Is China’s FMCG market finally stabilising after the 2024 slump?

Lower-tier cities drive 80% of China FMCG growth.

After a challenging 2024, China’s fast-moving consumer goods (FMCG) market showed early signs of stabilisation in 2025, posting modest growth amid subdued consumer sentiment and persistent price deflation.

Total FMCG spending rose 1.3% year to date through the third quarter of 2025, supported by a 3.8% increase in volumes, which offset a 2.4% decline in average selling prices (ASP).

Growth was front-loaded: the market expanded 2.7% year on year in the first quarter, before slowing to 0.7% in the second quarter and 0.4% in the third as macroeconomic momentum softened and household confidence remained cautious, despite ongoing policy support.

Lower-tier cities emerged as the primary growth engine. Tier 3–5 cities accounted for around 80% of total FMCG market expansion, benefiting from continued urbanization, deeper brand and retail penetration, and the rapid rollout of emerging channels such as snack collection stores and online-to-offline (O2O) platforms.

Lower living costs in these areas also helped sustain consumption. By contrast, Tier 1–2 cities remained largely flat, weighed down by slower economic recovery and ongoing consumption downgrading.

Performance varied widely across categories. Packaged food (+3.4%) and home care (+3.3%) led growth, supported by resilient demand for staples, hygiene products, and in-home consumption.

Personal care returned to modest growth (+1.1%) after several years of contraction, driven by a strong rebound in the first quarter.

Beverages, however, underperformed, declining 1.1% in value terms.

Whilst volumes rose 3.6%, sharp price deflation (–4.6%) eroded value, reflecting intense competition, aggressive pricing in emerging channels, and continued substitution toward freshly made drinks delivered via O2O platforms.

Within beverages, juice stood out with strong double-digit growth, driven by health-oriented products such as NFC and HPP chilled juices. Beer also posted solid gains, while milk and yogurt recorded steep declines amid oversupply and heightened price competition.

Price deflation, which accelerated through 2024, showed signs of easing in 2025. The overall ASP decline moderated to –2.4% year to date, compared with –3.4% in the prior year, supported by reduced promotional intensity and more disciplined pricing by brands.

Nevertheless, deflation remained widespread, affecting the majority of FMCG subcategories.

Traditional offline channels continued to face pressure, but new demand-generation formats expanded rapidly. Membership stores, snack collection stores, and discount stores recorded year-on-year growth of roughly 40%, 51%, and 92%, respectively.
O2O channels rebounded strongly, growing 7.9% in the third quarter, driven by higher penetration and increased purchase frequency.

Online FMCG sales rose 7%, with penetration edging up to 39%. Short-video and value-driven platforms such as Douyin and Pinduoduo now account for more than 40% of total FMCG e-commerce sales, underscoring their growing influence on consumer purchasing behavior.

Overall, China’s FMCG market in 2025 remains characterized by modest growth, volume-driven recovery, and intense competition. Lower-tier cities and emerging channels are reshaping the growth landscape, while brands navigate a “new normal” in which consumers weigh price and quality more carefully and deflationary pressures, though easing, continue to shape market dynamics.