2024, Top Ten Keywords in the FMCG Industry

Amidst the ongoing global economic fluctuations and transformation, the FMCG industry is stepping into a new era that is more complex, volatile, and full of both opportunities and challenges. Over the past year, we have witnessed the innovation and reshaping of traditional marketing models, as well as the rise and growth of emerging consumer trends. To comprehensively analyze the industry's context and precisely capture market dynamics, New Distribution has compiled the "Top Ten Keywords for the FMCG Industry in 2024," aiming to review the development trajectory of the FMCG industry from multiple perspectives and provide a strong reference for its future development. Supermarket Reforms When it comes to the hottest topic in the retail supermarket industry in 2024, it inevitably revolves around the word "reform." In March this year, Yu Donglai announced assistance to Bubugao, and subsequently helped Yonghui reform multiple stores, leading to a surge in performance. The "supermarket reform wave" quickly swept across the country. Well-known traditional supermarkets such as China Resources Vanguard, Lianhua Supermarket, and Inzone Supermarket also initiated their own reforms. However, whether it is the reforms assisted by Pangdonglai or the independent transformations initiated by major supermarkets, these are not just simple adjustments but involve profound transformations at multiple levels, with the core focus on the optimization and upgrading of "people, goods, and places." People: Efforts are made to optimize employee compensation and management mechanisms, using more reasonable incentives to stimulate work enthusiasm and creativity, thereby improving overall operational efficiency and service quality. Goods: A bold adjustment of product structure is undertaken, accurately grasping consumer needs and decisively delisting SKUs with poor sales and low efficiency. Emphasis is placed on cost-effectiveness and differentiation, actively introducing competitive new products that align with market trends and optimizing product portfolios. Places: Adjusting display layouts, especially in areas like fresh produce, bakery, and deli, to create immersive shopping experiences. By optimizing traffic flow, adding rest areas, and entertainment facilities, more personalized services are provided to customers. New Distribution Comment: Pangdonglai's service has always been highly praised. Most supermarkets offer services such as self-service bag storage, free tea, free delivery, and baby strollers, greatly enhancing customer convenience. In terms of product selection, Pangdonglai does not solely pursue profit maximization but adheres to the principle of price transparency, actively develops private labels, and achieves reasonable price reductions through optimized cost control and guaranteed product quality. This creates differentiated products, providing consumers with value-for-money choices and further enhancing the shopping experience. In the past, traditional supermarkets charged various channel fees, regardless of consumer demand, and would list products as long as they were profitable. These fees led to inflated retail prices, ultimately borne by consumers. However, such fees do not exist at Pangdonglai. It can be said that Pangdonglai's success was not achieved overnight, nor is it accidental. Pangdonglai's practical exploration has opened up new development paths and directions for traditional supermarkets. The wave of supermarket reforms demonstrates the positive progress of traditional retail supermarkets in China and represents a profound reflection and comprehensive review of the traditional retail model. The old model must change for the retail industry to find new opportunities. Traditional Chinese Health Drinks With the rise of health awareness among young consumers, traditional Chinese health drinks, which emphasize traditional wellness concepts, have become the ideal "water substitute" for young people. In February 2023, Genki Forest launched its "Zizai Shui" series, featuring "traditional Chinese health drinks" as a selling point. Within just four months, sales exceeded 100 million yuan, setting a record for the fastest sales growth in Genki Forest's history. Since this year, this trend has become increasingly pronounced, with numerous brands entering the traditional Chinese health drink market. Brands such as Haowangshui, Kekemanfen, Chaxiaokai, Yikehuoquan, and Panpan have launched their own traditional Chinese health drink products, such as longan water, chrysanthemum grapefruit water, and ginseng wolfberry health water. According to data released by the Qianzhan Industry Research Institute, the market size of "traditional Chinese health drinks" reached 450 million yuan in 2023, growing by over 350% from 2018 to 2022. It is expected that in the next five years, the compound growth rate of the "traditional Chinese health drink" market will exceed 88%, reaching a scale of over 10 billion yuan by 2028. Traditional Chinese health drinks adhere to the concept of "medicine and food homology," using ingredients such as longan, red beans, coix seed, and wolfberry, perfectly integrating traditional wellness with modern beverages. This not only satisfies young people's pursuit of health but also caters to their preference for tasty drinks, thereby driving rapid market development. New Distribution Comment: Since ancient times, Chinese people have believed that "food therapy is better than medicine therapy." It can be said that "health preservation" has always been deeply ingrained in the Chinese character. With the acceleration of life pace, health and wellness have become topics that more and more young people pay attention to in advance. They not only value health but also hope to integrate wellness into daily life, achieving wellness anytime and anywhere. Traditional Chinese health drinks cater to the public's pursuit of a healthy lifestyle. With their convenience and ready-to-drink