Free Subscription

  • Access 15 free news articles each month

Professional

Try one month for $4
  • Unlimited access to news,insights and opinions
  • Quarterly and weekly magazines
  • Independent research reports and forecasts
  • Quarterly webinars with industry experts
  • Q&A with retail leaders
  • Career advice
  • 10% discount on events

Covid-19 fuels FMCG deflation in China, says Bain

China’s FMCG sector stagnated in 2020 after more than five years of growth, a victim of the behavioural changes of consumers in lockdown.

While total sales have grown more than 5 per cent for the last three years straight, sales struggled in the early months of FY20 and while they had picked up by the end of the third quarter it wasn’t enough to outweigh the loss incurred early in the year, according to Bain & Company’s latest China Shopper Report.

The biggest contributing factor to the decline was a drop in average selling prices, which averaged 2.1 per cent lower during the first three quarters compared to prior years.

“We all knew that Covid-19 would have a significant impact on the China FMCG market,” said Bain’s Greater China Consumers Products partner Bruno Lannes.

“What came further into focus is the massive change in consumer sentiment, with a lot more caution and promotion hunting. It’s clear that this ‘2-speed’ will continue, with both premiumisation and flight to value.”

Online sales continued to boom, representing 26.7 per cent of all FMCG sales during the first three quarters of 2020, up from 21.9 per cent the year prior.

And certain categories enjoyed growth despite the overall fall: home care categories rose 9 per cent, carbonated soft drinks 16 per cent, and packaged foods 7.2 per cent – a more then three-fold increase over the same period of last year, as customers stocked up on instant noodles and frozen foods.

You have 7 free articles.