Goodbye mass-marketing: The changing FMCG landscape

For household brand names to grow in Asia-Pacific, marketers need to a take a targeted approach.

Companies seeking growth in fast-moving consumer goods (FMCG) across Asia-Pacific must look at the sector differently over the next five years and target pockets of opportunity rather than broad market, category or channel bets. When you break down the data and indicators, one thing becomes very apparent: the consumer landscape is becoming increasingly fragmented and mass-market thinking is a thing of the past.

We are no longer seeing ‘across the board’ growth in many markets with some categories comprising both growth and decline reflecting changing consumption patterns.

Thinking of the various factors that may impact the way we can approach a shopper or consumer across Asia-Pacific, you see a growing list of considerations with scales so broad that it may seem impossible to target groups with similarities across every aspect. We have the very rich and the very poor; urban versus rural; ranges in education; access to technology; demographics; and a range of differing attitudes and values that can differentiate interactions at a product, brand and retail level.

The combinations and permutations of considerations means we need to be more focused on anticipating the consumption drivers and be agile enough to jump on pockets of growth and readjust strategies that are not paying dividends. Our brands, marketing and sales need to be focused and in tune with consumer needs and drivers more than ever.

There are however a number of key themes that keep appearing in growth stories across various categories, countries and channels throughout FMCG in Asia-Pacific.

Premium and prestige

Continued economic growth coupled with infrastructure development, urbanisation and growing prosperity has seen hundreds of millions of consumers across Asia-Pacific seek to enjoy and express their improved financial positions. Trading up to new products, brands and categories has driven premium growth in FMCG and continues to create new opportunities. A recent study on premiumisation across Asia found that premium products (products which command prices up to 20 percent higher than the average category price) account for 16 percent of overall grocery sales and are growing by 21 percent — double the fastest growth of other price tiers.

In China, the premium segment had reached 27 percent of category sales. In India, the premium segment contributes to about one-fifth of the total FMCG market, but the super-premium segment accounts for 8 percent of the total (value share), and is growing 1.5 times as fast as the premium sector.

Health and wellness

Another recent Nielsen study highlighted that sales of healthy categories in APAC was growing by 15 percent and this trend was more prevalent in Asia than it is globally. After a decade of growing obesity in the region, there has been a noticeable sentiment shift with 82 percent of Asian consumers claiming they are actively making dietary choices to help prevent certain health conditions (such as obesity, diabetes, high cholesterol, and hypertension).

These preferences underscore a push for clearer labelling and ingredients sections on products and hints at how brands may be able to align with changing expectations. When we consider the increasing percentage of ‘aged’ consumers in countries like Japan, South Korea, and Australia (expected to be 30.7 percent, 19.4 percent and 18.5 percent respectively by 2025) there are expectations that age-related sickness and challenges will create further opportunities in the health area.

Ecommerce and tech platforms

Nielsen’s Connected Commerce report in January has highlighted just how influential ecommerce and online retailing in consumer packaged goods and FMCG is in Asia-Pacific. The survey found 22 percent of consumers in the region said they currently bought online regularly, compared to a global average of just 14 percent.

This reflects the willingness to adopt technology of a population that is comparatively younger and increasingly time poor. As technology infrastructure spreads and improves throughout Asia, ecommerce will not develop consistently. But certain categories such as baby care and beauty tend to enjoy faster adoption rates.

In China, the world’s largest ecommerce market, online retail sales accounted for 12.9 percent of the total retail purchases in 2015; in South Korea, it was 11.6 percent but with many markets across Asia-Pacific in their ecommerce infancy these leading markets show us not only how quickly the landscape could change but the stages involved.

Convenience 

Across Asia-Pacific we have seen near universal growth in convenience retail formats over the last four years. Again driven by urbanisation and increasingly busy lifestyles, the convenience share of trade between 2013 and 2016 has moved from 1.4 percent to 3.6 percent in China, from 21.7 percent to 27 percent in Thailand and from 24.3 percent to 27.7 percent in South Korea over the same period. 

We’re also seeing the growing prominence of delivery services such as Uber Eats launching in India and Singapore and a plethora of Chinese delivery firms, including Baidu Waimai, a subsidiary of search engine giant Baidu. It seems intuitive that technology-driven services will grow with retailing to meet this growing demand for convenience.

Social responsibility and sustainability

A recent report revealed that more than three-quarters of consumers in Asia-Pacific (76 percent) are prepared to pay more for products and services from companies committed to positive social and environmental impact, compared to 64 percent in 2014 and 58 percent in 2013.

When compared with the global average of 66 percent, it is clear that Asian consumers’ increasing concern around corporate responsibility will drive favourability for socially aware brands. When considered in conjunction with environmental commitments and emissions programs from countries in Asia-Pacific, there is a definite logic that consumers will be more aware and active in supporting socially responsible brands.

It is important to note that even among these growth drivers highlighted above there are country and even domestic nuances that are big enough to account for pockets of growth worth pursuing. It is this non-uniform evolution of consumers, markets and needs that will require companies and brands to be more tuned-in to change and more agile to keep focused on these fast-moving pockets of growth and demand.

Regan Leggett is executive director of thought leadership and foresight at Nielsen.