China FMCG growth slows as value-seeking shoppers take over

Lower-tier cities lead growth on stronger value sensitivity.

China’s fast-moving consumer goods (FMCG) market is being reshaped by value-seeking consumers, demographic shifts, and changing retail channels.

According to Bain & Company and Worldpanel by Numerator's 15th China Shopper Report 2026, the total FMCG spending in urban China grew by just 0.9% in 2025, driven by a 3.6% increase in sales volume but offset by a 2.6% decline in average selling prices (ASP).

The trend continued into 2026, with FMCG value declining 1.3% year-on-year in the first quarter despite a 1.3% increase in volume. However, data from April indicated a return to positive value growth, suggesting that the weakness seen earlier in the year may have been influenced by seasonal factors surrounding the holiday period.

The report noted that China’s consumer market is transitioning from decades of rapid population growth and rising incomes to a slower-growth environment characterised by deflationary pressures and softer consumer confidence.

FMCG growth is expected to remain in the low single digits throughout 2026.

China’s aging population and changing household structure are influencing spending behavior. Around 320 million people are aged 60 and above, whilst single-person households account for about a quarter of all households. These trends are contributing to stronger demand for value-oriented products.

“As China moves from a long period of rapid population growth and rising income into slower growth, demographic change, value-seeking behavior, and channel dynamics are becoming increasingly important drivers of how consumers shop and where growth comes from,” said Derek Deng, head of Bain & Company’s consumer products and retail practice in Greater China. “The challenge for brands is understanding these changing consumer needs and how they are reshaping the market.”

Lower-tier cities also continued to drive growth in 2025. Whilst Tier 1 cities recorded flat or slightly negative FMCG value growth, Tier 4 and Tier 5 cities generated a disproportionate share of incremental value.

These areas benefited from ongoing urbanisation and the expansion of modern retail and digital commerce channels, improving consumer access to products and broader assortments, the report said.

Older households and families with children in these markets increased spending faster than consumers in major cities.

Among major FMCG sectors, packaged food remained the most resilient category, posting 1.0% growth in the first quarter of 2026.

Meanwhile, beverage sales declined 2.9%, personal care fell 1.4% and home care dropped 3.0%.

Pricing pressures showed signs of easing in April, with packaged food returning to positive ASP growth and declines narrowing across beverage and home care categories.

E-commerce accounted for 38% of urban FMCG spending in 2025, whilst online-to-offline (O2O) channels rebounded strongly, with urban FMCG sales through O2O growing nearly 8% year-on-year in the third quarter.

Membership clubs, snack collection stores and discount retailers continued to gain market share as consumers sought better value. Domestic brands also expanded their presence across more categories, supported by faster innovation and competitive pricing.

Domestic brands strengthened their market position across multiple categories, benefiting from a combination of local consumer insights, rapid product innovation and competitive pricing.

Private-label products emerged as a key growth area, with sales rising more than 57% year-on-year to RMB 32.7b in 2025. Private labels accounted for approximately 2% of total urban FMCG sales.

“O2O, membership clubs, snack collection stores and discount stores are reshaping how shoppers fulfill different missions,” said Bruno Lannes, senior partner at Bain & Company. “Brands can no longer take a one-size-fits-all approach to growth. They need to understand the different occasions consumers are shopping for, and ensure that products, pricing and channel strategies are tailored to those needs.”

Rachel Lee, general manager of Worldpanel by Numerator China, added that consumers are increasingly managing household budgets through a combination of product, store and channel choices rather than simply opting for the lowest-priced products.

“Understanding these changing behaviors is becoming increasingly important for brands seeking sustainable growth,” she said.

The report also found that innovation remains active, with new products accounting for nearly 40% of total SKUs between 2022 and 2025. However, only 3.9% of products launched in 2024 achieved at least 1% market penetration within their first year.

Brands must adapt to changing consumer needs by focusing on value, local relevance, channel strategy and operational resilience to sustain growth in a slower and more competitive market, it added.