Home care remains the category champion, while Douyin dominates online
After a challenging 2024 for FMCG in China, this year started on a stronger footing. A sharp spending spike around the Chinese New Year festival, combined with an improvement in some macroeconomic factors, contributed to a 2.7% year-on-year growth in value during Q1.
Rising volume (+5.3%) was once again behind this growth, offsetting a moderate 2.5% drop in average selling prices (ASP). Price deflation had plagued China’s FMCG sector in 2024, with a 3.4% decline in prices slowing spending growth to 0.8% over the year.
Home care continues to lead
Consumer spend in the home care, personal care and packaged food categories increased in Q1 of 2025, while beverage growth stagnated – most likely caused by falling prices.
Home care (+6.1%) enjoyed a substantial volume rise of 8.8% as demand for health and hygiene related products persisted. Facial tissues, fabric detergent and kitchen cleaner all performed strongly.
Consumers’ demand for convenience meant that instant noodles once again spearheaded value growth in packaged food (+3.2%) in Q1. All major subcategories had posted volume growth in 2024, except for infant formula – an effect of China’s declining birthrate. Spend on beverages grew 0.5%, with juice, packaged water, beer, and RTD tea experiencing the highest growth.
Personal care experienced a reversal of fortunes in the first quarter. It turned a value drop of 2.3% in 2024 into a 4% year-on-year rise, thanks to a significant volume boost. ‘Sacrificing price for volume’ was the primary trend, and every category except diapers and hair conditioner successfully achieved value growth through this strategy.
Chinese consumers are omnichannel shoppers
On average, Chinese consumers purchase FMCG from more than seven different types of channels in a year in a quest for value and convenience. Both online and offline channels are continuously evolving into new formats to meet these needs.
Continuing their momentum from 2024, e-commerce and offline small-format stores gained further share of FMCG spend in Q1.
Offline retailers grew rapidly (+23%), fuelled by sustained growth in the Sam’s chain of stores, plus a rebound for Freshippo. The grocery and super/mini market formats, including discounters, remained dominant. Innovative new retail formats – including specialist stores such as snack collection stores, and membership stores – emerged as key growth drivers.
Online penetration continued to grow in non-food categories, especially home care and personal care. More promotions, availability of small brands, and cheaper prices all appealed to shoppers.
Douyin’s standout performance in 2024 saw it leapfrog JD to become become China’s second largest e-commerce platform, with a 23% share of online FMCG sales. It continued to grow rapidly in Q1, stealing share of spend from Taobao and Tmall.
After losing 10% of its share in 2024, O2O online-to-offline (O2O) channels lost even more momentum in Q1 of 2025, as shoppers returned to offline stores. Community group buying and horizontal marketplaces declined most drastically.
Homegrown brands claim more share
Domestic brands held more than three quarters (76%) of the Chinese FMCG market in 2024 – gaining value share from foreign brands in nearly half of the 27 categories tracked.
Both new and established domestic brands won more spend through product innovation, competitive pricing, and channel expansion. For example, Blue Moon combined the introduction of a new concentrated fabric detergent with an enhanced presence on Douyin.
Consumers keep trading down
Product choice had the greatest influence on FMCG spending in 2024, and into Q1 2025. Consumers increased the volume they were able to buy through seeking more affordable alternatives to their usual products. This downtrading trend was consistent across all four major categories: packaged food, beverage, home care, and personal care.
This said, premium segments were still able to thrive in categories that innovate and cater to specific needs. In juice, instant coffee, toothpaste and sanitary pads, for instance, the premium segment outgrew the market overall, driven by new launches and product upgrades.
The 2025 pricing environment remains challenging. Brands face a strategic choice: specialise in the premium segment, compete in the mass/mainstream segments, or endeavour to do both.
There are many opportunities to grow in China’s FMCG market, even though deflation persists and consumer confidence remains lukewarm. Brands will need discipline and focus to navigate the challenging – albeit improving – period ahead.
Read the new China Shopper Report 2025 Vol. 1 from Worldpanel and Bain & Company to explore the emerging trends, and position your organisation for success.