Chinese FMCG brands make progress

07 August 2012

BEIJING: Local brands may be catching up with their overseas rivals in several categories in the Chinese fast moving consumer goods industry, figures from Euromonitor International suggest.

According to the firm's estimates, quoted in the Wall Street Journal, a herbal toothpaste manufactured by Yunnan Baiyao Group has increased its market share from 1.1% to 8.8% in the last five years, despite costing $8.60 per tube.

This is almost double the price command by Crest 3D Vivid White, made by Procter & Gamble. In the last five years, P&G's share of the toothpaste segment has contracted from 20.8% to 19.7%.

Similarly, Unilever, another multinational FMCG group, has seen its proportion of sales slide from 12% to 9.9% in this market, where Zhonghua is its leading offering.

Elsewhere, the Hengan International Group took the top spot in the tissues and hygiene products sector in 2010, retaining this position in 2011 on a share of 10.6%. Procter & Gamble was second on 10.5%.

Turning to homecare, incorporating lines like soap and detergent, the Guangzhou Liby Enterprise Group and Nice Group are together responsible for 27.6% of sales, ahead of Procter & Gamble's 7.6% and Unilever's 6.6%, Euromonitor stated.

"P&G and Unilever will have to fight harder for shelf space and fight harder to differentiate from domestic brands that are now offering a wider range of products and features," Ben Cavender, a senior analyst at the China Market Research Group, said.

A recent poll of 300 shoppers in small cities across China by Nielsen, the insights provider, also found that 70% of respondents believed Ariel, made by Procter & Gamble, was an indigenous product.

However, Paul Fox, P&G's director of external relations, argued the notion that international players are being overtaken by local operators holds in a select number of areas.

"It only works if you pick a subcategory and then make comparisons, but you could equally pick another subcategory and demonstrate that multinationals are gaining share," he said.

In its quarterly earnings call last month, Unilever reported that its market share was increasing in every sector except one in China. Jeffrey Graubard, the organisation's media relations manager, also revealed its data showed Yunnan Baiyao took 5% of toothpaste sales.

"We are more than holding our own in fabric cleaning, and it's only in mass facial care that we've seen growth from local companies, much of it at the expense of our competitors," he added.

Data sourced from Wall Street Journal; additional content by Warc staff