--- title: "The FMCG Industry Is in Chaos Right Now" description: "Recent visits to multiple regional markets reveal widespread anxiety across the FMCG industry, affecting brand owners, retailers, and distributors alike. Since 2024, over half of listed food and beverage companies have seen declining revenues, while retail is being reshaped by new formats and online channels, forcing a fundamental redefinition of roles and collaboration." author: "周群" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2025-07-12" categories: "Brand Marketing, Capital, Earnings & M&A, Consumer & Categories, Dealer Operations, Distribution & Channels, E-commerce & Instant Retail, Retail Formats" language: "en" canonical: "https://xinjignxiao.com/en/articles/the-fmcg-industry-is-in-chaos-right-now-005a7e95/" markdown: "https://xinjignxiao.com/en/articles/the-fmcg-industry-is-in-chaos-right-now-005a7e95.md" original_source: "https://mp.weixin.qq.com/s/KHIMlUN6iAMEZ1fXYfn3ZQ" translation: "https://xinjignxiao.com/zh/articles/%E5%BF%AB%E6%B6%88%E8%A1%8C%E4%B8%9A%E7%8E%B0%E5%9C%A8%E5%A4%AA%E4%B9%B1%E4%BA%86-005a7e95.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-fmcg-industry-is-in-chaos-right-now-005a7e95/" citation: "周群. “The FMCG Industry Is in Chaos Right Now.” New Distribution, 2025-07-12. https://xinjignxiao.com/en/articles/the-fmcg-industry-is-in-chaos-right-now-005a7e95/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # The FMCG Industry Is in Chaos Right Now > Recent visits to multiple regional markets reveal widespread anxiety across the FMCG industry, affecting brand owners, retailers, and distributors alike. Since 2024, over half of listed food and beverage companies have seen declining revenues, while retail is being reshaped by new formats and online channels, forcing a fundamental redefinition of roles and collaboration. Recently, I have made intensive visits to multiple regional markets, and one clear perception stands out: the entire FMCG industry—whether brand owners, retailers, or distributors—is feeling anxious. From the brand owner's perspective, since 2024, more than half of listed food and beverage companies have seen continuous revenue declines, and the trend has continued into the first quarter of this year. The changes at the retail end are even more pronounced. Formats such as snack stores and discount stores have risen, supermarkets are undergoing adjustments to seek change, and online retail methods like instant retail, community e-commerce, and front-warehouse models are rapidly eroding terminal market share. These upstream and downstream changes have made distributors' businesses harder. Old operating methods have become ineffective, and most new paths are still in the exploratory stage. Whether trying B2b or transitioning to category operations, many distributors have yet to find a truly viable way forward. On the surface, this looks like chaos; but at a deeper level, it is a reconstruction of the order of commodity circulation. The capability structures, collaboration logic, and value positioning of the three major roles—brand owners, retailers, and distributors—are being forced to redefine themselves. **Brand Owners Are No Longer Anxious About Growth** **But About Losing Their 'Basic Market'** "The bigger the brand, the more anxious it is now. The business is too large to turn around easily, and change is too slow." This was shared by a friend who is a brand owner. Looking at the industry's total volume, demand has not shrunk significantly, but the performance of leading brand owners is increasingly weak. The core issue is that leading brand owners are losing their once-stable basic market. This loss has multiple causes. First, there is a shift in consumer demand. In today's market where supply far exceeds demand, consumers' choices are no longer about "whether it exists" but "which one suits me better." The functional value of products no longer constitutes differentiation; soft dimensions such as emotional value, social value, aesthetic value, and cultural expression have become the main drivers of purchasing decisions. However, many big brands remain stuck in their own narrow domain, with weak product innovation and an inability to respond promptly to changing demands, gradually losing their grip on the market. In contrast, some small and medium-sized brands have seized this shift in demand and rapidly risen in niche areas, strongly impacting the market share of leading brands. For example, emerging brands like Guozishule, Manxiaobao, and Hezhengran have grown quickly in the past two years. Second, there is a sluggish response to channel changes. In the past, leading brands looked down on some emerging channels, but now these channels have become core traffic entry points. When leading brands try to enter now, they find they are a step behind in layout. For instance, recently many brands have proactively approached New Distribution to learn how to cooperate with regional B2b platforms, but in reality, B2b emerged several years ago, just on a smaller scale than now. At that time, some brands proactively established cooperation, gaining a certain first-mover advantage. Moreover, the larger the brand, the more prone it is to path dependence and decision-making lag. Feedback from regional markets cannot quickly transmit back to headquarters, and the efficiency of connecting with new channels is low, with slow response times, leading to missed windows of opportunity. In the FMCG industry, being half a beat slow often means falling behind. The biggest dilemma for brand owners today is not the lack of growth opportunities, but that the old linear growth model—"brand-centered, function-anchored, channel-as-terminal"—no longer works. Consumers have changed, channels have changed, and traffic structures have changed. What brand owners face is not how to do a little more, but the need to reconstruct their cognitive logic, transmission paths, and market interfaces. Today's anxiety among big brands is not about doing poorly, but about doing things according to past models without effect. They are not just facing a market with slowing growth, but a whole new set of rules. If they do not evolve, their so-called basic market will eventually become "historical heritage." **Offline Retail Is in Chaos** **But There Are No Winners in the Price War** In recent years, the changes in offline retail formats have been the most obvious, from community group buying, B2b, to snack stores, discount stores, front-warehouse models, and so on. Although there are many formats, no definitive direction has emerged yet. Both traditional supermarkets and new formats are still groping forward, and most remain stuck at the level of price wars, lacking substantive change. The decline in performance of