personal care throughout the year. It experienced a significant value drop of 10.9% in the fourth quarter, landing on a f

110、ull-year value decline of 4.8%. ASP decline drove the sector value drop in 2022, though volume growth was flat. Within the sector, makeup continued to experience significant volume decline (-14.2%) and ASP deflation (-4.6%) due to fewer social occasions and ongoing mask-wearing policies. Meanwhile,

111、both the skin care and toothbrush categories showed clear ASP decline, -4.8% and -6.8%, respectively, as consumers shifted toward more value-for-money options enabled by fierce competition. Personal hygiene-related categories like personal wash and toothpaste had relatively stable performances in 20

112、22, achieving value growth of 2.5% and 1.2%, respectively.The two-speed growth phenomenon we first identified in 2016 was still evident. Consistent with our findings in 2022 Vol. 2, high-speed categories were largely concentrated in food, beverage, and personal hygiene, while many nonessential or re

113、placeable categories experienced negative growth (see Figure 4). Kantar Worldpanel | Bain & Company, Inc.13China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.Figure 3: Packaged food and home care led growth, beverage growth slowed

114、down, and personal care reversed its growth trends due to suppressed needs in 2022Total FMCGFMCG BreakdownUrban FMCG market value growth(%, 20182022)Urban FMCG market value growth(%, 20182022)Note: Kantar updated the consumer universe in 2022 and 2023, leading to some inconsistencies with previous y

115、ears dataSources: Kantar Worldpanel; Bain analysisHome carePersonal careBeveragePackaged food181919202021212220212122181919205.610%5.60.13.11.550-515%5100-55.210.49.4-4.84.21.111.81.15.5-4.53.06.3-1.11.02.3FoodNonfoodPercentage point change in value CAGR (%, 2022 vs. 2021)High speed40%3020010-10-20-

116、30Low speed20191916151312121111-20-16-14-12-11-11-9-8-6-5Notes: 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 analysisInstantnoodleJuiceIcecreamWettissuesFrozenf

117、oodPetfoodCarbonatedsoft drinksFacialtissueFunctiondrinkHandwashAirrefresherCerealsToothbrushYogurtWineFragranceForeignspiritChewinggumSoybeanmilkMakeupCategory highly sensitive to Covid-19 Category grew 3 consecutive years Category declined 3 consecutive yearsFigure 4: Two-speed growth continued in

118、 2022, with categories highly reactive to Covid-19 and categories showing a consistent growing trend in the past three yearsChina FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.14In 2022, we observed that some categories were highly

119、sensitive to Covid-19, such as instant noodle, hand wash, and fragrance. Instant noodle showed exciting growth at 20% in 2022 thanks to the increase in at-home eating. In contrast, it experienced negative growth (-10%) in 2021, when the pandemic subsided. Similarly, demand for hand wash surged to 11

120、% growth in 2022, when hygiene concerns were top of mind, but declined 10% in 2021. Fragrance was the opposite. It enjoyed 28% value growth in 2021, but declined 11% in 2022, when social occasions were drastically reduced. Meanwhile, a few categories have shown consistent growth over the past three

121、years. A “little treats mentality” during lockdowns continued into 2022 and benefited categories such as ice cream (CAGR 201922 at 20%) and carbonated soft drinks (CAGR 201922 at 15%). Similarly, facial tissue (CAGR 201922 at 10%) maintained demand due to ongoing health considerations. On the other

122、hand, yogurt maintained a declining trend (CAGR 201922 down 10%) due to its weakening value proposition vs. substitutions such as milk and juice.E-commerce growth slowed while O2O soaredConsistent with our findings in 2022 Vol. 2, growth in e-commerce slowed in 2022. The year-over-year growth rate w

123、as 2% in 2022, relative to 14% in 2021. E-commerce stagnation was a result of logistic disruptions that occurred during lockdowns in the first and second quarters and nationwide infections in December, as well as heightened regulatory scrutiny of key opinion leaders and the livestreaming industry. I

124、n contrast, convenience stores and grocery gained traction, achieving 7% and 8% year-over year growth, respectively. They benefited as consumers preferred the predictability, convenience, and safety of shopping at nearby locations during the pandemic (see Figure 5).Online-to-offline (O2O) boomed dur

125、ing Covid-19 outbreaks as consumers stocked up and fulfilled instant needs while avoiding traffic and exposure in large physical stores. As a result, FMCG O2O saw 18% value growth in 2022 and channel share increased from 5.7% to 6.7% of total FMCG. O2O became a critical value contributor for the top

126、 10 offline key accounts, accounting for 15% share, on average, with contribution ranging from 5% to 50% individually.5 Large brands and domestic brands pulled aheadBrand competition remained dynamic. We compared category share gains and losses between large brands and their smaller insurgent counte

127、rparts, as well as between foreign and domestic brands.In the battle between large and small brands, we found that, in 2022, the top five brands regained share in a few categories in which long-tail/insurgent brands had won in the previous two years. This change is similar to what we observed in the

128、 first quarter of 2020. During turbulent times, larger brands tend to be more trusted by consumers and have more resilient supply chains and distribution networks, as well as financial strength. For example, in the facial tissue category, an increase in raw materials caused a few small tissue brands

129、 to experience profitability issues and exit the market, benefiting larger brands. At the same time, long-tail brands managed to continue gaining share in some categories, such as juice, in which insurgent brands like Lingduguofang（零度果坊）, DrinkClean（纯饮）, and Genki Forest（元气森林） innovated in health-fo

130、cused concepts to spur growth. Similarly, in the toothbrush category, many small local brands entered the electronic toothbrush segment and aggressively gained share with value-for-money positioning (see Figure 6).15China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kant

131、ar Worldpanel | Bain & Company, Inc.Figure 6: Brand competition remained dynamic; top 5 brands regained share in a few categories in which long-tail (insurgent) brands were winning in previous 2 yearsSources: Kantar Worldpanel; Bain analysisShare gain/loss of top 5, top 620 and long-tail brands(%, 2

132、022 vs. 2021)Categories in which Top 5 brands regained share in 2022, whileinsurgent brands gained in 202021Top 5 brands losing sharesTop 5 brands gaining shares6%3.92.92.21.91.51.51.31.31.30.70.90.50.50.80.90.80.80.91.20.81.21.91.92.52.03.3-3.9-2.9-2.2-1.9-1.5-1.5-1.3-1.3-1.3-0.7-0.9-0.5-0.5-0.8-0.

