Imported products dominate growth in FMCG sales

China's overall spending on fast moving consumer goods (FMCG) in the first three quarters added 4.9 percent from a year earlier, with noticeable pick-up in imported merchandise, according to a joint report by Bain & Company and Kantar Worldpanel.

Personal care and home care product sales grew at 11 percent and 7.8 percent respectively, while food and beverage categories were lukewarm with a mere 2.3 percent increase in spending in the first three quarters, said an annual report on Chinese shoppers released on Thursday.

In the first six months of 2019, imported consumer goods' sales in China jumped 10 percent to 88 billion yuan (US$12.6 billion), driven mostly by online sales, which surged 35 percent during the period.

Offline sales of import goods were flat, standing at 53 billion yuan in the first six months, with an annual compound increase of 7 percent between 2016 and 2018.

The study covers more than 100 categories of consumer goods purchased for home consumption. It excludes tobacco and fresh food, and purchases made at canteens and coffee shops.

“By concentrating on selling online, foreign FMCG companies gain traction in China without the need to build a complex physical route to market model,” said Jason Yu, managing director of Kantar Worldpanel China and a co-author of the report.

While the impact of global trade tensions has been felt in such areas as commodities and heavy machines, it has not put a dent in Chinese consumers’ desire for imported goods from the US and elsewhere, the report indicates.

Sales of American makeup products in the 12 months ending in the second quarter of 2019 rose 54 percent from the same period in 2018.

“Consumers' enduring desire for imports is especially true for product categories where consumers perceive foreign goods as higher quality than those produced domestically, such as fragrance, wine and milk powder for example,” added Bruno Lannes, a Bain & Company partner in Shanghai and a co-author of the report.

Sales volume in the first three quarters increased 1.1 percent from that same period in 2018, picking up from 0.5 percent growth last year as new product categories pushed up purchasing.

However the growth of average selling prices was slower, dropping from 4.6 percent last year to 3.7 percent this year, only slightly above the inflation rate. 

This was partly due to stiff competition to woo price sensitive shoppers and price discounts especially during online sales campaigns.