FMCG market charts new growth path

Local brands do well

Domestic brands continued to strengthen their position across multiple categories, often outperforming multinational competitors in segments where local insights, faster product cycles and sharper pricing strategies proved decisive, according to the report.

Private label products are also emerging as a structural force in retail strategy. Sales rose more than 57 percent year-on-year in 2025 to reach 32.7 billion yuan ($4.82 billion), accounting for about 2 percent of total urban FMCG sales. While still relatively small, the growth rate signals accelerating retailer investment in in-house brands as a tool for differentiation and margin management.

"Emerging formats — including O2O, warehouse clubs, snack discount chains and hard discounters — are reshaping how consumers fulfill needs across different occasions," said Bruno Lannes, a senior partner at Bain. He said brand owners must move away from one-size-fits-all approaches and instead tailor strategies to specific shopping missions, channels and price expectations.

General Manager of Worldpanel by Numerator China, Li Rong, said Chinese households are becoming increasingly sophisticated in how they evaluate value. "Seeking value for money does not equate to simply choosing the cheapest option," she said. Consumers, she added, are still willing to pay for differentiated products when benefits are clear, but are more deliberate in weighing trade-offs across brands, stores and channels.

Product innovation

Despite slower growth, the report finds that product innovation remains highly active. New SKUs accounted for roughly 40 percent of total SKU counts between 2022 and 2025, reflecting continued experimentation by brand owners and retailers.

However, the effectiveness of that innovation remains limited. Only 3.9 percent of new products launched in 2024 achieved penetration of at least 1 percent within their first year, underscoring a significant gap between product launches and scalable success.

To address these challenges, Bain recommends that companies adopt a revised "core" framework. This includes re-anchoring demand planning around "circumstances" shaped by value-for-money expectations, redesigning "offerings" for localized relevance, optimizing "routes" through channel-specific strategies, and strengthening "execution" capabilities to operate in a low-growth, high-volatility environment.