FMCG in China continued slowdown in Q1 2014

Weakness in FMCG purchasing has been driven by slower growth in household spending- especially in key 4 cities

Kantar Worldpanel, the global market leader in consumer panels, reports 6.1% value growth for the FMCG (Fast Moving Consumer Goods) market for the latest 52 weeks up to March 21st 2014 compared to the same period a year ago. This figure is lower than the 7.4% growth seen last year. While China’s economy grew at its slowest pace in 18 months, weakness in FMCG purchasing has been driven by slower growth in household spending- especially in key 4 cities. Average prices continue to increase as a result of inflation and the trading-up trend.

Lower tier cities in China remain the key driver to overall growth with counties seeing the fastest growth, +9.2% in the latest quarter. For the first time, Key cities saw a decrease in spending, -1.9% observed in Q1, mainly due to a slowing down in growth of basket size.

Sun-Art Group Maintain Significant Growth across All Regions

Sun-Art Group again is the key player to have seen significant growth over the last quarter reaching an all time share high of 9.3% at national level. The group continues to grow presence across all four regions - and has been particularly impressive in the South where the share has now reached 5.5% with 0.9 points gained in Q1. Expansion into East and North is also proving successful with share gains here as well.

Wal-Mart is showing signs of a recovery with stronger growth over the latest quarter which has been driven by further expansion in lower tier cities in the south of China. YongHui Group is also worth highlighting with good performance in Q1, especially in North regions - putting some of the more dominant players under pressure.

E-commerce

E-commerce continues to impact the retail landscape and how households shop for FMCG products. The latest 52 weeks saw 32% of Chinese urban households using this channel at least once. Over Q1 in 2014, E-commerce giants like Alibaba, Yihaodian and Jingdong have been launching aggressive sales campaigns to promote products such as imported milk, facial mask and other personal care products. The result is the sharp rise in E-commerce shoppers in Q1, as revealed by Kantar Worldpanel.