2016 has been a momentous year on the world stage with Britain voting to exit the European Union and Donald Trump winning the United States election. There have been major upheavals in the Asia Pacific too – literally in New Zealand and Japan with damaging earthquakes, but also a political scandal in South Korea, the passing away of Thailand’s King Bhumibol, and unexpected currency reforms announced in India. We are living in uncertain times where disruption is becoming the new norm.
But despite the uncertainty, Asia Pacific’s economies are proving resilient and have remained relatively stable across the region with only marginal changes compared to 2015. Consumer confidence remains strong having increased in 10 of 14 countries this quarter while holding steady in the rest.
Overall FMCG volume growth across the region for bricks and mortar stores has slowed considerably during the last five years to an all-time low of 1.3% for the latest annual growth to Q3 2016. Last year’s downturn was driven by a decline in sales of China’s offline packaged goods sales as e-commerce flourished. Pockets of opportunity can still be found in many countries as the FCMG sector rebounds, especially in Malaysia, Indonesia, Philippines and Vietnam.
It comes as no surprise that FMCG volume growth in Asia Pacific is highest in countries where consumers are most positive and where the overall economy is performing well. The Philippines, India and Indonesia are three such countries and it’s worth taking a deeper look at some common themes among these markets.
Their governments have a strong focus on controlling inflation and investing in infrastructure and the nations each have a sizeable young population in the labour force. The combination of these factors is helping drive domestic consumption.
The impact of infrastructure investments should not be underestimated. As local communities become more connected – whether by roads, telecommunications, or better logistics – new distribution channels emerge and opportunities and access to goods and services expand.
The long-term growth of e-commerce is particularly reliant on new and improved infrastructure. Smartphone penetration is growing rapidly across the region and consumers have access to goods and services like never before. But to realise the growth potential of e-commerce, distribution and delivery infrastructure must be in place.
E-commerce for consumer packaged goods is still in its infancy across much of the region but as shown by Korea and China, there is vast potential for many markets. China’s Singles Day on November 11 generated more e-commerce sales in that one day than Brazil achieves in a year! Another key take out from Singles Day analysis was that 27% of purchases were from international brands or merchants. This highlights the increasing interest of Chinese consumers in foreign brands and the enormous opportunities that await foreign brands that can connect with this market.
Opportunities for bricks and mortar stores are still there as they too can tap into the promise of convenience which has helped drive the emergence of e-commerce. Convenience formats and mini-markets dominate the retail landscape and store numbers grew 11% over the last five years. Convenience is becoming a basic requirement of consumers’ busy lifestyles and companies that can deliver on this need will do well.
In this issue, we have a special focus on “What’s Hot and What’s Not” as we take a snapshot of the fastest growing and declining categories across our Asia Pacific markets.
We hope you enjoy this edition of Asia Pacific Quarter by Numbers.
Insights contained in this article are extracted from the 2016 quarter 3 edition of Nielsen Quarter by Numbers, where a total retail picture in Asia Pacific is presented. Every three months, Quarter by Numbers will scan the markets that matter to organisations doing business in Asia Pacific, report on the latest consumer insights, and dive into FMCG landscapes to help senior business leaders think fast and win big in this region.
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