Domestic brands in China dominate segments from electric vehicles to electronic products to various everyday goods, but more shoppers are reaching for foreign competitors in specific categories including chocolate, infant formula, diapers and instant noodles. In chocolate, Japanese brand Meiji gained market share last year based on a reputation for high quality and Japanese craftsmanship, according to a report released by consulting firm Bain & Co and market researcher Worldpanel. Gift-giving continued to benefit brands like Swiss luxury chocolate maker Lindt & Spruengli. “Foreign brands keep adjusting their competitive strategies, spending more time and resources to build brand strength and create new brand positioning suited to local consumption scenarios,” said Derek Deng, head of Bain & Co’s consumer products and retail practice in Greater China. “Many international brands have rolled out various related initiatives.”
China’s first bricks-and-mortar Lindt store, on downtown Shanghai’s Huaihai Middle Road, opened in April and exceeded sales expectations, according to the company, which also operates flagship stores on multiple e-commerce platforms. The ketchup segment saw sales growth last year, largely driven by Heinz, which increased its market value in China by 31% year-on-year. Penetration increased to 13% from 11%, owing to the company’s efforts to reposition the product as an ingredient in Chinese cooking rather than merely a Western-style dipping sauce. “As a traditional Western brand, it revamped and repositioned its classic Western product lines to suit Chinese consumers, thereby driving growth,” said Rachel Lee, General Manager of Worldpanel.
Meanwhile, in infant formula and diapers, falling birth rates in China have reduced the market prize while lifting the bar on safety and trust. This has benefited multinationals such as German brand Aptamil and New Zealand’s A2 for infant formula, and U.S. labels Pampers and Huggies in diapers. All of these posted marketshare gains last year, ranging from 0.6 to 3.2 percentage points, the report said.
In nutrition supplements, science-led foreign brands such as Schiff Move Free from the U.S. and Blackmores from Australia maintained their edge on product efficacy and consumer trust, it said. Domestic players captured marketshare in more consumer goods categories than they lost, often by combining attractive pricing with reliable quality and fast innovation cycles, according to the report. Instant noodles stood as a notable exception, with local brands losing 1.6 percentage points of share last year, it said. South Korean instant noodles accounted for the biggest portion of marketshare gains among foreign brands, led by Samyang Foods, Ottogi and Nongshim. This indicated that foreign brands could establish strong positioning where trend-driven innovation and distinct brand imagery mattered more, the report said, as reported by the South China Morning Post.
