With the outbreak of Omicron and global inflation, volatility is the normal in FMCG market. Although the Chinese market has undergone rapid changes in the past decade, the leading brands always stay ahead of the curve, set up a sustainable growth model of shoppers through building the power of brands, channels and product innovation. Nowadays, brands must have a deep insight into the impact of pandemic which has led to constantly changing shopping behavior and new usage occasions. It is also critical for them to constantly review their product assortment and supply chain agility as well as the development of new channels to grow against the headwind.
The Top 10 most chosen brands are dominated by local brands. If we look from 2014 onwards, more and more Chinese brands joined the list of most chosen brands, demonstrating the growth of –Chinese brands‘ power. We can also see that the Top 10 list is quite stable, with only 14 brands joining the club in over 10 years. These brands are focused on providing better solutions for Chinese consumers’ everyday needs and thus been able to cover a wide buyer basis.
Yili and Mengniu remain in 1st and 2nd place respectively, managing to grow their shoppers to reach 9 out of 10 households. With a wide range of dairy categories, both brands will continue to catch the rising needs of nutrition and a healthy immune system post-COVID.
The growth of hygiene needs post-COVID also saw two paper tissue brands, Vinda and Hearttex, join the list. Vinda is one of the Top 10 fastest growing brands, growing in both consumer choice and penetration. Its disruptive actions in expanding to niche categories, penetrating lower-tier cities, and developing emerging channels have facilitated this growth.
This year marks the first year in 10 years that more non-food brands than food joined the top 10 fastest growing brands list.
Hygiene awareness remained high after the 2020 COVID outbreaks, and for that reason brands which provide comprehensive house cleaning solutions were well placed to achieve rapid growth. C&S continues to hold the top spot with the expansion of their consumers’ base. Launching crossover products that trigger nostalgia became the road to rejuvenation of domestic brands such as Yunnanbaiyao and White Cat.
As the need for in-home cooking and convenient foods slowed down, the out of home market gradually recovered. Pepsi is the only food brand whose growth has ranked in the top 10 every year for past 3 years, while Nescafe joined the fastest growing club for the first time.
Yanjing Beer gained +21.2% CRP growth compared with the previous year thanks to an increase in penetration.
As a brand that usually focuses on the mass market, following the trend of premiumisation in the beer category, Yanjing entered the mid and high-end market with a series of new products which helped to enrich its product lines.
Yanjing’s success lies in its core product, Yanjing U8. Tapping into the young’s evolving need for ‘tipsy’ drinking occasions, Yanjing launched U8, a product with low alcohol and easy-to-pull bottle cap. The brand used famous idols as celebrity endorsements, which built brand awareness among young consumers. Integrated marketing also play an important role. From splash ads to outdoor campaigns, Yanjing brought the brand closer to their targets and successfully attracted more consumers.
Area expansion is a further driver. As a brand historically based in North China, Yanjing increased its presence in potential regions in hypermarkets and supermarkets which helped earn +2.8 penetration points and +3.5 points in East and Northeast China.
Simple Love is Mainland China’s fastest growing local dairy brand, with significant CRP growth of +49.2% and reaching more than 27 million Chinese households in 2021.
With the increase in health conscious and consumption upgrading trends, more and more consumers care about food health and safety. Simple Love positioned itself as a “pure and additive free” dairy brand, in order to meet these high education / high income consumers’ needs in quality dairy products.
It launched a series of non-additive yogurt products to different target groups, starting with spoonable sugar-free yogurts targeting young adults, sucker cup for children, followed by a special pack for kids and functional yogurts with LGG probiotics, etc.
Simple Love also invested in its own dairy farm, which enabled stronger milk supply and wider distribution – both ecommerce & new retail and offline large-scale KA achieved strong growth.
Qianhe is Mainland China’s fastest growing food brand (within the Top 30 most chosen brands in food category), with significant CRP growth of +12.2% compared with the previous year and reaching more than 41 million Chinese households in 2021.
Qianhe’s promising growth lies in its dominant product, soy sauce. It invests in the healthy segment by providing healthy and naturally brewed soy sauce including zero additives, first extracted, organic and low-salt. Besides this, it specializes in “Zero additives” across other products in its condiments portfolio, including vinegar and cooking wine. With its typical “0” packaging, it achieves huge success everywhere in Mainland China, with its stronghold in the West (such as Sichuan & Shaanxi) and Key & A cities (such as Chengdu).
