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Fast-moving consumer goods market on the upturn Release date: 2023-08-29

China's fast-moving consumer goods market, as buoyed by a flurry of preferential policies, has moved out of negative growth and is back on the upturn track, according to NielsenIQ China, a global monitoring and consumer intelligence company.

In the second quarter, sales of fast-moving consumer goods across all channels on the Chinese mainland rose by 4.2 percent year-on-year, driving up the overall growth in the first half of the year by 1.9 percent, according to the latest NIQ retail survey data released on Friday.

"After a full recovery, China's economy will remain a major engine of global growth," said John Patrick Cua, managing director of NIQ China, adding that the strong resilience of China's economy is attributed largely to recovering consumption despite the complex and challenging external environment.

In Q2, China's GDP growth rate came in at 6.3 year-on-year, 1.8 percentage points higher from Q1 with consumption contributing to 84.5 percent of the economic growth, he added.

Going forward, as the retail market of fast-moving consumer goods will embrace lean operation instead of extensive growth like it pursued in the past, brand operators will reevaluate the challenges and opportunities in consumer stratification, low-tier market and channel restructure, according to the NIQ report.

James Luo, vice-president of Customer Success Consulting of NIQ China, said that there is a trend of further consumer stratification as consumers at different levels diverge their channels and priorities.

According to the survey data, some 37 percent of Chinese consumers intend to change their consumption patterns to seek optimal prices, highlighting how affordability and cost-effectiveness in consumption is meant to please oneself.

In addition, lower-tier consumer markets, highlighted by prefecture-level and county-level cities and counties, led the recovery of retail at a faster clip. In June, the lower-tier cities monitored by NIQ saw more than 5.5 million retail outlets, with active brands outnumbering those in upper-tiered cities by over 1,000.

Furthermore, NIQ data showed that, as offline consumption scenarios diversify, offline small format stores - represented by small supermarkets, convenience stores and grocery stores - will embrace further development with special a focus on lean and differentiated operation.

Meanwhile, the NIQ report suggested that online channels represented by interest-oriented e-commerce such as Douyin and Kuaishou became a new area for tapping consumer potential.

By Wang Keju