Sales of fast food giant KFC in China slumped an estimated 36% last month, according to parent Yum! Brands, as consumers shunned chicken due to the H7N9 bird flu outbreak. Same-store sales fell an estimated 29% in April. With more than 4,200 KFC outlets, China is a key market for Yum. The company recorded a 20% year-on-year fall in its China sales in the first quarter. KFC said it had taken measures to ensure food safety and win back trust from customers. Yum generates more than half its revenue in China and, as of 2011, had a 39% share of the country’s CNY86.9 billion fast-food industry, according to the most recent figures by research firm Euromonitor. Its nearest rival, McDonald’s, had 15.6%.

The annual growth in sales of consumer goods is expected to slow this year to 13% year-on-year, according to the 2013 China Consumer Market Development Report of the Chinese Academy of International Trade and Economic Cooperation. Consumption will mostly be supported by private consumers rather than by public funds. Fewer government stimulus policies will back consumption this year and the government measures to crack down on corruption will curb overspending and the sales of luxury goods. Consumption of food and beverage products is expected to remain strong, boosted by the policies to increase incomes for lower and medium-income earners. Sales of clothing products will also grow rapidly, with more online transactions and more exposure expected for Chinese brands. The report also found that high-end caterers have suffered the most from the government’s policies to crack down on waste and lavish spending. In Beijing and Shanghai, the revenue of high-end restaurants dropped 35% and 20% year-on-year, respectively, during the Spring Festival period. Sales of luxury liquor brands such as Wuliangye and Moutai have also been affected and demand for high-end liquor will be severely hit, but the report estimated that average liquor consumption will continue to grow. The fastest sales growth will be seen in the furniture and decoration materials sector, which is expected to increase 20%, supported by demand from second- and third-tier cities. The telecom and jewelry sectors, which grew at the fastest rate since 2011, have seen weaker sales since last year, despite a recent rebound in jewelry sales due to the lower prices of gold. The growth of auto and electronic appliances sales is also expected to remain sluggish this year. Urban consumption, which accounts for 80% of China’s overall consumption, is expected to grow at a slower pace than consumption by rural residents, the China Daily reports.

Bottled water company Nongfu Spring has decided to cease production of barreled water in Beijing permanently following a temporary suspension order imposed by the capital’s quality watchdog in a dispute over standards. The company said that nearly 100,000 residents in the city who had prepaid for deliveries would be given five 4-liter bottles of its water produced in other provinces instead of their usual 19-liter barrel. A 19-liter barrel costs CNY20 while five 4-liter bottles cost CNY35. Zhong Shanshan, the company’s CEO and Chairman, told a press conference in Beijing the company couldn’t “produce water under such circumstances.” Production of 19-liter barrels was suspended on April 20. Zhong said the company didn’t follow national standards but those of Zhejiang province, where the company is based, because they were stricter. “The standard of Zhejiang, DB33833, covers 57 criteria while the one of Fujian province covers 28, Hunan province 37, Chongqing 25, and Guangdong province 40,” Zhong told reporters. He said the ph of Nongfu Spring was controlled at between 6.8 and 7.8, which was also stricter than most standards in China. The Beijing plant made a profit of CNY4.2 million last year while this year it was estimated the figure would reach CNY5 million. The company has filed a lawsuit against the Beijing Times claiming CNY60 million compensation for publishing reports that had seriously damaged its reputation, the Shanghai Daily reports.

Chinese consumers are no longer swayed by the lure of foreign brands and would instead prefer to buy more brands that are made in China, according to the 2013 China customers’ loyalty study conducted by marketing research firm Epsilon. The number of local-brand supporters has increased to 43% from 31% in 2011. Led by the fashion industry, self-branded products from other sectors, such as cars and consumer electronics, are also growing in popularity. Four out of the top five smartphone vendors in the Chinese market are domestic brands, with Samsung Electronics the only international player on the list. There is also an increasing convergence between foreign and Chinese brands. The Epsilon survey found that 75% of the respondents in China are optimistic that their individual or family economic prospects will improve significantly over the next 10 years, 11 percentage points higher than in the 2011 survey.

Gold consumption in China, the world’s largest user after India, jumped 26% in the first three months of 2013 from a year ago amid strong bullion sales and rising jewelry demand. Total consumption reached 320.54 metric tons in the first quarter, the China Gold Association said. Purchases of gold bars surged 49% to 120.39 tons, while jewelry gained 16% to 178.59 tons. Gold output in China, the world’s largest producer, gained 11% in the same period to 89.91 tons. “Physical demand picked up significantly over the last couple of weeks,” said Zhang Bingnan, Secretary General of the China Gold Association. “Consumers and industrial users tend to see price drops as buying opportunities. Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives.” Zhang added that both gold sales and processing volumes spiked last month. India and China account for more than a third of global demand, according to the World Gold Council. China produced 403 tons of gold last year, but consumption was more than double that, at 832 tons. A Spokesman for Hong Kong jewelry chain Chow Tai Fook, the world’s largest jewelry retailer by market value, said traffic at its mainland stores jumped by 50% during the Labor Day holiday.