As Asian consumers redefine what ‘value’ means to them, they are moving away from mainstream FMCG products towards premium ranges which offer a touch of luxury, and basic ranges that make their shopping more affordable.
This polarisation is not always exclusive: a mix of products from both ends of the scale can often be found in the same shopping basket, as consumers balance a desire for quality with the continuing need to budget. To grow their footprint in the region, both global and local FMCG brands must think differently about what they are offering.
Aspiring to higher quality
Asian shoppers trade up because they can, and because they want to give their families the best. The culture of gift-giving is also increasing demand for premium offers.
The rising affluence of the growing middle classes provides new opportunities for brands to position premium products, which can command double or triple the average price. In Indonesia for example premium chocolate, mouthwash, facial care, liquid soap and cheese brands have all boosted their market share, while 60 per cent of shampoo is now sold at premium price.
FMCG brands are responding to and driving this trend in a number of ways—including using superior quality ingredients, which has helped Japanese-style ready-to-drink (RTD) green tea brand Oishi to increase the number of times households in Thailand buy its products by 21 per cent over the last year. Other brands use shiny packaging to give a product the feel of a ‘gift’, like Lifebuoy—Asia’s fourth most-chosen FMCG brand – with its Gold variant. Brands are also looking at how they price, position and market their products.
Global brands profit from rising shopper sophistication
Capitalising on the increasing market for fabric softeners, Downy—the fastest riser in Kantar Worldpanel’s Brand Footprint ranking of the world’s most-chosen FMCG brands—is engaging consumers with new premium variants. Downy Infusions features luxurious fragrances, including Parfum Mystique in Thailand, designed for women to wear as a part of their wardrobe. It emphasises its positioning through innovative digital marketing, including an online drama series in Indonesia called The Scent of Passion.
Haircare brands including TRESemmé have successfully expanded the segment beyond shampoo and conditioning by introducing new steps to the haircare regime—including masks, oils and even fragrances. Offering salon-quality experiences at home, TRESemmé’s strongest growth over the last year was in India and Indonesia, where it boosted its power and fashion credentials with high-profile sponsorship of the TV show Asia’s Top Model.
Some brands are introducing more sophisticated formats—such as Vim, which has reinvented bleach in a more effective gel. In Vietnam, where it launched the variant with an educational campaign for germ-free toilets, Vim is now the most-chosen bleach. Wet toilet tissue is rapidly gaining acceptance in China, meanwhile, where it has been successfully introduced by Breeze, Vinda, Kleenex and Treasure.
Bringing health and convenience to consumers’ lives
Another way brands are able to command a price premium is by adding ingredients, benefits and functions that make people’s lives healthier or easier.
Asian consumers are more aware of the importance of a healthy lifestyle and have more money to spend on achieving it—valuing ‘naturalness’ and herbal-based benefits in particular. At the same time, changing working and social patterns is making lives busier, leading to a demand for convenience.
Food brands such as Knorr and Maggi are making themselves indispensable in kitchens across Asia, with new premium-priced solutions such as taste enhancers that use natural ingredients to add an authentic ‘home cooked’ flavour to food, at the same time as cutting preparation time.
If a brand is to increase its footprint in Asia, however, it cannot focus entirely on the premium end of the market. The economic landscape is more complex than that: growth in China has dramatically decelerated from last year as consumers become more price-conscious, while in South Korea, where GDP growth has stalled, consumers are buying FMCG brands 3 per cent less than they did last year.
Premium positioning with an affordable price-tag
One way to appeal to consumers who want to upgrade without over-spending is to offer ‘masstige’ products: those that provide a ‘touch of luxury’ (prestige) at a price that is within the reach of the majority (mass).
Probiotic drinks brand Yakult is purchased by 59 million households in Asia. By offering products that contribute to good health at a price everyone can afford it has embedded itself into the daily lives of its target middle class consumers. Its biggest growth market is Indonesia, where 4.5 million new households bought its products over the last year.
Brands are also making themselves widely accessible by taking an innovative approach to sizing—including Oreo, which has launched Mini Oreo packs in Asia. South Korean beauty manufacturer Amore Pacific has made its luxury, botanical-infused cosmetics brands affordable with single use face treatments in premium packaging.
In Indonesia, Kopi Luwak’s pioneering low-acid White Koffie, which offers a caffeine hit that is gentle on the stomach, is sold in single-serve sachets that enable the brand to position it as a drink which is healthy and affordable. Since launching in 2011 it has captured 10 per cent of the coffee market.
Ranges with something for everyone
The most successful FMCG manufacturers will be those that develop and invest in ranges which incorporate both premium options and lower tier ranges or brands—such as Omo.
Polarisation is very conspicuous within Asia’s laundry market. While more middle class households are buying premium liquids, cheaper powder formats are also growing as other households enter the market for the very first time. In China, Omo’s liquid format is gaining buyers fast, increasing 2.5 per cent in penetration in the last year. A new variant called Omo TT, which it sells at a lower price point, is already bought by 11 per cent of Chinese households. At the same time, Omo has maintained its lead in powder and bars by offering new mixes.
There is room for brand innovation in Asia’s FMCG industry. Brands with ambitions to grow their footprint can rejuvenate the market by responding to consumers’ increasing desire for luxury and quality, in authentic ways that reflect what matters to people in Asia – for instance, cultural traditions as well as cool technology – while also meeting the ongoing need to save money where possible.
Virginia Garavaglia is marketing director, Asia, with Kantar Worldpanel