characteristics, they simplify the complex preparation process of traditional health beverages, making wellness more efficient. However, most traditional Chinese health brands currently focus on a limited range of raw materials such as red beans, coix seed, wolfberry, and red dates, which to some extent limits product diversity and innovation. At the same time, as health benefits become more recognized by consumers, this could also become a constraint on brand development, limiting the expansion of consumption scenarios. For traditional Chinese health drinks, despite the emerging trend and vast development space, how to break consumers' fixed perceptions, innovate products, and expand new consumption scenarios remains an important issue for brands to address. Private Labels According to the "2023 China Supermarket Private Label Case Report" released by the China Chain Store & Franchise Association, the sales proportion of private labels among the top 100 supermarket enterprises in China has been increasing year by year, reaching 5% in 2022. Sam's Club introduced its private label Member's Mark to the Chinese market as early as 2000. Currently, this brand has over 700 products, covering almost all categories, and accounts for more than one-third of sales. Walmart globally derives 30% of its annual sales and over 50% of its profits from its private labels. ALDI's private label share in the Chinese market has reached about 90%, and it continuously iterates its private label products to meet consumer needs. Pangdonglai's chairman, Yu Donglai, shared that Pangdonglai currently has over 100 private label SKUs, with sales reaching 1.1 billion yuan. It is expected that in the next three years, the sales proportion of Pangdonglai's private labels will at least exceed 50%. Yonghui Supermarket's 2024 interim financial report shows that private label sales reached 1.28 billion yuan, and it stated that it will "continue to optimize the supplier structure and increase the proportion of high-quality suppliers for private labels." The popularity of private labels continues to rise in the retail industry, becoming an undeniable force. This not only reflects consumers' dual pursuit of quality and cost-effectiveness but also demonstrates new strategies in supply chain management and brand building by retail supermarkets. New Distribution Comment: The core advantages of private labels lie in differentiation and cost-effectiveness, which have become a major trend in the retail industry. Retailers actively engage in creating private labels because they understand market demand and know what products consumers need, thereby developing products that align with corporate characteristics and meet local customer needs, achieving product differentiation while effectively enhancing customer loyalty. By establishing direct partnerships with suppliers and factories, retailers can bypass the intermediate links of brand owners and distributors, achieving high cost-effectiveness. In addition, private labels give retailers more pricing autonomy, making them more competitive in the fierce market. However, building a private label is not easy and requires substantial upfront investment in funds and resources. During the development process, retailers must carefully balance product quality and price to avoid falling into a vicious cycle of "low price and poor quality." Only by adhering to the development philosophy of high quality and high cost-effectiveness can they win consumer trust and loyalty, laying a solid foundation for sustainable brand development. Value for Money Today, consumers are becoming more rational. But pursuing rational consumption does not mean simply seeking low prices. Voices like "It's okay to buy expensive, but not to be overcharged" and "Not only should the price be low, but the quality should also be good" are increasingly heard. Chicecream, which once pushed ice cream prices to new heights with its unique positioning, began to change amid the "ice cream assassin" trend. This year, Chicecream launched a new series called "Sa'Saa" priced at only 3.5 yuan, marking a significant adjustment in its pricing strategy. But price reduction is not the goal; the core of value for money still lies in quality. Three Squirrels continued to focus on "high-end cost-effectiveness" this year, attracting many consumers with a product strategy emphasizing high quality, differentiation, and richness. The "2023 Consumer Trends Observation" shows that "value for money" is becoming a new consumption concept recognized and practiced by a considerable number of consumers. They do not make impulsive purchases, reject unjustified premiums, and dislike low-quality low-price consumption. New Distribution Comment: From cost-performance to value-for-money, consumers are no longer blindly consuming but are more focused on improving their quality of life. Regardless of the brand, as long as the product is good, quality is high, and the price is low, there is a consumer market. Therefore, many private labels and white-label products are gradually entering the public eye. They do not excessively pursue the external value of brands but pay more attention to the essence of products, seeking value for money or even more than expected. This shift in consumption philosophy is not only a manifestation of consumers becoming more mature and rational but also an important sign of market progress. It promotes continuous improvement in product quality, innovation, and service. To cater to consumers' pursuit of value for money, FMCG companies also achieve low prices and high quality by optimizing supply chain management, improving production processes, and strengthening quality control. However, it is worth noting that value for money is not the only choice in the current consumption trend. When positioning their brands, companies still need to fully consider their own characteristics and the needs of target consumer groups to determine whether value for money is an appropriate