---
title: "Five Certain Trends in the FMCG Industry for 2024"
description: "Anxiety about the future stems not from economic growth or decline but from uncertainty. Certainty, whether positive or negative, allows for preparation, turning challenges into opportunities or difficulties rather than anxiety. After a transitional 2023, 2024 brings more certainty, with five definitive trends in the FMCG sector: the era of shrinking volume, the nearing end of the internet commercial revolution, the onset of supply chain revolution, brand going global as a growth path, and FMCG as a necessity that transcends economic cycles."
author: "刘春雄"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-12-14"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/five-certain-trends-in-the-fmcg-industry-for-2024-3e05b75d/"
markdown: "https://xinjignxiao.com/en/articles/five-certain-trends-in-the-fmcg-industry-for-2024-3e05b75d.md"
original_source: "https://mp.weixin.qq.com/s/Nk4rH-YU_QRXMP6DRSMj1w"
translation: "https://xinjignxiao.com/zh/articles/2024%E5%B9%B4-%E5%BF%AB%E6%B6%88%E8%A1%8C%E4%B8%9A%E4%BA%94%E4%B8%AA%E7%A1%AE%E5%AE%9A%E6%80%A7%E7%9A%84%E8%B6%8B%E5%8A%BF%E5%88%A4%E6%96%AD-3e05b75d.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/five-certain-trends-in-the-fmcg-industry-for-2024-3e05b75d/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Five Certain Trends in the FMCG Industry for 2024

> Anxiety about the future stems not from economic growth or decline but from uncertainty. Certainty, whether positive or negative, allows for preparation, turning challenges into opportunities or difficulties rather than anxiety. After a transitional 2023, 2024 brings more certainty, with five definitive trends in the FMCG sector: the era of shrinking volume, the nearing end of the internet commercial revolution, the onset of supply chain revolution, brand going global as a growth path, and FMCG as a necessity that transcends economic cycles.

Anxiety about the future stems not from economic growth or decline but from uncertainty. As long as there is certainty, whether positive or negative, one can prepare in advance, facing opportunities or difficulties rather than anxiety. Over the past decade-plus of internet commercial revolution, due to uncertainty in technological progress, many have been anxious, even internet giants. During the three years of the pandemic, with rapid virus mutations, uncertainty outweighed certainty, and habitual anxiety prevailed. 2023 was a transitional year. Constrained by the three-year pandemic, people placed concentrated hopes on 2023. Consequently, many were quite disappointed with 2023. Looking ahead to 2024, there is more certainty than in the past decade-plus. Although these certainties are not predominantly positive, they suffice for us to make early decisions. Even if it means retreat, it is better to decide early and retreat in an orderly manner. In 2024, the FMCG industry will see five definitive trends.

**Trend One:**
**The Era of Shrinking Volume Will Persist**
The consumption volume limit for FMCG is determined by the human body's intake capacity, which cannot increase indefinitely. Insufficient intake affects health and growth; excessive intake also harms health. For example, one cannot drink alcohol or water, or consume sugar and salt, without limit. 2013 marked the peak for the vast majority of FMCG categories, and since then, FMCG has entered an era of shrinking volume, lasting a decade. For instance, baijiu (white liquor) declined by 55% over ten years, and beer by 30%. **The growth before 2013 was a result of economic improvement, and the shrinkage after 2013 is also a result of economic improvement. This is determined by the stage of economic development.** The good news is that many industries are about to enter a sideways market; for example, the beer industry has seen slight growth in the past two years. But don't forget, this is a rebound, not a reversal. In a sideways market, there are ups and downs. Don't be too happy about rises, nor too despairing about falls. In the era of shrinking volume, if a company grows, it must be at the expense of several others declining. **In the era of shrinking volume, involution is inevitable, especially for mass consumer goods.** The result of involution is raising the industry's break-even point until more companies die and industry concentration increases. **When shrinkage is inevitable, the necessary countermeasure is premiumization.** The industry shrinkage began in 2013, but it wasn't until 2016 that FMCG found the antidote of "mainstream gear shifting." Mainstream gear shifting means moving the mainstream price band forward. For example, the mainstream price for bottled water rose from 1 yuan per bottle to 2 yuan per bottle. **Currently, there are two ways to cope with the era of shrinking volume: First, continue "mainstream gear shifting," such as the recent price increase of a certain tea beverage brand; second, premiumization. For example, in the baijiu industry, Moutai's premiumization has opened the industry's ceiling.**

**Trend Two:**
**The Internet Commercial Revolution Is Nearing Its End**
The advent of the internet commercial revolution was unexpected and unforeseen. It is a result of technological progress. Why is China's 2C internet leading globally? In Europe, Japan, and even the US, traditional commerce is too developed, and the internet's impact on traditional commerce is insufficient, or traditional commerce is too stable. In other developing countries, the industrial revolution is incomplete, and internet commerce lacks an industrial foundation. Only in China, the achievements of the industrial revolution coincided with the internet commercial revolution, forming a seamless connection, and traditional commerce's resistance was insufficient. Therefore, the internet commercial revolution flourished in China. By 2023, the internet's impact on traditional commerce has greatly weakened, and the boundaries between online and offline have become clear. Internet physical retail's 26% share is near its limit; there may be growth in the future, but not substantial. In some industries, online growth rates are even lower than the industry average. In 2022, I, along with marketing expert Mr. Fang Gang, proposed a "return to offline" call, which gained increasing response in 2023. However, we must pay attention to two major impacts of the internet:
> **First, "user operation" has become standard.** Whether it's platform-based online user operation (F2P2C), private domain user operation (F2C), or offline user operation (b2C, bC integration), it will become standard. **Second, online-offline integration has spawned numerous new channels and new retail,** such as community group buying and flash warehouses, which have carved up traditional commerce's share, leading to channel fragmentation and greatly impacting traditional commerce. Those who previously only handled distribution and KA channels must now operate across all channels.

