Dive into the nuanced consumer landscape of Asia Pacific, where concerns over rising costs and economic slowdown are shifting the way consumers shop, and brands and retailers engage them.
Despite challenges, a resilient majority anticipate brighter financial horizons by 2024.
Explore four strategic imperatives unveiled by NIQ experts, offering a roadmap for fast-moving consumer goods (FMCG) manufacturers and retailers in the Asia Pacific region to thrive amidst shifting consumer sentiments and market dynamics.
Consumer sentiment is split in Asia Pacific
NIQ’s latest Consumer Outlook report reveals that within the Asia Pacific (APAC) region, 38% of consumers feel they are in a financial situation compared to last year, while 30% of consumers have concerns about their financial situation.
Of the 30% of consumers who report being worse off this year, 77% report the increased cost of living as the source of their worsening situation, 41% attribute it to the economic slowdown, 32% to job insecurity or loss.
Despite ongoing financial concerns, 55% of APAC consumers are optimistic their financial situation will be better by the end of 2024. Consumers in the region continue to prioritize spending on groceries and household essentials, thereby maintaining a crucial foothold in the consumer market. Fresh foods and wellness products are at the top of the priority list, followed by home essential products, dairy, and fresh meat.
4 success strategies for 2024
NIQ’s experts recommend four key strategies for FMCG manufacturers and retailers in Asia Pacific to uncover opportunities and grow amidst opposing consumer sentiments in 2024:
1 : Expand the concept of value
The appeal of lower price tiers, private label products, and enticing promotional offers continues to resonate with consumers across online and offline platforms throughout the Asia Pacific region.
Brands and retailers can expect heightened demand for emerging price tiers like affordable-premium, or super-discount, as financial polarization deepens and consumers seek to blend “affordability” with desires for proactive health, enticing innovations, and authentically sustainable options.
NIQ’s analysis shows a clear trend of price tier divergence within FMCG categories. Both mass-market or FMCG brands with a price index of 41-80 (+0.2pt) and luxury or FMCG brands with a price index greater than 201 segments (+0.1pt) are growing. Clearly communicating the value-for-money proposition is imperative, especially given current economic conditions.
2: Maximize moments at home
Everything from holidays, to socializing, and especially out of home activities, are all likely to feel the brunt of consumer cutbacks.
While discretionary scrutiny has lessened in a few areas (for instance Clothing/Apparel saw a net change score of -19 in 2023, and today stands slightly improved at –17) the situation remains fairly stable from a year ago. The positive takeaway for FMCG: consumers will continue to prioritize their grocery and in-home spending.
And 2024 offers a few notable events, including the Olympics, Euro 2024 Football tournament, and more, that stand as opportunities to engage shoppers and boost sales.
While 49% of APAC consumers intend to maintain their usual spending on in-home entertainment, categories like beverages and snacks typically experience a surge in sales during these occasions.
Marketers can capitalize on global and local opportunities by aligning their strategies with current news cycles to remain relevant to consumer interests.
3: Innovate boldly
In the past, successful Private Label growth involved innovating beyond basic value concepts. Brands must reevaluate their positioning, and innovate how they appeal to consumers.
NIQ’s data confirms the crucial role innovation plays in driving growth— its impact is exponential. Companies with growth in innovation sales are 1.8 times more likely to achieve overall sales growth compared to those with stagnant or declining innovation sales.
Moreover, a significant portion (59%) of APAC consumers express openness to new or innovative products tailored to meet their health and wellness needs. Categories with notable growth potential/current growth include hydration products, respiratory health, and products related to adult nutrition and incontinence.
4: Play to channel dynamics
As omni-channel journeys become increasingly prevalent, accurately identifying consumer purchasing behaviors and leveraging key global channels become imperative.
Discounters, traditional trade, and e-commerce platforms have consistently outperformed the market in terms of growth. 72% of APAC consumers indicate increased store switching to manage expenses, and 35% visiting Discount or value retailers more often in order to save. Consumers in China, India, South Korea and Thailand report that shopping online for deals is their top savings strategy.
With this in mind, understanding the channels that resonate most with shoppers and identifying successful categories in specific locations can significantly boost growth.
What’s next for FMCG in Asia Pacific
In navigating the dynamic landscape of Asia Pacific’s consumer market, FMCG manufacturers find themselves at a critical juncture where adaptation and innovation are paramount. The emergence of polarizing price tiers underscores the necessity for manufacturers and retailers to pivot towards the burgeoning segments to align with evolving consumer preferences.
Concurrently, expanding into new categories and markets presents an avenue for sustained growth, provided it’s done with astute consideration of local consumer inclinations. Leveraging existing brand equity remains integral, but it must be coupled with a commitment to tailor offerings to regional tastes.
Despite the prevailing challenges, the potential for growth in APAC remains abundant. However, it’s the companies that make informed, data-driven decisions and proactively tackle obstacles that will not just survive, but truly thrive in the long run. As we move forward, strategic agility and a deep understanding of consumer dynamics will continue to be the cornerstone of success in the ever-evolving FMCG landscape of Asia Pacific.