positioning strategy. Dealer Transformation With the diversification of consumer demand, fragmentation of sales channels, and diversification of retail models, the traditional dealership model relying on multi-level distribution networks is facing severe challenges. As an important part of the traditional distribution model, dealers previously played the role of intermediaries, assisting brands in distributing products to terminals. However, with the rise of disintermediation, the transaction structure has changed, and the living space of dealers has been gradually squeezed. Market changes have also prompted dealers to rethink their business logic and how to enhance their supply chain capabilities and channel advantages. In previous reports by New Distribution, some dealers have begun their own transformations, responding to market changes through deep cultivation of categories, strengthening supply chain and category management capabilities, and transforming into regional B2b supply chain platforms. New Distribution Comment: The traditional business model of dealers, which relies on sales representatives visiting orders and vehicle sales, has prominent issues of low efficiency and high costs. At the same time, manufacturers' pressure to stock up exacerbates dealers' inventory pressure, making it difficult for dealers to have the initiative. But the trend of disintermediation in the current FMCG market is becoming increasingly evident. Of course, this does not mean that dealers have lost their value. On the contrary, this trend places higher demands on dealers, requiring them to possess more professional capabilities. Dealers should not just deliver goods to terminals but must understand terminals, master terminals, and help terminals sell, thereby enhancing their channel advantages. Facing the fiercely competitive environment, if dealers do not change in time, they will face the risk of being marginalized or even eliminated from the market. The traditional business model of dealers is clearly no longer viable. Forward-thinking dealers have already begun to change, bravely trying new strategies and technologies, and continuously enhancing their flexibility and competitiveness. Actively adapting to rapid market changes and continuously innovating and optimizing their supply chain management capabilities have become key to their survival and prominence in the increasingly fierce market competition. Emotional Consumption With the accelerating pace of life and the constant pressure of work, anxiety has become a common emotional state for contemporary young people. Young people value emotional experiences and pursue a higher quality of life, and this inner need has given rise to more types of spiritual consumption products. More and more consumers are increasingly inclined to invest in their emotional value, seeking an "emotional antidote" for themselves. Various types of "squishy toys" on social media seem to have become essential for stress relief among workers. During the 618 shopping festival in 2024, searches for "squishy toys" increased by 125% year-on-year; as of November 8, 2024, on the social platform Xiaohongshu, posts related to "squishy" toys had accumulated 3.426 billion views. Not only that, this year, the popularity of homophonic puns like "ban jin jiao lv" (banana to prevent anxiety) and "wan shi bu nan" (pumpkin for no difficulties) made bananas and pumpkins new work companions for workers. Data shows that in mid-April, searches for "ban jin jiao lv" increased by 70% week-on-week, and orders increased by about 30%. In addition, the popularity of various designer toys, the boom in concerts, and the rise of the pet economy are all vivid manifestations of emotional consumption, with more and more consumers willing to pay for happiness. New Distribution Comment: The emergence of emotional consumption has enabled consumers to shift from satisfying "material pursuits" to "spiritual pursuits." Consumers value "self-pleasing" experiences, which is profoundly influencing our consumption concepts and patterns. But while emotional consumption gives rise to new scenarios and formats, it is not without risks. Facing work and life pressures, people often hope to seek temporary comfort and escape through consumption, but this escape cannot fundamentally solve problems. Excessive consumption may instead increase psychological burden. Some merchants, to attract consumers, may even launch products or services with high prices but potentially unsatisfactory actual effects. In addition, during emotional consumption, consumers may also face issues such as personal privacy leakage, opaque pricing, and unclear services. Therefore, when choosing emotional consumption, consumers need to remain rational. While enjoying the temporary happiness brought by emotional consumption, they should also learn to actively face and solve problems, avoiding blind following or excessive dependence. Direct Sourcing According to New Distribution reports, starting in August, brand owners were successively invited by Yonghui and Jiajiayue stores to renegotiate cooperation terms. The stores demanded two autonomous rights: supply prices equal to those for dealers to eliminate intermediaries, and independent retail pricing without brand owner restrictions. This model is called "direct sourcing" in the industry. It can be said that the rise of the direct sourcing model is closely linked to the current trends in the FMCG industry. In the past, traditional supermarkets mainly operated and profited by charging various fees such as barcode fees, entry fees, and display fees. Now, the role of retailers is becoming increasingly prominent; they are stepping forward and actively seeking new cooperation models. Through the direct sourcing model, intermediaries are eliminated, allowing retailers to directly obtain the lowest product prices, set prices independently, and then pass on the cost savings to consumers, thereby attracting and increasing foot traffic, thus