China's FMCG Enters the 'Era of Great Disruption' China and the United States are both superpowers, and their economic development histories share certain similarities. The U.S. decade-long Great Depression from 1929 to 1939 may offer lessons for China's current FMCG industry. Historian Frederick Lewis Allen pointed out in The Big Change: "Old experiences completely fail; in a zero-sum game, 'not regressing is progress.'" This statement still holds practical significance for many manufacturers and distributors today. What Did the U.S. 'Era of Great Disruption' Bring?
Widespread consumption downgrade: Cheap entertainment replaced high-end consumption; low-cost activities like cycling and football became popular, reflecting a 'small bets for big wins' psychology and compromise with reality.
Middle-class spending cuts: Families dismissed servants, quit membership clubs, and lunch costs dropped from $1 to 75 cents.
Wave of business closures: Industrial output halved, new enterprises nearly vanished, salaries and dividends shrank significantly, and giants sought survival through mergers.
Channel distress: Urban store vacancy rates soared, advertising and credit sales failed, and consumerism collapsed.
Entertainment as escape: Movies became a haven of 'false prosperity,' with screens showing only the lives of the rich. However, while the Chinese and U.S. markets are similar, they are not identical. In 1929, the U.S. had 250 cars per 1,000 people; in 2024, China also has 250 cars per 1,000 people. In 1929, the U.S. had 43 million home telephones; today, China has 1.27 mobile phones per capita. Similar too is the preceding decades-long boom and optimism of 'rising housing prices, rising wages, and rising stock markets.' But the U.S. 'Black Thursday' and 'Black Tuesday' abruptly ended that optimism, with the stock market losing 75% of its value and 5,100 banks failing within three years, leading to a decade-long depression. In contrast, China's FMCG industry is moving toward 'disruption' rather than overall decline. While some sectors decline, others grow, marking a 'dual-track era.' As of May, among 131 listed FMCG companies, 68 saw year-on-year revenue declines, accounting for 51.9%, and the decline is still expanding. However, segments like prepared dishes, healthy snacks, and functional beverages maintain high growth rates above 20%. For example, Dongpeng Special Beverage achieved high double-digit growth in both revenue and profit, with its new product 'Bushuila' performing well. Nongfu Spring's 'Oriental Leaf' remains strong as the only sugar-free tea product exceeding 10 billion yuan in sales. Emerging brands such as Chunguang Coconut Drink, if Coconut Water, Guozishule, Qingshang, and Mingren Soda Water continue to expand. Notably, at the first online product selection meeting held by New Distribution on May 29, nearly a thousand 'Tameng' excellent distributors showed great interest and enthusiasm for these growth-oriented brands. Many emerging brands received cooperation intentions from over fifty distributors. On one side is the sea, on the other is fire; decline and growth, despair and hope. What forces are at play behind the great disruption in China's FMCG sector? The Ice and Fire of the FMCG Market We should recognize that many phenomena Allen described in The Big Change regarding demand and supply are also occurring to some extent in today's Chinese market. Therefore, our most fundamental judgment about the market is: The stock market will continue, and excess supply will be cleared in a brutal manner until a new supply-demand balance is achieved. Based on this judgment, we should consider what kind of capacity or supply will be eliminated, and what will survive and develop? This depends entirely on the 'new demand' from the consumer side. When supply is insufficient, consumers buy whatever is offered; supply determines demand. When supply is excessive, production follows what consumers buy; demand determines supply. So, on the consumption and product side, we see: Generation Z seeks multiple satisfactions of 'emotional value + functional efficacy'; they no longer blindly pay for brand premiums.
The aging wave arrives, and the silver economy gives rise to 'elderly-friendly packaging + precise nutrition.'
In first- and second-tier markets, there is 'consumption downgrade,' while county-level markets experience 'consumption upgrade,' seeking 'big-brand alternatives + extreme cost-performance.'
