25 FMCG Companies win over 100M Chinese Households
25 FMCG Companies Win over 100 Million Chinese Households, with Wahaha Joining the 100-million League for the first time
According to past research by Kantar Worldpanel (a CTR service in China), a brand's market position is highly correlated with penetration (the number of consumers), and the key for a brand to expand its scale and enhance its strength is to attract more consumers. This is universally applicable regardless of whether the market is in a downturn or recovery phase; regardless of the category or brand size; in any country or region. This pattern is more obvious among manufacturers with consumer bases over 100 million households.
According to the latest report from Kantar Worldpanel, there were 25 Fast Moving Consumer Goods (FMCG) companies reaching over 100 million urban Chinese households during the 52 weeks ending October 4th 2024. Compared to the previous year, these top 25 companies have experienced an overall increase of 2.48 million urban Chinese households, equivalent to a 1.2% growth. Among them, Wahaha has seen a rapid growth of 40.5% and has debuted on this list for the first time. Other companies that have grown relatively quickly include Vinda Group, Hengan Group, Nongfu Spring, Nice Group, Liby Group, and China Resources Group.
"Chinese consumers are becoming more prudent in their spending, considering more on price and total expenditure, but are also willing to pay a premium for products that are healthy, efficient, and have emotional value. In this new reality, the FMCG market is not advancing as rapidly as in the past but is recovering gradually. We have observed that the top FMCG companies, by accurately grasping the needs of different consumers and continuously launching innovative products that adapt to new occasions and new needs, as well as driving emerging channels and penetrating deeper into lower tier markets, have successfully attracted new consumers and stood out in the competition", said Rachel Lee, General Manager of Kantar Worldpanel China, who believes that this strategy is crucial for FMCG companies.
Meeting Sophisticated and Diversified Consumer Needs Helps Top Manufacturers to Attract Fans
Kantar Worldpanel indicates that Chinese consumers' demand for health keeps increasing. Although consumer behavior is now more rational and prudent, with the enhancement of health awareness and the new needs derived from different life occasions, products that can bring happiness and relaxation are becoming more important. Consumers are still willing to pay a premium for solutions that are healthy, convenient, and provide emotional value.
Among these top 25 companies which have over 100 million Chinese urban households, Wahaha is the fastest-growing manufacturer in terms of consumer base in the past year. For packaged water, in addition to the flagship product Wahaha purified water, it has also focused on developing "Oxygen-World water" with water-quality safety and health, and environmental protection as selling points. Packaged water has recruited 36.9 million more urban Chinese households for Wahaha. In addition to packaged water, Wahaha has also targeted the upgrade needs of health, launching a series of low-sugar, low-fat, sugar-free, and fat-free beverage products, meeting the health needs of the Chinese consumers for beverages.
Nongfu Spring's Eastern Leaf Tea attracts consumers with a "healthy original tea" image, while ‘Tea π’ is loved by consumers for its unique taste and packaging. Nongfu Spring's tea drinks have successfully attracted 12.64 million urban Chinese households.
Among the non-food sector, the demand for immediate cleaning is rising, and consumers are relying more on paper products for everyday life. Hengan Group and Vinda Group have captured this market trend, mainly promoting products that are not easy to break when wet, such as the MianRen(??) and YunGanRouFu(????) series, which are welcomed by the market for their high quality. Specifically, facial tissue paper products of Hengan Group and Vinda Group have attracted 9.44 million and 4.55 million urban Chinese households, respectively. In addition, Hengan Group is also actively exploring new usage occasions for paper products, such as oil absorption and cleaning in the kitchen, and actively promoting the development of kitchen paper products.
Liby Group has actively responded to consumer needs on a higher quality of life by promoting Master Fragrance laundry detergent, which can provide a pleasant emotional value. As of October 4, 2024, within 52 weeks, Liby laundry detergent has added a total of 8.4 million urban Chinese households.
Diversified Omni-Channel Strategies to Attract New Consumers
The development of channels in China is becoming more and more multi-dimensional, and future retail channels will also be more diversified, personalized, and intelligent. Effective channel differentiation has also become a key strategy for various manufacturers. This year, consumers choosing to shop in physical channels, especially convenient proximity channels, have increased, while shopping online and O2O has decreased. Kantar Worldpanel data shows that within the 52 weeks ending October 4, 2024, the penetration rate of e-commerce and O2O has dropped by about 1-3 points compared to the same period last year. However, both e-commerce and O2O are still very important.
At the same time, emerging retail formats are now springing up, constantly attracting consumers. For example, membership stores, with store and warehouse integration, brings a convenient shopping experience, combined with streamlined and high-end SKUs, has resulted in an increase in the number of shoppers. Its penetration has risen by about 2 points. On the other hand, discount stores, which caters to consumers' demand for cost-effectiveness, has seen its penetration rise by about 3 points. Snack store is also a new channel format, attracting many children and adults with a variety of novel and interesting snack products, and the penetration has increased by around 10 points.
Although the market share of these emerging channels is relatively small, they provide new growth opportunities in the rapidly changing market. For manufacturers, it is crucial to have a differentiated channel strategy and seize these emerging opportunities. Among these emerging channels, leading FMCG companies have performed well. Data from Kantar Worldpanel shows that within the 52 weeks ending October 4 2024, these 25 leading manufacturers have attracted 19.59 million, 4.42 million, and 2.5 million urban Chinese households in snack stores, discount stores, and membership stores, respectively. It is worth noting that at least 60% of the new consumers in these emerging channels are contributed by these 25 leading manufacturers.
Winning new shoppers in the lower tier
Although the FMCG market is in a gentle recovery, within the 40 weeks ending October 4, 2024, China 1-6 tier cities (including town) have increased by 1.4% compared to the same period last year, and 3-5 tier cities have grown faster, with a growth rate of 2.9%. The growth rate of town markets is even higher. It can be seen that with the development of China and the inclination and support of national policies, low tier markets will be the key to driving market recovery. At the same time, the lifestyle and purchasing methods of consumers in low tier market will become more and more similar to those of consumers in the upper tier cities, which also indicates that winning consumers in lower tier markets can lay a solid foundation for future growth.
As the fastest-growing manufacturer in attracting Chinese households, Wahaha's national consumer expansion, 58% are contributed by 3-5 tier cities. Hengan Group and Vinda Group have experienced a nationwide growth in China urban households up to 4.8% and 4.0%, respectively, with households in tier 3-5 cities contributing 66% and 71% respectively to their overall increases.
In addition to 3-5 tier cities, town markets are also a blue ocean for the development of the Chinese market in the future. Currently, in town markets, the manufacturers with the highest number of consumer households are Yili, Mengniu, Haday, Procter & Gamble, and Master Kong, which is basically consistent with the national ranking, indicating that the leading enterprises with strong distribution advantages still have significant advantages in the town market.
This year, Wahaha, which has the fastest growth in the number of households, has performed particularly well in town market. Within the 40 weeks ending October 4th 2024, Wahaha's penetration in town has exceeded 70%, greatly narrowing the gap with other leading enterprises.
In summary, in the context of a gentle recovery, it is crucial to attract consumers and stand out from the competition in order to gain market share. Manufacturers must respond to different consumption occasions, deeply understand the real needs of consumers, and capture their attention. In addition, a differentiated omni-channel strategy and tapping into lower tier market are also key to ensuring that consumers can conveniently purchase your products at any time, from any place.