Growth of ASEAN
With a combined GDP of about US$2.6 trillion and strong projected growth, ASEAN is seen as a rising trade and investment star among the world´s growth markets. ASEAN´s economic growth has also seen the size of its middle-class consumer base increase dramatically, with the number expected to double between 2015 and 2020 to reach a total of about 400 million people.

As these middle-class consumers enjoy a better quality of life, they will develop a stronger appetite for imported and branded goods, as well as for lifestyle products and services. As ASEAN´s urban middle class grows at break-neck speed, there’s ample opportunity for international food and beverage producers with attractive products and an appropriate long-term strategy, to enter and succeed in the regional markets.

Localization Often the Right Call
The ASEAN market is full of opportunities, but manufacturers must look beyond a one-size fits all solution. For example, McDonald´s in the Western world is known for having a similar product offering wherever you go. McDonald´s across Asia offers a wide range of local favorites and classics with a twist. McDonald´s in Japan offers many different shrimp burgers and products with teriyaki sauce are extremely popular. In Thailand, McDonald´s has classic rice dishes and congee, which are more commonly found at the many street restaurants in Thailand.

This is just one of many examples of large food and beverage companies that recognize the importance of localization when taking on the ASEAN market. Even though increased overseas travel has made consumers more receptive to western foods and drinks, the McDonald´s example shows that local tastes still hold power in these regions.

Three trends Finnish producers need to be aware of:

Trend 1: Healthy, Fresh and Natural 
Increasing levels of wealth, improved education, targeted government campaigns, and globalization, mean that ASEAN shoppers are increasingly aware of the importance of healthy living, fresh food, nutrition and product sourcing. Retailers in ASEAN are responding to this by highlighting healthy ranges and freshness by using innovative concepts, layouts and technologies.

As a result of this trend, trust and transparency are more important now than ever. Consumers are taking the time to read product labels and are choosing products based on reputation and consumer reviews, instead of always going for the cheapest or one with the most attractive packaging.

Consumers are often looking for elements that are associated with “natural”, “pure” and “fresh”. This includes use of natural ingredients, but also natural production and processing methods, for example, fermentation and brewing. Scandinavian and Finnish food and beverage products have an advantage as these regions are seen as trustworthy.

Trend 2: Protein is Seen in a New Light         
Global market intelligence agency Mintel found out that the share of new food launches with high protein claims across ASEAN grew by an average of 8% every single year from 2012 to 2016, and Thailand lead the way with the highest amount of high protein food launches.

Consumers in ASEAN are increasingly seeking specific nutritional benefits to support their growing interest in health and active living, while simultaneously demanding greater convenience to fit their busy, urban lifestyle.

Higher protein diets have quickly evolving from a practice focused on by athletes and bodybuilders, to now being more of mainstream health and wellness approach. Protein-fortified foods are common, and they have clearly expanded into the mainstream, and will continue to expand as incomes rise.

Trend 3: Strong Growth in Luxury and Indulgence Products         
”Luxury” or “indulgence” products sales in ASEAN continue to see strong growth in several product categories, reflecting the rising levels of affluence in the region. For example, small indulgences such as ice cream, cakes, chocolates, fresh milk, juices, bottled water, frozen meals and crispy snacks have increased their penetration.

As overall incomes increase, upper-income shoppers are now spending even more on experiences such as leisure travel, but also on premium F&B products and dining out in more expensive restaurants.

By looking at the consumer patterns in more affluent ASEAN countries like Thailand, they are found to be quite like what has been seen in other countries as household incomes rise. Once the consumers can meet their basic level needs, demand for small indulgences rises first. Then, when incomes reach middle-income levels, luxury products and services become more sought after, and experiences gain momentum.

Pricing strategies on luxury products can vary widely, with some products that find monopolies in certain niches being able to charge significantly higher prices compared to the home market. These monopolies can come about by tighter regulations putting off competitors or from the varying prices and margins of sub contractors used in the supply chain. It’s crucial to stay on top of sector and competitor pricing before and after market entry in order to correctly value the opportunity for luxury or indulgence products and successfully leverage the  new market opportunity.