**Trend Three:**
**The Supply Chain Revolution Is Unfolding**
When China's commercial system from the industrial revolution era was not yet complete, the internet "cut in line," diverting attention to the internet commercial revolution. As the internet commercial revolution nears its end, it is time to make up for the lessons of the industrial revolution era. **The biggest lesson is the supply chain revolution.** The main players in the supply chain revolution are retailers. There are roughly four aspects: first, private brands; second, pan-hard discount stores; third, platform-based distributors; fourth, the chain-ization of BC-type stores. What is a private brand? It is a brand operated by a retail store or channel operator. Its characteristic is eliminating brand premiums, bypassing distributors, and reducing distribution costs, providing "weapons" (products) for retailers' hard discounts. In Europe, private brands account for 38% of retail share. We predict that within 10 years, private brands will account for about one-third of China's retail share. China's deep distribution is a formidable barrier; only brands that can cover the country's over 6 million retail terminals and/or 8 million catering terminals can become industry leaders, thereby increasing industry concentration and giving rise to industry oligarchs. **Private brands are also a formidable barrier, greatly increasing the scale of the retail industry and forming retail oligopolies.** Chinese distributors have remained small-scale in the channel revolution. The supply chain revolution will marginalize distributors; to cope with its impact, traditional distributors combined with internet B2B will give rise to platform-based distributors. I believe **platform distributors are currently the only viable option for distributors.** If you can't achieve this, retreat in an orderly manner as soon as possible. The development of private brands also significantly impacts small and medium-sized brand owners. So, where is the way out for them? I have proposed that **in the future, small and medium-sized enterprises have a better path in high-end than low-end, because low-end is bound to be concentrated, while high-end may be dispersed.** Traditional commerce has seen e-commerce carve out about one-third of the share, and private brands will carve out another third. The remaining share will inevitably see fiercer competition.

**Trend Four:**
**Brand Going Global Is the Growth Path for Brand Owners**
The era of shrinking volume means the Chinese market is saturated, and future growth lies in brand going global or marketing going global. What is brand going global? Let me quote Kotler Consulting's stage theory on brand going global.
> Going Global 1.0: Export of low-value products primarily through international trade. Going Global 2.0: Export of value-added products primarily through platform e-commerce. Going Global 3.0: Export of complex products through a hybrid model of self-built local distribution channels and online channels. Going Global 4.0: Localized production capacity for innovative high-value products with "new four modernizations" at the core.

If simplified, it can be divided into two stages: **First, product export; second, brand going global.** The difference is that product export only carries the "Made in China" label, while brand going global carries the brand's imprint. As Kotler said over a decade ago, **product export makes China the "world's production workshop," while brand going global makes China the world's "marketing workshop."** Why the shift from product export to brand going global? With China's sustained economic development, China's "national brand" has become strong enough, and brands themselves are "psychological admiration" for consumers.

**Trend Five:**
**FMCG Is a Necessity That Transcends Economic Cycles**
Economic changes affect all industries, but to varying degrees. FMCG practitioners need to understand how short-term economic changes impact the industry. **Most FMCG categories are daily necessities. Changes in FMCG demand are not determined by short-term economic fluctuations but by lifestyles shaped by medium- to long-term economic changes, giving them anti-cyclical characteristics.** For example, the current boom in hard discounts. Some say economic crises gave birth to hard discounts. However, hard discounts have been a common model in the US, Europe, and Japan for decades, transcending economic cycles, not just a model for crisis periods. **Once a lifestyle is formed, FMCG won't do much better in economic booms, nor much worse in downturns.** Take meat consumption. Early on, meat consumption increased with income. After reaching a certain level, meat consumption declines. The logic is: income changes lifestyles, and lifestyles change consumption. **Lifestyles are essentially rigid unless there are major income changes.** Before 2013, FMCG volumes grew regardless of economic conditions. After 2013, FMCG volumes have declined regardless of economic conditions. For example, condiments. In early stages, income growth increased demand for condiments. In another stage, income growth reduced condiment usage. Now, high-end consumers are using fewer condiments. **The impact of economic changes on FMCG, besides affecting consumers, may have a greater impact on channel merchants' future expectations. When the economy is good, they dare to stock up; when it worsens, they rush to liquidate.** I believe that even if FMCG improves in the future, it won't improve much; even if it worsens, it won't worsen much. In short, it has anti-cyclical characteristics. Current FMCG changes must be clarified: are they determined by short-term economic conditions or medium- to long-term trends? Personally, **the current state of FMCG in 2023 cannot be said to be unrelated to short-term economic conditions, but it is more determined by medium- to long-term trends, by new lifestyles influenced by economic development.** For example, the healthier the lifestyle, the more demand for certain categories declines. Therefore, even if the economy improves, FMCG won't improve much.

**The Deadly Growth Expectation**
China's 30-plus years of rapid growth have created strong growth expectations, as if growth is unlimited. In FMCG, quantitative growth has limits; only qualitative growth can be limitless. The biggest problem now is: **actual growth is nearing its limit, but expectations for growth are limitless.** Compared to quantitative growth, qualitative growth is more difficult. If you want sustained quantitative growth, I suggest going to underdeveloped countries in Asia, Africa, and Latin America and redoing China's quantitative growth of the past decades. **If you want better development in China, you can only choose the more difficult qualitative growth.** If you can't do either, I suggest an orderly retreat. An orderly retreat may preserve the fruits of victory. For example, the rise of a platform distributor may mean the disappearance of countless ordinary distributors, because during the rise of platform distributors, brand agency rights will increasingly concentrate in their hands. Of course, retreating in an orderly manner is also challenging.


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671