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Healthy food and drink is in demand globally, driven by the many individuals who are becoming more aware of their nutrition intake. Such products – particularly those with a functional positioning – are often more expensive than conventional packaged food and beverages. Despite this, global sales were up 3% over 2012-2013 in constant value terms, to reach an impressive US$749.6 billion in 2013, equivalent to 34% of total beverage and packaged food sales globally.
However, it is the emerging markets that are the global engine of growth in health and wellness (HW). Euromonitor International’s HW data shows that in 2013 of the top 10 fastest-growing countries in HW packaged food and HW beverages five and four of them were in Asia Pacific, respectively. While China (inclusive of Hong Kong) led, partly driven by the incredible demand for fortified/functional milk formula, opportunities do not only lie here. Indonesia, Vietnam, Thailand and India are significant growth markets – albeit from a smaller base – with increasing disposable income levels and rising availability of healthier food and drink. In addition, rising health concerns related to dietary intake are also helping to fuel this demand for health and wellness.
|Top 10 Growth Markets for HW Packaged Food |
(% Y-on-Y Growth)
|Top 10 Growth Markets for HW Beverages |
(% Y-on-Y Growth)
|Hong Kong, China||China|
|Romania||United Arab Emirates|
Source: Euromonitor International
Developing countries are increasingly facing the same challenges as developed ones where non-communicable diseases like diabetes and obesity-related conditions are concerned. According to Euromonitor International’s Countries & Consumers data, in Vietnam, for example, which features as the third-ranked growth market in HW beverages, obesity in the population aged 15+ rocketed by 92% over the 2008-2013 period, while in China and India it rose by 57% and 37%, respectively.
Owing to a multitude of factors resulting from rapid social and economic change, extremes of malnutrition and obesity exist side by side in the emerging markets of Asia Pacific. This puts a firm focus on affordable maternal and child nutrition, as well as weight management and diabetes products. This is hence driving the demand not just for HW products but more specifically for fortified and functional (FF) food and drink.
It is evident that the demand for HW is capturing ever more consumers in Asia Pacific. Over the period of 2002-2018, the region will rise from having 20% of global HW sales to an expected 31%. A key driver of this growth is, of course, milk formula. As consumers in Asia Pacific – and more specifically China – become more educated about nutritional issues and disposable income levels rise, demand for more functional milk formula, with additional omega fatty acids, probiotics, prebiotics and a multitude of vitamins and minerals, is growing. In 2013 alone, annual growth reached 18% in China. However, while milk formula has a part to play in the strong growth, there is increasingly demand for health benefits from everyday food and drink products.
Source: Euromonitor International
In Asia in 2013 annual growth reached 10%, with the market being predominantly driven by fortified/functional (FF) dairy brands. Wahaha, Yakult, Wang Zai and Yili rank as the top four in Asia Pacific in 2013. While these brands resonate with different consumer groups, a common feature is their ability to promote the products’ additional digestive health benefits. In fact, digestive health is the third largest positioning in Asia Pacific, behind general wellbeing and weight management. There is a growing awareness of probiotics and association of digestive health with retaining a slim figure and, hence, weight management. In dairy products, it is not just the well-known vitamins and minerals that are attracting consumer attention, but inulin, magnesium and manganese are starting to appear in ever more products.
Asian consumers are looking beyond food and drink to supplements to boost their wellbeing. The three highest-selling single nutrient supplements are calcium, ginseng and protein and the region will post the second highest amount of new sales of US$6.9 billion over 2013-2018, behind only North America. Interestingly, despite Asia having the largest value sales of any region, it has the third lowest per capita spend, indicating that vitamins and dietary supplements are relatively affordable to a large number of the population.
In tune with the rise in digestive health, while those linked to traditional medicine continue to perform well, so too did probiotic supplements. The region posted a constant value CAGR of just 2% over 2008-2013. While, Japan is the most established market in the region, in South Korea and China, demand is growing fast with a CAGR in constant value terms of 13% and 10%, respectively, recorded over the same time period.
It is evident that outside of ingredients linked to traditional medicine practices, the functional food market is capturing the imagination of ever more consumers in Asia Pacific. Behind digestive health ranks the energy boosting positioning, with sales of US$7.8 billion in 2013. Led by TC Pharmaceutical Industry Co Ltd’s Red Bull in China and Otsuka Holdings Co Ltd’s Oronamin in Japan, the market is continuing to evolve with the launch of snack bars such as Soy Joy and more natural alternatives. While caffeine remains important to the energy boosting market, the B vitamins, ginseng, taurine and royal jelly, among many others are also increasingly gaining presence in products, particularly soft drinks. Linked quite closely to energy boosting is the demand for products that boost cognitive performance.
As research into brain health and memory gains tract, this positioning has the potential to be successful in Asia. However, in order to see success manufacturers must build consumer trust around the efficacy of the product and use well-established ingredients such as omega fatty acids, vitamin E and gingko biloba. In fact, China is gearing up to be an important market for omega fatty acid supplements, particularly targeting the ageing population. Guidelines for intake were recently introduced as it is estimated that only a quarter of the population ingest enough omega fatty acids. These guidelines recommend 250-2,000mg per day for adults.
Despite rapidly increasing sales of HW products, the Asia Pacific market is far from saturated. In fact, it has the second lowest per capita consumption of HW products of any region, only above Middle East and Africa. To stay ahead, manufacturers should capitalise on the rising interest in functional ingredients in the region and launch new variants incorporating more novel functional ingredients. Manufacturers expanding in Asia Pacific have the significant advantage of targeting consumers who are more willing to try and have faith in new functional ingredients.