133、9-0.8-0.8-0.9-1.2-0.8-1.2-1.9-1.9-2.5-2.0-3.3420-2-4-6InfantformulaFacialtissueChewinggumToilettissueInstantnoodlePackagedwaterDiaperReady-to-drinkteaKitchencleanerTooth-pasteFabricdetergentBeerPersonalwashSkincareCarbo-nated softdrinksBiscuitMilkHaircondi-tionerChocolateYogurtMakeupFabricsoftenerSh

134、ampooJuiceCandyTooth-brushTop 5Top 620Long-tailFigure 5: E-commerce kept gaining share while growth continued to slow down; small offline formats (convenience store, grocery) outgrewNotes: Kantar updated the consumer universe in 2022 and 2023, leading to some inconsistencies with previous years data

135、; in Kantar Worldpanel, 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 analysisValue share in urban FMCG retail market by channel(B RMB)1,3821,3

136、831,4261,4471,309100%80604020014%12%12%12%15%22%28%31%32%17%4%4%3%3%3%3%5%5%4%4%5%19%17%16%15%20%34%32%31%31%35%20192020202120222018OtherE-commerceGroceryConvenience storeSpecialist storeHypermarketCAGR(2122)1.5%5%2%8%7%-1%-4%2%CAGR(2021)3.1%1%14%-12%1%-1%-3%0%CAGR(1820)2.8%-6%32%-11%-1%-6%-6%-2%Sup

137、er/mini3%3%3%3%China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.16Competition between foreign and domestic brands showed similar trends to previous years. Among the 26 categories that we track, domestic brands gained share from f

138、oreign brands on aggregate, mainly through volume gains, while ASP decreased. Domestic brands performed strongly in a few categories, such as instant noodle and juice. In 2022, foreign brands lost value through both volume and ASP. Interestingly, significant ASP decreases were observed in a few cate

139、gories, with clear trade-down trends, such as skin care and toothbrush.The first quarter of 2023 provides insight into the road aheadAfter a challenging year in 2022, Chinas economy has been gradually rebounding. The first quarter of 2023 showed promising signs of economic recovery and suggested a p

140、ositive trajectory for the rest of the year. Notably, Chinas economic growth and overall retail sales both exceeded expectations. GDP expanded 4.5% in the first quarter. Total retail sales, excluding auto, achieved 10.5% growth in March and 16.5% growth in April. Moreover, domestic traffic also resu

141、med, evidenced by a 20% total increase in subway traffic across 29 major cities, resembling March 2019 levels. Likewise, catering sales enjoyed 26.3% growth in March and 43.8% in April. However, full recovery takes time, and some concerns persist. By March, the Consumer Confidence Index showed a ste

142、ady upward trend but has yet to return to pre-pandemic levels. This suggests consumers are gradually gaining confidence now that the governments Zero-Covid policies have ended, but many are hesitant to resume their pre-Covid-19 spending patterns. Additionally, the unemployment rate remained around 5

143、.5%, with youth unemployment (1624-year-olds) surging to 19.6% in March and affecting the immediate purchasing power of young consumers.Overall, in the first quarter, the FMCG industry rebounded from the fourth quarter of 2022 and reported value growth of 1.9%, driven by modest volume growth (2.7%),

144、 despite a decline in ASP (-0.8%). Both food and nonfood sectors rebounded to positive growth, hitting 2.0% and 1.7%, respectively (see Figure 7). While the overall FMCG growth rate was moderate in the first quarter, the month-by-month basis was more volatile. January was severely affected by a Covi

145、d-19 outbreak. The trajectory, however, drives optimism for consumption in the coming months. April experienced an exciting FMCG growth of 5.1%.Packaged food and home care continued to grow, while personal care and beverage showed signs of recoveryAcross all four major sectors, home care continued t

146、o lead growth at 13% in the first quarter, achieving the highest quarterly growth rate since the third quarter of 2020. Packaged food also grew 3.2%. Beverage and personal care showed signs of recovery as social gatherings increased (see Figure 8).Delving deeper into each sector, home cares healthy

147、growth was driven by both volume (9.5%) and ASP (3.2%). Nearly all key categories continued to grow due to heightened attention to hygiene and health-related needs. The impact of Covid-19 and influenza infections persisted into the first quarter of 2023 and caused paper-related categories and disinf

148、ectants to soar. For instance, facial tissue grew 22.1% in value, with 16.3% growth in volume and 5% growth in price. The heightened focus on hygiene and health-related needs is expected to continue for the rest of the year. In April, the overall home care sector grew 12.2%.17China FMCG: Slowly Rebo

149、unding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.Note: *4 weeks ended April 21, 2023Sources: Kantar Worldpanel; Bain analysis Total FMCGFMCG BreakdownUrban FMCG market value growth(%, Q1 2022Q1 2023 vs. Q1 2021Q1 2022; Apr 2023 vs. Apr 2022)Urban FMCG

150、market value growth(%, Q1 2022Q1 2023 vs. Q1 2021Q1 2022; Apr 2023 vs. Apr 2022)10%50-515%5100-5Home carePersonal careBeverage-6.8-0.9-3.6-0.8-2.6-3.9-10.9Packaged foodQ422Q322Q222Q1223.32.36.35.1Q123April23*1.96.13.43.23.83.35.912.23.010.46.57.86.113.02.90.31.08.38.8Q122Q222Q322Q422Q123April23Achie

151、ved the highest quarterly growthsince Q3 2020, driven by paper (e.g.,facial tissue) and disinfectant productsdue to heightened health needsFigure 8: Home care achieved significant growth in the first four months in 2023, while beverage and personal care showed clear signs of recoveryYear-over-year c

