From 13%-14% in Q1 2012 to 4.3% in Q1 2015, the growth rate of China's FMCG market has slowed significantly. According to Kantar Worldpanel, the compound annual growth rate of food and beverage e-commerce sales is over 34%, making food and beverage a key battlefield for e-commerce development.

Based on Kantar Worldpanel's monitoring of over 100 sub-categories of food and beverage sold online, in the past year or so, although the market share of food and beverage in e-commerce is only 3.3%, the compound annual growth rate has exceeded 34% (see Figure 1), forming a sharp contrast with the growth rate of China's FMCG market.

Various signs indicate that the market is currently showing a faster and more obvious trend of consumer shift. Consumers and the consumption environment are becoming more digital and mobile, and e-commerce is rapidly changing consumer shopping behavior.

This is mainly reflected in the following aspects:

First, third- and fourth-tier cities are becoming the main drivers of the market. In terms of online shopping penetration (Figure 2), in some key cities, 50% of households purchase FMCG through e-commerce, with amounts exceeding RMB 1,000. In counties and below, e-commerce is relatively underdeveloped. In intermediate cities, e-commerce development varies but not significantly, all showing typical channel "disintermediation" characteristics, and consumer shopping behavior is mostly consistent. Therefore, Kantar believes that third-, fourth-, and fifth-tier cities are driving the overall growth of China's FMCG market and e-commerce channels.

Second, emerging categories are experiencing explosive growth. According to Kantar's survey, in 2012, only 26% of households in first- to fifth-tier cities purchased FMCG through e-commerce. By 2014, this number reached 36%, and in the first quarter of this year, it reached 37%. Many e-commerce small categories, especially emerging ones, are showing explosive growth. In the categories listed in Figure 3, growth rates are all above 80%. Among them, cheese saw an overall e-commerce channel growth rate of over 300% last year. This indicates, on one hand, strong demand for cheese as an emerging category in the Chinese market; on the other hand, it shows the rapid development of fresh food e-commerce, as products like cheese have strict requirements for storage temperature and transportation.

In terms of overall consumer spending in China, out of every 100 yuan spent online, Beijing, Shanghai, Guangzhou, and Chengdu spend 55 yuan on food, while county-level cities and counties spend only 36 yuan. However, the share of food and beverage in e-commerce channels is far below the market average, at only 1.6%. This may be because bottled and canned products are not suitable for purchase through e-commerce channels, and more consumers are still accustomed to buying in supermarkets, convenience stores, or grocery stores. Interestingly, within the entire food and beverage category (Figure 4), cat food and dog food have the highest share and are also the fastest-growing compared to last year, indicating that consumers have formed habitual purchasing.

Third, mainstream e-commerce platforms lack obvious differentiation. As shown in Figure 5, according to Kantar's monitoring, there is no obvious differentiation among mainstream e-commerce platforms. Relatively speaking, JD.com has the highest average purchase price, Yihaodian has the highest number of items per purchase, and JD.com has slightly more male consumers, so the total spending per purchase is slightly higher. In addition, mainstream e-commerce platforms invest heavily in mother and baby products, especially milk powder, but in terms of food category building, the differences among them are not obvious.

This article is excerpted from the "Small Data" column of the 17th issue of "New Food" magazine. For full details, please refer to "New Food" magazine.

This article is reprinted from: Sugar & Wine Express

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