Written in collaboration with

Written in collaboration with

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Executive summary

This is the 13th consecutive year we have tracked the shopping behaviors of Chinese consumers. Our ongoing research provides a valuable long-term perspective across 106 fast-moving consumer goods (FMCG) categories purchased for home consumption in China. As in the previous 12 years, we analyzed 26 key categories across the four largest consumer goods sectors: packaged food, beverage, personal care, and home care. This year, we updated our tracking to include nutrition supplements, coffee, and sanitary pads, while removing toothbrushes and fabric softener, bringing our total tracked categories to 27 to better reflect evolving market dynamics.

In this report, we will provide updates on the following two topics, and then close with the implications for brands:

• Topic 1: Overall FMCG performance in China for Q3 2024 year-to-date (YTD)
• Topic 2: The fundamentals of brand growth and changes compared to previous years

Overall FMCG growth in China has slowed during the first three quarters, becoming slightly negative in Q3 and further declining in September (P10). Specifically, FMCG growth rates were +2.0% in Q1, +1.6% in Q2, -1.1% in Q3, and -3.5% in P10. For Q3 2024 YTD, the average FMCG growth of +0.8% was influenced by a +4.6% increase in volume alongside a -3.6% decline in average selling price (ASP). This decline represents the most significant drag on FMCG performance in China since we began observing the deflationary trend in 2021. Price deflation accelerated throughout all three quarters, with ASP declines of -1.5% in Q1, -4.2% in Q2, -5.1% in Q3, and -5.2% in P10. Among the major categories, personal care and beverage experienced the largest ASP declines and have faced depressed prices for the past five years. Home care and packaged food also reversed their ASP growth in Q3 2024 YTD, entering a period of decline. This accelerating deflationary trend highlights the increased price sensitivity of consumers and the heightened promotional focus of platforms and retailers.

In Q3 2024 YTD, offline channels outperformed the market, gaining 1% market share for the first time since the inception of e-commerce. This gain was driven in part by the expansion of discount chains and club warehouse formats, as well as by smaller formats such as grocery, convenience stores, and super/mini markets. The slight downturn in online channels stemmed from robust volume growth, which was offset by a similar-sized ASP decline due to heavy promotions across nearly all platforms. Within the e-commerce landscape, Douyin continued to experience double-digit growth, surpassing JD to become the second-largest e-commerce channel by gross merchandise value.

As outdoor activities have surged following the post-Covid reopening, we have noticed a slight decline in food and beverage spending at home, now accounting for 55% in Tier 1 and Tier 2 cities. In this context, catering to on-the-go consumers in the food and beverage sector has become the primary focus for grocery stores and convenience stores.

At a time of increased promotional activations by brand and platforms, it is important to remember the fundamentals of brand growth.  The starting point is to understand that categories behave differently along the repertoire-loyalist continuum.  We have looked at this question three times in the past (in 2013, 2016, and 2019). Given the significant changes since 2019, we have decided to provide an updated analysis of this important topic. As previous readers may recall, in repertoire categories, increased shopping frequency typically results in consumers purchasing a greater variety of brands. Conversely, in loyalist categories, higher purchase frequency does not lead to an increase in the number of brands bought. This year, we arrived at several conclusions—some consistent with previous findings, while others differ:

• Shoppers across most repertoire categories have become more repertoire-oriented over time, likely due to intensified competition and an increase in available brands.
• Online penetration has minimal impact on either repertoire or loyalist shopper behavior. This holds true across both categories with high online penetration, such as baby diapers and make-up, and categories with low online penetration, such as candy and packaged water.
• Markets remain highly competitive, with a significant share of market potential still up for grabs. Among the 27 categories studied, an average of 18% of the top 10 brands dropped from the list in 2023 compared to 2019.
• Consistent with previous years, the main factor driving performance for leading brands as compared to others is brand penetration, which surpasses frequency and repurchase rate.
• On average, shoppers have shown lower engagement with brands (as measured by average purchase frequency), with a steady decline over the past decade.
• The revenue contributions from low-frequency shoppers have become increasingly significant across most categories over time.
• Thus, the shopper base for brands resembles a “leaky bucket,” particularly for smaller and nonleading brands. Consequently, brand teams must prioritize the continuous recruitment of new consumers to expand their shopper base.

