NielsenIQ: CNY celebrations will downsize but in-home consumption will drive FMCG Sales

Chinese New Year is approaching and FMCG sales normally benefit before and during the festive season. Although the pandemic is still impacting the worldwide economy, it is expected that in-home consumption will drive FMCG sales this year across Asia, according to Nielsen.

The scale of this year's celebration across Asian markets is likely to be reduced given the challenges of COVID-19 such as social distancing measures, restricted commercial operations and border closures. However, trends across different markets will vary. 

“We believe that these time-tested Chinese New Year traditions will continue during the pandemic, but they will take different forms and be smaller in scale," said Didem Sekerel Erdogan, senior vice president of intelligent analytics for Asia Pacific and Eastern Europe, Middle East and Africa at NielsenIQ.

"We expect a rise in home-cooking, for example, as families avoid crowded restaurants for the reunion dinner. Smaller-sized social gatherings may also impact the sale of alcoholic beverages with consumers choosing quality over quantity, thereby favouring premium brands," she added.

NielsenIQ has examined different markets in the region. In Hong Kong, the city's FMCG market reaches its peak in a year during the Chinese New Year period. Data from the company has shown that FMCG sales increased by up to 27% compared to non-festive periods. In the weeks leading up to the festival, there is typically a rise in sales of household cleaning products, food categories, hair colourants and sharing or gifting confectionery. 

In previous years, FMCG sales during this time was also boosted by visitors from China and other parts of Asia. This year, however, due to the mandatory quarantine requirement for visitors, FMCG sales will likely be impacted and will be largely driven by local consumption.

"Consumers practice caution when it comes to gatherings and physical distancing measures are also in place at restaurants and other public places. As such, we anticipate that celebrations this year will centre around the home, with an increase in in-home consumption and home-cooking occasions,” commented Andrea Borelli, commercial leader of retail intelligence, Hong Kong and Macau, NielsenIQ.

Borelli advised retailers and manufacturers to realign their sales planning for the festive season, focusing their sales strategies on local consumables by specific store clusters, and ensuring that popular ingredients, food items and beverages are optimally promoted during this period to capture shoppers’ share of wallet.

In the Chinese market, during the CNY period, FMCG sales value is typically 33% higher than during non-festive periods, while promotions increase by 17%, according to Nielsen's figure. 

Sales growth is driven by food categories such as chocolates, biscuits and salty snacks, all popular items for gifting. It is expected that festive FMCG sales in China will rebound from the 2020 dip caused by the pandemic's outbreak during the celebrations last year.

“We expect that consumers will spend more time at home this Chinese New Year, and we anticipate a surge in home cooking, home food delivery as well as e-commerce. Retailers and manufacturers should therefore cater to consumers who want to have fun at home by offering value-for-money promotions through bundles or gift packs,” said Eva Liu, senior director of Big Data for China at NielsenIQ. 

Moreover, retailers and manufactures are advised to be aware of promotional wastage as brands may lose money due to ineffective promotions.

“There is no one-size-fits-all approach when it comes to promotions, as consumers respond differently to deals across different categories," said Sekerel Erdogan.

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