Chinese FMCG Sector Witnesses Massive Slowdown, Foreign Brands Face Tough Challenges

Published By : 02 Jul 2015 | Published By : QYRESEARCH

The FMCG sector in China witnessed a decline of 4.4% in the Q1 of 2015. In past, the sector maintained around 12% of growth rate during the period of 2011-2012. The foreign brands have witnessed a sharp decline in the FMCG market in China during the first quarter of 2015.

According to a report, the skin care products market was the sole sector among all product categories that exhibited significant growth in the Q3 of 2014 and the Q1 of 2015.

Among other FMCG industries, the markets for home care, personal care, packaged food, and beverages are the key sectors responsible for this slowdown. The amount spent on FMCG per household is much lower than the disposable income of the nation. The volume produced in the FMCG sector in China reports mere growth of 0.1% in 2014 compared to that of 2013.

The retail market segment is exhibiting various pattern of growth, wherein, the growth rate of hypermarkets is on a decline. In 2013, the growth rate in this segment was 7.9% that, in 2014, decreased to 3.7%, with the significant decrement in footfall in the Chinese hypermarkets. However, small supermarkets, convenience stores, and mini-marts remained stable on the grounds of regular traffic over the same period.

The Chinese e-commerce market, the biggest digital retail market across the globe, has maintained its dominance in China. The online sales accounts for 3.3% share of the revenue generated in the overall FMCG, reporting a growth at 34% in 2014.

The lower-tier towns of China were minimally impacted by this slowdown owing to the increasing growth of almost 8% in the sales, whereas the first-and the second-tier cities recorded the growth at around 2% in the previous year.
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