Implications for brands

To prepare for success in 2025, brands should concentrate on five key strategies:

1. Re-examine and keep innovating portfolio: Align product offerings and value propositions with genuine consumer needs and channel-specific requirements. Consumers are becoming more rational and are looking for true value, not necessarily lower price, so innovation will continue to play a key role.
2. Maximize physical availability, both online and offline: Capitalize on the full potential of omnichannel approaches, connecting online and offline efforts through large consumer data sets to establish a connected commerce strategy.
3. Embrace out-of-home opportunities for food and beverage categories with specific portfolios and route-to-market, as consumers have returned to out-of-home eating and drinking occasions.
4. Capture mental availability: Implement focused marketing campaigns aimed at recruiting consumers. To navigate through media channel dynamics, brands must follow a 1+N+X approach (1 stands for a brand's core value proposition, N stands for key marketing campaigns, X stands for tailored marketing content per media channel) to focus on brand building while adapting to the diversified content expression on different media channels.
5. Continue to manage costs given the persistent deflationary environment, and investigate partnership opportunities and asset-lite operating models.

Reflection on the first three quarters of 2024

In the first three quarters of 2024, China's fast-moving consumer goods (FMCG) industry experienced modest growth of 0.8% year-to-date. This growth included a promising recovery in the first half of the year, with increases of 2.0% in Q1 and 1.6% in Q2. However, this was followed by a decline of 1.1% in Q3 and a more pronounced decline of 3.5% in September (P10) (See Figure 1).

The performance lagged total retail sales, which rose by 2.8% excluding catering, partly due to the country's pro-consumption policies aimed at durable goods. Initiatives such as the consumer equipment upgrade and trade-in program have stimulated domestic demand, as evidenced by significant increases of home appliance sales — 20.5% in September and 39.2% in October. There has also been a continuous reallocation of consumer expenditure toward service sectors such as dining and travel, with retail sales in these areas experiencing a 6.7% increase during the first three quarters of 2024.

Figure 1

2024 marks the second year following the lifting of Covid-19 restrictions in December 2022. Although the year-to-date growth of +0.8% was similar to the +1.0% growth recorded in Q3 2023 year-to-date, the underlying dynamics are significantly different. In Q3 2023, growth was driven by a +1.2% increase in volume, coupled with a -0.2% decrease in average selling prices (ASP). In contrast, Q3 2024 recorded a solid volume increase of +4.6% (see Figure 2); however, the ASP experienced a significant decline of -3.6%, the highest drop since 2019, while the Consumer Price Index rose by +0.3% during the same period. Deflation became increasingly pronounced over the three quarters, with rates of -1.5% in Q1, -4.2% in Q2, -5.1% in Q3, and -5.2% in September (see Figure 3). Of the 27 tracked categories (see Figure 4), 16 experienced price deflation in Q3 2024 YTD, driven by consumers increasingly seeking value for money, intense competition, and a lack of innovation.

Figure 2

Figure 3

Figure 4

Trade-up: Among the 27 categories tracked, 9 did not experience a drop in average selling price (ASP). Most of these categories maintained a flat ASP, with changes between 0% and 1%. Only juice, instant coffee, and toothpaste saw increases exceeding 1% in ASP. This growth can be attributed to rising demand for health and wellness products, along with innovations within the categories. For example, the juice category experienced heightened demand for higher quality and richer flavors, with coconut water emerging as a rapidly growing subcategory. Instant coffee also benefited from innovations such as freeze-dried instant coffee pods.

K-shape: Certain categories displayed a K-shaped pattern, where innovations met consumer needs but faced fierce price competition. The home care segment exemplified this trend most clearly. In facial tissue, the mass segment grew by +18%, driven primarily by volume, while the premium segment experienced significant value growth due to innovations such as four-layer (+36%), five-layer (+93%), and lotion facial tissues (+26%), although these figures originated from smaller bases.

