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By: Feng Zhang

Two years on from the haze incident in 2013, South East Asian residents are once again experiencing thick haze in the atmosphere from forest fires caused by illegal slash and burn agricultural activities and catalysed by dry weather in Indonesia. As a result, sales of air purifiers are surging in Malaysia, Singapore, Indonesia, and Thailand, which are most seriously affected by the haze. Although haze has helped manufacturers and distributors clear stock in less than two months, they are struggling to supply the current demand, since they cannot predict haze and carrying stock in non-haze periods comes at a price. How to solve the dilemma?

Pedestrians Wearing Masks in Singapore amid the Haze in 2015

Pedestrians-Wearing-Masks-in-Singapore-amid-the-Haze-in-2015

Source: Euromonitor International

Drivers for air purifier sales

Before answering this question, we need to examine what factors are driving retails sales of air purifiers in South East Asia. There are mainly two factors stated by leading manufacturers: haze factor and non-haze health factor.

Between the two, most manufacturers and distributors are in agreement that the haze factor is the more significant. During the haze, all kinds of consumers buy air purifiers, and customer segmentation is near impossible. Because many South East Asian consumers are price sensitive, budget (<US$150) and mid-price (US$150-600) air purifiers usually sell out first, followed by premium models (>US$600), during haze periods. Companies cannot predict haze and therefore do not stock enough units to cope with demand when haze is at its worst, because they usually need place orders two to three months in advance. Most brands are selling well, because supply is much lower than demand during haze periods.

Real-time Update of PSI Reading in Singapore Hypermarket to Further Promote Air Purifiers

Haze-Alert Fair-price

Source: Euromonitor International

The other factor is non-haze healthcare concerns. Consumers with asthma or allergies to odours, airborne viruses, dust or pollen purchase air purifiers to cope with those threats. As children, the elderly and long-term sick people are more prone to non-haze health issues, they constitute the main consumer segments for relatively stable but weak retail sales of air purifiers during non-haze periods. During such times, market supply is higher than demand, so competition is fairer, and based on function, quality, brand, after-sales service, and so on.

Japanese manufacturers have been expanding their territories

With long history and deep rooted reputations in South East Asia, Japanese companies have conquered more than half of the South East Asian market since 2008. In 2015, they hold 63% of retail market volume share, based on Euromonitor International’s latest consumer appliances market research. Among them, Sharp Corp has been champion in retail volume sales in South East Asia from 2006 to 2015. It has been actively investing in regional development and marketing for air purifiers. In addition to its established brand, Sharp Corp’s air purifiers are popular among South East Asian consumers because they combine several leading filtering technologies such as plasmacluster ionizer, HEPA filter and haze software control mode, to improve the air purification performance. With the continuous efforts in product development and marketing, Sharp’s volume share in South East Asia has increased from 32% in 2006 to 43% in 2015.

Company Retail Volume Share of Air Purifier in South East Asia in 2015

Company-Retail-Volume-Share-of-Air-Purifier-in-South-East-Asia-in-2015

Source: Euromonitor International

There is still room to grow by correcting consumers’ misconceptions

Even though most companies are doing well during haze periods, manufacturers and distributors should do more to protect consumers’ health by correcting their misconceptions. Some consumers still believe that staying indoors with all windows closed and air conditioners switched on will keep the air clean. In fact, those two actions do not stop haze affecting their health. Firstly, closing all windows without any air circulation is bad for ventilation and dangerous for families that cook with gas. Secondly, the air space between the fibres of normal dust filters in air conditioners is too big to filter haze particles. It is recommended that manufacturers and distributors clearly explain to consumers the benefits of air purifiers in order to promote sales. Since it is highly uncomfortable to wear masks all day long, it is more convenient for consumers to use air purifiers to guard their families against haze.

Product development is the key to differentiate among competitors

Education is crucial for consumers to be aware of the importance of air purifiers, while product development is one key area in which manufacturers are competing. One of the hottest trends is multifunctional air purifiers. Some examples already available on the market are air purifiers combined with built-in ionizers, humidifiers, and so on. Among them, an air purifier with a built-in ionizer which can remove both odours and viruses, is a popular dual-function format. Air purifiers with built-in humidifiers are interesting, because some consumers with air conditioners need humidifiers to prevent their skin from getting too dry.

One interesting development is Sharp Corp collaborating with Malaysia Institute for Medical Research to launch an air purifier claimed to be the world’s first air purifier with a built-in mosquito catcher, in October 2015. Since South East Asia also has many hot spots for dengue fever which is spread by mosquitos, this product has great market potential.

