From August 20-22, 2024, the 6th China FMCG Conference, the 3rd China FMCG Hard Discount Conference, and the 3rd China FMCG Distributor Conference grandly opened in Shanghai!

On August 22, at the distributor conference, Yuan Lai, Chief Content Officer of New Distribution, and Wendy Li, Partner of New Distribution's Research and Consulting, released the "2023-2024 China FMCG Distributor Business Condition Survey Report" (hereinafter referred to as the Report).

This report is based on in-depth surveys of 302 medium-to-large distributors closely cooperating with New Distribution nationwide, covering 14 core FMCG categories across 131 cities. Through detailed data and case studies, it aims to present the true picture of the distributor community in a complex market environment.

Combining quantitative questionnaire surveys with qualitative in-depth interviews, the report delves into distributors' business performance, management practices, and future plans, aiming to provide profound insights and inspiration for the industry.

First-half Sales Target Achievement

The overall market environment is challenging. Among surveyed distributors, only 55% achieved their brand sales targets in the first half of the year, with an average target achievement rate of 98.1%. Distributors primarily dealing in water and beverages, and convenience foods performed relatively well.

The water and beverage market demand is relatively stable and strong, with 72.6% of distributors achieving sales targets and an average achievement rate of 103.3%.

Leisure snacks and rice, flour, and grain oils had lower achievement rates, indicating significant market uncertainty or competitive pressure in these categories.

First-half Revenue and Profit

Regarding revenue and profit in the first half of 2024 compared to the first half of 2023, distributors' average revenue decreased by 1.6%, and average profit decreased by 6.5%.

37.1% of distributors saw revenue growth, 14.2% remained flat, and 48.7% experienced a decline.

In terms of profit, 18.2% of distributors saw profit growth, 18.5% remained flat, and 63.2% experienced a decline.

By category, water and beverage distributors performed relatively well, while beer and leisure snack products faced pressure.

Reasons for Revenue and Profit Decline

Sluggish downstream store sales, intense market competition, and the impact of new channels are the main reasons for revenue decline.

Meanwhile, the corresponding decline in overall sales volume, market competition, and increased costs and expenses are the main factors leading to profit decline.

Reasons for Revenue and Profit Increase

Increasing product categories and brands, expanding terminal outlets, and omnichannel coordination are the main drivers for distributors to boost revenue. Increased overall sales volume, optimized product mix, and optimizing low-profit channels and customers are the main reasons for distributors to increase profits.

Cost Changes:

Significant Increase in Personnel and Promotional Expenses

Distributors faced pressure from rising various costs in the first half of 2024, especially personnel costs and promotional expenses, reflecting the industry's continued reliance on human resources.

At the same time, intense market competition necessitates substantial marketing investment. Due to differences in category characteristics and operational focus, cost increases vary significantly across categories.

High Personnel Cost Pressure: Most distributors face pressure from rising personnel cost ratios, especially in convenience foods and paper hygiene products.

Promotional Expenses Surge: Distributors in multiple categories reported an increase in the proportion of promotional expenses, particularly in personal care, indicating intense market competition.

Warehousing and Distribution Costs Increase: Water and beverage, and leisure snack distributors saw a relatively higher increase in warehousing cost ratios; water and beverage, beer, and rice, flour, and grain oil distributors commonly saw a simultaneous increase in distribution cost ratios, indicating challenges in storage and transportation.

Inventory Management Challenges: Daily chemical and household cleaning, and paper hygiene product distributors saw a relatively larger increase in inventory cost ratios, highlighting high inventory pressure in these categories.

Expense Investment:

Conservative Market Investment Strategy

Affected by the economic environment and industry competition, brand owners generally adopt conservative market investment strategies, with overall market expense investment decreasing. Especially in lower-tier cities, 76.7% of brand owners did not increase market expense investment, indicating market saturation or high cost pressure.

Of course, different categories face different market environments, leading brand owners to adopt differentiated investment strategies.

Brand owners in paper hygiene products, ambient milk and dairy, and water and beverages significantly increased market expense investment; leisure snacks, convenience foods, and daily chemical and household cleaning brand owners significantly reduced market expense investment; beer and personal care brand owners mostly kept market expense investment flat.

Business Insight Summary

Distributors' revenue and profit are affected by multiple factors such as market demand, product mix, channel competition, operational efficiency, costs and expenses, brand cooperation, and customer relationships.

To achieve revenue and profit growth, distributors need to continuously adapt to market changes, optimize product structure, adjust channel strategies, control costs and expenses, strengthen customer development, and improve operational efficiency.

At the same time, when facing challenges of revenue and profit decline, distributors need to analyze specific reasons and adopt corresponding strategies of increasing revenue, reducing costs, and improving efficiency to respond.

2024 Revenue Expectations

Distributors' expectations for 2024 revenue are clearly divergent, with overall market prospects highly uncertain. 40.4% of distributors expect revenue to rise in 2024, 31.5% expect a decline, and 28.2% expect it to remain flat.

Future Development Insights for Distributors

The above is part of the report content. For more details, please refer to the full report.

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