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Packaged Food in Asia at a Glance

November 28th, 2015

The world may be seeing the strongest growth from the dairy and snack categories in 2015, with Asian countries like Vietnam showing the biggest jump from 2014. But how is the race within Asia? Which companies are leading and what trends are shaping packaged food in 2015?

Key trends: Impulse and indulgence, and convenience

The impulse and indulgence categories are engines for growth throughout Asia, especially in developing markets. Sweet and savoury snacks is posting whopping double-digit growth rates in the Philippines, India and Thailand, while ice cream and frozen desserts is fastest growing in both Singapore and Indonesia.

Top Three Growth Categories for Select Asian Countries, 2015

Top 3 growth categories for select asian countries 2015

Source: Euromonitor International

For these fast urbanising countries with swelling disposable incomes and an influx of multinational companies, consumers are more open to snacking and becoming more interested in Western-style instead of traditional snacks. For example, Mondelez (M) Sales Sdn Bhd launched Walla Walla in Malaysia in 2015, an extruded snack marketed with the slogan “inspired by Twisties” – leveraging on the success of its sister brand was a sure-fire way to gain trust from consumers who typically exercised precaution before spending. Additionally, the Philippines’ number one player Universal Robina Corp and global snacks giant Calbee Inc engaged in a joint venture in February 2015, and subsequently launched their product line Jack ‘n’ Jill Calbee.

Another trend fast spreading through Asia and boosting value growth in categories like ready meals and processed food is convenience. A much talked-about trend globally, its prevalence rose in countries seeing significant urbanisation and innovation. South Korea, Taiwan, Thailand and Vietnam are seeing ready meals leading packaged food value growth rates, while processed food is also among the top three fastest-growing categories for these three countries. Ready meals’ performance is particularly bolstered by the rise of convenience stores in Thailand, along with factors like the fast-paced lifestyle and availability of ready-to-eat products.

India, Indonesia and Vietnam are consistently strong performers in Asia

India, Indonesia and Vietnam are booming markets in Asia. They are key geographies in Asia that stand out among the others as consistently topping growth figures throughout individual categories in packaged food in 2015.

These three countries have some things in common – for example, the sheer size of their developing population and better performing economies compared to other Asian countries in 2015. Hence, although each of them may have been facing their own complexities in 2015, they still performed better than the rest of the region in comparison. For example, Thailand faced widespread droughts that restricted the production of commodities like rice and other agricultural goods, while Malaysia experienced rising prices and shrinking purchasing power due to the severe strain on its economy, particularly after the implementation of the Goods and Services Tax (GST) in April 2015. Meanwhile, large multinational companies moved to neighbouring countries to reduce costs. For example, Nestlé opened a new factory in southern Vietnam in late 2014 for the production of its dairy products.

The top five companies have cemented their positions, but competition heats up below them

Despite the volatile economic factors, the top five brand owners in Asia remain the same from 2014. Within the top 10, however, the competition is becoming more aggressive.

Firstly, Mondelez International Inc jumped two spots to sixth, pushing down Meiji and Lotte. Mondelez’s strength was in biscuits and snack bars, and confectionery – two popular categories in 2015, in line with the year’s key trends. Mondelez retained its leadership in Singapore and jumped spots in Vietnam and India, making up for its fall in Malaysia, a market where snacking was secondary in 2015 due to the volatile economy and rising prices.

Secondly, Bright Food (Group) Co Ltd entered the top 10, leapfrogging from 14th place, swapping with Yamazaki Baking from Japan. Bright Food’s performance in China, which saw the company climbing the rankings in almost every category it operated in, was instrumental in its rise in Asia.

Asia Pacific: Packaged Food Company Shares (Global – Historical Owner) % breakdown

Company 2014 rank 2015 rank 2015 shares %
Nestlé SA 1 1 3
Inner Mongolia Yili Industrial Group Co Ltd 2 2 2.4
China Mengniu Dairy Co Ltd 3 3 2.4
Wilmar International Ltd 4 4 1.3
Ting Hsin International Group 5 5 1.2
Mondelez International Inc 8 6 1
Meiji Holdings Co Ltd 6 7 1
Lotte Group 7 8 1
Bright Food (Group) Co Ltd 14 9 0.9
Want Want Holdings Ltd 10 10 0.8

Source: Euromonitor International

What’s next? Convenience trends set to continue, while health gains importance in penetrating key markets

Looking at the projected development of Asian countries over the next five years, as well as the increasing purchasing power of millennials, convenience trends are likely to remain important, especially in impulse/indulgence categories like confectionery and sweet and savoury snacks. Packaging growth rates are likely to be faster at both ends of the size band to bolster this growth, while the smallest size band of 0-50g is expected to continue to be biggest due to mobility and portioning, larger size bands will also win over consumers as they are marketed as share/family packs.

With rising education levels and more consumers thoroughly reading nutrition labels, health consciousness and nutrition tracking will likely be more significant in Asia over the forecast period, catching up with Western markets, where health and wellness is already booming. Multinational companies moving into this region are expected to leverage on health trends by bringing in customised products that address health concerns. For example, the high prevalence of anaemia in Vietnam was addressed by local player Bien Hoa Confectionery Corp (Bibica)’s introduction of packaged cakes fortified with zinc in 2015. Studying what each country needs is important for products to be better received. In 2014, Malaysia’s average calories per person consumed per day was almost nine times that of an Indian, while an Indonesian’s average consumption of carbohydrates was almost twice that of a person in China, despite similar calorie consumption. What can companies with large research and development departments offer in packaged food to cater to these complex nutrition patterns?

With governments struggling to quash further growth of disease and health problems, multinationals could face more regulations within packaged food in certain markets. For example, the Department of Education in the Philippines banned the sale of junk food in all school canteens located in Quezon City and several other localities in July 2015. It is therefore imperative that companies need to watch what nutrients are offered in their products for long-term benefit. It is expected that companies will weave both packaging and nutrition improvements into their packaged food innovations in the forecast period as a way to enter the volatile Asian markets.

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Emil Fazira

Emil Fazira is an Analyst from the Food and Nutrition team at Euromonitor International. She covers research for four emerging markets in Asia Pacific, and hails from Nanyang Technological University with a degree in Bioengineering. She enjoys doing research and intends to continually learn and understand FMCG, especially consumer behaviours.

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