Traditional carbonated and sweet drinks are being avoided due to sugar concerns; sugar-free tea, traditional Chinese health teas, and electrolyte water continue to surge.
Industrial beer continues to shrink, while craft beer grows year after year.
...... On the distribution and retail side, we see: Traditional hypermarkets saw a 15% year-on-year increase in store closures in 2024, but discount chains are still expanding at a 300% growth rate.
Traditional stores see business decline by half or more, but Sam's Club, Pangdonglai, and even 'Pang-renovated stores' see significant growth.
Brand attitudes toward hard discount and other new retail formats have shifted from banning to acceptance, and now to proactive cooperation.
...... The force behind the great disruption in China's FMCG is the shift in supply-demand power. Traditional retailers are not spokespersons for consumers; they are rent-seekers of shelf space and partners bought by suppliers with fees. New retailers are spokespersons for 'demand' and 'interest allies' of consumers. When supply-demand power shifts, the competitive logic of China's FMCG has begun a power transition from 'brand-led to retail-led, essentially consumer-led.' Building New Supply Capabilities Discovering and Meeting New Demand Thinking that the new era is simply the 'era of retailer dominance' is a simplistic and shallow understanding. This mindset often leads to a superficial and harmful judgment: retailers only need to continuously reduce intermediate links and compress upstream costs, and manufacturers only need to keep cutting prices to gain market share. As mentioned earlier, 'retailers are spokespersons for consumer demand,' which means the most important thing for retailers is definitely not to brutally pressure upstream. Li Jingyao, Vice President of China Resources Vanguard, said: "Retailer dominance does not mean retailers have the final say in everything. Retailers should initiate and unite relevant supply parties to jointly create value for consumers. Only by establishing a symbiotic rather than adversarial new retail-supply relationship can new demand be better met." For consumers, brand owners, distributors, and retailers are all supply parties. In the past supply-demand environment, the essence of the relationships among these three was transaction and game-playing. But in an environment of overcapacity, shrinking old demand, and booming new demand, if the three parties cannot truly abandon game-playing thinking and jointly build a new supply system, they will inevitably fail in the competition for customers. Where is new demand? What are its distinctive features? How can we discover and meet precious new demand? How can we build a new supply system that meets new demand? In the new system, how will manufacturer-distributor and retail-supply relationships change? In the new supply system, where do different brand owners, distributors, and retailers stand, and what are their respective missions and tasks? From August 19-21, 2025, the '7th China FMCG Conference' with the theme 'New Demand, New Supply' will be grandly held in Shanghai. The 'China FMCG Conference' is an annual FMCG event hosted by New Distribution. This year's conference will also hold the '5th China FMCG Retail Innovation Conference' and the '5th China FMCG Distributor Conference' concurrently. Additionally, parallel forums and one-on-one precise matchmaking closed-door meetings will be held, including 'Exploring New Alcoholic Beverages,' 'Embracing New Channels,' 'Creating Super Single Products,' 'Igniting Scenario Marketing,' 'Digital AI+ Reconstructing New Growth,' and 'How Super Distributors Are Made.' This conference will bring together over a hundred heavyweight guests from the FMCG industry, including brand giants, marketing experts, industry dark horses, economists, pioneers in going global, and front-line channel service providers, to jointly gain insights into industry trends. At the same time, representatives from multiple incremental channels, regional B2b platforms, excellent distributors, retail chains, instant retail platforms, and chain supermarkets will gather to discuss new business solutions. Furthermore, the latest in-depth industry reports will be exclusively released, including the Distributor Survival Survey Report and the White Paper on the Transformation of China's FMCG Production, Supply, and Marketing, providing first-hand data support and decision-making references for enterprises seeking deterministic growth. 🔺Scan code for ticket inquiries🔺 Whether you are looking for new growth, breaking through the stock market, or efficiently connecting with quality channel resources, this is the key arena to expand growth radius and plan the overall business. True growth opportunities begin at the China FMCG Conference!