Consumer goods sector shows signs of recovery
After a slow 2022, China's fast moving consumer goods sector is showing signs of recovery, building momentum for a positive remainder of 2023.
China's FMCG market reported value growth of 1.9 percent in the first quarter from a year ago, according to the latest China Shopper Report 2023, jointly released by Bain & Company and Kantar Worldpanel.
The figure has picked up from an annual gain of 1.5 percent in 2022, thanks to mild volume growth of 2.7 percent in the first three months.
Leading industry experts and market watchers point to new product categories with strong growth potential in the long term.
Home-care and packaged food categories continued to lead growth, while beverage and personal-care posted weaker growth.
"The FMCG industry recovery is likely to take shape over the coming months as it demonstrates resilience with new formats and offerings to adapt to ever-changing circumstances," the report noted.
Most brands are putting more efforts into marketing activities that foster long-term relationships with consumers instead of solely relying on short-term sales promotions, said Jason Yu, managing director of Kantar Worldpanel in China.
Brands will continue to invest with new product launches and innovative offerings to woo consumers to sustain further growth, although the competitive landscape is more demanding.
However, they should also pay more attention to better manage costs and focus on what really matters to consumers in terms of product formulation, raw materials and packaging. Cost savings would be invested in marketing and pricing/promotion to address the ongoing price sensitivity, the report suggests.
The findings echoed a separate study suggesting China's GenZ shoppers' are becoming more demanding when they choose snacks and beverages.
As many as 73 percent of GenZ customers favor new snacks and beverages with high value for money, and 77 percent believe health benefits are the most important factor when they choose which product to buy, according to the latest study by Ries Positioning Strategy & Consulting in China.
The study, which surveyed about 2,000 respondents born between 1995 and 2009 across the country, suggested that by simply changing old recipes into low-sugar and low fat versions would not succeed, according to Luo Xianliang, vice president of Ries Positioning Strategy & Consulting China.
"New brands should avoid the missteps of following the latest trends and charging a premium while ignoring the basics, such as high quality and more reasonable pricing," he added.
Food vendors needed to respond to these new trends that shoppers want high-quality and affordable price at the same time, he noted.
Exploring new product categories for GenZ consumers is crucial for food vendors, and in the long term, health benefits would be an inevitable trend, and niche categories such as low-fat yogurt and nuts are most likely to increase penetration in the coming years.