Chinese FMCG Market Seeing A Slowdown: Bain & Co
The China Shopper report by Bain & Company with Kantar Worldpanel, the report titled China’s Two Speed Growth: In And Out Of The Home, finds ongoing slowdown of home consumption reaches a new five-year low while food delivery and out-of-home consumption is racing ahead. A shifting trend among Chinese consumers has seen ‘out of home’ (OOH) consumption rising significantly, signaling a major change in how Chinese customers choose to consume their food and beverage and that “two-speed” home consumption is continuing and that instead of preparing food at home, many Chinese consumers now prefer restaurant food delivery or dining out.
While this may not be of much interest as far as the Indian market is concerned but gives perspective on what’s happening in one of the biggest emerging market economies in the FMCG sector.
This year, in addition to the usual panel of 40,000 households for home consumption, Bain and Kantar Worldpanel analysed 4,000 Chinese individual consumers in Tier-1 and Tier-2 cities about their food and beverage purchases for consumption outside of their homes using smartphones. In combination with additional data sources, they conducted an in-depth analysis of overall eating and drinking channel dynamics. The results reveal that while food purchased for in-home meal preparation grew by 3 percent annually from 2013 to 2016, food delivery rose by 44 percent and dining out grew by 10 percent over the same period. This shift provides a new lens on fast-moving consumer goods (FMCG) value growth and provides a significant opportunity for forwarding looking brands.
“This is the first time that we have analyzed the Chinese FMCG market with this additional focus on out-of-home consumption and the results show a fundamental shift in how consumers across the country are shopping for food and beverage,” said Bruno Lannes, partner in Bain’s Greater China Consumer Products Practice and co-author of the report. “This shift, in many ways provides an additional lens on the “two-speed” trend we identified in the 2016 Shopper report: High-speed dining out and delivery vs. low-speed home cooking.”
Many companies have already begun to aggressively address these changes by focusing on the restaurant and out-of-home (OOH) channels. In overall FMCG, covering food, beverage, home care & personal care, this year’s report finds two-speed growth continuing. It also shows that annual growth in FMCG value for home consumption remained sluggish across all sectors studied in 2016, hitting a five-year low of 3 percent. This was due to a combination of almost flat volume growth and a deceleration of price growth, which dragged down overall FMCG value growth.
