US Insights

Who is winning more Chinese Consumers in 2018?

Jason Yu

Greater China General Manager

Brands 11.27.2018 / 13:30

ChinaLanterns

P&G and Yili lead the race, reaching over 160 million families.

The latest report from Kantar Worldpanel shows that 21 Fast Moving Consumer Goods (FMCG) companies reached over 100 million urban households during the 52 weeks ending October 5, 2018, with P&G and Yili being the first to hit the 160 million milestone.  The duo reported 92.4% and 90.9% penetration rates respectively, enjoying the widest consumer base in China. In terms of growth rate, Nongfu Spring, Haday and Dali are top three performers, reporting over 5% increase in total number of buying families year on year.

Manufacturer

Sector

Buyers (million households)

Growth rate%

Penetration rate (%)

52 week ending 2017/10/06

52 week ending 2018/10/06

52 week ending 2018/10/06

P&G

Non-food

159

162

2.1%

92.4

Yili

Food

153

160

4.1%

90.9

Mengniu Group

Food

151

156

3.3%

88.8

Master Kong

Food

142

142

0.3%

81.1

Nestle

Food

140

140

-0.1%

79.5

Unilever

Non-food

135

137

0.5%

79.0

Heng An

Non-food

130

134

2.6%

76.3

Coca Cola

Food

128

132

3.2%

75.2

Liby

Non-food

124

128

2.7%

72.8

Haday

Food

122

128

5.7%

73.2

Nice Group

Non-food

125

123

-1.6%

70.4

Mars Group

Food

122

121

-0.8%

69.1

Mondelez

Food

118

120

1.6%

68.3

Nongfu Spring

Food

111

120

8.0%

68.3

Colgate Group

Non-food

119

117

-1.1%

66.9

Pepsico

Food

114

117

1.6%

66.9

Want Want

Food

114

116

1.4%

66.1

Dali Group

Food

106

111

5.0%

63.5

Wilmar

Food

104

106

1.3%

60.2

Shuanghui

Food

103

106

3.5%

60.5

Uni-president

Food

102

100

-1.4%

57.3

In a challenging environment for brands and retailers, companies that constantly innovate and evolve within the new retail era are best placed to succeed. The biggest gains inside the top 21 were created by innovations most relevant to today’s Chinese consumers, making their lives healthier, happier and easier. In the last 12 months, Chinese companies continued to outpace multinationals in recruiting new shoppers faster through braver innovations, agile go-to-market capabilities and successful activation of omni-channel strategy.

Winning over millennials

Despite China's aging population, winning the love of millennial consumers (meaning post 80s and post 90s generations in China) is critical for brands to thrive.  With more disposable income and need to express their individuality, young consumers offer great opportunities to unlock future growth. For the companies that grow penetration ahead of the market average, most of them saw noticeable advances in young families. For example, Nongfu Spring managed to grow its shopper base amongst young singles/couples by 30% in the last 12 months through its phenomenal success of Victory vitamin water, which rode on the massive popularity of reality show “Idol Producer”.  The company also launched the NFC juice brand 17.5° to cater to younger middle consumers’ aspiration for authenticity and freshness. Similarly, Coca Cola in China grew its penetration through smaller pack and new lines such as “Sprite Fiber Plus” to balance young consumers’ needs for both nutrition and indulgence. Liby, an established player in the home cleaning sector, has actively used sponsorship and film stars to refresh its brand image and won 1.5 million young single/couple families.

Combination of innovation and go-to-market

According to Kantar Worldpanel, almost one new product is launched every three minutes in China in 2017, and consumers in China are facing cluttered shelves with new products trying to grab their attention. However, only 6% of the new launches managed to bring incremental buyers. Brands that succeed in China’s formidably competitive marketplace will have to stand out by offering unique innovation and having go-to-market excellence.

P&G, with its powerful house of brands line, has been leading the FMCG market in terms of penetration for five years in a row. In recent years, P&G have stepped up their innovation pipeline by launching a series of sophisticated and differentiated products, e.g. Whisper Pure Cotton, Always Infinity, Rejoice Micellar Water shampoo as well as Olay and SK II premium range. In the latest 52-week period, P&G also grew their physical availability, particularly leveraging the strength of social and e-commerce platforms.

Dali, a well-entrenched food conglomerate, reported strong buyer gains in the latest year through its launch of Doubendou, a soy milk product riding on the concept of “natural and GMO bean free”.  Backed up by Dali’s established distribution network to ensure its wide availability and in-store presence, Doubeidou was a blockbuster success and brought 13 million new buyers to Dali Group in the first year after it was launched.

Offline penetration remains paramount

E-commerce has been a game changer in the last 10 years in China, transforming the way brands connect to consumers. In the “New Retail era”, brands will have to adopt a holistic omni-channel view to win consumers at every possible touch point. Offline stores, especially in lower-tier cities, remain crucial to build trial and engagement through their interactions with millions of shoppers on daily basis. With the expansion in data integration and logistic capabilities, consumers are now able to choose multiple ways to shop and the boundary of online and offline channels are increasingly blurring.

The latest Kantar Worldpanel report indicates that successful companies in growing shoppers are those who achieved a balanced penetration gain across both online and offline channels. Yili, as a leader in food & beverage, grew its online and offline buyers by 4 and 6 million respectively. Offline distribution channels brought more shopper growth for companies like Mengniu, Hengan and Dali. Even for P&G, it managed to add 2.4 million incremental buyers through brick-and-mortar stores. Consequently, partnership with offline retailers remains essential for brands to keep up the omni-channel footprint.

EN 2018 100 Mln Family Online And Offline

Source: Kantar Worldpanel

Editor's Notes

* Notes for data:

1. Kantar Worldpanel China continuously measures household purchases over 100 product categories including cosmetics, food and beverages and the toiletry/household sector. Its national urban panel covers 20 provinces and four municipality cities (Beijing, Tianjin, Shanghai and Chongqing).

2. International retailers refer to retailers originated outside Mainland China, Taiwan, Macau, and Hong Kong.

3. Mengniu includes Yashili, Biyou from Danone

4. Nestle includes Yinlu, Hsu Fu Ch and Totole

5. Mars includes Mars and Wrigley

6. Colgate includes Colgate and Darlie;

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