After Covid-19, consumers want a healthier diet and higher quality of life. Qianhe, which is devoted to the middle and high-end market, offers premium soy sauce with attractive promotions to meet consumers’ new needs. It successfully appeals to high-income mature families. Meanwhile, the “Zero additives” concept also helps to win over the young audience.
OMO is the 2nd fastest growing home care brand in CRP reach and the 5th biggest, purchased by over 73 million Chinese households in 2021 alone.
OMO’s main business lies in the fabric cleaning category, playing across multiple formats such as powder, bar, liquid and capsules. Perceived as a convenient format, capsule is gaining strong interest from consumers, with Omo leading the way thanks to its multiple-chamber offer that can tackle various consumer needs around fabric care, perfume and hygiene. Omo has also been very successful in maintaining its strong performance across other formats, despite the category formats’ evolution trend, and was able to attract more buyers from lower city tiers & lower income families.
OMO has also recently expanded its business to the household care category with dish wash, contributing to a big part of its fast CRP growth achievement. Omo has leveraged the development of the home cleaning category and positioned itself as a preferred brand choice with a slightly more premium proposition versus the category average.
Clean & Soft (C&S), the 2nd fastest growing local brand of CRP in the Health & Beauty sector in 2021, has manifested a remarkable CRP growth of 24.4% and has reached over 64 million Chinese households in comparison with the previous year. Accompanied with the growing recognition of the brand, the masses are purchasing more and more C&S products.
The growth in 2021 was predominantly driven by C&S ‘Facial Tissue’ products, which dominate over 90% of annual turnover amongst all C&S Health and Beauty products. C&S mainly adopted two subtle strategies in the field of facial tissue: more targets and more presence, which the brand has successfully implemented.
In terms of ‘more targets’, C&S launched its innovative superior products (e.g., the Oil Painting Series of better quality and aesthetic design) to attract more young customers and upscale customers. C&S also enhanced its competitiveness in low-medium-end markets through the development of a new brand “Sun”. In order to achieve more presence, C&S moved into unconventional channels (e.g., direct cooperation with E-business platforms), while also consolidating traditional marketing channels.
1. What makes you unique as a business? Vinda has been established for over 37 years since 1985. Despite continuous market changes through the years, Vinda’s focus on building strong and sustainable brands with a compelling consumer offer has consistently defined who we are as a company.
The concept of ‘family’ has always been at the heart of Chinese society and values. As households are Vinda’s core consumers, we are constantly exploring and adopting different methodologies to understand the multi-faceted elements and needs of families in modern society. This is key as every commercial success case starts from our ability to deeply understand and fully leverage these true consumer insights. Aside from investing in R&D, Vinda’s other priorities for success are to adapt to change in an agile way, focus on premiumization and drive impactful marketing innovations.
Mainland China is a very dynamic market that requires us to stay on top of the latest trends and stay close to our consumers, all while retaining a clear and consistent value proposition. Our Vinda tissue brand essence is centered on the idea of “strength”. This attribute is the basis of all our products: from our high quality Vinda Classic Blue tissues of superior strength, to our Vinda Ultra Strong tissues that remain ‘strong even when wet’ and our Vinda Deluxe embossed tissues that offer premium strength and softness. “Strength” is also the emotional attribute reflected in our Vinda brand campaigns and commitments that revolve around strong families and parent-child relationships. We drive this communication through impactful 360-degree market activations below and above-the-line, including our popular Vinda China Tour brand roadshow that has run for 10 seasons until now. This consistency and precision in execution has enabled us to successfully engage millions of Chinese households around the Vinda brand over the years.
Consumers are always looking for products to fit their ever-changing lifestyles and needs, such as products during the pandemic to keep their families healthy. One of Vinda’s core principles is innovation whereby we strive not only to solve our consumers’ challenges today, but to invent the future for them. This means making it our job to know what consumers need to improve their quality of life, even before consumers themselves know what they need. The numerous first-in-category innovations that Vinda has launched – including limited edition products in collaboration with licensed trademarks and celebrities, wet wipes for children, sanitizing wet wipes and washable kitchen towels - prove our commitment to this principle.
