---
title: "In-depth Analysis: 2024 China FMCG Distributor Business Status Insights"
description: "As we approach the end of 2024, New Distribution's Yuan Lai provides an annual review and summary for FMCG distributors nationwide, based on the '2024 China FMCG Distributor Business Status Survey Report' released in August. The analysis covers distributor business profiles, performance in 2024, and the pressures and challenges faced, offering strategic insights for the future."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-09-30"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/in-depth-analysis-2024-china-fmcg-distributor-business-status-insights-768401aa/"
markdown: "https://xinjignxiao.com/en/articles/in-depth-analysis-2024-china-fmcg-distributor-business-status-insights-768401aa.md"
original_source: "https://mp.weixin.qq.com/s/jMZQ8KQyr_1LCqc2xHoyYg"
translation: "https://xinjignxiao.com/zh/articles/%E4%B8%87%E5%AD%97%E8%A7%A3%E8%AF%BB-2024%E4%B8%AD%E5%9B%BD%E5%BF%AB%E6%B6%88%E5%93%81%E7%BB%8F%E9%94%80%E5%95%86%E7%BB%8F%E8%90%A5%E7%8A%B6%E5%86%B5%E6%B4%9E%E5%AF%9F-768401aa.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/in-depth-analysis-2024-china-fmcg-distributor-business-status-insights-768401aa/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# In-depth Analysis: 2024 China FMCG Distributor Business Status Insights

> As we approach the end of 2024, New Distribution's Yuan Lai provides an annual review and summary for FMCG distributors nationwide, based on the '2024 China FMCG Distributor Business Status Survey Report' released in August. The analysis covers distributor business profiles, performance in 2024, and the pressures and challenges faced, offering strategic insights for the future.

As we meet, I am Yuan Lai from New Distribution.
Today is September 30, with only 3 months left until the end of 2024. In these final 90 days, I hope to conduct an annual review and summary for FMCG distributors nationwide.
Coincidentally, in August, New Distribution released the "2024 China FMCG Distributor Business Status Survey Report" at the conference, and I would like to take this opportunity to interpret and share the full 56-page PPT content.
Based on this latest report, combined with this year's latest thoughts, I will share in detail. My sharing is divided into three parts:
> **Part 1: Interpretation of Distributor Business Profiles**
> **Part 2: Analysis of Distributor Performance in 2024**
>
> **Part 3: Pressures and Challenges for Distributors in 2024**
Now, let's officially begin my sharing.
**Interpretation of Distributor Business Profiles**
For this report, we quantitatively **surveyed 302 distributors, covering 14 categories, with business scales ranging from 5 million to 300 million and 1 billion yuan, from provincial capitals to county-level cities. Additionally, in terms of regional coverage, the sample distribution across east, west, north, and south is relatively reasonable.**
Okay, let's get back to the point.
**Regarding the business profile of distributors.**
**First, from the dimension of 'main product categories,' distributors tend to operate multiple categories to achieve complementarity in distribution channels and seasonal peaks and troughs.**
Compared with 2023 data (45.2% of distributors operated multiple categories), the 2024 figure is 58.3%. Clearly, distributors do not want to be limited to a single category or brand, enhancing market competitiveness and risk resistance.
How exactly to operate multiple categories? We also elaborated on category relevance:
First, distributors mainly dealing in 【water and beverages】 have the highest possibility of cross-category expansion, with three main directions. The first direction is +beer, baijiu; the second is +milk and dairy; the third is +snack foods and convenience foods.
Second, distributors mainly dealing in 【snack foods】 have the mainstream cross-category direction of convenience foods.
Third, distributors mainly dealing in 【condiments and sauces】 have the mainstream cross-category direction of rice, flour, and cooking oil.
Fourth, distributors mainly dealing in 【daily chemical and personal care】 have the mainstream cross-category direction of either household cleaning and general merchandise, or paper products and oral care.
Why interpret category relevance? The core point is that **more and more distributors are not satisfied with the growth of current categories and have begun cross-category operations,** providing a reference for cross-category expansion.
At the same time, we also believe that future offline distributors should base their business layout on a city and channel. A single subdivided category or single brand is often insufficient. What categories and brands to operate are carriers of business resources, not strategic directions.
