Despite challenges due to the pandemic, 19 out of the top 22 FMCG companies in China grew their shopper base, demonstrating there are ample growth opportunities for even the biggest players. The disruption caused by the pandemic has impacted different sectors, yet successful players have managed to respond rapidly to changes in consumer needs and shopping behaviour.
Riding the new waves of opportunities
COVID-19, the most unexpected factor in 2020, transformed the FMCG market dramatically. Dairy players, such as Yili and Mengniu group, have won more consumers because their products are well placed to take advantage of the increased importance people have put on health and immunity.
With restrictions on travel and a lot of time spent at home, consumers in China enjoyed more home-cooking occasions. This has enabled seasoning and cooking aid category leaders, such as Haday and Wilmar, to thrive and grow faster.
Driven by the consumer need for convenience and stocking up, Shuanghui, Master Kong and Uni-President grew their customer base through packaged sausages/meat and instant noodles. On the non-food side, hygiene-conscious consumers are buying more cleaning-related products such as hand wash and anti-bacterial wipes to protect them from the virus. This trend also helped to boost buyers of P&G, Unilever and Hengan.
O2O – changing the game in offline retail
As the footfall to offline stores fell during and after the outbreak of the pandemic, 41% of Chinese families ordered FMCG through delivery platforms and retailers’ own channels such as apps. Despite the decrease in penetration in Q3, O2O (online to offline delivery) still attracted 31% of families in China.
O2O has played a critical role in recouping lost traffic in offline stores and tapping into the new growth ‘moment’. All major players have been rallying to work with retailers to build their presence in the last 12 months, with Yili, Mengniu and P&G leading the pack.
Ecommerce instrumental in attracting new shoppers
Pure-play e-commerce (excluding O2O) remained a major driver of FMCG growth in China. In the last 12 months, 85% of Chinese families bought FMCG through the e-commerce channel, almost 20% more than in the previous year. We know leading players can only sustain growth through wider and deeper eCommerce deployment.
Yet there are still opportunities for expansion in the offline world. Shuanghui, a traditional food brand, attracted 4.6 million new buyers through e-commerce, but 8.9 million is coming from offline. In total, Shuanghui increased its consumer base by 10.1 million. This shows that shopper growth from offline channels is still far from saturated.
Market leaders such as P&G, Yili and Mengniu are all enjoying strong shopper growth through online channels, as they try to make their products more accessible to Chinese consumers. Yet all of them enjoyed incremental shopper gains, indicating that manufacturers will have to build an effective omnichannel strategy in order to maximise their growth.