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China’s rapidly changing consumer goods market has seen a slow recovery as consumers remain cautious and tend to choose profitable food, drink and personal care products, according to a report by consultancy firm Bain & Co.
Sales of consumer staples grew 1.6% in the first quarter of this year compared to the same period in 2019, slower than the 3% growth recorded two years earlier, according to The report on the behavior of the country’s buyers released Tuesday. “Overall, growth is picking up steam, but remains moderate,” the report said.
The slow recovery in spending on fast-moving commodities reflects how consumption remains a weak spot in China’s economic recovery from the Covid-19 pandemic compared to solid growth in capital investment, production and of exports.
Volume was the main contributor to sales growth, as average selling prices fell 1% in the first quarter compared to the same period in 2019, the report writes, with consumers shopping more frequently with the national epidemic under control. The report was written by analysts at Bain in coordination with those at Kantar Worldpanel, another consulting firm.
Last year, the average price of fast-moving consumer goods fell for the first time in five years as consumers were more cautious and bought cheaper items, according to the report. Analysts expect a weak recovery in the near future given the change in buyer behavior due to Covid-19. Consumer Staples (FMCGs) are non-durable products that sell out quickly at a relatively low cost. Examples of FMCG include milk, gum, fruits and vegetables, toilet paper, and over-the-counter medications like aspirin.
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The recovery in the consumer market has been subdued in part because Beijing’s pandemic relief plan focused more on supporting businesses and investments than handing cash back to households, Wang Qian wrote. , Asian Chief Economist at Vanguard Group Inc., a global investment management firm. Thursday note (link in Chinese). US consumer spending has recovered faster than China, with Washington transferring money directly to its citizens, leading to increased household incomes, she wrote.
Covid-19 has altered consumer preferences in various ways and accelerated some existing trends, according to the report. For example, ice cream, which was not popular among households before the pandemic, was bought at record rates because people wanted comfort foods.
Consumers have been even more enthusiastic about health and hygiene products since the start of the pandemic, although such interest was already visible in recent years. Milk sales have increased dramatically after prominent infectious disease specialist Dr Zhang Wenhong (å¼ æ–‡å®) last year called on Chinese people to choose milk over rice porridge for breakfast to boost their body’s ability to fight infections, analysts say. wrote.
The growth in FMCG sales comes mainly from medium and small cities. While sales in first- and second-tier cities, the two largest city categories, fell 1.5% and 1.1%, respectively, mid-sized cities and small towns recorded a strong sales growth, writes the report.
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) editor Flynn Murphy (flynnmurphy@caixin.com)
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