Continuous deflation: Among the 16 categories experiencing a decrease in ASP, 4 saw declines exceeding 5%, all within the personal and home care segments. These categories included hair conditioner (-10%), skincare (-6%), makeup (-10%), and baby diapers (-8%). The notable price deflation was caused by several factors: increasing cost-consciousness among consumers, competitive pressure from duty-free channels, aggressive competition among platforms for traffic, domestic brands offering value-for-money products, and a lack of breakthrough innovations in these categories.

Geographic pattern: Growth patterns aligned geographically with total retail market trends, as Tier 3 and Tier 4 cities outperformed Tier 1 and Tier 2 cities (see Figure 5). For Q3 year-to-date, Tier 3 and Tier 4 cities grew by +2.9% and +5.5%, respectively, while Tier 1 and Tier 2 cities faced declines of -4.4% and -0.9%. Volume led growth across all city tiers, with the exception of Tier 1 cities while ASP declined across all city tiers.

Figure 5

In Q3 2024, China's economy grew by 4.6%, its slowest pace since early 2023, falling short of the full-year GDP growth target of around 5%. Authorities have committed to implementing additional stimulus measures and providing guidance to support household consumption since late September. While it will require patience and time for the stimulus to take full effect, it is likely to progressively build consumer confidence, which will later translate into higher consumption.

Category update throughout the first nine months of 2024: Home care continued to lead growth in the FMCG sector, closely followed by beverages

Among the four major sectors (see Figure 6), home care experienced the highest growth with a value increase of +3.5%, just ahead of beverages at +3.3%. Packaged food saw more moderate growth at +1.4%, while personal care faced an increased decline compared to 2023, returning to a level similar to 2022 with a decrease of -4.4%. This marks a decline from -2.0% in 2023 and -4.8% in 2022.

Figure 6

Home care delivered +3.5% growth (see Figure 7), driven by robust volume growth of +8.7%, surpassing the +7.1% volume growth recorded during the same period in 2023. This segment experienced a -4.8% average selling price (ASP) deflation among all sectors, with its volume growth being the strongest. The overall volume increase was supported by both greater product penetration and frequency of use, reflecting heightened health and hygiene concerns alongside a growing desire for self-indulgence and an improved quality of life at home. Consumers are increasingly seeking products that have a lower impact on health and the environment, enhanced fragrance and aesthetics, and professional-grade efficiency and effectiveness. Fabric detergent and kitchen cleaners both recorded significant growth at +6%, driven by high volume increases of +8%, despite a slight decline in ASP. In the kitchen cleaner category, fruit and vegetable wash achieved a remarkable +26% value growth with premium pricing, while value packs of 2–3L and 3L saw strong increases at +14% and +25%, respectively. Cleaning occasions in kitchens and bathrooms continued to rise, becoming more specialized with products targeting drain cleaning, water stain removal, and toilet odor elimination. Facial tissues grew by +6%, a slowdown from the +18% growth observed during the same period in 2023, yet still demonstrating relative strength, propelled by a +8% volume increase despite a -2% ASP decline. This segment shows divergence in ASP, with higher-end options, including multilayer and lotion-infused varieties, commanding a premium and growing at over +25%. Innovations have also emerged in the mass segment, with hanging tissues experiencing growth exceeding +800% from a small base. Conversely, toilet tissue declined by -8.5% (with rolled tissues comprising 90% of the category's total value), which included a -4.4% volume decline and a -4.2% ASP decline. This decrease is attributed to a shift toward alternative formats (such as hanging tissue, cotton tissue, and wet tissue) and consumers opting for more value-for-money products.

