China’s consumer packaged goods (CPG) companies must deal with a situation that will undergo dramatic shifts over the next few years.

First, as the economy has re-balanced overall growth has slowed, dropping to just below 7% after multiple years of double-digit expansion. Physical channels are also projected to lose share despite continued increases; online, by contrast, is positioned for explosive gains (with a projected CAGR of 21% from 2014 to 2019). CPG organizations need to adjust to this ‘new normal’ as well as shifting channel dynamics.

e-Commerce will demand agility and new capabilities from China’s CPG companies. They must partner with retailers who are expanding their footprints and targeting new segments and occasions. CPG winners will also develop new, multi-channel strategies that encompass both online and offline platforms and integrate an omni-channel approach (including, in some cases, CPG companies that are going direct to consumers).

This report provides a detailed picture on how some of China’s most successful CPG companies are navigating today’s market. We highlight what differentiates them through a proprietary Customer and Channel Management (CCM) survey developed in collaboration with Nielsen that was conducted for the first time in China.

It covered five modules: Channel Strategy, Online Strategy, Route-to-Market, Pricing, as well as Trade and Promotions. Using Nielsen’s retail measurement of in-market performance the report also contrasts the practices of winners and non-winners (or “others”). Winners are companies that achieved higher sales growth than their categories, and outperformed others on one or more customer- or channel-management metrics.

Excelling in CCM is difficult. While 14 of the 23 companies surveyed ‘won’ in at least one module, only six ‘won’ in more than one, and only one company ‘won’ in all five.

About the authors

Felix Poh is a principal in McKinsey’s Shanghai office, Max Magni is a director in the New Jersey office and Rohit Razdan is a principal in the Singapore office.

Image Credit: Flickr/Nuala

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