---
title: "30 Observations on Consumption Trends, Opportunities, and Challenges After the Pandemic"
description: "Data shows that the FMCG industry has been significantly impacted. In April, total retail sales of consumer goods fell 11.1% year-on-year, with declines in most categories except beverages, grain and oil, and medicine. Consumption sentiment is cautious, with a trend toward conservative spending rather than downgrading. Channel inventory is high, and companies face cost pressures and sales challenges. The competitive landscape remains stable, but new opportunities exist in prepared dishes and compound seasonings. Recommendations include prudent investment, product structure adjustment, and embracing new retail channels."
author: "道农"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2022-06-02"
language: "en"
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---

# 30 Observations on Consumption Trends, Opportunities, and Challenges After the Pandemic

> Data shows that the FMCG industry has been significantly impacted. In April, total retail sales of consumer goods fell 11.1% year-on-year, with declines in most categories except beverages, grain and oil, and medicine. Consumption sentiment is cautious, with a trend toward conservative spending rather than downgrading. Channel inventory is high, and companies face cost pressures and sales challenges. The competitive landscape remains stable, but new opportunities exist in prepared dishes and compound seasonings. Recommendations include prudent investment, product structure adjustment, and embracing new retail channels.

**At the data level,**
**the FMCG industry has been significantly impacted**
1\. According to the National Bureau of Statistics, April retail sales of consumer goods totaled 2.9483 trillion yuan, down 11.1% year-on-year. Urban retail sales were 2.5637 trillion yuan, down 11.3%; rural retail sales were 384.6 billion yuan, down 9.8%.
By consumption type, April commodity retail sales were 2.6874 trillion yuan, down 9.7%; catering revenue was 260.9 billion yuan, down 22.7%.
Source: National Bureau of Statistics
In commodity retail, categories with year-on-year declines included: units above designated size down 13.3%, furniture down 14%, communication equipment down 21.8%, tobacco and alcohol down 7%, clothing, shoes, hats, and textiles down 22.8%, cosmetics down 22.3%, gold, silver, and jewelry down 26.7%, daily necessities down 10.2%, and automobiles down 31.6%.
Only four categories saw growth: beverages up 6%, grain and oil foods up 10%, Chinese and Western medicines up 7.9%, and petroleum products up 4.7%.
This data suggests that April's commodity retail market was mainly affected by the pandemic and inflation.
The pandemic has severely impacted women's and travel-related consumption, putting pressure on traditional women's and conspicuous consumption markets such as apparel, home furnishings, cosmetics, and jewelry. Meanwhile, the pharmaceutical and grain/oil markets were less affected, possibly even boosted.
Addictive goods—tobacco and alcohol—saw declines, likely due to reduced gifting and dining out, as well as lower consumption during extended time at home.
2\. Overall, consumer confidence is clearly weak, but sentiment is polarized. Categories like grain, oil, and convenience foods have grown significantly, especially canned goods and grain/oil. In contrast, snack foods, high-end consumption, and impulse purchases have been hit hard by the pandemic.
3\. I don't think consumption downgrading will occur; it's a vague concept. The more obvious impact is that consumption is becoming conservative.
4\. Especially when the pandemic is unstable, many companies face cash flow and layoff pressures, which transmit to consumers, who are reluctant to spend ahead. However, once consumption reaches a certain stage, downgrading won't happen, but rational and conservative spending is very evident.
5\. In the long run, the upward momentum of the national economy hasn't been fully curbed; the country's fortune is still positive. It depends on the government's control measures, policies, attitude, and the progress of an Omicron vaccine.

**Channel inventory and pressure**
6\. Inflation has a clear impact. Raw material prices have risen sharply, causing high cost pressure and sluggish consumption, putting companies in a dilemma. Raising prices may reduce sales, but with weak sales, companies dare not raise prices.
7\. Currently, channel inventory for many FMCG companies, especially traditional non-staple food brands, is very high. In the second half, terminals will face significant pressure from slow sales. I consulted several beverage and beer distributors; May should have been peak season, but April's inventory pressure led many to give up on May targets.
8\. Most companies face heavy sales pressure in the first half, which will inevitably carry into the second half. Companies will try to maintain growth, likely through substantial channel subsidies. However, due to cost pressures, most companies will only manage to match last year's performance or achieve single-digit growth.