Figure 7

The personal care decline widened to -4.4% (see Figure 7), compared to -2.0% in 2023. However, makeup, along with scalp serum and leave-in hair treatments, contributed to a strong recovery in volume demand, which rose by +5.8%, up from +1.4% in the previous year. Shampoo experienced a value increase of +2% alongside a volume growth of +7%. In contrast, hair conditioner saw a value decline of -1% but enjoyed a volume increase of +9%. Makeup also recorded a value decrease of -2% while achieving a volume growth of +9%.  These figures indicate that the personal care sector faced accelerated ASP deflation of -9.6%, compared to -3.3% during the same period in 2023. This trend persisted throughout the year, with Q1 at -7.5%, Q2 at -10.6%, and Q3 at -10.5%. The decline was driven by consumers' heightened cost-consciousness, competitive pressure from duty-free channels, aggressive promotions from online platforms, and domestic insurgent brands offering value-for-money alternatives. Both hair conditioner and makeup experienced steep ASP declines of -10%. Skincare recorded a value drop of -4% with modest volume growth of +2%, while personal wash achieved a value increase of +3% alongside a volume rise of +4%. This growth was fueled by a trend to simplify skincare routines, despite the expansion of sub-occasions like knee cream. Consumers are increasingly focused on functionality and ingredients, opting for value-for-money products when they do not perceive tangible benefits from higher-priced options. Toothpaste was the only category within the sector that experienced premiumization, showing a value increase of +7%, volume growth of +5%, and an ASP rise of +2%. This trend can be attributed to its low ticket price and functional, need-driven premiumization. Sanitary pads remained flat in both volume and ASP due to a lack of breakthrough innovations this year. Baby diapers declined by -12% in value and -5% in volume, reflecting similar results to the same period in 2023, which saw a -11% decline. This downturn was driven by broader demographic trends and like sanitary pads, this category has not seen significant new developments that could positively impact ASP.

Beverage growth increased by +3.3% in value (see Figure 8), surpassing the same period in 2023, which recorded only +0.1% growth. This rise was fueled by robust volume growth of +4.5%, compared to +3.4% in 2023, although there was a slight decline in average selling price (ASP) of -1.2%, higher than last year's -0.1%. The trend toward near-water drinks continues as consumers shift from high-sugar options to low- or no-sugar alternatives, particularly those with Chinese ingredients, especially in ready-to-drink tea. As a result, juice recorded impressive growth of +20%, following a +24% increase in 2023. Ready-to-drink tea grew by +11%, down from +14% last year, while packaged water increased by +6%, a decrease from +9% in 2023. Notably, coconut water, a segment within juice, surged by +129% after remarkable growth of +203% in the same period of 2023, significantly boosting overall juice performance. Carbonated soft drinks (CSD) faced a moderated decline of -3%, with sugared options down by -1% and zero-sugar varieties dropping by -12% year-to-date, as consumers express concerns over the potential carcinogenic effects of aspartame sweetener. Beer experienced growth of +7% driven by volume increases, benefiting from the trend of home being the new center of life and a slowdown in catering services. However, prices did not rise as they had in previous years, signaling a more challenging environment for brands attempting to premiumize their offerings, particularly in Q3. Instant coffee growth slowed to +3% in value compared to +6% last year, influenced by competition from value-for-money fresh options. Nonetheless, premiumization remained significant, accompanied by an ASP increase of +9%, driven by freeze-dried instant coffee pods. Milk declined by -4%, with low-single-digit decreases in both volume and ASP due to a lack of innovation and expansion into new occasions. Similarly, yogurt witnessed a -4% decline, primarily due to a -5% drop in ASP resulting from insufficient new developments.