152、hange in urban shoppers total spending on fast-moving consumer goods20%100Note: Kantar updated the consumer universe in 2022 and 2023, leading to some inconsistencies with previous years data; *4 weeks ended April 21, 2023Sources: Kantar Worldpanel; Bain analysisTotal FMCGFood and beveragePersonal a

153、nd home careQ1Q2Q320185.2%Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q1 April*Q4Year-over-yearvalue growth20195.6%20200.1%20213.1%202220231.5%1.9% 5.1%-10Figure 7: China FMCG recovered slowly in Q1 2023 to about 1.9% growth, and achieved a growth at 5.1% in AprilChina FMCG: Slowly Rebounding from Turbulence wi

154、th Optimism for the Rest of 202318In the packaged food sector, value growth (3.2%) was mainly driven by an ASP increase (5.2%). However, volume dropped 2% as stockpiling behaviors reduced and out-of-home catering occasions increased. Nearly all of the packaged food categories that we tracked (e.g.,

155、biscuits, chocolate, candy, and chewing gum) experienced value drops in the first quarter. Even instant noodles high-speed growth momentum from 2022 stopped. Instant noodle only slightly increased value in the first quarter (0.9%), driven by an ASP increase of 6.3%. However, seasoning and nutrition

156、supplements maintained their growth trends, due to at-home cooking habits and health needs cultivated during the pandemic era. In April, we observed a fair growth rate of 3.8% in the packaged food sector.Beverage value grew 1% in the first quarter of 2023, driven by volume growth (3.4%) and ASP decl

157、ine (-2.4%). Juice, ready-to-drink tea, milk, and packaged water led the sectors growth. In April, the beverage sector experienced a further growth of 3.3%, displaying its rebound trajectory.In personal care, the trend of declining value slowed in the first quarter of 2023 (-2.6%), with an increase

158、in volume (4.1%) thanks to an increase in social occasions. Most categories showed healthy volume growth compared with last year. For example, hair conditioner and personal wash achieved volume growth at 6.7% and 6.1% respectively. In April, the sector achieved an exciting growth of 5.9%, providing

159、confidence for the upcoming months.Categories reflect predictable rebound patternsThe resurgence of Covid-19 outbreaks in December 2022 and January 2023 and gradual improvement from February to April encouraged us to revisit the four distinct category rebound trajectories that were identified in 202

160、0: Continuous booming categories benefited during Covid-19 outbreaks in December 2022 and January 2023 and achieved stable growth afterward. Boom and stabilize categories grew during outbreaks but did not sustain their growth post-Covid-19. V-shape and stabilize categories were hit hard by the pande

161、mic but rebounded afterward. L-shape categories declined during and after the outbreak and took longer to recover.By revisiting these category-specific rebound trajectories, we can better anticipate trends in the coming months. In this study, the four distinct patterns continued into the first quart

162、er of 2023, though the level of divergence was less pronounced, and convergence came much sooner (see Figure 9). This can be attributed to several factors. First, consumers were more relaxed about stockpiling during nationwide infections given the certainty of policy relaxation. For example, instant

163、 noodle was a stockpiling item in the boom and stabilize category during previous outbreaks but experienced relatively milder growth during the more recent infections and stabilized sooner. Second, the release of Covid-19 restrictions encouraged consumers to significantly increase outdoor activities

164、 and social gatherings, resulting in a sharper rebound for categories like shampoo, hair conditioner, fabric softener, and fabric detergent.Kantar Worldpanel | Bain & Company, Inc.19China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, In

165、c.Zooming into the continuously tracked categories, the majority rebounded similarly to 2020, but a few categories displayed different patterns due to four factors: Increased social occasions: The release of Zero-Covid policies and mask mandates had a significant impact on certain categories, such a

166、s makeup and wine/foreign spirit, causing the categories to shift from an L-shape to a V-shape. Both categories experienced a notable decline during the nationwide infections in December (-32% and -29%, respectively) but quickly rebounded in March. Demographic changes: The number of births declined

167、sharply since 2020 and significantly challenged baby-related categories, especially infant formula and diapers. Though they followed V-shape and boom and stabilize patterns in 2020, they clearly shifted to L-shape in 2023 with a continuous decline. Sources: Kantar Worldpanel; Bain analysis4 w/e 2022

168、/11/0430%0-1515-30FMCG sales value year-over-year growth (Nov. 2022 to Mar. 2023, %)4 w/e 2022/12/024 w/e 2022/12/30Nationwide Covid-19infections8 w/e 2023/02/244 w/e 2023/03/24Four types of category growthtrajectories sustainedHowever, one-third showed differentpatterns vs. 2020Category with patter

169、n changesCategory without pattern changesL-shapedV-shape and stabilizeContinuous boomingBoom and stabilizeYogurtDiapersInfant formulaCandyChocolateJuiceMakeupBiscuitsBeerChinesespirits/ SakeWine/foreign spiritsReady-to-drink teaHouseholdcleanerInstantnoodlesFacial tissueToilet tissueFrozen foodPacka

170、gedwaterSoy sauceContinuousboomingBoom andstabilizeV-shape andstabilizeL-shapedCarbonatedsoft drinksPersonalwashPet foodChewing gumMilkSkin careShampooHairconditionerToothpasteToothbrushFabricdetergentFabricsoftenerFigure 9: Four distinct rebound trajectories continued; most categories showed consis

171、tent rebound trends as in 2020, but one-third responded differentlyChina FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 202320Kantar Worldpanel | Bain & Company, Inc. Boosted category growth: Category education and consumer lifestyle changes played pivotal roles in driving sus

172、tainable growth. Juice and ready-to-drink tea are two categories that shifted from L-shape to V-shape. This transformation can be attributed to flavor innovations, healthier formulations, and appealing packaging designs. As a result, both juice and ready-to-drink tea experienced remarkable rebound p

173、ost-outbreak, achieving growth rates of 25% and 15%, respectively, in March. Pet food also changed from V-shape to continuous booming, benefiting from lifestyle changes during the pandemic as people spent more time at home and sought companionship through pet ownership. This shift in consumer behavi

