As of now, New Distribution has compiled the 2023 interim reports of 154 listed FMCG companies, sorted by revenue, as shown in the table below. Among them, 52 food and beverage companies saw net profit growth, accounting for about 61.18%; 9 condiment companies saw net profit growth, accounting for about 47.37%; 8 personal care companies saw net profit growth, accounting for about 53.3%; and 28 liquor companies saw net profit growth, accounting for about 80%.

Data Table of Listed FMCG Companies' Financial Reports for H1 2023

Food & Beverage Industry In H1 2023, Yihai Kerry's revenue exceeded 100 billion yuan, with 10 companies surpassing 10 billion. The top three were Yihai Kerry, Yili, and Mengniu. By segment, companies like Master Kong, Weilong, Yanjinpu, and Juewei Foods achieved both revenue and profit growth, while Liangpinpu, Toly Bread, Qiaqia Food, Kemen Food, Babi Food, and Haixin Food saw varying degrees of net profit decline. Haoxiangni saw a loss expansion of 880.11%, the largest decline, mainly due to its single-product focus and insufficient growth momentum, making it difficult to improve performance.

Notably, in the first half of the year, the bulk snack channel became a new channel choice for many snack food companies. In H1 this year, Ganyuan Foods, Yanjinpu, and Juewei Foods all deepened cooperation with bulk snack brands such as Snacks Busy, Snacks Youming, Zhao Yiming Snacks, and Laopo Daren, advancing a full-channel development strategy and opening new performance growth points, thereby increasing revenue.

Image source: Visual China

Weilong recently announced that in August 2023, the group sold 371,800 boxes of products through the bulk snack channel, covering all categories including seasoned flour products, vegetable products, and soy products, a 38.1% increase from July 2023.

It can be seen that sales through the bulk snack channel continue to rise rapidly. The emergence of bulk snack stores will inevitably bring a new round of transformation.

Beverage companies generally saw growth in H1 2023. Nongfu Spring's ready-to-drink tea segment contributed 52.86% of revenue, up 59.8% year-on-year, accounting for 25.8% of total revenue, an increase of 6 percentage points from last year. The growth of tea drinks is inseparable from the contribution of the sugar-free tea brand Oriental Leaf. According to Nielsen data, Oriental Leaf grew 114% year-on-year in the past 12 months, with a growth rate more than 9 times the overall ready-to-drink tea industry.

Image source: Oriental Leaf Weibo

Uni-President China's beverage business revenue in H1 2023 was 9.258 billion yuan, up 12.3% year-on-year, accounting for 63.53% of total revenue. Among them, Hai Zhiyan's sales volume grew by over 80%, with revenue nearly doubling year-on-year.

Overall, the development of the beverage industry in the first half of this year benefited from the recovery of dining scenarios and the increase in out-of-home occasions. Additionally, companies implemented diversified development strategies, advancing tea drinks, juices, electrolyte drinks, and other categories, increasing innovation, continuously meeting consumer needs, and boosting revenue.

Leading dairy company Mengniu could not escape the trend of increasing revenue without increasing profit. During the reporting period, net profit fell 19.5% year-on-year. Other companies with declining net profit include Feihe, Zhuangyuan Dairy, China Shengmu, Miaokeland, and Western Dairy.

In the first half of the year, milk prices continued to decline, but farming costs kept rising, leading many companies into a situation of "increasing revenue without increasing profit" or even "losses."

Condiment Industry Among the 19 condiment companies surveyed, 7 achieved both revenue and profit growth. The top three companies with revenue exceeding 10 billion yuan were Meihua Bio, Fufeng Group, and Haitian Flavoring, but all three giants still saw varying degrees of decline in revenue and net profit. Meihua Bio stated that the main reason was the decline in prices of its main products (monosodium glutamate, threonine, and lysine), leading to a decrease in main business revenue. Fufeng Group's revenue increase in H1 this year was mainly due to stable MSG revenue contribution and increased revenue from starch sweeteners, while the decline in gross profit was mainly due to "a decrease in MSG gross profit contribution."

Haitian Flavoring's core categories such as soy sauce and oyster sauce remained industry leaders in H1 2023, but soy sauce revenue fell by over 9%. As market competition intensifies, Haitian will focus on diversified product layout, concentrating on sub-segments such as variety, taste, and specifications.

With the popularity of the zero-additive concept, Qianhe Flavoring delivered a satisfactory performance in H1 this year, achieving revenue of 1.531 billion yuan, up 50.89% year-on-year; net profit attributable to shareholders was 257 million yuan, up 115.94% year-on-year. At the same time, it accelerated its national expansion strategy. As of the end of the reporting period, Qianhe had 2,786 distributors, a net increase of 556. Its distribution model contributed 1.144 billion yuan in revenue in H1, up 69.7% year-on-year.

In addition to Qianhe, Tianwei Food, Zhongjing Food, and Lotus Health also achieved both revenue and profit growth. The main reason is mostly the diversified development of products, no longer solely pursuing big single products, but paying more attention to the coordinated development of business forms.

For example, Zhongjing Food's seasoning food business already has over 120 SKUs. Lotus Health also stated that it is actively exploring a second growth curve, laying out products in diversified condiments, drinking water, and prepared dishes.