Figure 8

In the China Shopper Report 2023, Vol. 2, we observed that the packaged food sector experienced significant deceleration in the first three quarters of 2023. This trend corresponds with the stabilization of demand for staple items, which returned to pre-crisis levels in the post-pandemic environment. This year, we recorded moderate growth of +1.4%, with volume rebounding to +2.3%, compared to a decline of -1.5% in 2023. However, the premiumization trend has halted, leading to a decline in ASP of -0.9%, in contrast to increases of +4.9% in 2023 and +3.2% in 2022. Instant noodles emerged as the fastest-growing category within this segment, achieving +8% growth, fueled by a mix of volume recovery and product innovation, particularly from leading brands like BaiXiang. Nutrition supplements continued to grow but at a much slower pace of +2%, down from +21% in 2023. The penetration curve began to flatten, with less than a 1 percentage point gain compared to a 7 percentage point increase last year. Additionally, consumers increased their average number of items purchased by +24% last year. The ASP for nutrition products continued to decline due to competition from domestic brands, though this decline moderated to -4%, compared to -7% in 2023. Infant formula also experienced a more modest decline than in 2023, with an overall decrease of -8%, consisting of a volume drop of -7% and an ASP deflation of -1%, influenced by demographic trends. Other segments, including candy, chocolate, and biscuits, generally saw solid volume recovery ranging from +5% to +6%, with stable ASP growth between +0% and +1%. This stability in ASP was largely attributed to innovations that brands introduced to meet consumers' increasing demand for value-for-money alternatives. Notably, there were pockets of growth within these segments; for instance, soda biscuits grew by +46%, and private-label varieties increased by +32%, as consumers perceived them as healthier and more cost-effective options.

Channel update: Offline channels have outperformed the market in the first nine months of 2024, while online-to-offline services, excluding community group buying, have seen a slight decline due to the recovery of offline traffic. Additionally, online penetration has plateaued.

Offline channels: Fueled in part by the growth of discount chains and club warehouse formats, offline channels recorded a year-to-date growth rate of +1.8% and experienced less price deflation at -3%, compared to a -6% average selling price (ASP) for online channels. This segment gained market share (see Figure 9). Consumer loyalty to specific channels remains low, with the average shopper using 4.5 different offline outlets. The channel landscape is evolving, with smaller formats gaining share and discounters outperforming nondiscounters. Super/mini formats and grocery stores experienced accelerated growth compared to last year, with super/mini formats increasing by +6% versus +4% in the same period of 2023, and grocery stores growing by +11% compared to +6% previously.

Figure 9

There are two types of offline discounters: hard discounters, which leverage scale and operational efficiency along with private labels to offer value (e.g., Lingshi Henmang, ALDI), and soft discounters that sell near-expiration products at reduced prices (e.g., HotMaxx). Both types have experienced significant growth. Hypermarkets have continued to decline at a mid-single-digit rate, while club warehouses have seen notable growth of +17%, though this is a slowdown from +58% in the same period of 2023. This growth is supported by China's expanding middle class, which is seeking premium quality and differentiated products at good value. Notably, club warehouses in Tier 1 and Tier 2 cities have grown by +11% year-to-date, while those in Tier 3 and Tier 4 cities have seen impressive growth of +59%, as retailers expand into relatively affluent lower-tier cities such as Yangzhou and Jiaxing.

Online channels: E-commerce saw rapid growth during the Covid-19 pandemic, with its market share increasing from +23% in 2019 to +33% in 2021. However, 2022 and 2023 showed relative stagnation as offline consumption recovered. Compared to Q3 2023 YTD, overall online penetration remained stable, with traditionally high online penetration categories—such as skincare, beauty, and infant formula—slightly expanding their online share. In 2024, e-commerce faced a slight decline of -0.6% and lost market share for the first time since its inception. This downturn was driven by robust volume growth of +6%, offset by a similar-sized decline in average selling price (ASP) due to extensive promotions across nearly all platforms. Within the e-commerce landscape, the interest-based e-commerce platform Douyin continued to grow at a double-digit rate of +35%, although this was slower than the +65% growth seen in 2023. Douyin has now surpassed JD to become the second- largest e-commerce channel by gross merchandise volume (GMV). Discount platforms like Pinduoduo experienced lower growth compared to 2023, while Kuaishou declined by -12%. Traditional e-commerce platforms also faced accelerated declines, contributing to the overall downturn in the channel.

