For the twelve months ending April 2004, the urban Chinese FMCG market grew 9 per cent in value compared to the urban Indian FMCG market, which grew by 2.2 per cent. However looking at the cosmetics and toiletries categories, the figures revel that these sectors continue to dominate the top position. In China, sales of shampoo maintain the number one FMCG slot, and continued to show an increase of just over 3 per cent. Likewise, in India the sale of toilet soaps continues to dominate FMCG sales, although sales for this category during the period slipped by 1.1 per cent.
In China the figures also reveal that some of the most significant gains contributing to the rise in overall FMCG sales have been made in the cosmetics and toiletries segment, which last year grew by 8 per cent to reach a value of €5 billion. In particular sales of skin moisturizer registered a 25.2 per cent increase in sales to become the fourth biggest selling FMCG. Likewise sales of toothpaste were up 10.1 per cent , making it the sixth largest category.
Conversely, the sales figures for other cosmetics and toiletries in the Indian market - which, like China has a fast-growing economy and a population of over 1 billion - did not look so promising. Toothpaste was the sixth largest category, but sales fell by 9.6 per cent, whilst the skin creams category came in in the ninth position, registering a drop in sales of 2.7 per cent. ACNielsen said that the downturn in this market had been caused by extensive price rationalisation by marketeers, which had caused many prices to fall, but that in the long-term it would also cause more consumers to enter the categories for the first time.
"While the list of largest categories varies in terms of products, these categories are the bellwethers of the FMCG industry in these markets and offer a fair indicator of growth trends," Russell Farmery, MD, ACNielsen South Asia.
"The Chinese FMCG market has enjoyed a more balanced development with a two-pronged growth from food and non-food categories. Non-food categories grew by 6 per cent and food categories by 12 per cent supporting overall market growth" explained Farmery.
China appears to be ahead of India in terms of modern trade development within the urban geographies - a key causal factor driving consumption. While the value of consumer products sold through the modern trade in China is currently 46 per cent, the Indian modern trade channels comprise only 7 per cent of the total value of the urban branded FMCG goods monitored.
"While China has the lead in terms of modern trade progress and its positive impact on new introductions,availability, affordability and inducement to spend, the Indian market is unlikely to lag behind for very long. The Indian subcontinent is likely to witness a more gradual and symmetrical growth with modern trade development riding on increasing disposable incomes as it has in the Chinese context" Farmery said.
"Two other extraneous factors have created this divergence in broad trends between China and India. Increased health concerns drove up the sales of personal care and hygiene products in China. While this did not impact India as much, the reduction of prices in large categories like washing powders, detergents and shampoos precipitated a downslide in value growth. Once this stabilizes, it may well move in a positive direction provided factors like overall economic growth and rainfall support it. In a country with a billion consumers, it is clear that the long term growth story for the FMCG sector is intact." concluded Farmery.