Consumers in Asia are spending more carefully as inflation continues to hurt purses, with the food, beverage, and home care sectors driving growth in the third quarter of the year, according to a new analysis from Kantar.
“Shoppers are feeling the squeeze on their wallets and are using different strategies to adapt depending on the local economic situation where they live,” said the report.
Asian economies continued to survive in the third quarter of 2022, with some markets enjoying growth. Fast-moving consumer goods (FMCG) spending in the Asia-Pacific grew by 4.2%, which is higher than the 3% growth seen during the previous quarter. In Mainland China, Taiwan, India, Indonesia, and Thailand, people are shopping more often in e-commerce, but are spending less each time.
The food, beverages, and home care sectors are driving growth this quarter, and growth tripled in the food sector due to significant gains in all Asian markets.
The report released in December gave consumption highlights across key Asian markets.
In China, e-commerce continues to attract more shoppers. Here, e-commerce has entered a new stage of development, offering an interface that enables consumers to search for and buy products directly via high-quality content marketing. Among the different FMCG sectors, beverages enjoyed the highest year-on-year growth.
With the easing of the pandemic in Taiwan, shoppers returned to physical stores and social events more often, which has led to a slight recovery in the cosmetics sector. E-commerce, which had benefited from the pandemic lockdown, saw online spending per trip drop slightly as offline spending rose.
South Korea continues to see growth in the importance of online channels, with the value reaching 34.5% across all channels in Q3. The convenience of e-commerce is becoming more widespread, which helped it to become a leading channel, especially in the FMCG market. Despite inflationary pressures, consumers carried out “revenge spending” in leisure, entertainment and travel to buoy the economy.
Indian shoppers are buying bigger packs and shopping more frequently than before the pandemic. In contrast, the average pack size and spend per trip are declining, reflecting the current inflation situation in the market. e-commerce is seeing the highest growth in terms of shopping occasions. Sales of home hygiene and immunity-building products have declined, while categories including chocolates, soft drinks, biscuits, salty snacks and noodles have kept constant.
For Indonesia, FMCG growth is currently 7%, the same level as Q3 thanks to the positive impact of Indonesia’s festive season. “However, looking at the long-term trend, consumer spending is starting to slow with people shopping less frequently and spending less,” said Kantar.
In-home FMCG consumption in Malaysia declined marginally as consumers adjusted their spending habits due to inflationary pressures. The food sector is slowing down, unlike non-food, where consumers are absorbing higher prices and spending more. Drug, beauty and pharma channels are gaining in penetration as well as trip size and spend.
In Thailand, reduced government support combined with high inflation has led to a drop in disposable income. “Shoppers are therefore becoming more careful about what they spend and buying a smaller number of categories and products and shopping around for better deals,” said the report. The quarter saw the rise of channels such as supermarkets and convenience stores, which offer more promotions.
While spending remained higher than a year ago, shoppers in the Philippines have recently taken steps to rein in their FMCG spending as they adapted to inflationary pressure. This is being driven by middle to lower-income homes and less-developed regions, with spending mainly on food and home care.
In Vietnam, higher growth of total FMCG was seen in rural areas while growth is slowing in urban areas compared to Q3 last year when the fourth COVID-19 wave hit the hardest. The average price paid continues to be the key value driver. Kantar expects the beverage sector to bounce back after the lockdown and the sector is looking likely to thrive once again after a two-year slump. By PhilExport
