China’s FMCG (Fast Moving Consumer Goods) market recorded 11 per cent value growth for the latest quarter to December 28, compared to the same period a year ago.
Kantar Worldpanel says the figure is slightly higher than the 10 per cent growth reported in Q3 2012 showing that the FMCG market growth has not continued to slowdown which spells positive news for manufacturers and retailers in the sector. The FMCG market grew by 14 per cent over full year in 2012 compared to 2011 which is higher than the 7.8 per cent GDP growth for China.
Urbanisation and the move to more premium products have been the two key factors which drove this trend. Hypermarkets continued to fuel much of the growth during 2012 but emerging channels such as personal care stores, cosmetic stores and e-commerce have grown faster through new store openings and more homes with access to the internet.
Over 2012 many of the top 10 retail groups or banners struggled to grow share with only Zhongbai, Yonghui and BuBu Gao reporting growth, all of which are local Chinese retailers. This increased competition from the local retailers has meant the share of modern trade that international retailers account for has decreased from 29 per cent to 27 per cent across all city tiers including the top four cities where the international retailers have historically been more dominant.
The Q4 share movements do show a more positive story particularly for the Sun Art Group and Carrefour. However, the Wal-Mart group sees a similar picture to the annual movement with a 0.8ppt drop. Yonghui success story continued in the fourth quarter reaching a share high of 4.3 per cent in the West region as well as further traction gained in the North as a result of new store openings in Beijing.
Many local retailers have had a successful 2012, gaining share from the more dominant international players within modern trade. Bu Bu Gao (or to use its English name: Better Life) is one such case. Starting from Xiangtan, Hunan province in 1995 the retailer expanded its operations within the Hunan and Jiangxi provinces and now has approximately 241 stores.
Bu Bu Gao has a multi-format approach offering hypermarket, supermarket and convenience store formats as well as electronic and apparel specialist stores. This sets it apart from many of the key players who tend to focus more on hypermarket or supermarket formats.
Kantar Worldpanel reports a value share of 28 per cent in Hunan province for Bu Bu Gao and the retailer attracted 56 per cent of shoppers in this province during 2012.
“As local retailers such as Bu Bu Gao and Yonghui continue to grow their footprint within China we will expect to see them become even more competitive with the international players during 2013,” said Kantar Worldpanel.
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