BEIJING: China's FMCG market grew 7.1% in the second quarter of 2013 compared to the same period a year ago, signalling a slight slowdown in the category.

Kantar Worldpanel, the market research company, pointed out that growth for the first quarter was +8.4%, and that the latest results represent the slowest quarter-on-quarter growth in the last two years. The company attributed the slowdown to more conservative household spending in the world's most populous nation.

The survey of 16 provinces also uncovered significant regional and provincial disparities, important information for global retailers when considering their expansion plans and footprint.

The north of China, which includes Beijing, recorded the slowest growth at just +3.9%, but the south fared much better with quarterly growth of +8.4%. Fujian province, on the south-east coast, reported growth of nearly 15%, while the central provinces of Henan and Anhui in the east also delivered double digit growth.

In comments accompanying the data, Kantar warned retailers and manufacturers that they should not adopt a uniform strategy for China's FMCG market, as channels and retailers perform very differently from one province to the next.

For example, hypermarkets, supermarkets and convenience stores were key for driving growth in Henan province, with several local retailers, such as Da Zhang and Vanguard, performing well. RT-Mart and Chinese retailer Yonghui also doubled their market share in the province over the past year.

But Anhui province, by contrast, saw traditional grocery shops growing 23% year-on-year with direct sales growing 45% and ecommerce rising by 70%.

Western hypermarket chains struggled in the northern provinces, but succeeded in Fujian province where Walmart and RT-Mart enjoyed year-on-year growth of more than 50%. The Yonghui chain also performed well in Fujian.

Ecommerce growth also continued, especially in the key cities of Shanghai, Beijing, Guangzhou and Chengdu, where this channel now accounts for 3.7% of total FMCG trade.

Kantar predicted that annual penetration will be more than 60% in key cities within the next three years.

Data sourced from Kantar Worldpanel; additional content by Warc staff