174、or led to sustained growth in pet food, with 21% growth during the period of national infections in December 2022 and 15% growth in March. Constant epidemic outbreaks: In the first quarter, ongoing Covid-19 and influenza A outbreaks increased demand for hygiene and health-related categories such as

175、toilet and facial tissue. As a result, both categories shifted into the continuous booming pattern. Toilet tissue and facial tissue have seen constant growth at 10% and 30% respectively since the Covid-19 outbreak in December 2022. Pricing trends across categories further diverged Since this year, t

176、he inflation has significantly moderated, as evidenced by the 1.3% rise in the CPI in the first quarter of 2023 compared with 2% in 2022. Additionally, it experienced a minimal increase of only 0.1% in April, marking the slowest month of growth since early 2021. Overall FMCG continued its deflationa

177、ry trend, which has persisted since the beginning of 2020. However, this deflationary trend is not uniform across all categories, channels, or brands.Facing continuous rising input costs, FMCG brands have pushed for price increases to manage their margins in the first quarter of 2023. However, overa

178、ll ASP continued to decline in the first quarter of 2023 (-0.8% vs. last year). In general, consumers opted for lower-priced products and shifted toward lower-priced channels like online. Compared with previous years, promotion rates abated a bit (down 1.3%) in both online and offline channels. In t

179、he first quarter of 2023, the online promotion rate declined 2.1%, while the offline promotion rate decreased 1.6%.Looking at the four sectors over the past two years, packaged food and home care both managed to reverse the ASP deflation trend by responding to surging demand for necessity products d

180、uring the pandemic. Conversely, personal care and beverage experienced continuous declines. This can be attributed to consumers reduced willingness to pay for products deemed nonessential (see Figure 10).FMCG brands across all sectors continued pushing for price increases in the first quarter of 202

181、3. However, consumers reacted to the price increases quite differently across sectors (see Figure 11).21China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.Figure 10: Packaged food and home care reversed the ASP downtrend over the p

182、ast two years; beverage and personal care continued their ASP downward trendSources: Kantar Worldpanel; Bain analysisPackaged foodBeveragePersonal careHome careYear-over-year growth ofpackaged food ASP(%, 20192022, Q1 2022Q1 2023)6%420-2-42020 2021 2022Q120232020 2021 2022Q12023202020212022Q12023202

183、0 2021 2022Q120236%420-2-46%420-2-412%840-4-8-3.8-0.8-2.5-2.8-2.4-4.9-1.50.60.75.23.20.11.13.2-1.9-6.4Year-over-year growth ofbeverage ASP(%, 20192022, Q1 2022Q1 2023)Year-over-year growth ofpersonal care ASP(%, 20192022, Q1 2022Q1 2023)Year-over-year growth of homecare ASP(%, 20192022, Q1 2022Q1 20

184、23)Figure 11: FMCG brands continued pushing for price increase in Q1 2023, but consumers reactedwith different approaches across sectorsNotes: LFL = like-for-like; Analysis only reflects the average shopping behavior of single households and is not comparable to the total FMCG trendSource: Kantar Wo

185、rldpanelContribution of different factors to FMCG average household spending change(12 weeks ending 2023/03/24 vs. 12 weeks ending 2022/03/25)Overall like-for-likeprice increase forexisting SKUsShoppers are buyingmore/less FMCGcategories and/or ahigher/lower volumewithin certain categoriesShoppers a

186、re buyingin fewer premiumstores/channelsFewer promotion eventsor lower discountShoppers arechoosing a more/lessexpensive productShoppers arespending more/lesson FMCG vs. last yearLFL* price increaseAvg. householdpurchase volumeStore choicePromotion choiceProduct choiceAvg. householdspendingShopper r

187、esponses to LFL price increasePackagedfoodBeverageHomecarePersonalcare3.02.2-2.00.2-8.1-4.85.26.5-0.70.7-1.89.91.91.0-0.60.2-4.9-2.34.0-9.5-0.40.2-3.42.2China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.22Packaged food: Brands tri

188、ed to pass inflation costs to consumers with a like-for-like price increase of 4.0% in the first quarter of 2023. Consumers reacted strongly through purchase volume drop and product choice, but didnt change much in channel selection and promotion participation. The significant volume drop of 9.5% ca

189、n also be partially explained by the decrease in at-home eating occasions and reduction in stock-up demands thanks to Covid-19 subsiding. Interestingly, consumers are willing to pay for premium products due to rising health awareness, resulting in a 2.2% increase in product choices. Therefore, the a

190、verage household spend on packaged food showed a 3.4% net decline in the first quarter of 2023.Beverage: In opposition to the packaged food sector, when beverage faced a lower like-for-like price increase (1.9%), consumers increased purchase volume by 1.0%, but opted for more value-for-money alterna

191、tives (-4.9%). As a result, the average household spend experienced a 2.3% net decline.Home care: Home care brands increased like-for-like price by 5.2%. To cope with the rising product price, some consumers switched to discounted online channels (-0.7%) and opted for more value- for-money options (

192、-1.8%). However, continued heightened hygiene and health awareness drove consumers to keep purchasing more (+6.5%). In the end, average household spending increased by 9.9% in the sector.Personal care: Consumers reacted most strongly to the price increase in the personal care sector: though brands t

193、ried to increase like-for-like prices by 3.0%, average household spending decreased by 4.8%, compared to the same time last year. Although consumers increased volume by 2.2%, thanks to rising demands driven by more outdoor and social occasions, they switched to discounted online channels (-2.0%) and

194、, more importantly, opted for more value-for-money alternatives or simplification of their daily routines (-8.1%).Zooming into the 26 tracked categories, pricing trends became more divergent. Some categories continuously premiumized with an ASP increase. This occurred primarily within the home care

195、and packaged food sectors, while other sectors (mainly in the beverage and personal care sectors) sustained a decline in ASP (see Figure 12).23China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.Continuous premiumization: Categories

