FMCG sector evolves in China

Warc, 30 January 2013

BEIJING: Mengniu, Procter & Gamble and Coca-Cola are among the top firms by market share in China's fast-moving consumer goods sector, a category that is now seeing significant consolidation, a study has shown.

Figures from Euromonitor, the insights group, quoted by the Financial Times revealed the five biggest makers of packaged food, including dairy, held a 19.5% share in 2012, versus 15% in 2011.

Indigenous players dominate in this sector. Mengniu and Yili, two dairy specialists, led the charts, both taking more than 5% of sales despite suffering respective high-profile safety scandals.

Wang Yansong, assistant president of Mengniu, told the China Daily it is trying to rebuild consumer trust, saying: "We have upgraded our inspection facilities and implemented stricter quality control in our supply chain, transportation and all other production processes."

Wilmar International, a Singaporean agribusiness conglomerate, holds some 3.5% of the food market, with Ting Hsin, better known as Tingyi, on just over 3% and Wahaha on 2.5%.

Nestlé is only the category's tenth biggest member, one place ahead of Mars, both failing to surpass the 2% share level. Danone has also seen its figures fall from 2% to 0.7% between 2007 and 2012.

Turning to soft drinks, the top five in this segment are now responsible for 43% of sales, versus 36% six years ago. Coca-Cola heads the way on 17%, up from approximately 14% in 2007.

"We hold the leadership position in the sparkling category," Muhtar Kent, the chief executive of Coca-Cola, said late last year. "In our latest survey of consumers aged 12–49 years old, Coca-Cola was rated as both the most favorite sparkling and non-alcoholic ready-to-drink brand."

Elsewhere, Tingyi claims over 11% of the market, with Wahaha, PepsiCo and the JDP Group all congregating around the 5% mark.

Euromonitor's most recent totals for the beauty and personal care sector, from 2011, revealed that the five leading operators yielded 41% of volume purchases, improving from 38% in 2007.

Procter & Gamble remains the number one, although its share slipped from 18% to roughly 16% in the same period. L'Oréal, by contrast, has seen growth of three percentage points to around 11%.

Shiseido registered some 5% on this metric, with Unilever topping the 4% mark and Amway coming in just below this measure, having all enjoyed share growth since 2007.

Bob McDonald, CEO of Procter & Gamble, said last week it is the biggest consumer goods firm in China by a "large margin", with its rivals varying by sector. "In some categories it's the local competitor, in some categories it's the global competitor," he said.

Data sourced from Financial Times; additional content by Warc staff