FMCG growth cools in China

SHANGHAI: China's FMCG brand owners are facing a slowdown in demand as the nation's consumers make cutbacks, Kantar Worldpanel figures have indicated.

A new report from the research firm suggests that value sales in the category grew by 10% year on year in the third quarter of 2012. During the previous quarter, this growth rate was 15%.

The slowdown in FMCG sales reflects broader economic trends. China's economy grew by 7.4% during the last quarter, the slowest GDP expansion recorded in over three years.

"Shoppers have... made fewer trips to FMCG retailers whilst maintaining their basket size," the Kantar report added. "This shows signs that households may be starting to look at ways of managing their spending."

Lower inflation rates – with the nation's CPI falling to 1.9% in September – was also cited as a reason for the slowdown in FMCG value growth.

Within the headline value sales figure, food and drink was up 9% year on year, while household and personal care goods rose 12%.

Kantar added: "The growth of premium products and high levels of media spending are helping to contribute to the growth of many household and personal care brands but these departments are also seeing the slowdown in value growth over the last quarter."

Despite the general slowdown across the category, online FMCG sales nevertheless recorded strong growth in the third quarter. The ecommerce channel was up 52% year on year, with almost one in four Chinese households now going online to buy groceries.

Personal care brands were the FMCG category most likely to be purchased online, making up 57% of ecommerce sales. In brick-and-mortar hypermarkets, such goods account for just 18% of purchases.

Data sourced from Kantar; additional content by Warc staff, 30 October 2012

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