increasing profit margins. Retailers are no longer limited to the previous "selling shelf space" model but are more focused on shifting towards "selling products." This means that retailers' profit sources no longer rely solely on traditional channel fees but increasingly shift towards improving supply chain efficiency and ensuring product quality. New Distribution Comment: The reason why supermarkets and hypermarkets have the confidence to propose direct sourcing requirements to brand owners is that they are key venues for offline sales and have significant influence and appeal in local markets. For them, successfully implementing the direct sourcing model is undoubtedly a good opportunity to enhance market competitiveness and expand profit margins. However, the practice of disintermediation also means that the business share of traditional dealers will decrease, and profit margins will be significantly compressed, potentially even making it impossible for them to maintain their original business scale. This undoubtedly poses a severe challenge to the survival and development of dealers. For brand owners, the direct sourcing model also presents a dilemma: on the one hand, they are unwilling to harm the interests of long-term cooperative dealers; on the other hand, it is difficult to ignore the important offline traffic entrance of supermarkets and hypermarkets. Although the direct sourcing model can bring short-term benefits, it may also trigger long-term market imbalances and conflicts of interest. Therefore, how to establish a more reasonable cooperative relationship among brand owners, retailers, and dealers, ensuring the interests of all parties while promoting healthy market development, requires joint exploration. Pet Economy With an aging society and an increase in the proportion of single and solitary individuals, seeking emotional comfort and psychological satisfaction has become a common need. Raising pets, as a low-cost, high-return emotional investment, has gradually become a choice for consumers. The role of pets is no longer just companions in the family; they are more like "family members" endowed with more emotional attachment and responsibility. The shift in young people's attitudes towards marriage and childbirth makes them more inclined to seek emotional comfort in pets, thereby driving the comprehensive upgrade of pet consumption. According to the "2025 China Pet Industry White Paper (Consumption Report)", the pet economy continued to surge in 2024, with the market size successfully breaking through the 300 billion yuan mark, reaching 300.2 billion yuan, a year-on-year increase of 7.5%. Behind the booming pet economy, numerous niche markets have also emerged, such as pet travel, pet socializing, pet psychological services, pet grooming, pet photography, and pet boarding, with various specialized services emerging one after another. New Distribution Comment: The rise of the pet economy profoundly reflects the subtle shift in consumer psychological needs, especially the trend of being increasingly willing to pay for emotional value. The entry of the younger generation of consumers has further promoted the transformation of the pet market from meeting basic needs to pursuing high-end consumption. This shift is reflected in the innovation of pet food and supplies, such as the emergence of freeze-dried pet food, smart feeders, and smart training devices, which not only improve the quality of life for pets but also meet young consumers' demands for intelligence and personalization. However, the rapid growth of the pet industry has also brought issues of pet food safety. During this year's 315 Consumer Rights Day, multiple manufacturers were exposed for allowing substandard pet food to enter the market, raising public concern about the standardization and normalization of the pet industry. The standardization and normalization issues in the pet industry urgently need attention. Looking ahead, as the status of pets in families continues to rise, and as consumers continue to pursue emotional value and personalized needs for pets, the pet economy may continue to maintain strong growth momentum. Going Global Competition in China's FMCG market is becoming increasingly fierce, shifting from product competition to all-around competition, making profit growth difficult. Many FMCG companies are turning their attention to overseas markets, with Southeast Asia becoming the preferred destination due to its large market size, stable economy, and young, diverse population. In 2024, the going-global strategy of Chinese FMCG companies continued to heat up, with even a saying circulating that "if you don't go global, you'll be out." Numerous brands have shown strong growth momentum and innovation capabilities in the international market. Dongpeng Beverage, as a leader in the energy drink sector, is continuously deepening its overseas market layout. From establishing a subsidiary in Hong Kong in 2021 to setting up an overseas business division from late 2022 to early 2023, Dongpeng Beverage's internationalization steps are steady and powerful. This year, Vietnam is regarded as the first stop for Dongpeng Beverage's overseas expansion, with plans to establish a branch company there for further cultivation. Panpan Food has increased its investment in Indonesia this year, establishing a new production base. In addition, Genki Forest continues to increase its presence in overseas markets. In January 2024, Genki Forest announced that it was about to complete its layout in Costco, a mainstream supermarket in the United States. Its Chi Forest brand was officially listed in two major Korean retail chains in August-September this year, covering 19 Korean Costco stores and 35 Lotte Department Stores. For FMCG brands, going global is not only a brave attempt but also a key measure to explore new development directions and seek new growth points. Against the backdrop of increasingly fierce domestic market competition and bottlenecks in product