Core Insights - The Chinese fast-moving consumer goods (FMCG) market is stabilizing after a slow start in 2024, with total FMCG spending growing by 1.3% year-to-date (YTD Q3 2025), driven by a 3.8% increase in volume and a 2.4% decline in average selling price (ASP) [3][4]. Market Growth Dynamics - Growth in FMCG spending moderated from 2.7% in Q1 to 0.7% in Q2 and 0.4% in Q3, with volume being the main growth driver while deflation eased from a 3.4% drop in FY 2023-24 to a 2.4% drop in YTD Q3 2025 [4][5]. - Tier 3-5 cities contributed approximately 80% of total FMCG market expansion in 2025, with volumes increasing by 4-6% despite a 2-3% decline in prices, driven by urbanization and resilient local consumption [6][9]. Consumer Behavior and Channel Dynamics - Consumers in lower-tier markets are benefiting from lower living costs and improved access to modern trade, with online-to-offline (O2O) channels enhancing purchase frequency and category breadth [9]. - Small-format retail, including snack stores and community supermarkets, has emerged as a key growth engine, allowing brands to reach new consumers more effectively [9]. - Membership-based retailers, snack-collection chains, and discount formats have seen significant growth, with year-on-year increases of 40%, 51%, and 92% respectively, reflecting a consumer focus on value and convenience [12]. Category Performance - Packaged food led sales value growth at 3.4%, followed closely by home care at 3.3%. Personal care grew by 1.1%, while beverages declined by 1.1% due to price competition [10]. - Instant noodles (+5.9%) and nutrition supplements (+5.3%) gained traction, while juice (+19.2%) led the beverage category as consumers opted for healthier options. Conversely, milk (–6.4%) and yogurt (–5.8%) faced challenges due to oversupply [11]. Retailer Strategies and Trends - Private-label products accounted for 2% of FMCG sales in YTD Q3 2025, marking a 44% growth over the past two years, as retailers expand their private-label portfolios to capture consumer demand [16][17]. - The C.O.R.E. framework (Circumstances, Offerings, Routes, Execution) is introduced as a strategy for brands to achieve sustainable growth by understanding consumer demand triggers and tailoring offerings accordingly [17]. Conclusion - As consumption occasions diversify, brands that understand consumer behavior and adapt their strategies will be best positioned for success in the evolving FMCG landscape in China [18].