Organisation:
PwC, Rabobank, Temasek
Resource Link:
Published in 2021, Link
My Key Takeaways
You are what your customers eat.
For the next decade, Southeast Asia’s (SEA) food spend is expected to grow at a compounded annual growth rate (CAGR) of 4.7%, resulting in an incremental US$500B versus China (3.9%), and Japan & Korea (1.4%).
It’s easy to assume that tastebuds and preferences are similar across the Asia Pacific (APAC) region, but experienced executives operating in the region would tell you otherwise.
For example, “quality” remains the single most important factor (higher or equal in importance to price) for APAC customers but its definition is far from universal:
- In Australia & New Zealand, quality tends to mean taste, but for Asia, it’s freshness.
- India: locally sourced produce is seen as fresh, even if such products are sold in “kiranas” (mom-and-pop stores) without optimal refrigeration infrastructure (Pg 32)
- Vietnam: freshly-picked produce is often seen as the gold standard
- Singapore, Australia – consumers are generally willing to go by production/expiry dates to determine freshness.
Sharing some key takeaways from a report by PwC, Rabobank and Temasek which covers six key customer-driven food trends in APAC:
- Healthier diets
- Sustainable consumption
- Quality & Fresh produce
- Safe & Traceable sources
- Alternative protein
- Online purchasing
APAC dietary shifts – less meats & sugar, healthier snacks & more fruits.
You’ll find a fascinating summary of considerable shifts in dietary preferences across APAC, compared to 3 years ago (Pg 29).
Publicly listed global F&B companies with an emphasis on health-based products have also enjoyed a valuation premium of around 12% over the last 5 years, compared to those which didn’t (pg 50).
Safe and traceable sources – the trust premium
Across APAC, around three quarters of respondents in a 2020 study cite illness and death caused by contamination as their biggest concern for risks posed by food supply chains.
According to the report’s survey, more than 40% of Asian consumers are concerned about where their food is sourced from, with 81% of Chinese respondents indicating they would trace food sources over the next 12 months.
Educate for premium – 58% of study participants said they would pay around 37 % more for cell-based meat after listening to a detailed presentation [Maastricht University].
EU/UK agrifood companies should capitalise more on Europe’s trust premium when expanding and marketing their products in APAC.
Cloud kitchens – shared kitchens dedicated to delivery, slashing operating costs
SEA online food delivery platforms are expected to reach US$20B by 2025, a growth of around 50 times in just ten years!
Moreover, the global market of cloud kitchens would grow at a CAGR of 19% from 2020 – 2024, with APAC contributing 59% of growth (e.g. Gojek’s partnership with India’s Rebel Foods to build 100 Cloud kitchens across Indonesia).
Meal kits – getting down to cooking healthier meals
The meal kits phenomenon (Pg 44) is catching up in Asia, as consumers order the delivery of prepared ingredients with healthier recipes to cut down on food preparation time:
- Vietnam: consumers are most likely to utilise meal plans each week (from 1-2 times per week to over five times per week)
- Singapore: Nosh, a meal subscription provider, saw its “strongest demand in its four-year existence” since the Covid-19 pandemic despite stiff competition from readily available and low-priced take-out meals in the city-state.
APAC food sector’s strong growth in the coming decade
The report writes that Asia’s growing population will contribute to the region’s incremental US$4.4 trillion in food spend by 2030.
Around 55% of this incremental and explosive food spend (US$2.4 trillion!) will be actively driven by consumer-conscious behaviour.
To avoid costly fixed manufacturing assets, we can expect a proliferation of agrifood startups which would be keen to partner comanufacturers to scale up and reduce costs.
Agrifood companies would also need to invest in new R&D capabilities to create healthier food options that cater to Asian consumers’ tastes, while ensuring traceability and safety through supply chain innovations.
Emerging food categories like plant-based protein would also open up new co-innovation partnerships along the entire food value chain for European and UK agrifood players.
According to the report, there are generally inadequate “wet extraction”, “high moisture extrusion” technologies as well as novel ingredients for alternative proteins in Asia.
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Feeding Asia’s 4.5B consumers in 2030 will continue to be a massive challenge, but for European and UK companies who invest creatively in trends driving the future of Asian food, it will be a rewarding one.
My LinkedIn post here.
About Zhilin SIM
Having worked and lived in Singapore, the Nordics, China, Spain, UK, I’m now based in Paris.
I’m fluent in English, French and Mandarin, and I’m learning Arabic because it’s a beautiful and fascinating language.
My team creates and supports one-many initiatives connecting Corporate and Startup ecosystems in Europe to business and innovation opportunities in Singapore and Southeast Asia.
I’m passionate about horticulture, watercolour, startups/tech as well as French cuisine, Peranakan kueh techniques and other global cuisines.
Feel free to connect with me if you think my network in Europe and Asia could be of benefit to your business and innovation activities.