However, Xueyan Salt, Zhongju Hi-Tech, Anji Food, Hengshun Vinegar, and Fuling Zhacai all saw varying degrees of net profit decline. Among them, Zhongju Hi-Tech's net profit fell by 560.78%. The company stated that the loss was mainly due to a huge impairment provision from losing a lawsuit.

Personal Care Industry In the personal care industry, only Hengan International exceeded 10 billion yuan in revenue, but the leading company's profit declined significantly. The top three companies, Hengan International, Vinda International, and C&S Paper, saw profits decline by 4%, 81.08%, and 62.88%, respectively.

Regarding the decline in net profit, the interim reports show that some companies attributed it to pressure from rising raw material costs, while others attributed it to intensified market competition.

Although Hengan declined by 4%, it still performed relatively well, mainly due to the increased sales proportion of its high-margin "Q • MO" products, which offset the impact of rising costs on overall business profits.

C&S Paper and Vinda International mainly focus on low-margin tissue paper business, and fluctuations in pulp prices often severely affect company profits. In the second half of the year, as pulp prices show a downward trend, cost pressure on companies will gradually ease.

It is undeniable that the current personal care industry in China, especially the tissue paper market, remains highly competitive. Consumers' demand for high-quality, diversified tissue paper is also increasing, and market segmentation undoubtedly places higher demands on brands.

Liquor Industry Among the 35 liquor companies surveyed, 29 achieved positive revenue growth, while 6 showed a downward trend. Leading companies performed far ahead with stable growth.

Baijiu companies with revenue exceeding 10 billion yuan include Kweichow Moutai, Wuliangye, Yanghe, Shanxi Fenjiu, Luzhou Laojiao, and Gujing Gongjiu. In contrast, Shunxin Agriculture, Jiugui Liquor, Laobaigan Liquor, Shuijingfang, Tianyoude Liquor, and Lanzhou Yellow River saw significant net profit declines. Among them, Shunxin Agriculture turned from profit to loss, a decrease of 302.54% year-on-year. The company stated that the real estate and pig farming businesses affected overall performance.

Overall, in H1 2023, baijiu companies mostly focused on high-end and mid-to-high-end product structures, concentrating on core big products such as Feitian Moutai, Wuliangye Puwu, Guojiao 1573, and Fenjiu Qinghua. They continuously deepened excellent quality, sought progress while maintaining stability, and continued to reduce costs and increase efficiency, driving significant increases in revenue scale and gross margins.

Beer categories grew steadily in H1 2023. China Resources Beer and Tsingtao Brewery maintained 10-billion-yuan scale, achieving revenues of 23.871 billion yuan and 21.592 billion yuan, respectively. Chongqing Brewery, Yanjing Brewery, Zhujiang Brewery, and Huiqian Brewery also achieved both revenue and profit growth in H1.

On one hand, summer is the peak season for beer sales; on the other hand, the mid-to-high-end beer market is developing rapidly.

Tsingtao Brewery's 2023 interim report shows that sales of its mid-to-high-end and above products reached 1.975 million kiloliters, up 15% year-on-year. Earlier, Chongqing Brewery also acquired domestic craft beer brand Jing A, entering the craft beer track.

With consumption upgrading and accelerated premiumization, beer companies will continue to deepen their layout and seize market share in the mid-to-high-end segment.

Final Thoughts Overall, the FMCG industry showed a recovery trend in H1 2023, but development varied among different types and sizes of companies.

Snack foods: Channel transformation is deepening, and the explosion of bulk snack stores has attracted cooperation from many food brands; Condiments: Still under pressure from high raw material costs, while continuously upgrading categories and building a second growth curve. Health-oriented and salt-reduction trends are ushering in new development opportunities, becoming growth drivers for the condiment industry; Personal care: Mostly showing a downward trend, mainly due to the supply-demand contradiction not yet improved, with production growth still exceeding consumption. In the second half of the year, there may be an upward trend due to seasonal factors;

Liquor: Leading companies performed steadily, with more focus on channel construction and brand development. The proportion of mid-to-high-end product sales increased, and quality is gradually becoming a market focus.

With consumption upgrading and consumers' pursuit of quality life, changes in consumption habits and types have brought new opportunities and challenges to the FMCG industry. Industry consolidation and survival of the fittest will continue.

Therefore, for the FMCG industry, improving product quality, broadening marketing channels, paying attention to market changes, and continuously innovating are essential to meet consumers' growing needs, enhance brand core competitiveness, and respond to the ever-changing market environment.

The times are changing, and the market environment is also changing. FMCG companies must assess the situation and adapt accordingly.

How are the times changing? How is the market developing? From October 9-11, the 5th China FMCG Conference will reveal the answers.

This conference will revolve around the theme "New Era • Rebuilding", featuring a series of high-quality forums over three days, with depth, density, and professionalism, to help FMCG companies quickly and comprehensively understand and gain insights into external environmental changes, provide in-depth interpretation of the latest frontier information and development trends, and offer the strongest support for senior executives in making key decisions. We believe this will be an industry event well worth attending!