**Will the competitive landscape in food and beverage change due to the pandemic?**
9\. The barriers to entry in food and beverage are very high, making it difficult to enter the market. Although FMCG performance is poor, it's not as disastrous as the restaurant industry, so major structural changes are unlikely in the short term.
10\. Current innovation is unlikely to create new tracks worth over 10 billion yuan. Existing tracks are occupied by traditional brands. Creating a track as big as sugar-free is very difficult, but not impossible, depending on new consumption scenarios.
However, there are still opportunities: pandemic-induced home living has driven growth in prepared dishes, grain, and oil in the C-end.
11\. The trend of consumption upgrading hasn't changed, but I'd call it quality upgrading. Consumers' pursuit of a better life won't revert due to reduced purchasing power. Structural growth remains the mainstream.

**What are the trend judgments for beer, beverages, alcohol, and snacks?**
12\. A clear trend in the beverage industry over the past two years is the soda category, which has been opened up in the catering channel by companies like Genki Forest, Arctic Ocean, Dayao, Hankou No.2 Factory, and Ice Peak. This has given many new consumer companies opportunities, and domestic soda brands are exploding, with Huayang, Asia, and others expanding nationally.
13\. In 2022, the 315 Gala exposed issues, severely impacting Kangshifu and Master Kong's instant noodles. This year, with the pandemic, snacks should have sold well, but conversations with manufacturers reveal poor sales; many brands haven't even matched last year's figures.
Kangshifu's top product is braised beef noodles, but its pickled cabbage flavor sells more than Master Kong's, so Kangshifu was hit hardest. However, Master Kong sources say that due to many companies being included in supply guarantees, they saw slight growth of around single digits year-on-year.
14\. Prepared dishes and compound seasonings suitable for young and trendy tastes are growing online.
15\. In the long term, the upward cycle for baijiu hasn't ended. High-end liquor remains stable. If the pandemic stabilizes in the second half, high-end liquor's momentum won't decline.
16\. Due to the pandemic, the Russia-Ukraine war, and Sino-US relations, companies are hesitant to invest, channel and terminal confidence is weak, and cash is king. Consumers are holding onto money, so overall consumption power is weak, significantly impacting high-end baijiu.
17\. With moderate inflation, companies would normally raise prices, but this year's inflation is abnormal, and actual consumption power has weakened significantly. Companies will be very cautious about price increases. This year will be weaker than last year overall.
18\. Consumer confidence recovery may take one or two quarters, but the overall consumption cycle for FMCG is still upward. The pandemic has caused consumption scenarios and demographics to disappear, so the next two or three quarters will depend on the actual pandemic situation. If controlled well, market recovery should be optimistic.

**New retail, channels, and digitalization**
19\. Channel fragmentation is irreversible, but different consumption behaviors have different channel emphases. Planned, immediate (physiological, social), impulsive, and stockpiling purchases have different scenarios and emphases. Companies must decide based on their category characteristics.
20\. Manufacturer attitude: New retail channels gain consumer recognition by shortening the chain and breaking down traditional big brands' value chains. This makes big brands cautious, even closed and exclusive, when cooperating with such platforms. Only a few categories (especially brands with small offline presence) actively embrace them.
21\. B2B platforms have basically emerged from the trough of the Gartner curve. Small shop habits are fully cultivated. Due to labor cost pressures, B2B is a channel actively being deployed by brands. Many brands have completed their own B2B platform setups, and building F2B2b2C models will be a key focus.
22\. Short-video e-commerce is a significant part of brand retail scenarios. As mentioned, different consumption behaviors have different channel emphases. For brands, especially FMCG brands, offline remains the main battlefield.
23\. The omni-channel concept will become deeply rooted. Companies clearly know consumers don't shop on a single channel, so designing the user's omni-channel journey based on their full consumption lifecycle, behavior, and path is crucial for operational capability.
24\. Brands will use middle platforms, digital technology, and model innovation (private domain, TP, new retail departments, internal entrepreneurship) to integrate today's channels.

**Suggestions for manufacturers and distributors**
25\. Invest in sales, channels, and marketing within budget; prepare for winter.
26\. Respond actively in sales: protect the core, adjust product structure.
27\. Optimize organization and channels; appropriately replace talent and channels.
28\. Seize the post-pandemic sales window; actively help customers self-rescue and clear inventory.
29\. For new channels like home-delivery platforms (e.g., Quick Group, Duoduo Maicai, JD Daojia), headquarters should take the lead.
30\. Balance opportunities and fundamentals; seize opportunities while stabilizing the big picture!

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