Therefore, when a distributor reaches a business scale of 20-30 million or 50-60 million yuan, the next step of which category to cross into is a strategic issue that requires careful consideration, rather than just taking on any brand that comes knocking or has a good relationship. **The larger the distributor, the more they need to do category strategic planning, rather than focusing solely on the merits of a single brand.**
After discussing the 'main product categories' dimension, let's talk about 'channel coverage.'
**The larger the distributor, the more obvious the integration of online and offline channels.** For distributors with over 100 million yuan in business, more than 60% are involved in online channels.
Online channels here include: FMCG B2b platforms, community group buying, O2O instant retail, and other localized regional online channels, as well as national online live-streaming e-commerce and B2C comprehensive e-commerce (Taobao, Pinduoduo, etc.).
Of course, **although online channels are involved, offline channels remain the main battlefield for distributors.**
BC-class supermarkets and traditional mom-and-pop retail stores are the main offline channels for distributors, accounting for 82.6% and 81.3% respectively. In addition to the above mainstream channels, new channels such as hard discount chains, fresh supermarkets, snack stores, and warehouse membership stores are emerging across regions, which also deserve distributors' attention.
**In terms of 'business models.'**
First, around the distributor group, we divide business models into 6 categories: warehousing and distribution distributors, brand distributors, category distributors, channel distributors, B2b platform distributors, and supply-marketing integrated distributors.
Compared with the 5 types of distributor business models in 2023, this year we added a new category: **【supply-marketing integrated distributors】** .
We found that many distributors with over 100 million yuan in business, as their local agency business matures and stabilizes, have chosen to actively embrace and explore when facing the impact of hard discount chains and snack stores on local stores.
We have provided a standard definition for 【supply-marketing integrated distributors】: **Based on brand agency business, integrating supply chain resources, franchising or self-operating retail stores, integrating distribution and retail.**
Looking at different business models combined with corresponding main categories: for beer, room-temperature milk and dairy, and convenience foods, brand distributors account for the most significant proportion.
Of course, it is easy to understand, given the brand owners' high control over market channels and strict management of brand consistency.
In addition, in snack foods, condiments, personal care, daily chemical and household cleaning, and paper products, category distributors account for the highest proportion.
The sub-products under a category are wide, the market capacity of a single sub-product is low, and turnover is relatively limited, making it difficult for brand owners to enforce strong control. To increase sales, distributors often choose multi-product and multi-brand combinations to form category distribution.
Currently, more and more distributors are considering B2b platform development. However, we believe that not all distributors need or are suitable to develop in the B2b direction. Snack food distributors are the most suitable for B2b development.
Data research also validates this view: **snack food distributors have the highest B2b platformization rate, accounting for 40%. Next is convenience foods, accounting for 26.5%.**
To summarize the interpretation of distributor business profiles, there are three core directions:
**First, multi-category distribution rather than single-category or single-brand distribution is a definite trend.**
In terms of category combination, it is recommended that distributors be cautious. Category stacking is a strategic choice, not like starting a business in the past when encountering a good brand or manufacturer. Especially for distributors with over 50 million yuan in business, cross-category is a strategic direction.
Because the category determines the downstream channel type. At the same time, entering a new category will also face new competitors.
You choose a seemingly good category, but it also means you add one more competitor. If the competitor is weak, it's okay; but if the competitor is strong, it's a problem. Without gaining business increment, it may bring high costs and reduce your own trading gross profit level.
**Second, city-wide omni-channel operation.**
Omni-channel here does not mean opening a store on online channels or doing live-streaming e-commerce. Instead, I emphasize that distributors should base their omni-channel layout on their city.
In addition to LKA supermarkets, BC-class supermarkets, and mom-and-pop stores, seek more channel scenarios based on your category characteristics.
For example, special channels such as catering outlets, enterprise and institutional group purchases, gas stations, campus stores, and scenic area stores. Also, keep up with new channels. New channels mean new dividends.
**Third, in terms of business model, if a distributor is in an ordinary prefecture-level city, the most appropriate choice is to vertically operate one or two category distributors.**
Based on a major category (such as condiments & rice, flour, and oil; personal care & household cleaning, etc.), carry out omni-channel layout in the city and grow the business to over 100 million yuan.
This is a direction that mainstream distributors can consider.
