Milk Alternatives and Beverages: Balancing Health and Indulgence in Asia Pacific

Health and indulgence, two of the most crucial attributes in packaged food and beverages, are sometimes, unfortunately, in conflict. In line with rising health awareness accelerated by the Coronavirus (COVID-19) pandemic, food – milk alternatives in particular – and beverages with clean labels, such as reduced-sugar, lower-fat and additive-free, are gaining in popularity.

Products with such health-orientated positioning risk being perceived as lacking in taste, when a more indulgent sensory experience is often the key reason for purchasing. Players who can optimise the balance between health and indulgence, without compromising either, stand to secure consumer affinity.

Challenges for sugary drinks

Sweet tastes have traditionally typified beverages in Asia Pacific. Consumers are accustomed to the sweetness offered by a wide variety of beverages, encompassing carbonates, juices, energy and sports drinks – the list goes on.

However, a number of key factors are challenging this established preference. First, tighter government regulations across the region, exemplified by various tax initiatives on sugar in South East Asia. Related to this is the burgeoning health and wellness trend, evidenced by increasing consumer concern surrounding high sugar content in beverages. COVID-19 has fuelled growing health concerns, with consumers wanting to stay healthy and boost their immune systems, in case of infection. Given this context, there is mounting pressure on beverage manufacturers to innovate with new, healthier products.

In response, beverage companies in Asia Pacific have been upholding their classic offerings such as Coca-Cola Original through a wide variety of marketing campaigns. Health attributes have become the key focuses of new product development, however, Coca-Cola Fiber+ is one of the prime examples, as a non-sugar alternative to Coca-Cola Original. Critically, COVID-19 has accelerated company innovation addressing health and indulgence needs. A growing focus on immune support for new product development in beverages, such as the 2019 launch of iMUSE drink from Kirin, has emerged following the pandemic.

Reconciling health with indulgence via milk alternatives

Milk alternatives in Asia Pacific is a significant market, valued at USD9.4 billion in 2020. Despite health and indulgence being both crucial drivers in most countries, demand, and the importance of health and indulgence, still varies across national markets, reflecting individual countries’ socioeconomic environment and consumer psychographics.

In some countries, health is taking a relatively higher priority. For instance, in China, the biggest milk alternatives market in Asia Pacific, the pursuit of health and nutritional benefits of packaged food is fuelled by rising purchasing power and education levels. Consumers are therefore turning to natural, high-protein soy drinks as a habitually consumed nutritious staple food.

Similarly, in Thailand, the tightening sugar tax and the increasing awareness of lactose intolerance are driving momentum in milk alternative offerings with explicit sugar-free and lactose-free positioning.

In contrast, players in South Korea, a rapidly evolving market with dynamic competition among brands, are trying hard to consolidate their presence in food and beverages. Here, unique and novel product flavours tend to win out over health considerations in attracting domestic consumers.

Interestingly, leaning towards one aspect is not always the case in Asia Pacific. In Japan and Hong Kong, higher packaged food market maturity and product diversity have given rise to a value-for-money mentality – consumers are selective, looking for products with a decent balance of health and indulgence.

In Euromonitor’s presentation on Health and Indulgence: Optimising the Balance in APAC’s Milk Alternatives and Beverages Markets at Natural & Organic Asia, we deep-dived into how players in Asia Pacific’s key markets are optimising the balance between healthy living and consumer tastes, in accordance with national environment, socioeconomic conditions, and consumer psychographics.