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FMCG market recovers despite challenges. Consumer FMCG purchases in major Chinese cities rapidly rebounded at the end of December 2022. The market is expected to continue its recovery in Q2, with opportunities for brands that can meet consumers’ needs for health, convenience, pleasure and indulgence, particularly in lower-tier cities and towns.

O2O model shapes the growth of online retail. Although consumers purchased fewer products as they came out of lockdown, they tended to increase shopping frequency. The average consumer placed 15 orders yearly, similar to the average number of visits to large supermarkets.

Interest ecommerce booms. ‘Interest commerce’, which grew on the back of short-form video content and key opinion leaders (KOL), has achieved remarkable growth. Consumers are motivated to buy products they see being promoted, either via the link in a video or by searching for it themselves online.

FMCG growth remains as COVID slows. Although the pandemic in Taiwan is continuing to ease off, and people are returning to social life, FMCG sales growth remained strong in Q4 of 2022. The year-on-year growth rate was 5%, mainly driven by the food sector.

Healthcare continues to grow. Spend on personal care grew by 12% year-on-year, a large proportion of which came from the healthcare category. As Taiwanese shoppers became more health conscious after COVID, sales of health supplements increased significantly by 37% in Q4.

Ecommerce settles in. Online FMCG sales went up by 20% in Q4 versus the previous year. The health supplement and facial skincare categories were the biggest contributors.

A slowdown in GDP growth. The Indian economy grew between 5 and 5.1% in Q4 of 2022, lower than the 6.3% recorded in the previous quarter. High prices are adversely impacting the quantum of purchases made by Indian consumers. FMCG consumption declined by 0.8%, while value rose by 6.3%.

Barring beverages, all sectors decline in volume. Beverages is the only sector where both volume and value see sturdy growth. While the food, home care and personal care sectors have grown in value, they declined in volume. The fastest value growth is seen in categories including chocolates, soft drinks, and ready-to-eat mixes.

Ecommerce continues to rise. Among all the channels, ecommerce is seeing the highest growth in shopping occasions, distantly followed by supermarkets. Households have cut down on their spend per trip across channels.

Inflation affects the FMCG market. Consumer inflation in Korea was at 5% year-on-year in December 2022. As the inflation-induced price surge continues, the FMCG market increased 3.8% in value, but a contraction in shopping frequency has resulted in a decline in volume.

The rebound of beauty and increased demand for healthy drinks. The pandemic significantly affected the beauty industry, but colour cosmetics and hair care are now performing well due to the lifting of face-covering rules. The tea market is growing, driven mainly by the young generation's interest in healthy drinks.

Continuous expansion of ecommerce. With Korea’s strong digital infrastructure, the online channel gained in importance, and now accounts for a 35% share of total FMCG sales value. While other channels marked subpar performance in frequency, online successfully increased shopping occasions due to its convenience.

Economy slows but remains solid. Indicators for 2022 have pointed to a strong economy in UAE. The first half of 2023 may see a slowdown in oil GDP, but the government’s agenda and Dubai's transformational projects offer support for non-oil sectors, including FMCG.

FMCG purchase pattern shifting. Shopper behaviour is shifting towards fewer but higher-value trips, focusing on food and home care items, leading to a change in consumer spending patterns.

Leveraging online needs will bring benefits. The popularity of online shopping is increasing, with higher frequency and penetration. Online shopping results in a larger basket size than offline, and it keeps increasing over time. Brands and retailers should leverage its increasing popularity, especially among expat Arabs, to drive growth.

FMCG shows steady growth. FMCG growth stands at 6.5%, a steady increase on the previous quarter, as inflation pressures continue. Reducing spend per trip has become a strategy for coping with the price increases, and indicates shoppers might choose cheaper brands or smaller packs.

Price drives growth across sectors. In most sectors, price increase remains the growth driver, which means it is important for brands to anticipate how shoppers will prioritise the categories they buy. However, the home care sector has managed to grow volume, indicating that smaller packs are gaining traction.

Tighter competition for share of wallet. Although FMCG growth in 2023 is expected to be lower than last year, this presents an opportunity for brands to adapt to the changing needs of consumers. As shoppers continue to adjust their purchasing habits, brands need to work harder to compete for a share of the money they have to spend.

Consumers maintain a positive but cautious outlook. The Malaysian Consumer Sentiment Index continued to improve, increasing by 6.9 points to 105.3 in Q4 of 2022, higher than the same quarter in 2021 (97.2). This was potentially driven by an improvement in employment and income expectations, with inflation worries continuing to dampen optimism.

Consumers maximise spend for every trip. Spending remains cautious, with shoppers planning carefully, and prioritising saving for a future downturn. In-home FMCG spend per trip grew slightly, with household and personal care outperforming the food sector. However, consumers are making fewer trips overall.

Proximity channels are performing well. Within modern trade, sales in hypermarkets and supermarkets normalised, while the performance of minimarkets continued to improve due to higher penetration and trip spend. Meanwhile, drug, beauty, and pharma channels are growing in tandem with the non-food sector, gaining in penetration as well as trip size and spend.

In-home FMCG declines to pre-COVID levels. In-home FMCG saw growth during COVID as Thai consumers stayed at home more. In 2022, as they started to resume out-of-home (OOH) activities, demand returned to pre-COVID levels. In addition, reduced subsidies and high inflation caused in-home FMCG sales to fall at the end of 2022.

Trend for cautious spending continues. Lower government support and high inflation led to less disposable income and made consumers spend more cautiously. Thai shoppers started spending less per trip, while the number of categories they bought reached an all-time low.

Convenience stores and hypermarkets are winning. For in-home FMCG, convenience stores continued to grow after COVID, when consumers built a habit of shopping via this channel due to its proximity, good promotions, and convenient experience. Local channels, which benefited from government subsidy programmes during COVID, lost some share to hypermarkets.

Confidence and inflation remain key challenges. The Philippines economy is steadily recovering, and the unemployment rate has decreased to 4.2%, indicating that more Filipinos are finding jobs. However, consumer confidence continues to decline as inflation intensifies. As of January 2023, the inflation rate is at 8.7%.

Filipino shoppers spend more cautiously Although FMCG spending remained higher during the 2022 holidays than the previous year, shoppers are starting to deprioritise personal care and continue spending on food and beverages due to inflation.

Sari-sari stores are still key channels. To cope with rising prices, shoppers continue to manage their budget through sari-sari stores, which require a smaller cash outlay. Within hypermarkets and supermarkets, shoppers are maintaining their overall spending for FMCG.

Global instability and inflation exert pressure. In 2022, Vietnam's economy recorded impressive GDP growth of 8%, the highest in over a decade. However, the economy felt the impact of global inflation, with the consumer price index (CPI) rising significantly and further increases anticipated in 2023, putting pressure on purchasing power.

Beauty bounces back from 2021 decline. The beauty segment within the personal care sector is on track for a strong recovery in 2022, thanks partly to several facial care categories that recorded double-digit growth in two consecutive years.

Increasing average price paid is the key value driver. Total FMCG posted an overall year-on-year value growth in both urban 4 cities and rural areas, driven mainly by an increasing price paid. Rural areas showed promising signs as volume consumption increased, albeit more slowly than the price increases.

Modern trade and online gain in rural areas. Although they still account for a modest fraction of retail channels' total value, modern trade and online are gaining appeal in rural Vietnam. Mini stores are becoming important as frequency and spending per trip grow.