Early signs of stabilization in FMCG sales

China's fast-moving consumer goods market has shown early signs of stabilizing in the first three quarters, with smaller cities and rapidly evolving distribution channels being main engines, said research from Bain & Company and Worldpanel.

Total FMCG spending rose 1.3 percent in the first nine months, supported by a 3.8 percent increase in sales volume even as average selling prices fell 2.4 percent, which narrowed from that of last year, polled firms said in the newly released China Shopper Report 2025.

"The moderation of price deflation and steady volume growth indicate that China's FMCG market is moving toward a new normal, where consumers pursue value rather than pure price," said Rachel Lee, general manager of Worldpanel China. "Brands that calibrate pricing and promotion strategies to strike that balance will be better positioned to sustain growth."

The report identifies China's smaller cities as the main growth engines of the 2025 recovery. Tier 3-5 markets accounted for roughly 80 percent of total FMCG growth this year, with volumes climbing 4-6 percent.

The growth reflects rising urbanization, expanding access to modern retail formats and increasing penetration by national FMCG brands.

Small-format channels — including snack stores, community supermarkets and flash-delivery O2O platforms — are attracting new consumer groups at a faster pace, particularly in lower-income regions where living costs are lower and frequency of purchases is rising.

The shift in where Chinese consumers shop is reshaping the competitive landscape. Membership clubs, snack chains and discount stores notched explosive expansion, jumping 40 percent, 51 percent and 92 percent year-on-year, respectively, as shoppers seek value, convenience and broader choices.

Online-to-offline spending rebounded 7.9 percent in the third quarter after declining last year, buoyed by faster delivery times and stronger cross-platform promotions. In e-commerce, low-price and short-video platforms continued to expand the customer base, now representing more than 40 percent of FMCG online sales.

"Channels have become active demand generators rather than passive sales endpoints," said Derek Deng from Bain's consumer products practice section.

As retailers play a larger role in shaping demand, private-label goods have gained momentum. These products accounted for about 2 percent of FMCG sales in the first nine months, a 44 percent jump over two years.