In today's FMCG market, products are abundant, but what's truly lacking are brands that resonate with consumers. The old growth model relying on scale, channels, and traffic is gradually failing; in its place, a new round of competition centered on needs, experiences, and lifestyles is emerging. FMCG competition is thus no longer just about selling products but re-answering 'why consumers choose you.' At the 11th China FMCG Conference on March 18, Xiao Mingchao, founder and CEO of Zhimeng Consulting, shared his thoughts and explorations on the new consumption cycle, changes in consumer decision-making logic, and how FMCG can move from functional satisfaction to meaning-driven strategies. The following is a transcript of his speech (with some deletions), compiled by New Distribution for our readers.
FMCG Competition Has Shifted from 'Incremental Expansion' to 'Value Reconstruction'
To understand why FMCG is increasingly difficult today, one must first recognize a fundamental backdrop: the market has moved from incremental competition to a zero-sum game. In the past, many companies were accustomed to finding growth in an expanding market, leveraging channel penetration, demographic dividends, category education, and market gaps to scale up; but today, this environment has clearly changed. In 2024, the number of new consumer product categories nationwide increased by 14.1% year-on-year; in the first three quarters of 2025, it grew by 31.4% year-on-year. As of the end of September 2025, the total number of consumer product categories nationwide reached 230 million. Supply is still expanding rapidly, but consumers' attention, budgets, and trust have not grown in tandem.
Source: Zhimeng Consulting's '2026 China Consumer Trends Report'
This means that today's growth is increasingly not about expanding the market but about competing for consumer choices within similar needs and scenarios. Consumers are not refraining from consumption; they are spending more cautiously. Brands are not without opportunities, but they cannot use old methods to understand the market.
The phase of growth driven by scale, speed, and dividends is passing; what matters more going forward is depth, precision, and understanding of consumers.
For FMCG, the two most important keywords for 2026 are 'meaning' and 'value.'
Consumers are no longer just concerned about availability and price, but whether the product relates to their lives, whether it's worth buying, and whether it truly solves problems.
Therefore, merely talking about cost-effectiveness is insufficient. Price remains important but is no longer the sole competitive point. Products that are truly memorable are not just cheaper but can enter lives, scenarios, and emotions. The next phase of FMCG competition is not just about speed and distribution but about who understands consumers better.
Consumers Are Not Refraining from Spending; They Are Rearranging Their Consumption Logic
One of the most misread consumption phenomena today is attributing everything to 'consumption downgrade.' On the surface, many consumers are indeed becoming more cautious—comparing prices, exercising restraint, delaying purchases, and seeking higher cost-effectiveness in daily expenses. But looking deeper, this does not mean they are not consuming; it means they are consuming more selectively. Consumers are exhibiting a new 'rational-emotional symbiosis' personality, which can also be understood as a more pronounced 'K-shaped consumption' structure. On one side, they save rationally; on the other, they spend emotionally. According to Zhimeng's trend research, 75.2% of consumers save on daily trivialities to spend more confidently on things they truly love; 66.2% consciously control spending in some areas to freely spend in others. Source: Zhimeng Consulting's '2026 China Consumer Trends Report' Behind these figures lies a migration of consumption accounts and a rearrangement of life's meaning. Previously, consumers were more likely to make decisions based on identity, face, trends, and 'everyone is buying it.' Today, more and more people are allocating budgets around the life content they truly value. This also means that brands can no longer simply interpret market changes as 'consumers are becoming cheaper.' The real question is whether consumers have placed your product in their core account. If not, even low prices may not drive sales; if yes, even if not cheap, it may still be firmly chosen. Many FMCG products are not selling today not because consumers lack budget, but because they haven't entered the demand hierarchy that consumers care about more. In this context, another obvious change in FMCG is that consumption is shifting from 'quality awakening' to 'quality precision.' Consumers are no longer satisfied with buying more and cheaper; they are increasingly concerned about whether they buy the right thing, whether the experience is good, and whether it's worth repeat purchases. 77.8% of consumers fully utilize purchased items to maximize the value of each purchase; 74.4% seriously enjoy the experience brought by consumption, focusing on the happiness during the process. Source: Zhimeng Consulting's '2026 China Consumer Trends Report' These changes are crucial for FMCG. In the past, many new consumer brands interpreted 'new' as updated packaging, concepts, and visuals, even using higher pricing to correspond to so-called premiumization. But today, consumers are increasingly unwilling to pay for mere novelty. Premiumization does not equal high pricing; a higher price does not automatically mean higher value; updated concepts do not equal better experiences. What keeps consumers buying is not looking new but truly solving problems while making them feel comfortable, delighted, and trustworthy. So, from cost-performance to quality-performance to value-performance, the underlying logic is the same: consumers want not just 'cheap' or 'better,' but 'more right.' Products must meet basic quality, solve core problems, and offer better experiences and more stable reasons for repurchase. If FMCG remains stuck in the mindset of 'new packaging, new concept, slightly higher price,' it will struggle to penetrate the current consumption environment. Truly effective innovation is not making products look more like ads but making them more like life answers.
