FMCG growth slows in China

24 July 2012

BEIJING: A slowdown in China's economic growth has been reflected by the sales of fast-moving consumer goods in the country, new figures show.

According to Kantar Worldpanel, the research firm, value sales in the FMCG category rose by 15% over the three months to June 15th, lagging behind the annual rate of 16%.

The company suggested the moderation in China's annual GDP growth, which stood at a relatively modest 7.6% in Q2 2012, the worst performance in three years, may be "having an impact on the FMCG industry".

Indeed, in the country's four major cities – Beijing, Chengdu, Guangzhou and Shanghai – the pace of expansion stood at just 11% during the same period, compared with 18% in the second quarter of 2011.

By contrast, in lower tier cities, where modern retail outlets are expanding and attracting new customers, this acceleration was nearer to 20%.

The Sun Art Retail Group, comprising RT-Mart and Auchan, held 8% of the market over the year to 15th June. This total, however, fell to 7.6% in Q2 2012, off from 8.1% year on year.

Walmart and Trust-Mart stores, together making up the Walmart Group, claimed a 7.5% market share for the 52 weeks to 15th June, and 7% in the second quarter, down by 0.2 points and 0.8 points respectively.

Within this, Walmart strengthened its position, delivering 6.2% of sales for the most recent year and the latest quarter, with both amounts improving by approximately one point.

The study stated this trend was largely due to Walmart's growth in lower tier cities, where many of its rivals have a "very limited presence". Its share in these markets increased from 4.5% in Q2 2011 to 4.9% in Q2 2012.

Among the other big players, the CR Vanguard Group and Carrefour have remained essentially stable, averaging out at around 6.7% and 4.8% in turn. Yonghui has seen the most significant gains, as its annual share rose from 1.2% to 1.6%.

The analysis also indicated that online sales of fast-moving consumer goods climbed by 58% in the last quarter. Some 22% of households in top tier cities now buy from this channel, up from 16% in 2011, and a third do so once a year or more.

Taobao is an especially successful operator in this category, not least thanks to the launch of Tmall Supermarket, while Yihodian, an ecommerce specialist owned by Walmart, is expected to make further progress going forward.

Data sourced from CTR; additional content by Warc staff