196、 with this pattern experienced success through innovations, many of which addressed heightened health and hygiene needs. Juice, for example, experienced a premiumization trend by introducing products that embodied healthy concepts. In the first quarter of 2023, the premium juice segment experienced

197、25% volume growth and 7% ASP growth, largely surpassing the growth rate of the midrange and mass segments. Juice innovations included the adoption of new processing methods like NFC, which enhanced the quality and nutritional value of the juice. After introducing NFC plum juice in 2022, Huiyuan（汇源）a

198、mplified the NFC concept with the introduction of other flavors, priced at RMB 4/100 ml (vs. RMB 1 category average). Additionally, new flavors such as lime juice, hawthorn juice, and sea buckthorn juice played a significant role in driving up the price and attracting health-conscious consumers. Bra

199、nds like Baienshi（佰恩氏）launched zero-sugar lime juice in March 2023 as a healthier alterna-tive to traditional juice options and commanded a higher price (RMB 2.5/100 ml). Instant noodle is another example of premiumization. The premium segment of instant noodle experienced 27% vol-ume growth, while

200、the midrange and mass segments showed clear volume declines at 9% and 27%, respectively. Brands have been pushing to turn around the category image by launching premium healthy products and using new technologies (e.g., freeze-drying). Baixiang（白象）introduced Rich Crab Roe Noodle（蟹黄面）in 2022, adding

201、fresh ingredients and no fried noodles, priced at RMB 20+ per box (5 times higher than normal instant noodle SKUs).Figure 12: Zooming into 26 tracked categories, the ASP trend diverged even moreASP year-over-year growth(%, Q1 2023 vs. Q1 2022)ASP year-over-year growth (%, 2022 vs. 2021)2022 CPI: 2%Q

202、1 2023CPI: 1.3%T2: ASP growth reversedT4: Continuous ASP declineT1: Continuous premiumizationT3: ASP decline reversed-10-10010%-8-6-4-2246810%0Packaged foodBeveragePersonal careHome careMilkPersonal WashMakeupToothbrushSkin careShampooYogurtReady-to-drinkteaPackagedwaterInfant formulaHair conditione

203、rFacial tissueCandyFabric detergentBiscuitInstant noodleJuiceChocolateFabric softenerToilet tissueKitchen cleanerToothpasteBeerChewing gumCarbonated soft drinksDiaperNotes: For toilet tissue, ASP year-over-year growth from Q1 2022 to Q1 2023 is 16.2%; ASP year-over-year growth from 2021 to 2022 is 3

204、.9%Sources: Kantar Worldpanel; Bain analysis24China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.Continuous ASP decline: Categories with this pattern often faced trade-down behaviors or lower demand. A prime example is the toothbru

205、sh category, where intensified competition provided consumers with more value-for-money options. Across all price tiers, the mass segment showed the highest volume growth at 4%, with a 9% ASP decrease. More small local brands entered the market in recent years, often offering more affordable options

206、 (priced RMB 100300). Large electronic toothbrush players like Phillips and Oral B responded to this trend by introducing lower-priced product lines. For instance, in 2022, Phillips launched the HX2411 electronic toothbrush priced at around RMB 200. Its premium series is priced RMB 8002,000. Another

207、 example is the infant formula category, which experienced a sharp decline in value over the past few years, primarily attributed to the dropping birth rate. In response, brands have been adopting lower pricing strategies and increasing promotional activities to remain competitive. In the first quar

208、ter of 2023, nearly 50% of market value was sold on promotion.E-commerce reaccelerated, club warehouses soared, and O2O growth was sustainedThe lift of Covid-19 policies further shaped the channel dynamics in the FMCG industry. In the first quarter, some historical trends continued, for example the

209、rise of smaller formats (e.g., convenience stores and grocery), the club warehouse format, and O2O. On the other hand, we observed changes compared with previous years. For example, e-commerce went from idle growth in 2022 to accelerated growth in the first quarter of 2023, and hypermarket experienc

210、ed an amplified decline (see Figure 13). Notes: 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 is attributed to the channel of actual transaction of goods; gift channel value is

211、 allocated into each channel by its respective weightSources: Kantar Worldpanel; Bain analysisValue share in urban FMCG retail market by channel(B RMB)100%8060402004%5%1%1.9%1.5%3.1%(Q1 22Q1 23)(2122)(2021)CAGRCAGRCAGR-12%9%2%14%31%9%8%-12%-16%5%7%1%-3%4%-1%-1%-10%-12%-4%-3%-9%1%2%0%-6%0.1%(1920)CAG

212、R385Q1 2023378Q1 2022366Q1 20211,44720221,38320201,38220191,4262021OtherE-commerceGroceryConvenience storeSpecialist storeHypermarketSuper/mini13%29%5%14%32%13%28%4%17%32%13%27%5%17%32%12%32%4%15%31%12%28%5%17%32%14%22%5%19%34%12%31%4%16%31%3%4%3%3%3%3%3%3%3%3%3%3%3%3%Figure 13: E-commerce growth re

213、bounded as hypermarket declining trend worsened in Q1 2023; offline small format continued gaining share, partly driven by O2OChina FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.25In the first quarter of 2023, consumers accelerated

214、their shift toward online channels, reaching a growth rate of 9%up from 2% in 2022. The resurgence can be partially attributed to logistics resumption after a severe Covid-19 outbreak in December 2022. All 26 tracked categories showed positive penetration growth in the first quarter of 2023 vs. the

215、first quarter of 2022, whereas more than half of the categories experienced online penetration decline in 2022 (see Figures 14 and 15).Among e-commerce platforms, interest e-commerce companies like Douyin（抖音） and Kuaishou（快手） led the growth. Douyin gained significant traction in sales value for FMCG

216、 with a growth rate of 98%, becoming the third-largest e-commerce platform by sales value for FMCG in the first quarter of 2023 (see Figure 16). Its success could be attributed to its expanding user base, increased livestreaming penetration, and the introduction of new interfaces like Douyin Superma

