Posts Tagged ‘Consumer Goods’
China’s increasingly wealthy and health-conscious consumers helped to drive rapid growth in the country’s fast-moving consumer goods (FMCG) market in 2017.
China’s FMCG market grew by 4.3% last year, up from 3.6% growth in 2016, and a significant reason for the trend is a growing middle class that is spending more on premium and healthier products.
This is one of the key findings from an annual shopper report produced by management consultants Bain & Company and Kantar Worldpanel, the international insights firm.
Affordability is becoming less of an issue for Chinese consumers, the report found, because disposable household income per capita has grown at a compound annual rate of 8.2% over the past six years.
This in turn means that consumers are becoming increasingly sophisticated and now seek out premium and healthier products more than ever before.
But unfortunately for foreign brands, the study identified another trend in which nimble Chinese brands are taking the lion’s share of the growth in the FMCG market.
Local brands grew by 7.7% in 2017, contributing to 98% share of market growth, at the same time as foreign brands increased by just 0.4%.
“There are multiple reasons for this, but a major one is speed and an agile operating model, which is so critical in this fast-changing market,” explained Bruno Lannes, a partner at Bain’s Greater China consumer products practice.
In a later interview with China Global Television Network (CGTN), he said: “Local brands have the ability to go to the market and track results, improve, change and launch new products at a speed that multinationals have a hard time to cope with.”
According to Lannes, international brands face a dilemma. “Can the benefit of their global scale – the fact that they are a multinational – really offset the national speed and innovation of the local companies? The story so far has been no.
“In fact, the global scale doesn’t seem to be a competitive advantage as it may have been in other markets around the world compared to the speed and innovation rate of Chinese companies.”
He went on to advise global brands to transform their operating model by increasing the speed of decision-making while also making sure they have a local research and development centre to customise products for Chinese consumers.