Pockets of growth seems to be a recurring theme amidst an era of economic change, modest growth and evolving consumption patters. Across the board, growth in Fast Moving Consumer Goods (FMCG) is getting harder to achieve but if you scratch below the surface, there are many examples of companies, segments and channels performing strongly.
Last quarter, we focused on the huge potential e-commerce has in this region where internet connectivity and consumer adoption continues to expand at rapid rates. This quarter, we focus on those companies that are managing to achieve growth ahead of their peers.
Without a doubt, winners can be found across all sectors and markets - big and small, global, regional. But where we see continued and sustained growth is among local players in the region. As world markets hunker down under a guise of protectionism, the "Go Local" song has never been stronger. The prestige that global brands once held in developing markets appears to be losing some gloss as local brands compete on quality, often with more competitive pricing and more targeted marketing.
Nielsen conducted an analysis of the Top 100 FMCG players across Asia Pacific in 2016 reprsenting approximately 85% of FMCG.
In 2016, local players held the lions share of the FMCG market in Asia Pacific at 53% while global and regional players account for 39% and 9% share respectively. The real story though comes from who is driving the growth of FMCG and here, local players success is resounding, accounting for 73% of FMCG growth over the last three years. While the strength of local players does differ by market, their impact on FMCG growth is incredibly consistent.
Only a few years back, multinationals dominated modern trade while locals' strength lay in traditional retail formats. This too is changing with local players driving 90% of FMCG growth in Modern Trade and 63% in Traditional Trade.
Other traditional stereotypes are also being smashed. Food and Beverage categories have long been hailed as the stronghold of local players, given their local expertise for consumer tastes and preferences. But again, local companies are moving in and taking global ground in Household and Personal categories as well. It is in Beverage categories that global companies are driving most growth today.
In general, local players are offering incresingly better quality products a competitive pricing. They often have strong on the ground presence and a sustained distribution network that ensures their products are readily available to all consumers - not just those in the top tier cities, but in secondary cities and regions where consumption is accelerating. In many markets like India, governments are promoting the "Made in India" theme, which drives consumers' emotional connection and loyalty to local brands but also local brands are benefiting from a deeper understanding of local regulations and taxation incentives that these schemes provide.
Connecting consumers to your brand values and brand story is critical to success and longer-term loyalty. In a number of markets, local brands are capitalising on a revived 'local pride', leveraging a brand's heritage in the way they share their story with consumers often via social media. 'Focus' is also a strength of local brands - be it on a specific consumer group or specific region to ensure they maximise their impact for the resources they have available.
Big or small - locals are winning the growth race! It's up to global players to take stock, dig deep and understand the nuances by market and connect with local consumers.
Discover further insights from our global Quarter by Numbers Q2 2017 summary feature.
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