Stacking Shelves, page-763

Goldman Sachs report China Consumer Conections, linked below. Will require CommSec registration to access. (I’m travelling and unable to make a copy available via Dropbox.)

https://research.commsec.com.au/LoadPDF?docKey=B64ENCeyJkayI6IjI3NDgtYTY3MTEyMDM3ZjVhNDgyZjhmODU3MWQ1OWI1Mjk2ZmUtMSIsImZpZCI6bnVsbCwiZHQiOm51bGx9

In Jan 2019, our Alibaba’s Tmall/Taobao brand tracker indicates a broad yoy growth slowdown vs. Nov-Dec 2018 levels, across most categories. We believe the slower growth could be due to: 1) Implementation of the E-commerce law since Jan 1, 2019 and hence the exit of daigou/smaller merchants on Taobao; and 2) earlier timing of Chinese New Year (CNY) in 2019 impacting a few days of products shipping in late Jan (many merchants stopped shipping from Jan 25-27).

Categories that are highly exposed to overseas brand consumption were more severely impacted in Jan 2019, such as infant formula (Taobao sales down 40% yoy) and vitamin (Taobao down 7% yoy). However, cosmetics and sports related categories maintained relatively solid growth (+20%-40% range), albeit at a slower pace vs. Nov-Dec levels.

Looking forward, February online monthly data will likely show sequential improvement given the shift in CNY timing. However, we would like to see the combined Jan-Feb sales trend to have a better indication of any slowdown.In this report, we also include more analysis on China’s IMF market. While the latest Nielsen data indicates solid offline sales growth in Nov-Dec 2018 (up 10% yoy) and acceleration across most major IMF brands, we remain conservative on the 2019 industry growth given lower new births and still intense competition.