REGIONAL REVELATIONS
FMCG brandscapes of Asia and Latin America
The FMCG sector has faced complex global challenges in recent years, with regional nuances often being as influential as wider economic trends. To succeed in this environment, brands and retailers needed to display extraordinary agility. This agility extended beyond merely reacting to market changes. It involved a deep understanding—and at times, anticipation—of regional sentiments, cultural inclinations, and socio-economic patterns that swayed consumers' purchasing decisions. Each decision, whether related to product design or marketing strategy, had to strike a balance between global applicability and regional specificity.
The FMCG sectors in Asia and Latin America (Latam) are as vibrant and diverse as the continents themselves. Each region presents unique opportunities and challenges that reflect the distinct economic, cultural, and social fabric of these vast and varied markets.
Asia's FMCG market continues to blossom, led by powerhouse China. The surge in online FMCG sales during the Covid pandemic has eased, but online sales still account for a healthy 19.2% of all spending, underscoring the region's embrace of digital commerce. Despite this online stronghold, we expect some levels of channel saturation in mature markets and the ever-present need for innovation to be pervading trends.
In contrast, Latin America's FMCG landscape is grappling with the weight of economic woes. After years of consistent growth, the region saw a decline of 2.4% in total CRPs in 2022. The sting of inflation, particularly harsh in Latam, has led to a significant loss in purchasing power over two years. This economic turbulence has reshaped consumer behaviour, manifesting in more choices but less loyalty.
Asian consumers are increasingly health-conscious, favouring local brands that align with their values. The pursuit of value and quality is driving shopping behaviour, with promotions acting as a significant growth lever. There's also a shift towards more frequent shopping, particularly online.
In Latin America, the picture is different. Consumers made 1.3 billion fewer choices in 2022, though paradoxically, they are visiting more channels. A focus on essential purchases and the rising cost of FMCG, driven by high inflation across the region, has significantly impacted shopping patterns.
In Asia, top brands are aligning themselves with emerging consumer preferences, focusing on health, convenience, and value. Brands like Colgate and Master Kong are thriving, while local brands are challenging global players by tailoring their approaches to local tastes.
Latin America's brands are navigating a complex landscape, with penetration emerging as a key growth strategy. Success stories include Downy, Pepsi, and Oreo, which have excelled through targeted marketing, attracting new audiences, and strategic pricing. Local brands, contributing 62% of total Consumer Reach Points, further illustrate the importance of understanding local dynamics. As a reminder, the Consumer Reach Point of each brand is calculated by multiplying three numbers: Penetration, Population, and Consumer Choice.
The measurement is then weighted by the actual population to calculate the brand’s reach. As well as a clear picture of the size of its global footprint, this reveals where the brand has opportunities to grow its penetration and its frequency.
E-commerce is a pivotal force in Asia, with China's online FMCG market witnessing double-digit growth. The integration of online-to-offline (O2O) experiences is vital, creating seamless shopping experiences for consumers.
In Latin America, the omnichannel trend is gaining momentum, with an 18% increase in the number of channels visited by shoppers. While e-commerce attracted three million new shoppers in 2022, the value of physical stores in comparison and price evaluation remains significant.
The FMCG landscapes in Asia and Latin America tell a tale of contrast and complexity. Asia's growth, driven by e-commerce and health-conscious consumers, contrasts with Latin America's economic challenges and focus on value and penetration.
Global brands must recognise the nuanced characteristics of each market to navigate these two vibrant regions successfully. Embracing e-commerce in Asia and focusing on value in Latin America are just the starting points.
Latin America, with omnichannel experiences becoming more refined.
Europe, adapting to inflation and new consumer behaviours.
Asia, with other markets emulating China's rapid e-commerce growth.