World’s First Air Purifier with Built-in Mosquito Catcher Claimed by Sharp Corp

Sharp-Air-Purifier-with-Mosquito-Catcher

Source: Euromonitor International

In contrast to multifunction, getting portable is a niche trend for product development. Although consumers are protected by air purifiers inside buildings, they are still vulnerable when they leave. How to protect them on the move is a challenging but interesting direction to pursue. Since the confined car environment is relatively easy to start with, Koninklijke Philips NV and Panasonic Corp have been developing air purifiers for automobiles. Koninklijke Philips NV chose a cost-effective way. Its automotive air purifiers utilise the existing residential air purifier filter technologies but reduce the size of the components to fit the air purifier into the automotive environment. In contrast, the car air purifiers of Panasonic Corp are based on an innovative acid water particle technology to reduce the size of air purifiers. Due to the limitations of current battery capacity, both examples shown below are recharged by electricity.

Automotive Air Purifiers produced by Koninklijke Philips NV and Panasonic Corp

Automotive-Aip-Purifiers

Source: Euromonitor International from company research

The third direction for product development is towards smart air purifiers. Xiaomi Inc launched a smart air purifier in late 2014 in China but is yet to roll it out across South East Asia. With this smart air purifier, consumers can control the fan speed of the purifier and monitor the air quality remotely via their smartphone. It is one of the smart appliances products for its connected home development strategy. So when will be the best time for Xiaomi Inc to launch smart air purifiers in South East Asia?

As stated in previous articles, the success of smart appliances depends on a few factors. One of them is the pricing strategy. Since many South East Asian consumers are price sensitive, smart appliances with relatively expensive pricing will be less popular. Moreover, the weakening South East Asian currencies (especially Malaysian ringgit, Indonesian rupiah, Philippines peso, Thailand baht, and Vietnam dong) against the US dollar in 2015 reduce consumer purchasing power. More importantly, manufacturers usually choose their headquarter country or developed markets, such as the US or Europe, to launch their latest products. South East Asia is neither the base for headquarters of manufacturers nor a developed market as a whole. In contrast, East Asia is the home of several leading manufacturers, such as Samsung Corp, LG Corp, Haier Group, Midea Group Co Ltd, Panasonic Corp etc, which have been competing intensively on launching smart appliances. Based on the above reasoning, the South East Asia market is relatively slower than the East Asian market in adopting smart appliances. With the forecast increase in annual disposable income, the growing population of middle class households and the influence from East Asia, smart appliances will gradually take off in South East Asia during 2015 to 2020. Since air purifiers are not yet essential appliances, it is recommended that manufacturers launch smart air purifiers together with other appliances with the most potential, when the smart appliances market warms up in South East Asia.

Smart Air Purifier Launched by Xiaomi Inc in Late-2014 in China

Xiaomi-Mi-Air-Purifier

Source: Euromonitor International from company research

Multifunction is the way to reduce sales’ dependence on haze

Illegal slash and burn practices occur in Indonesia almost every year. Depending on the wind direction, haze also affects Indonesia from time to time. The most serious years were 1997, 2005, 2006, 2009, 2013 and 2015.  Although the governments of Indonesia, Singapore and Malaysia have been taking collaborative fire fighting action and implementing legal acts to prevent haze, it is still difficult for Indonesia to control the situation, considering complex business interests from different parties, a limited number of professionals and resources, difficulties in monitoring illegal slash and burn activities, and dry weather. Since the haze factor cannot be completely eliminated, it is anticipated that retail sales of air purifiers in South East Asia will still rely on haze from 2015 to 2020.

Product development should be aligned with business strategies to maintain sales of air purifiers. Smart air purifiers will be the ultimate long-term development direction, but it is considered that smart air purifiers relying on “smart” as the key selling point alone will not help with the fluctuating sales due to haze. Euromonitor International also thinks that, although portable air purifiers is a niche trend that is worth pursuing for long-term development, the limited size restricts its potential to be developed towards being multifunctional. Compared with consumers’ spiking demand for air purifiers due to highly unpredictable haze, the non-haze demand for appliances that address humidification, catching mosquitos etc are relatively stable. With multifunctional air purifiers, consumers can utilise the non-haze function during non-haze periods, with the peace of mind that the haze function is there should they need it.

However, the price point of the multifunctional air purifiers cannot be higher than the sum of the individual products. Although multifunctional air purifiers carry the benefits of saving space to consumers, overpriced products will not be popular among price-sensitive consumers. With proper pricing, Euromonitor International believes that the strategy of multifunctional air purifiers leveraging on consumer’s non-haze needs will be the best for manufacturers and distributors to solve the sales dilemma.

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