ASIA INSIGHTS

A land of promise for global and local brands

Year on year, the APAC region contributes a higher percentage of the total Consumer Reach Points (CRPs) held by the world’s Top 50 most chosen FMCG brands – a figure that is now nearing 50%. This is indicative of the immense possibilities Asia holds for brands seeking to expand their footprint.

Many of the FMCG brands that are present in our region have had a good year, with the major global names increasing their CRPs by 2.4%.

This achievement is all the more impressive when placed in the context of the pressures that all shoppers around the world are facing, including the impact of ongoing inflation.

Paying more for less

Asia’s FMCG industry has ‘grown’ significantly over the last year, if we look at it in terms of dollars spent, with an overall value increase of 3.1%. However, this has been purely driven by price rises: buyers are spending 3.7% on their groceries every trip than they did last year.

For the first time ever, the average household spend per year on consumer brands has reached $866USD, a 3.1% increase from $849USD the previous year. This figure is important, because it represents the pool of money brands and retailers have to target to win their share of the shopper’s FMCG budget.

As buyers become more cost-cautious due to the impact of inflation – at the same time as their mobility is restored following the pandemic – they are adapting by changing their behaviours and priorities. Let's see what that looks like.

More brand choices indicate resilience

Whereas in other parts of the world shoppers are making fewer brand choices overall in an effort to control their grocery spend, consumers in APAC are making 4% more than they were in 2021. Growth is being driven predominantly by South Asia, in particular India; the scenario is more challenging elsewhere.

Fading Loyalty

Shoppers are also expanding their brand repertoire – purchasing on average 45.3 brands per year, 1.8% more than in 2021. Globally, this figure is 61.3. As the number of brands in the basket increases, it gets more difficult to hold on to consumers’ loyalty, and everyone has to fight harder to be chosen.

Shopping frequency has also declined by 0.5%, meaning that brands have fewer opportunities to secure their spot in the Asian consumer’s basket.

Traditional trade retains its importance

Shoppers are moving back to traditional trade as COVID restrictions on mobility ease, attracted by the proximity and accessibility of these smaller neighbourhood stores. As a result, this remains the most important channel in APAC, representing 28.1% of total FMCG value, with 5.3% growth in the last year.

E-commerce growth tapers off

Due to mobility constraints during the pandemic, e-commerce spending accelerated, but as COVID restrictions eased this growth began to slow. Value in online channels grew 5.3% in 2022, compared to 16.2% in 2021, and today represents 19.2% of total spending. This means it is important for brands to rethink their channel strategy in order to reach more shoppers.

Homegrown heavyweights

Local brands today account for 73.2% of FMCG spend in Asia; significantly higher than the global proportion, which stands at 67.4%. Homegrown brands have increased their share of value by 4.7% since 2020, outgrowing global brands, which is an extraordinary achievement. They are particularly dominant in North Asia, where they contribute 80.1% of total FMCG value.

Looking at retailers’ private label brands, while globally they have gained a 21.6% share of FMCG spend, in Asia their share is only 1.4%. The challenge for global brands, therefore, is to compete with the local brands that dominate the markets.

Localisation is key for global brands to win, especially in North Asia. This means developing an in-depth and detailed understanding of the nuances in each market – a challenge in such a diverse region.

Smaller brands gain ground

Small brands – those with less than 10% penetration in any given market – are outperforming their larger rivals. More than half (51%) are growing, compared with 46% of all other brands.

Conquering categories

Non-food categories have traditionally been the stronghold of global brands. However, their prevalence is declining year on year, as they lose share of spend to local brands. These are growing the most where traditionally they have had less of a foothold: food, dairy and home care. Beverages is the only territory where global brands have managed to sustain their leadership.

Understanding specific local preferences and needs is becoming more important for non-food brands in Asia – this is, of course, what gives local brands their advantage.

A zero-sum game

Globally, half of the world’s FMCG brands are growing in value, and half are declining. In the APAC region the story is slightly different, with just 41% growing and 59% declining.

So how can brands make sure they fall on the ‘growing’ side?

The power of penetration

Year after year, Brand Footprint data proves that the only way to grow is through finding more shoppers – and this is the pathway to success in both good times and bad. A massive 92% of the brands that grew their CRPs in Asia in 2022 did so by improving their penetration.

There has been a significant increase in the number of brands that have grown their CRPs through improving penetration alone, as opposed to through frequency. This is especially true for those within the small and medium sized cohort; they have the room to grow and are grasping the opportunity with both hands. The importance of penetration is apparent among bigger brands, too: they are likely to increase their reach through a combination of penetration and frequency, as their shopper bases are highly loyal.

Benchmark for success

As a brand owner, increasing your shopper base should be the primary goal, year after year. Do this successfully, and frequency and loyalty will follow as your brand grows.