217、rket.On the other hand, hypermarkets experienced an amplified downtrend in the first quarter, with a 12% decrease in sales value. This decline was influenced by a reduction in the number of stores, lower foot traffic due to the pandemic, and operational challenges faced by some key accounts. Contras

218、ting with the overall hypermarket trend, club warehouses saw significant growth. The club warehouse differs from a traditional hypermarket in three ways: membership fees drive profit more than product margins, items sold are mainly imported or self-labeled, and products are primarily sold in bulk wi

219、th lower unit prices vs. single packs. Club warehouses showed a remarkable increase of 38% in the first quarter (see Figure 17). Their growth is attributed to a growing number of buyers (30%) and increased shopping frequency (13%).O2O shopping habits have been growing over the past few years and con

220、tinue to thrive, even after the relaxation of Zero-Covid policies; FMCG O2O witnessed remarkable value growth of 16% in the first quarter. Around 44% of the incremental value was attributed to increased purchase intensity (e.g., higher shopping frequency or higher value per trip), and 36% came from

221、non-O2O channels, particularly offline hypermarkets, supermarkets, and mini markets (see Figure 18).Across different sectors, O2O showed higher importance in food (i.e., packaged food and beverage) than nonfood (i.e., personal care and home care), with 6.6% vs. 5.8% value share, respectively, in the

222、 first quarter of 2023. However, nonfood showed more exciting growth at 30%, driven by a few fast-growing categories (e.g., facial and toilet tissue) and growing cross-purchasing behaviors.From a category penetration perspective, O2O has distinct patterns compared with online penetration. Necessity

223、categories with instant needs, such as frozen food, facial tissue, and toilet tissue, lead O2O penetration. Consumers are responding favorably to the convenience and fast delivery offered by O2O solutions. Meanwhile, unlike traditional e-commerce, where food and beverage significantly lag in penetra

224、tion, categories such as soy sauce and milk have surpassed some personal care and home care categories in O2O penetration (see Figure 19).26China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.Figure 15: All categories online penetra

225、tion increased in Q1 2023, thanks to subsiding Covid-19 infections and the resumption of logisticsOnline relative penetration change(%, Q1 2023 vs. Q1 2022)Notes: Online relative penetration is defined as the total number of online purchasers divided by the number of purchasers of the category; onli

226、ne purchases includenot only traditional e-commerce (EC) platforms but also certain types of online-to-offline (O2O) platforms, namely Vertical Grocery EC and Community Group Buy;average penetration rate refers to the average online relative penetration rate of 26 tracked categoriesSources: Kantar W

227、orldpanel; Bain analysisPackaged food and beverageOnline relative penetration rate (%, Q1 2023)Q1 2022 average penetration rate: 24%Q1 2023 average penetration rate: 26%5-2020%46%10152025354045505565607075%30Personal care and home careCarbonatedsoft drinksFabric softenerReady-to-drink teaToothbrushF

228、abric detergentJuiceKitchen cleanerBeerChewinggumPackagedwaterMilkYogurtCandyInstantnoodleBiscuitsChocolateToothpasteShampooPersonal washToilet tissueHair conditionerInfantformulaSkin careFacial tissueMakeupDiaperOnline relative penetration change(%, 2022 vs. 2021)Notes: Online relative penetration

229、is defined as the total number of online purchasers divided by the number of purchasers of the category; online purchases includenot only traditional e-commerce (EC) platforms but also certain types of online-to-offline (O2O) platforms, namely Vertical Grocery EC and Community Group Buy;average pene

230、tration rate refers to the average online relative penetration rate of 26 tracked categoriesSources: Kantar Worldpanel; Bain analysisPackaged food and beverageDiaperFacial tissueSkin careMakeupInfant formulaToilet tissueFabric detergentPersonal washShampooToothpasteBiscuitsYogurtToothbrushChewing gu

231、mPackagedwaterChocolateCarbonated soft drinksBeerMilkKitchen cleanerReady-to-drink teaCandyHair conditionerInstant noodleFabric softenerJuiceOnline relative penetration rate (%, 2022)2021 average penetration rate: 37%2022 average penetration rate: 36%5-4-200%24%1015202535404550556560757080%30Persona

232、l care and home careFigure 14: In 2022, online penetration growth lost steam, with only a few categories continuing their upward momentum27China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 2023Kantar Worldpanel | Bain & Company, Inc.Notes: Platform sales value data of Douyi

233、n/Kuaishou is tracked since 2021; others include Red, VIP, Suning, Yunji, Kaola, and other long-tail platforms; Kuaishouand Douyin include sales value of transactions redirected and completed on third-party platformsSources: Kantar Worldpanel; Bain analysisChina Urban FMCG EC market share by platfor

234、m sales value (%)100%CAGR(Q1 22Q1 23)9%-2%CAGR(2122)2%-4%CAGR(2021)14%-9%CAGR(1920)32%11%44%63%n.a.n.a.12%-4%90%213%98%181%n.a.n.a.7%5%16%38%-1%-9%8%36%6080200402019202020212022Q1 2022Q1 2023(38%)(32%)(25%)(24%)(25%)(22%)(15%)(16%)(16%)(16%)(17%)(16%)(2%)(6%)(10%)(9%)(9%)(11%)(3%)(8%)(6%)(10%)(2%)(3

235、%)(3%)(4%)(45%)(47%)(44%)(39%)(40%)(36%)Taobao / TmallJDPDDDouyinKuaishouOthersFigure 16: Douyin overtook PDD for the first time, becoming the third largest e-commerce platform for FMCG in Q1 2023Note: Club warehouse is categorized in Hypermarket in Kantar Worldpanel and refers to Sams Club, Costco,

236、 Metro, Carrefour membership store, Freshippomembership store, Beijing Hualian Group membership storeSources: Kantar Worldpanel; Bain analysis Club warehouse FMCG retail value (B RMB, Q1 2021Q1 2023)Driving factors ofmembership store growth(Q1 2023 vs. Q1 2022)More buyersHigher frequency+30.3%+12.8%