innovation, opening up new international markets has undoubtedly become an important choice for brands to achieve sustainable development. New Distribution Comment: Facing intense competition caused by domestic overcapacity and economic fluctuations, FMCG brands finding new market increments has become key to escaping involution and achieving sustainable development. However, tastes, characteristics, and dietary habits vary greatly around the world. Chinese enterprises going global face dual challenges of cognition and culture. In the food and beverage industry, this challenge is particularly severe, with factors such as short shelf life, differences in domestic and international standards, and complex supply chains making the overseas journey more difficult. Most brands rely on traditional trade models to go global. Although they can enter the market quickly, the high supply chain costs become an insurmountable obstacle. Therefore, companies like Genki Forest, Want Want, and Panpan have chosen to build factories overseas to reduce production costs, enhance competitiveness, and strive for deep cultivation and expansion in overseas markets. Localized production requires brands to have keen market insight, efficient operational management capabilities, and strong resource integration capabilities, all of which are key elements that Chinese brands need to continuously accumulate and improve on their future overseas journey. Scenario-Based Consumption In today's consumer market, consumers have shown a high degree of maturity, and their demand for FMCG products has gradually shifted from single product functions to diversified experiential value. The era of relying solely on traffic growth is over, and scenario-based consumption models are increasingly favored. Consumers' personalized needs have made customized scenario-based consumption a new favorite. Merchants are no longer limited to providing standardized products but are committed to crafting tailored products and services based on consumers' specific needs in different situations, such as holiday celebrations, social gatherings, or travel outings. The acceleration of life pace has raised consumers' expectations for shopping convenience and immediacy. Various instant consumption channels have sprung up, with 24-hour convenience stores, vending machines, and various online instant delivery services becoming important ways for consumers to obtain products. At the same time, immersive marketing has also become an important means of interaction between brands and consumers. For example, large supermarkets like Sam's Club and Costco create immersive shopping experiences by optimizing layouts, enriching product categories, and improving service quality. Various offline AR experiences allow consumers to enjoy more intuitive immersive feelings. The increase in scenario-based consumption is the result of the combined effect of changing consumer concepts and market progress, which also prompts more and more enterprises to rethink product positioning, deeply explore consumer pain points, and open up new increments. New Distribution Comment: In the era of stock, how to accurately capture and satisfy consumer pain points and stimulate consumers' shopping desires is one of the key challenges in creating consumption increments. Creating scenario-based consumption has become an effective strategy. Starting from consumers' consumption motivations, building diverse consumption scenarios allows consumers to naturally associate consumption in more scenarios. At the same time, the expansion of scenario-based consumption is continuously driving FMCG companies to innovate product diversification to adapt to the needs of different consumption scenarios. However, scenario-based consumption is only a means, connecting consumers' potential needs with brand products or services. Therefore, under scenario-based consumption, high-quality products or services are still needed as support. This also requires brands to continuously optimize products and services while exploring niche scenarios, providing personalized products and solutions at every moment consumers may need. Let scenario-based consumption truly play its due value and become an important driving force for sustained brand growth. Final Thoughts In 2024, the FMCG industry is undergoing profound transformation. In the era of stock, brand owners are seeking external solutions in the face of fierce industry competition. Traditional retailers have deeply realized the fundamental shift in consumer demand and have begun adjustments and reforms. Value for money has become an important consideration for retailers in adjusting their product selection logic, and they have begun to focus on the development and establishment of private labels. This not only signifies the subversion of traditional business models but also heralds the rise of entirely new business models. In this context, direct procurement and direct sourcing models have become important ways for retailers to enhance their competitiveness. However, the living space of dealers has been severely squeezed, and the era dividends of the past are gradually dissipating. Dealer groups have to accelerate self-innovation and transformation, strengthen supply chain capabilities, and build their own moats. These changes are not just a simple pile-up of market phenomena; behind them lies a profound change in the entire industry order—a critical period of transition from the old order to a new one. How can FMCG manufacturers find new paths and opportunities in the context of order reconstruction, becoming the leaders and builders of the new FMCG order? From March 17 to 19, 2025, New Distribution will hold the 10th China FMCG Innovation Conference, the 4th China FMCG Hard Discount Conference, and the 4th China FMCG Dealer Conference in Chengdu, China, under the theme "New Order · Symbiosis." 【New Order · Symbiosis】 10th China FMCG Innovation Conference Time: March 17-19, 2025 Location: Chengdu, China