Ultimately, I believe what gives Vinda its unique competitive advantage is our ability as a company to deliver on our business plans with solid execution and speed-to-market in the present, while strategically staying ahead of the game for the future. I am always proud to share how Vinda was the category forerunner in the adoption of online retail channels. We established our e-commerce team as early as 2012 and successfully developed long term partnerships with major e-commerce platforms over the past decade, while maintaining our strength in traditional distributor and key account channels. E-commerce now accounts for over 40% of the group’s total revenue, making Vinda a truly omni-channel company today based on our foresight years ago.
2. What has been your biggest success in 2021? The Kantar Worldpanel consumer panel data for 2021 showed that Vinda was the No.1 player in terms of market share in the Chinese tissue market for the 7th consecutive year. The brand also enjoyed the largest ever increase of its consumer base during the year, with a year-on-year growth of 9.9%. For the first time, we became one of a handful of FMCG companies to reach over 100 million Chinese households. These were all significant milestone achievements!
Consumer tissue is a highly commoditized category – that’s why we constantly place a high focus on product innovation to create a clear differentiation for the Vinda brand. Following 5 years of research and development, we successfully launched Vinda POWER-X in 2021 – the very first washable kitchen towel in the market. The launch of this first-of-its-kind innovation strongly reflects our strategic ambition to perpetually lead and shape the market, with compelling product and marketing innovations that will continually satisfy consumer needs now and into the future.
Having said that, the one success I am most proud of last year is our highly-driven and learning-oriented team at Vinda. Our people have been instrumental in ensuring the continued strong development of our business and brands in the face of unprecedented challenges and a rapidly changing market since 2021. I am very proud of all our accomplishments as a team. 3. If you were starting a new independent business in the FMCG space, what would it look like? Millennial (Gen Y) and Gen Z consumers are highly open and receptive to novelty and new experiences. Growing up with the internet and technology as part of their everyday lives, they are demanding consumers with a shorter attention span and a strong passion for causes that matter to them. Any new business in the FMCG space must put the needs of this dynamic audience at the forefront to succeed. I see the key success factors as having an authentic and engaging brand story and value proposition, highly innovative, impactful and differentiated packaging and communication, endorsement from credible peers and influencers, and of course, masterful execution of omni-channel sales and marketing.
4. How do you think smaller brands can survive and grow? Consumer needs and purchase motivations are extremely diverse. I believe smaller brands can identify or even define new and untapped categories, to create a differentiated, niche position for themselves. There are also opportunities for smaller brands to build a more intimate and personalized experience with consumers that generates well-targeted word-of-mouth. Of course, being able to skillfully leverage digital marketing and platforms is essential for smaller brands to reach consumers at a relatively low cost.
I consider our feminine care brand – Libresse – to be an example of a relatively small brand that launched 3 years ago and has now successfully managed to gain a strong growth momentum within the well-established Chinese feminine hygiene category. Libresse is positioned as a progressive brand that aims to break taboos and inspire modern women to live the life they want, by engaging them in open dialogue around periods and other relevant topics. This unique brand differentiation - combined with its superior, high quality product performance - has allowed Libresse to win over a significant consumer base within a relatively short time.
5. What about consumer behaviour that has surprised you the most over the past five years? And what about the next five years? With digitalization and the rising purchasing power of Chinese households, we have seen rapid lifestyle upgrades over the last 5 years among a fast-emerging Chinese middle class. Consumers are increasingly sophisticated in their purchase decisions, seeking high quality yet unique products within FMCG portfolios. They are also more demanding in pursuit of brands that fulfil all their needs but have a higher loyalty to their preferred brands once they have found them. Purchase decisions are heavily driven by word-of-mouth and user reviews. These are all significant changes in consumer behavior.
However, I believe we will see the fastest and most dramatic changes in the next 5 years to come. With Gen Z becoming the major driving force for consumption, we will have to rise to the expectations and experiences they demand from us as companies. We will need to continuously innovate, optimize our product portfolio, and refresh our brands to stay relevant and appealing to this dynamic consumer group. As the line between online and offline platforms blurs even more, integrated omni-channel sales, marketing and services will be a priority to seamlessly engage consumers at all digital and physical touchpoints. As lifestyles continue to improve, purchasing priorities will also shift. Consumers will look to buy meaningful experiences, not just products. They will also become even more health and sustainability conscious about their purchases. As brands, we will need to be authentic, sustainable and innovative to win their hearts and of course, their wallets.