At the same time, for snack food & convenience food distributors, I strongly recommend that on the basis of stabilizing BC stores and LKA supermarkets, vigorously promote B2b platformization around mom-and-pop stores. Affected by snack stores and hard discount stores, the snack food category will continue to be impacted.
If you are a distributor in Beijing, Shanghai, Guangzhou, Shenzhen, or provincial capitals, leverage geographical advantages and accumulated professional capabilities in certain types of channels to focus on one or several channel distributors.
For example, focus on Walmart and Yonghui systems in South China and East China, or provincial Jiajiayue and Hejiafu systems, or Sinopec gas station channels, etc.
If viewed by mainstream cities, category distributors and B2b platform distributors will be the mainstream groups in a city's commercial circulation and the most competitive distributors.
The above is the interpretation of distributor business profiles in Part 1.
**Analysis of Distributor Performance in 2024**
First, let's look at the sales target achievement of distributors in the first half of 2024.
We asked 302 distributor bosses about the sales target achievement of their TOP1 brand (with the highest sales proportion) from January to June 2024, and the data result was: **only 55% of distributors achieved the brand sales target.**
You might think this data is not bad, with 55% of distributors meeting the target.
But my own feeling from the front-line market is that 55% is probably not reached. I am also thinking, I guess it is probably because the 302 surveyed distributors are all our alliance members, with relatively leading business scale and operational capabilities locally.
In addition, looking at sub-categories, **distributors under the water and beverage category have relatively better sales achievement; distributors under snack foods and rice, flour, and oil categories have relatively lower achievement rates.**
In terms of business scale, **obviously, the larger the distributor, the better the sales achievement. Distributors below 30 million yuan have an achievement rate of less than 50%. Distributors above 100 million yuan have an achievement rate of 63.8% or more.**
From this dimension of data, I think it also validates the viewpoint I have always expressed:
**Distributors do not create value; they only transfer value. The business of transferring goods cannot have small but beautiful or small but strong businesses; only scale effects.**
To become a big distributor in a local area (city), the core is to occupy stores, occupy shelves, and even occupy brand agency resources, building a local channel moat. Only then can you earn profits.
Profit comes from no competition. A business with a monopoly is a good business.
Just mentioned is 'target achievement,' using the completion of TOP1 brand manufacturer tasks as a reference benchmark. Now let's return to the overall revenue situation of distributors.
In terms of overall revenue, 37.1% of distributors saw revenue growth, 14.2% remained flat, and 48.7% declined. In terms of profit, only 18.2% of distributors increased, while more, 63.2%, declined.
From the perspective of revenue and profit, it is clear that distributors are under significant operational pressure.
Some distributors even achieved revenue growth, but profits still declined, which also reflects the real situation in the front-line market: **high operating costs and intense market competition.**
Looking at the 'revenue scale' dimension, the larger the revenue scale, the better the revenue growth performance, but there is no strong correlation with profit performance.
In the 'business model' dimension, B2b platform distributors and supply-marketing integrated distributors themselves have considerable revenue scales, but their profit growth performance also shows no strong correlation.
The lack of strong correlation at least shows that revenue growth and profit growth are two different things for a distributor.
Although front-end business revenue has increased, back-end costs have also increased. This poses higher challenges to distributors' business management. In the past, income increased, and profits naturally increased.
Now it doesn't work. Income may increase, but the products sold may not be profitable, with no gross profit; or adding front-line salespeople may not result in more profit, just an extra person to support.
**It is necessary to increase revenue and build a channel moat, while also reducing costs and increasing efficiency to boost profits. This is the fundamental purpose of business management. Distributor bosses must grasp both aspects firmly.**
Next.
We also asked distributors whose revenue increased: why did your revenue increase? What are the reasons?
Based on city dimensions, the top reason for revenue increase in upper-tier cities (key cities and provincial capitals) is:
**Regional expansion, accounting for 51.4%.**
This is easy to understand: the city has a large geographical area, large market capacity, and naturally more increment.
In lower-tier cities (ordinary prefecture-level cities, county-level cities), the top reason for revenue increase is: adding more categories, brands, and products.
The urban regional market capacity is limited, and coverage and penetration are relatively complete. The core focus is how to increase per-store output in existing stores, and the most effective way is to add products.
Based on revenue scale, **distributors with over 100 million yuan in revenue have the lever of: adding more terminal outlets.**
**Distributors with 100 million yuan or less have the lever of: adding more categories, brands, and products.**
From this perspective, I believe that a business scale of 100 million yuan is a landmark or milestone for a distributor.