O2O (Online-to-Offline): The O2O segment experienced a -11% decline. Both the number of buyers and purchase frequency decreased at a mid-single-digit rate, while basket size remained stable. Within subsegments, community group buying was the primary contributor to this decline, dropping by -21%. This decline is attributed to platforms like Duoduo Maicai (多多买菜) and Meituan Youxuan (美团优选), which focused more on improving profitability rather than on gross merchandise volume growth. Horizontal marketplaces also saw a slight decrease of -5%, driven by a 1.2% reduction in buyer numbers and a 7.8% drop in basket size, as offline traffic to stores—particularly expanding formats like discounters and club warehouses—grew rapidly. Across categories, we observed that high ASP categories (such as skincare, alcohol, and shampoo) declined significantly, with high double-digit decreases, while aggregator platforms (such as Meituan and Ele.me) led this decline.

For the 11 food and beverage categories we track in both home and out-of-home (OOH) channels, the share of at-home spending has declined for the first time in recent years.

During the Covid-19 pandemic, the at-home share of food and beverage spending increased from 47% in 2016 to 55% in 2022. Despite the easing of pandemic restrictions at the end of 2022, at-home spending continued to gain share in 2023, partly due to lower ticket sizes for OOH options. By the end of the third quarter, at-home spending accounted for 56% of overall food and beverage expenditures in Tier 1 and Tier 2 cities. However, in 2024, as outdoor activities continued to recover, the trend for at-home spending reversed, losing share to OOH while still representing 55% of total food and beverage consumption in Tier 1 and Tier 2 cities (see Figure 10).

Figure 10

In the 11 food and beverage categories we tracked, out-of-home (OOH) consumption constitutes 87% of sales in convenience stores and grocery stores. This trend is consistent across all categories. For instance, OOH occasions account for 93% of beer sales, 91% for ready-to-drink tea, and 75% for milk in convenience stores and grocery stores. Consequently, brand teams should prioritize convenient pack sizes and promotional materials for on-the-go consumption in these channels.

This year, we also analyzed consumption patterns for the same 11 food and beverage categories at a national level across Tier 1 to Tier 5 cities. At-home consumption was lower at 52% across all tiers, compared to 55% for Tier 1 and Tier 2 cities. This indicates that at-home consumption in Tier 3 to Tier 5 cities is significantly lower than in Tier 1 and Tier 2 cities. Consistent with the trends observed in Tier 1 and Tier 2, the at-home channel lost share to OOH across all tiers, with a decline of 1 percentage point compared to the same period in 2023.

What drives brand growth

In an era of heightened promotional activities by brands and platforms, it is crucial to revisit the core principles of brand growth. We have explored this topic in previous Shopper reports (2013, 2016, 2019), and given the significant changes in consumer behavior, retail dynamics, and the FMCG landscape in China since 2019, it is time to reassess our findings. As before, our analysis relies on Kantar Worldpanel data, which reflects actual consumer behavior rather than self-reported actions from surveys.

To begin, it is crucial to recognize that categories behave differently along the repertoire and loyalist spectrum (see Figure 11). In repertoire categories (such as biscuits and skincare), the more frequently consumers shop, the more brands they buy. For example, as of 2023 in the biscuit category, an average household buys 7.8 times per year and buys 5 brands. However, households with heavy shoppers buy 15.8 times per year, and buy 8.9 brands. The more vertical the slope in Figure 11, the more repertoire the category is.

In loyalist categories (such as infant formula, and baby diapers), shoppers buy the same brands regardless of increasing frequency. As a result, the slope in Figure 11 is more flat.

Figure 11

Our findings indicate that these categories continue to demonstrate the same repertoire or loyalist traits as in previous years (see Figure 12). Figure 12 shows the slope of the different categories, as calculated in Figure 11. For instance, categories like milk, diapers, and infant formula exhibit strong loyalist behavior, with shopper patterns in 2023 mirroring those from 2019 and 2013. However, in repertoire categories such as makeup, nutrition supplements, skin care, shampoo, and candy, consumers are now purchasing an even broader range of brands than in prior years. This trend is likely fueled by the influx of new brands, including digital insurgents, entering these markets.