237、Share oftotal channel43210Share ofhyper0.5%Q1 2021Q1 2022Q1 20231.92.83.848%38%3.83%0.7%4%1%7%Figure 17: Though hyper was on the downtrend, club warehouse grew rapidly, driven by both buyer increase and higher frequency28China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 202

238、3Kantar Worldpanel | Bain & Company, Inc.Figure 19: Necessity categories with instant needs led the O2O penetration; unlike online, some food and beverage O2O penetration exceeded certain personal care and home care categoriesNotes: O2O relative penetration is defined as the total number of O2O purc

239、hasing households divided by the number of purchasing households of the category;doesnt include categories covered in Kantar Worldpanel baby panel (e.g., infant formula, diaper) and Kantar Worldpanel beauty panel (e.g., skin care andmakeup)Sources: Kantar Worldpanel; Bain analysisO2O relative penetr

240、ation change(%, Q1 2023 vs. Q1 2022)Packaged food and beverageOnline relative penetration rate (%, Q1 2023)05-1012%10152025%Personal care and home careCarbonated soft drinksFabric softenerReady-to-drink teaToothbrushFabric softenerJuiceKitchen cleanerBeerChewing gumPackaged waterMilkYogurtCandyInsta

241、nt noodleBiscuitsChocolateSoy sauceToothpasteShampooPersonal washToilet tissueHair conditionerFrozen foodFacial tissueNecessity categories with instant needsNote: O2O value of total channel is calculated by dividing total urban FMCG O2O value by total urban FMCG channel value (excluding gift and wor

242、k unit channel);*increase in purchase intensity refers to O2O penetrated consumers purchasing more on O2O, which can be higher frequency or more purchasing per tripSources: Kantar Worldpanel; Bain analysisTotal Urban FMCG O2O value(B RMB, 20212022 and Q1 2021Q1 2023)Incremental Sales Breakdown(Q1 20

243、23 vs. Q1 2022)O2O valueof totalchannel100908010020212022Q1 2021Q1 2022Q1 202318%17%16%70831517205.7%6.7%4.9%5.6%6.3%Channel breakdownHyper/Super/Mini (51%)Pure online(31%)Conveniencestore/Grocery (5%)New O2O buyers fromother channels20%Increase in purchaseintensity*44%Others (13%)+3O2OvalueGaining

244、from non-O2Ochannel36%Figure 18: Online-to-offline continued gaining importance, mainly driven by increasing purchase intensity and gaining from offline hyper/super/miniChina FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 202329Among the four types of O2O platforms we closely

245、tracked, we observed these changing patterns:Offline retailers such as RT-Mart (大润发优鲜) and Walmart offer O2O services via self-owned or third-party delivery capabilities. Their growth surged 22% in the first quarter of 2023, mainly driven by an aggressive push by retailers to retain their offline st

246、ore shoppers through O2O solutions. Convenience and wide portfolio offerings are their primary value propositions. Vertical grocery e-commerce retailers such as Dingdong Maicai (叮咚买菜) rely on self-owned dark stores and their own delivery capabilities. This format lost share this year with negative g

247、rowth (-10%) mainly due to the closure of a leading player, Missfresh (每日优鲜), in 2022. This models best business opportunities are in condensed urban areas, so expansion potential seems limited. In fact, Dingdong Maicai halted operations in 10 cities in the past 12 months to prioritize profitability

248、. Community group buying (CGB) platforms such as Duoduo Maicai (多多买菜) and Meituan Youxuan (美团优选) rely on community captains to coordinate orders and deliveries and manage offline pickups. In 2022, lockdowns in top cities significantly boosted CGB penetration and cultivated new consumer habits thanks

249、 to their low-price value proposition. In the second half of 2022 and into the first quarter of 2023, we saw aggressive penetration expansion among leading players like Duoduo Maicai (多多买菜) and Taocaicai (淘菜菜). They sustained the rapid growth of the format, achieving 23% year-over-year growth in the

250、 first quarter of 2023.Horizontal marketplace platforms such as Meituan (美团), JD Daojia (京东到家), and Ele.me (饿了么) serve retailers and brands with O2O distribution capabilities. In 2022, these asset-light platforms saw steady growth at 18%. In the first quarter of 2023, growth slowed to 10%, mainly du

251、e to competition from offline retailers with similar delivery speed but more affluent portfolios.O2O shopping habits have been cultivated over the past years and are expected to continue, given the clear value propositions of convenience and quick and reliable delivery.Out-of-home consumption reboun

252、dedFollowing the release of Covid-19 restrictions in December 2022, consumers have been regaining the confidence to engage in social activities outside their homes. Several indicators such as do-mestic traffic and catering spending indicated quick rebounds of outdoor consumer activities. This year,

253、we continued to track 11 FMCG categories in food and beverage. We witnessed the out-of-home (OOH) consumption gradually recover and land at 4.6% growth in April for the 11 categories in Tier 1 and 2 cities, showing a positive sign for the rest of year.Restaurants experienced the highest growth (36%)

254、 thanks to an increase in OOH catering occasions. Across the 11 food and beverage categories, most drinks rebounded strongly in April. Beer, juice, and ready-to-drink tea saw outstanding growth rates of 11.0%, 20.7%, and 19.0%, respectively.Kantar Worldpanel | Bain & Company, Inc.China FMCG: Slowly

255、Rebounding from Turbulence with Optimism for the Rest of 202330Whats nextand implications for brands and retailersChinas recovery from its year-end Covid-19 outbreak and subsequent release of Zero-Covid policies has produced the expected bounce back in economic activities, as evidenced by first quar

256、ter GDP growth and retail sales. Economists expect the recovery to accelerate in the second half, particu-larly on the back of a low base of comparison in the same period in 2022, when the market was sig-nificantly affected. While conditions have improved, macroeconomic obstacles cannot be ignored,

257、such as high youth unemployment, a mixed recovery in the property sector, and overcapacity in the industrial sector. Consumption will remain the key factor of economic growth, bolstered by a steady recovery in consumer confidence. Furthermore, the government has already implemented stimulus policies