A scale of 100 million yuan indicates that they have already formed the prototype of a local commodity supply chain platform.
The distributor's products may be basically in a certain category, such as snack food supply chain, daily chemical supply chain, condiment supply chain, etc. Based on the supply chain organization capability of a certain category, continuously increase more outlet coverage.
We also asked distributors whose profits increased: why did your profits increase? What are the reasons?
First, from the overall surveyed distributors, the three core levers for profit increase are:
> Product structure adjustment, operational efficiency improvement
>
> Cost and expense control
If compared by city dimension, distributors in upper-tier cities benefit more from reducing inventory and warehousing and distribution costs; distributors in lower-tier cities mainly benefit from personnel costs and sales expenses.
If compared by business scale, distributors with over 100 million yuan mainly achieve profit improvement through efficiency (operational efficiency) and cost reduction (personnel and warehousing costs); small and medium-sized distributors rely on channel and customer optimization.
In summary, **the three paths to profit improvement, in layman's terms, are products, channels, and personnel.**
**First, look at products.**
It is recommended that all distributors conduct a physical examination of the brands they represent. Which brands are making money for you, and which are losing money.
Is it worth losing money on brands that are losing money? Is it for expanding channels or increasing store stickiness as a strategic loss?
For brands with low profit and losses, and no after-sales support, stop cooperation immediately; for brands with overdue expenses, set a firm red line.
**It is recommended that distributors rank brands by sales contribution and gross profit contribution.**
Brands with high sales contribution and low gross profit contribution cannot be abandoned in the short term; they are the basis for expanding business channels.
Brands with low sales contribution but high gross profit contribution are potential brands that must be paid attention to, increase investment, and amplify benefits.
Brands with high sales contribution and high gross profit contribution are rare, or even basically non-existent. If there are any, no need to say more, continuously expand share.
Brands with low sales contribution and low gross profit contribution should be evaluated immediately for cooperation.
Such ranking should not be done once a year; it is best to do it monthly or quarterly for iterative optimization.
Especially for local leading distributors with many brand agencies and many SKUs, continuous iteration and optimization are key monthly focuses for every distributor.
**Second, look at channels.**
Similarly, **which channels are losing money, and even which specific supermarket stores are losing money.**
I once heard a distributor friend say, "Store sales are sluggish and declining, but I don't know which specific stores. This year, we conducted a profit and loss analysis on all covered stores. Among more than 3,000 channels, 180 stores were stopped due to excessive returns and untimely payments." Just this one action reduced losses by hundreds of thousands of yuan.
It is still recommended that distributors rank stores by sales contribution and gross profit contribution.
First, pay attention to the top and bottom stores. Stores with high sales contribution and low gross profit contribution indicate that the store relationship is okay, but they are not making money. See how to turn them around, whether by adding more SKUs or appropriately optimizing cooperation terms.
For stores with low sales contribution and low gross profit contribution, understand the reasons immediately. If the store business is really not good and is impacted by surrounding discount supermarkets, reduce services. This situation cannot be changed by the distributor.
**Finally, look at personnel.**
People are the biggest cost in distributor operations.
Analyze the output of each salesperson: who is making money and who is losing money. Are the money-makers the result of their efforts and abilities, or are they lying flat due to company resource bias?
Are the losers due to ability issues or attitude issues? **If attitude is bad and ability is also poor, optimize promptly; if attitude is good but ability is problematic, continuously improve ability through mentorship.**
Although people are the company's biggest cost, they are also the company's biggest asset.
The best way to enhance personnel cohesion is to lead the team to victory. In a trading company, the simplest and most direct way to lead the team to victory is through one project at a time and one key battle at a time.
It is recommended that distributors give different key projects every month.
**This month is a key battle for store activity rate, next month is a key battle for a certain brand product promotion, and also a key battle for gross profit.** Focus on one key task and key goal, and lead the team like playing a game and passing levels.
After all, salespeople are not bosses; they cannot stare at sales target progress and profit realization progress every day like bosses. Let salespeople set relevant indicators based on the achievable stores and brands they are responsible for, and charge forward.
Finally, regarding the reasons for the decline in distributor revenue and profit, I will not elaborate further.