Figure 12

Interestingly, similar to 2019, the level of online penetration of a category does not determine whether it is classified as a repertoire or loyalist category. For instance, categories like makeup (repertoire) and baby diapers (loyalist) exhibit high online penetration, while others, such as candy (repertoire) and packaged water (loyalist), show significantly lower levels. Additionally, shoppers exhibit similar behaviors online as they do offline (see Figure 13). Although the vast selection offered by e-commerce led many to anticipate an increase in repertoire behavior online among consumers, the data indicates otherwise. What matters more is the inherent nature of the category itself.

Figure 13

Similar to our findings in 2019, all categories remain highly competitive, with market share still up for grabs. Among the 27 categories studied, 18% of the top 10 brands in 2019 have fallen off the list by 2023, and 7 categories now have different market leaders (see Figure 14). In some categories, maintaining a leading position is particularly challenging. For instance, the market leadership in the juice category has shifted between Nongfu Spring, Minute Maid, and Huiyuan over the past few years. Similarly, the leadership in baby diapers has alternated between Huggies and Pampers, with 4 of the top 10 brands from 2019 experiencing a change in ranking four years later.

Figure 14

Market leadership is determined by a brand’s ability to boost and maintain household penetration, defined as the percentage of households in a market that purchase a particular brand within a year. As we explained in China Shopper Report 2014, Vol. 2 (Chinese Shoppers: Three Things Leading Consumer Products Companies Get Right), the key to growing market share is increasing penetration. This insight stems from research conducted by the Ehrenberg-Bass Institute for Marketing Science, summarized by Professor Byron Sharp, the Institute's director, in his book How Brands Grow, which is based on decades of observations of buying behavior. Furthermore, Bain & Company and Kantar Worldpanel shopper reports have validated this finding in China over the last 10 years specifically, (shopper reports looking at consumer behaviors in 2013, 2016, and 2019), even as online channels became more and more prevalent for consumers.

Across all categories studied, leading brands demonstrate significantly higher penetration than their competitors (see Figure 15). For example, in the packaged water category, Nongfu’s penetration is 5.8 times that of the average of the top 20 brands, while its purchase frequency and repurchase rate are only 1.9 and 1.6 times that of the average of the top 20 brands’ average, respectively. In personal wash, Safeguard’s penetration is 6.2 times that of the average of the top 20 brands' average, whereas its purchase frequency and repurchase rate are 2.1 and 1.6 times that of the average of the top 20 brands respectively. The larger the market share of the leading brand, the greater the penetration compared to following brands. For example, in the instant coffee category, Nestle dominates the category with approximately 6x RMS (relative market share, calculated as No. 1 market share divided by No. 2 market share). In RTD tea category, Wanglaoji leads the category with approximately 1.2x RMS.

Figure 15

Similar to our findings in the past, we confirm that penetration is the key driver of market share for FMCG brands (see Figure 16). The fabric detergent example illustrates the importance of penetration to drive market share. In addition, we note that the higher the penetration rate, the higher the frequency and repurchase rate, creating a full virtuous cycle of brand growth (see Figure 17).

Figure 16

Figure 17

It is worth noting that shoppers' purchase frequency of the top brands in a category remains quite low and has decreased over time (see Figure 18). For instance, in 2016, consumers bought one of the top three beer brands an average of only three times a year, compared to just two times a year in 2023. Similarly, consumers purchased one of the top three toothpaste brands an average of 2.4 times a year in 2016, which has dropped to 1.9 times in 2023. This data highlights shoppers' increasingly lower engagement with brands, even as e-commerce platforms actively promote these brands and make them widely available.

Figure 18

If penetration is key, then brand teams need to focus on low-frequency shoppers—those who purchase a brand only one or two times a year. For most brands, these consumers represent a significant portion of the shopper base and contribute a substantial amount of revenue. This trend has become more pronounced over the past decade (see Figure 19). For example, among the top three juice brands, low-frequency shoppers contributed 48% of revenue in 2016 and 66% in 2023. Shoppers who bought Huiyuan once or twice a year comprised 80% of its shopper base and accounted for around 50% of its revenue in 2016; these figures rose to 88% and 68% in 2023. More strikingly, for the top three skincare brands, the revenue contribution from low-frequency shoppers increased from 26% in 2016 to 72% in 2023—a 46-percentage point increase. Low-frequency shoppers made up around 75% of Olay's shopper base and contributed approximately 40% of its revenue in 2016; these numbers changed to 91% and 70%, respectively, in 2023.

