TAIWAN MARKET SNAPSHOT
The Taiwanese economy is feeling the pressure of the prevailing slowdown of the global economy and cautious investment sentiments stemming from US and China trade tensions. The market’s export-oriented economy recorded GDP growth of 1.7% per annum in the first quarter of 2019, declining since last year in the same quarter (GDP growth 3.2% p.a. in Q1 2019).
Despite the external headwinds, the Taiwan Government forecasts a rise in domestic demand and government consumption in the second half of 2019. Meanwhile, consumer confidence remained unchanged in the second quarter of 2019, with CCI index at 84, and the majority of consumers (61%) indicating they are funneling their spare cash in savings and a further 35% are channeling spare case into investments in stocks and mutual funds1.
There is a notable increase in FMCG growth in Q2 2019, up 4.9% compared to 0.6% in Q2 2018. Supermarkets (29% of FMCG retail sales, growing 11.4% in Q2 2019) and convenience stores (28% of FMCG retail sales, growing at 2.8%) are the preferred store formats for Taiwanese consumers who are keen on making frequent trips for immediate needs. Recent quarters have seen marked growth in health and wellness categories, with medicinal application product sales up 5.9% and nutrition supplements up 3.5% reflecting Taiwan’s ageing population—62% of the population2 in the 50-65 years age segment are still working. Consumers in this segment reflect a growing preference for convenience stores to purchase food and non-food items, and demand for adult nutritional supplements in easy-to-eat and easy-to-carry packaging is increasing in convenience stores.
Taiwanese consumers are digitally savvy, with 43% saying they are adopting e-commerce and mobile shopping lists for purchasing FMCG. Recent research reveals that online FMCG sales in Taiwan is growing at 18.2% in Q2 2019 compared to 12.5% in 2018, and digital channels are particularly popular for product categories such as diapers (up 4% from 17% FMCG value growth in 2018), skincare (up 0.7% from 12.3% FMCG value growth in 2018) and pet-food (up 2% from 11% FMCG value growth in 2018).3
With internet usage and social media consumption forecast to continue rising, consumers’ familiarity and comfort level with online shopping channels will increase in tandem, leading to growth in a broader range of FMCG categories. This could be a leading signal for retailers and manufacturers to expand their online product range and continue to enhance their fulfillment and logistics capabilities.
- CCI - Consumer Confidence Index by The Conference Board Global Consumer Confidence Survey conducted in collaboration with Nielsen
- Executive Yuen, 2018, Nielsen Life Index
- Nielsen eCommerce Retail Measurement Services , Y2019 MAT Mar vs Y2018 MAT Mar Value