258、 to boost consumption, and more are expected. However, we also observed continuous price sensitivity from consumers and a persistent FMCG deflationary environment.Following the economic recovery, the FMCG industry continues to demonstrate resilience, and consumers, brands, and retailers continue to

259、adapt to ever-changing circumstances. The FMCG recovery is likely to persist over the coming months, repeating a few trends from the first quarter of the year.To be positioned for success in 2023 and beyond, brands should:Follow the consumers in their post-Covid-19 needs: Since the conclusion of the

260、 Covid-19 pandemic, remarkable shifts in consumer needs and preferences have occurred. For example, a few nonessential categories, especially in personal care and beverage sectors, are likely to experience a demand rebound thanks to more social gatherings. Continued demand for health and hygiene pro

261、ducts is expected, driven by the habits cultivated over the past three years of dealing with Covid-19. The FMCG market has pockets of opportunities in new demands, new segments, new geographies, new occasions, new channels, new touchpoints, and so forth. Therefore, brands must closely monitor and un

262、derstand these ever-evolving demands, as well as keep a vigilant eye on the strategic moves of their competitors, to unleash all the potential growth opportunities. Manage costs down: With persistent deflationary trends across FMCG, albeit with differences by category, it is critical for brands to m

263、anage their costs and focus on what really matters to the consumers in terms of product formulation, raw materials, and packaging materials. The savings achieved in these areas can be invested in marketing and pricing/promotion to address the ongoing price sensitivity.Build integrated route-to-marke

264、t strategies: The border between online and offline channels is blurred thanks to the fast development of O2O. Meanwhile, the dynamics among online channels keep evolving (e.g., traditional e-commerce platforms, interest e-commerce, and private domain). Moreover, new offline formats, like the club w

265、arehouse, are gaining traction. To fully unleash the opportunities within winning channels, brands should break their strategic planning silos between online and offline. They need to develop integrated strategies with differentiated collaboration models that address the distinct demands of each cha

266、nnel type/customer.Kantar Worldpanel | Bain & Company, Inc.China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 202331Rejuvenate OOH opportunities: Early signs of consumption trends show that post-Covid-19 consumers are prioritizing experience-based consumption, like travel an

267、d OOH meals. With the resurgence of OOH consumption, it is crucial for food and beverage brands to strategically reinvest in food service-related channels, such as restaurants.Facing intensified competition and changing channel dynamics, retailers should also:Sharpen their value propositions and enh

268、ance shopper loyalty: Given the proliferation of retail formats, retailers should focus on clearly defined core shopper segments and deeply understand their unique preferences and needs. Thus, they can enhance shopper loyalty through differentiated value propositions that are embedded in merchandisi

269、ng, pricing and promotion, and shopper engagements to maximize consumer lifetime value.Optimize category and assortment: As social activities increase, consumers demands will evolve across categories. Retailers should adjust and redefine their category roles accordingly. Because consumers product ch

270、oices vary by category, retailers should assess product economics with demand projections at SKU level within each category and optimize pricing and promotion mechanisms.Double down on O2O: Consumers have embraced O2O during Covid-19 and are expected to continue to do so beyond Covid-19. Retailers m

271、ust fully capture this irreversible trend by breaking through silos between online and offline operations. To do so, they can pursue self-built O2O services or seek deep partnerships with the leading O2O platforms, design compelling assortments to maximize full category performance (e.g., drive full

272、 potential of necessity categories while nurturing nonfood sectors), adjust the supply chain and fulfillment capability, offer optimal consumer activations, and so forth.Kantar Worldpanel | Bain & Company, Inc.China FMCG: Slowly Rebounding from Turbulence with Optimism for the Rest of 202332Notes1.

273、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 adjuste

274、d the online channel weight factor upper threshold for paper products to better reflect market realities in 2020. Skin care and makeup data are collected from the Kantar Worldpanel beauty panel, covering consumers aged from 1564 in Tier 15 cities; infant formula and diaper data are collected from th

275、e Kantar Worldpanel baby panel, covering households with babies 036 months old in Tier 1-5 cities. All average selling prices are calculated based on RMB per Kg/L, except for diapers and toothbrushes, which are calculated based on RMB per piece; skin care and makeup, which are calculated based on RM

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

277、s, and packaged water; (c) personal care: skin care, shampoo, personal wash, toothpaste, makeup, hair conditioner, diaper, and toothbrushes; and (d) home care: toilet tissue, fabric detergent, facial tissue, kitchen cleaner, and fabric softener.3. In Kantar Worldpanel, online-to-offline (O2O) sales

278、value is categorized in channels where the transactions happen: sales of O2O vertical grocery EC and community group buy are accounted for in e-commerce; O2O offline retailers sales are categorized according to the retailers main formats (e.g., Walmart O2O sales are categorized in hyper); O2O horizo

279、ntal marketplaces sales are calculated based on the end shopping entities (e.g., if consumer orders from 7-Eleven through Meituan/Ele, the value will be calculated in convenience store).4. The 11 tracked key food and beverage categories are beer, chewing gum, candy, chocolate, milk, yogurt, biscuits

280、, packaged water, ready-to-drink tea, juice and carbonated soft drinks.5. Top 10 offline key accounts are Yonghui, Wumart, Walmart, Vanguard, Suning, Sun Art, Spar, Bailian, Bubugao, and WSL Group.Kantar Worldpanel | Bain & Company, Inc.Bold ideas. Bold teams. Extraordinary results.Bain & Company is

281、 a global consultancy that helps the worlds most ambitious change makers define the future. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tail

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283、education, racial equity, social justice, economic development, and the environment. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry. KantarUnderstand People, Inspire Growth Kantar is

284、 one of the worlds leading evidence-based insights and consulting companies. Kantar has a complete, unique and rounded understanding of how people think, feel and act, globally and locally in over 90 markets. By combining the deep expertise of Kantars people with its data resources, benchmarks, innovative analytics and technology, Kantar helps clients understand people and inspire growth. In the China market, the Worldpanel division is one of the services in CTR. more information, visit