Figure 19

What this means is that the shopper base of a brand is like a “leaky bucket” for repertoire categories—and the holes in the bucket are getting bigger each year. For example, H&S, a shampoo brand, saw its recurring brand shoppers (defined as those who purchased the brand in the previous year) contribute 50% of its shopper base in 2022 and 46% in 2023 (see Figure 20).

Figure 20

Chinese shoppers still love brands, but many switch brands within a year (see Figures 21 and 22). Among the 11 categories we studied in 2016 and 2023, 60% of the top five brands’ shopper base left within 12 months in 2023, compared to approximately 55% in 2016. This shift accounted for 50% of their revenues, down from about 40% in 2016. Meanwhile, newcomers represented 60% of the shopper base for the 11 brands in 2023, up from roughly 50% in 2016, and contributed to 50% of their revenues, compared to about 45% in 2016.

Figure 21

Figure 22

Implications for brands

China's recovery in the FMCG sector will take time. Although the Chinese government has recently launched a stimulus package, brands and retailers must carefully monitor its effects amid ongoing macroeconomic challenges. Consumption will be crucial for China's recovery, as evidenced by the government's measures to stimulate and support domestic spending. Over the past two years, Chinese consumers have shown strong price sensitivity, contributing to a persistent deflationary environment in the FMCG sector. Additionally, consumers are increasingly displaying repertoire behaviors, leading to a more competitive market landscape for brands.

To position themselves for success in 2025, brands should focus on several key strategies:

Develop a superior portfolio by aligning it with the true needs of consumers: Brands must strategically adjust their portfolios and value propositions to reflect current consumer trends and channel specificities. As macroeconomic challenges continue, consumers are becoming more discerning in their spending and choices. They are becoming more rational, looking for true value, not just low prices. Therefore, innovation will continue to play a key role. This approach will help offer products and services that genuinely address those needs and differentiate the brand from the competition.

Maximize physical availability (online and offline) by unlocking the full potential of omnichannel and developing a connected commerce strategy: The shopper's journey now seamlessly integrates online and offline experiences. Brands must adapt to this dynamic landscape and engage consumers through an effective omnichannel approach, leveraging large sets of consumer data. Achieving this requires not only a refreshed route-to-consumer strategy that coordinates online and offline efforts, but also a carefully crafted portfolio strategy that considers suitable products and pack sizes for each channel.

Embrace out-of-home opportunities: As out-of-home consumption recovers, packaged food and beverage companies must invest to capitalize on these prospects. The strategies for succeeding in out-of-home channels differ from those for at-home channels. To fully seize these opportunities, it is essential to have the right product offerings, a tailored route-to-market coverage model, and strong organizational capabilities.

Capture mental availability by running focused marketing campaigns to recruit consumers: As consumers become more selective and the leaky bucket phenomenon persists, brands must focus on expanding their shopper base through targeted marketing efforts. Brand building is more critical than ever and only brands that consistently invest in their brand can weather the cycle. To navigate through media channel dynamics, brands must follow a 1+N+X approach (1 stands for a brand's core value proposition, N stands for key marketing campaigns, X stands for tailored marketing content per media channel) to focus on brand building while adapting to the diversified content expression on different media channels.

Continue to manage costs: The deflationary trends encourage brands to seek opportunities for performance improvement, investigate partnership opportunities and asset-lite operating models, and to reinvest in areas that are crucial for business growth, such as product innovation and marketing campaigns aimed at recruiting consumers.

This report is a joint effort between Bain & Company and Kantar Worldpanel. The authors extend gratitude to all who contributed to it, especially Enqing Wang, Kate Liu, Matthew Wu, Jelly Guo, Yongqi Si, and Borui Wang from Bain, as well as Tina Qin and Sallian He from Kantar Worldpanel.