Emotional Value and Health Visibility Are Redefining FMCG Growth Entry Points
If the above addresses the 'why buy' question, the next is where FMCG can find new growth. There are two clear directions: emotional value and health visibility. First, emotional value. In the past, many companies treated emotional value as a marketing term, packaging phrase, or trendy expression on social media. But from today's consumption trends, emotion is not just a communication language but a significant component of product premium. Consumers are experiencing a state of 'spiritual nomadism,' where 'emotional value' becomes a new premium capability. 80.3% of consumers engage in 'emotional consumption' at least once a month, with main motivations including healing mood, stress relief, and rewarding oneself. Source: Zhimeng Consulting's '2026 China Consumer Trends Report' This means that many FMCG purchases are no longer just functional satisfaction but emotional anchor points. Consumers seek emotional placement in three directions: outward, through travel, getaways, and cultural tourism consumption for geographical escape; toward the crowd, through performances, events, and social hotspots for emotional resonance; and inward, by continuously paying for products imbued with emotional meaning in daily life. The implication for FMCG is direct. More and more growth comes not from broad, all-encompassing scenarios but from small scenarios, small resources, small experiences, and small joys. Consumers are increasingly willing to invest time and money in fragmented moments like alone time, work breaks, pre-sleep relaxation, and instant rewards. In other words, FMCG innovation can no longer revolve around 'one big category, one big function, one big selling point' but must learn to enter smaller, more specific, and more emotionally resonant consumption scenarios. So, many brands have succeeded in recent years not solely because their products are strong but because they are better at creating 'emotional micro-moments' for consumers. Now, health. Like emotional value, health is no longer just a basic functional need but is rapidly becoming a visible language and lifestyle expression. 60.9% of consumers increased health-related spending compared to last year; young people's spending on health-related products and services is concentrated in functional foods/beverages, traditional Chinese tonics, and health supplements. More importantly, health management is shifting from an abstract concept to a life practice of 'eating for a state of being.' Source: Zhimeng Consulting's '2026 China Consumer Trends Report' This is why a key trend in FMCG today is not simply talking about sugar reduction, fat reduction, or low burden, but making 'health' more visible, perceptible, and shareable. Health must be seen at a glance by consumers, from naming to packaging to content expression, all more direct; at the same time, health must have stories, warmth, and be integrated with different lifestyles, rather than remaining a rigid functional manual. Health is not just a formula change but a narrative change, visual change, scenario change, and relationship change. From this perspective, emotion and health are not two isolated trends; they actually point to a deeper change: consumers are pulling FMCG back from 'functional consumption' to 'lifestyle consumption.' Whoever can turn products into responses to life states will more easily secure the next round of growth.
AI Reconstructs Information Gateways; FMCG Innovation Must Return to User-Centricity
The final key point is the change brought by AI. Its importance lies not only in tool upgrades but in the redefinition of information gateways and decision-making mechanisms. In the past, consumers relied more on offline shelves, salesperson recommendations, word-of-mouth, platform content, and brand advertising when buying FMCG; but today, AI has become an important reference for many consumers before shopping. 81.1% of consumers are willing to use AI as a 'decision partner' for its analysis and suggestions when facing important decisions; in life planning and consumption decisions, the top purposes for using AI include checking reviews/guides, health diet planning, and AI-recommended product selection. Source: Zhimeng Consulting's '2026 China Consumer Trends Report' This means that brands studying only 'how to list, how to seed, how to drive traffic' is no longer sufficient. In the future, more and more consumption decisions will occur outside traditional shelves and content platforms, within AI-assisted information integration and recommendation processes. Especially for products with higher prices, more complex information, faster updates, and less consumer familiarity, AI is more likely to be relied upon for auxiliary judgment. AI will not replace brands' understanding of consumers, but it will change how brands reach consumers. In 2026, AI is accelerating into daily life, first as an efficiency tool, then as an information filtering tool, and finally as an innovation collaboration tool. For brands, the key is not just whether they can use AI, but whether they have clear, credible, and structured information that can be recognized and recommended by AI. This also brings FMCG innovation back to a more fundamental question: everything must start from the user. Past methods relying on experience, intuition, and channel feedback are still valuable but insufficient to address today's more segmented, complex, and fragmented consumption needs. Truly effective approaches involve finding more specific scenarios and clearer target groups, deepening segmented needs, and then forming breakthroughs. So, the innovation focus in the new cycle can be summarized in three words: life meaning, scenario value, and relationship building. Products must not only answer what they sell but also what they mean in consumers' lives, which scenarios they fit into, and what kind of relationships they can establish. Future innovation is not just launching a product but engaging in empathy, consensus, and co-creation with consumers, making products truly part of daily life. Final Thoughts Today, the difficulty is no longer producing goods or distributing channels but making products valuable again in a more competitive and segmented market, and being truly chosen by consumers. From this perspective, 'from shelf to flow' is not just a concept but a real change happening in FMCG competition. In the past, the competition was about display, price, and distribution efficiency; next, it will be about whether products have meaning, can enter scenarios, carry emotions, and build more stable relationships with consumers. So, the focus of the next round of growth will not be just making more products, grabbing more channels, or investing more traffic, but redoing innovation around new consumption logic. Whoever can more accurately understand consumer needs, seize new opportunities like emotion and health, and reconstruct connections with users will have a better chance to emerge in the new cycle.