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Foreign brands losing ground to domestic firms

By WANG ZHUOQIONG (China Daily) Updated: 2014-07-02 07:12

Amid a sluggish consumer goods market in China, foreign brands are facing pressure, with six out of 10 losing market share to their domestic rivals last year, an industry survey has found.

China's market for soft drinks, packaged foods, personal care products and other consumer staples has contracted by two-thirds since 2011, according to China Shopper Report 2014, the third annual study jointly conducted by Bain & Co and Kantar Worldpanel.

Foreign brands losing ground to domestic firms
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Foreign brands losing ground to domestic firms
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Market growth for non-durable consumer goods slowed to 4.6 percent in the first quarter of 2014, down from 10 percent growth in 2012 and 15 percent three years ago. The rate of decline was consistent across all cities regardless of size.

Volume growth was mostly stable as price increases declined, in large part due to fewer new premium products entering the market.

Growth in annual spending per household dropped from 9 percent in 2012 to 4.6 percent last year, while the number of urban households grew by 2.6 percent per year, contributing to volume growth.

The survey, released on Tuesday in Beijing, projects continued single-digit market growth this year, a significant drop from previous years, as a result of lower growth in disposable income and annual spending per household.

The study surveyed 40,000 Chinese households and analyzed 106 product categories covering personal care, home care, beverages and packaged goods, which account for 80 percent of the country's non-durable consumer goods market.

Foreign brands overall lost share across 26 categories. Some saw marginal share gain, but the overall scorecard was negative, with 60 percent of foreign brands losing share, the survey said.

For example, in the carbonated soft drinks category, foreign brands saw a 6.3 percent share loss, while domestic brand Wahaha increased market share by 3.8 percent through product innovation and large scale marketing, according to Kantar.

However, foreign brands achieved marginal share gain in some categories, including hair conditioner and cookies.

Foreign brands losing ground to domestic firms
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