A latest report launched by Kantar Worldpanel shows that China’s market for soft drinks, packaged foods, personal care and other consumer staples has slowed dramatically, by two-thirds since 2011. And, 60% of foreign brands reviewed lose share in 2013.
The study of 40,000 Chinese households and analysis of 106 product categories, by Kantar Worldpanel and Bain & Company, shows some interesting findings:
- Market growth for non-durable consumer goods slowed to 4.6% in Q1, down from 10% growth in 2012 and 15% growth three years ago. The rate of decline was consistent across all cities regardless of size
- Volume growth was mostly stable as pricing increases declined, in large part due to fewer new higher-premium products coming to market. Growth in annual spending per household dropped from 9% in 2012 to 4.6% last year, while the number of urban household grew 2.6% per year, contributing to volume growth
- Offline shopping channels represented 97% of all purchases in 2013, but the nascent online sales channel is booming, and China is now the world’s No. 1 digital market. Online growth for all 106 product categories was 42% overall
- Foreign brands overall lost share across the 26 categories studied in more detail. Some foreign brands did see marginal share gain, but the overall scorecard was negative, with 60% of foreign brands losing share.
The Kantar Worldpanel and Bain study, first of two this year, recommends investment in three brand assets to build penetration:
- Spending on critical marketing touchpoints that will anchor a brand in consumer minds, such as advertising (above-the-line) and sales promotion (below-the-line) investments
- Priority investment in so-called “hero” products that have greatest potential with shoppers
- In-store asset investments that ensure that the most important products are always available and in the right place on store shelves.