traditional retailers is the most direct phenomenon, as reflected in financial reports. Therefore, many chain supermarkets have launched adjustment plans, focusing on product structure optimization and supply chain improvement, hoping to attract consumers again by reducing costs and optimizing product portfolios. But so far, the effects of these adjustments are not obvious. Supermarket traffic has not stabilized after a short-term boost. At the same time, new formats are rapidly rising and diverting share from traditional markets. For example, chain retail formats like snack stores and discount stores, with their more flexible product selection and closer-to-consumer scenario experiences, have quickly captured market share from small and medium-sized stores. A distributor friend in Yunnan told me, "Based on local point-of-sale data he obtained, the number of store closures among small and medium-sized stores, including some small restaurants, in his region in 2024 doubled compared to 2023." Even more impactful is the accelerating penetration of internet platforms into offline retail. For example, instant retail, with its hour-level or half-hour-level delivery models, is changing consumer shopping habits, further eroding traffic for traditional offline retail formats. But behind this fierce competition, no true winner has emerged yet. New Distribution's research in multiple cities found that these new formats are still grabbing market share with low prices, and their profitability is not yet stable. In other words, the current retail market is not lacking heat, but the heat is unhealthy. The relationship between old and new forces is not a simple shift of gains and losses, but a trap of universally "exchanging low prices for sales volume." Under the stimulation of massive discounts, subsidies, and promotions, retailers may see better short-term book numbers, but behind this lies the accumulation of profit erosion and supply chain pressure, making it difficult to form long-term competitiveness. **Distributors' Functions Are Changing** **And There Are Fewer and Fewer Business Opportunities** At the Changsha Xinqiao Wholesale Market, I talked with a distributor friend who said, "Now I don't know how to do business at all. Various experts give too many directions—do B2b, do categories, do operations—I don't know which path is good." Compared with brand owners and retailers, the anxiety of the distributor group is more specific and more urgent. In the past, distributors were the intermediate link in the FMCG distribution system, building a moat of local distribution networks through deep cultivation of regional markets. But today, the logic of such a moat is rapidly failing. More and more distributors feel that the business they can do is truly getting less and less. The main battlefield for distributors—traditional channels—is shrinking. Chain supermarkets' sales continue to decline, and many large chains are accelerating the removal of intermediaries, reducing their dependence on distributors; the per-store output of small and medium-sized stores has also significantly decreased, with lower distribution efficiency. In the past, they could rely on brand momentum to push inventory, but today, cross-regional dumping is rampant, and stores hold the initiative. Problems like inventory backlog, extended payment terms, and difficulty in collecting payments have become normalized. At the same time, many new channels are gradually moving from high-tier markets to lower-tier markets, but most distributors have not yet realized this issue. For example, front-warehouse models have already covered a considerable number of stores in many county towns, but during my market visits, many distributors still had no direct perception and did not know that there were already dozens of such stores in their regions. In this reshuffling of old and new channels, many distributors are gradually being bypassed, not because they are incompetent, but because they do not know how to adapt. The essential issue is that the operating logic of new channels has changed. In the old model, distributors undertook functions such as advancing funds, stocking, delivering, and distributing, following the actions and paths set by manufacturers. But in many new channels, because the platform's scale is large enough, many manufacturers can cooperate directly, either eliminating distributors or making them palletizers. For manufacturers, direct supply reduces intermediate links and provides direct data feedback. Therefore, today's distributors must seriously consider a question: when there are fewer and fewer business opportunities and living space is continuously compressed, "what else can I do" in the new channel system. Many distributors actually do not lack teams, products, channels, or experience. What they truly lack is a new role definition compatible with the future channel system. Without this definition, you do not know what to invest in, whom to hire, or what systems to change, and you can only maintain cash flow as much as possible in the downturn of traditional business, delaying decline. **Final Thoughts** Over the past few decades, the distribution system of the FMCG industry has followed a stable linear logic: brand owners define products and strategies, distributors are responsible for distribution and implementation, retailers provide the final touchpoint, and consumers passively receive information and complete purchases. But today, this chain has been broken. Consumers no longer wait passively; they actively search, compare, and choose. Retail terminals no longer rely on a single supply source; they connect with platforms, systems, and brands simultaneously. Brand owners no longer hold absolute dominance; they must contend with platform algorithms, content dissemination, and terminal demand. And distributors are no longer the irreplaceable intermediate hub; they need to redefine their functions. This is not a matter of old versus new, but a systematic reconstruction of the underlying order. We must see that today's problems cannot be solved with yesterday's experience. What we face is not just partial adjustments to products, channels, and models, but a new business world that requires re-understanding demand and redesigning supply. At this critical juncture of cognitive shift, in August, in Shanghai, let us face this challenge together. 🔺 --- ## Citation metadata - Publisher: New Distribution - Author: 周群 - Published: 2025-07-12 - Canonical: https://xinjignxiao.com/en/articles/the-fmcg-industry-is-in-chaos-right-now-005a7e95/ - Original source: https://mp.weixin.qq.com/s/KHIMlUN6iAMEZ1fXYfn3ZQ ## Copyright and AI use This article is sourced from New Distribution. 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