It is nothing more than sluggish sales, price declines, channel impacts leading to revenue decline, and the above plus rising costs and expenses leading to profit decline.
**Pressures and Challenges for Distributors in 2024**
After discussing the performance analysis for 2024, let's summarize the overall business of distributors in 2024.
**First, the impact of emerging channels on distributors.**
First, the negative impact. Topping the list, as everyone knows, is the greatest impact from snack chain stores, followed by community group buying (Meituan Select, Duoduo Maicai), and third is comprehensive e-commerce.
Clearly, distributor bosses have become accustomed to the impact of online comprehensive e-commerce. Community group buying and snack chains, two types of local emerging channels, have become the biggest threatening channels.
Then look at the positive impact, that is, what can bring increment.
On online channels, O2O & instant retail ranks first. I think this should be more prominent in first- and second-tier cities, especially the increment brought by Meituan Flash Warehouse.
On offline channels, the increment brought by special channels is the most obvious, such as enterprise and institutional group purchase benefits.
A few days ago, I met a daily chemical distributor friend. Daily chemical business declines by 10% every year, so in the past two years, they started a holiday group purchase gift box business.
Three festivals a year—Dragon Boat Festival, Mid-Autumn Festival, and Chinese New Year—local enterprises need to distribute gifts every year. This is a rigid demand and also cash settlement. Although bidding is required and preparation starts one or two months in advance, the overall business performance is good, effectively compensating for the decline in daily chemical business.
I think this is also why 45.5% of distributors choose special channels to bring increment.
If you are a local leading distributor with good social relationships and interpersonal skills, it is recommended that distributors consider this.
**Second, changes in operating costs. The three mountains of cost: personnel, warehousing, and promotional expenses.**
Although different cities, business models, and business scales vary, personnel costs are the largest proportion.
Regarding personnel costs, I have already explained in Part 2 above, so I will not repeat here.
**Third, manufacturers' expense investment.**
From the survey results, overall upstream manufacturers' investment tends to be conservative, which is related to the overall economic downturn and stock competition in the industry.
Specifically, 75.1% of manufacturers did not increase market expense investment. The landlord has no surplus grain either.
By category, manufacturers in snack foods, convenience foods, and daily chemical and household cleaning have significantly reduced market expense investment.
In my view, in the past, distributors found business harder and gross profit declining, and still hoped manufacturers would invest more and provide policy rebates. But now manufacturers' business is also not good, and they have no time to care about distributors. I heard that even regional managers cannot hold on.
**Fourth, internal management pressure.**
The prominent manifestations in internal management are summarized in three points: **compensation and performance, personnel management, and product operation.**
Compensation and performance is a common topic, and there are many experts and teachers in the trading field providing training and consulting on compensation and performance.
If distributor bosses still use basic salary + sales commission for compensation and performance, whether business is good or bad, I suggest taking some courses and making some optimization adjustments.
But it is also recommended not to make drastic changes all at once; take small steps, make small adjustments, and iterate.
Change from pure sales commission to sales commission + gross profit commission, and then to net profit commission.
In fact, a salesperson managing 10 supermarkets or 200 small stores is the small distributor boss of that route. They must gradually develop business awareness, cost awareness, and gross profit awareness.
In personnel management, I think it is not about welfare and care systems, but more about daily business assistance.
Starting from helping them improve professional and sales abilities, provide process coaching, rather than only focusing on sales volume, performance, and results.
If salespeople feel their abilities improve in daily work (such as store negotiation, new product sell-in, etc.), give them a sense of honor periodically. Timely feedback and timely rewards are important.
In product operation, I think more than 90% of distributors neglect it.
In the earliest days, the distributor's function was to pay, receive goods, and handle logistics and distribution; in the past decade, a function was added: store distribution coverage, product shelving and display; now the distributor's function is shelf resource grabbing, brand combination, and new product promotion.
But I believe **the core function distributors need to do in the future is product management based on stores.**
What does product management based on stores mean? Position different supermarket stores (campus stores, community stores, comprehensive mall stores) to do different scales, price bands, flavors, and other product combinations, classify, grade, and layer, and manage products based on the category, with a retail category mindset.
The above shares the review and summary of the 2024 FMCG distributor business status. Due to space limitations, insights on business direction development for 2025 will be published separately. Stay tuned.


---

## 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