According to NielsenIQ, “increasing food prices” is the top consumer concern in 11 out of 14 APAC markets, namely Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand, and Vietnam.
Notably, in the last five years, consumers in APAC are spending 13% more on FMCG products but are getting 2% less in volume.
“The Chinese government cited that retail goods growth is the lowest in 18 months during the recent announcement of the country’s Q2 GDP. Therefore, we need to be cognisant of this dynamic that consumers are going to be worried about increasing prices and will be more discerning about where they spend their money,” said Craig Houliston, Regional Executive Director at NielsenIQ.
He was speaking at Growth Asia Summit 2024 held in Singapore from July 16 to 18.
At the same time, health is also among the top concerns for APAC consumers, of which sleep has been pinpointed as a key area to be addressed.
“Last year, the National University of Singapore did a global report on sleep. It stated that Asians go to bed later and have lesser sleep than people anywhere else in the world, and that they have the worst quality of sleep, largely stemming from long working hours and everyday pressures.
“This leads to another concern — mental health. It’s ranked second in Asia overall, but it’s the number one concern in Malaysia and Thailand. In October 2023, the WHO published a report stating that one in seven people in South East Asia suffer from mental health issues, and that the treatment gap is very vast in this region.”
These consumer needs are creating “huge opportunities” for innovation, and Houliston expects to see it happening across all FMCG in the near future.
Striking a balance
While there are myriad opportunities, companies should be prepared for challenges, especially in the face of the cost-of-living crisis that is impacting consumers in Asia, who may be looking for more affordable ways to improve their health and well-being.
Nevertheless, Houliston emphasised that the sophistication of APAC consumers must not be underestimated.
“APAC consumers are very perceptive of how a product can benefit their life and justifying that value with its price. We often talk about value for money as if it’s synonymous with something being cheap. It’s not; it means justifying a price.
“If you look at what people are buying on platforms like TikTok, they are not searching brands but for benefits. If you can justify the price [of your product] by clearly articulating its benefits and how it may potentially save their money in the future, then it should take off.”
Despite inflation concerns, APAC consumers are said to be willing to pay a premium for convenience and nutritional benefits. These include beverages fortified with vitamins and better-for-you options.
For example, 60% of consumers in China and 58% of consumers in Malaysia shared that they are willing to pay a premium for snacks with healthy ingredients.
“Consumers in APAC are also open to trying innovations and are not restricted to a single brand. Fifty per cent of surveyed consumers in Thailand and 52% in Vietnam stated that they are willing to use generative AI to find new FMCG brands.
“E-commerce and social commerce are going to enable more trial of new products, although that would bring other issues, as a lot of sellers on TikTok are claiming attributes that are not necessarily proven.”
Unmet needs
Based on NielsenIQ’s survey, consumers in 11 out of 14 APAC markets said that “improving gut health” is an unmet need in existing beverage products.
An unmet need is defined as “highly important to a consumer but what is available in the market right now is not good enough to meet needs or not affordable enough”.
The three markets that did not identify improving gut health in beverages as an unmet need are Australia, New Zealand, and India.
In addition, the general unmet need in snacks and confectionery is “lower calories” while that of dairy products is “high protein”.
Significantly, an emerging trend and commonality across the beverage, snacks and confectionery categories, in terms of unmet needs, is linked to mood enhancement.
“This relates back to the biggest concern for consumers right now — increasing food prices, job insecurity, worries about the economy, and stress. People are looking for products that can make them feel better.
“It is not just about premiumising [through adding vitamins or healthy ingredients into products], but also making products accessible for all consumers. Not everyone can trade up to buy more expensive things. There needs to be more options in the market, and that’s where opportunities lie,” Houliston reiterated.
